Rajasthan Electricity Regulatory Commission (RERC) has accepted the petition filed by Rajasthan Urja Vikas Nigam Limited (RUVNL) for the adoption of tariff discovered through a transparent bidding process for 1,070 MW of solar photovoltaic (PV) projects.

The Commission rejected issues raised by Green Infra Wind Energy, Aljomaiah Energy, and Water Company and NTPC, regarding declaration of change in law and force majeure events.

Background

In July last year, SECI issued a request for selection to set up 1,070 MW of grid-connected solar projects in Rajasthan (Tranche-III).

In November 2020, the SECI auction for 1,070 MW of solar projects in Rajasthan set a record-low lowest (L1) tariff of ₹2 (~$0.0270)/kWh (Tranche-III).

The winning tariff was quoted by Aljomaiah Energy and Water Company and Green Infra Wind Energy Limited, a subsidiary of Sembcorp, for 200 MW and 400 MW of solar projects, respectively. NTPC Limited quoted the second-lowest bid at ₹2.01 (~$0.0272)/kWh for 600 MW of projects but were only awarded 470 MW under the bucket-filling method.

On March 24, 2021, RUVNL filed a petition for tariff adoption for the power to be purchased from the 1,070 MW of solar projects by three distribution companies, for which SECI had conducted the bidding.

However, Green Infra Renewable Projects filed a plea to be added as a respondent in the matter. On June 22, 2021, the Commission, while disposing of Green Infra’s plea, added all successful bidders in the SECI bid as respondents in the case – Aljomaiah Energy and NTPC, besides Green Infra Wind Energy.

The matter was finally heard on July 15, 2021. SECI, during the hearing, had stated that they support the tariff adoption and the plea made in the petition.

However, the winning bidders – the other respondents in the matter – have stated that change in law, force majeure events, and the events leading to delay in project activities, which have occurred after the bid submission date (October 28, 2020), would have a direct impact on the tariff and the timelines for construction of the project.

These change in law events, force majeure, and other events include the Supreme Court order that stated that all existing and future overhead low and high voltage power lines in the priority and potential habitats of Great-Indian Bustard must be underground; levy of Basic Customs Duty (BCD) on solar cells, modules, and panels; spike in BCD on solar inverters; Covid-19 lockdown imposed in Rajasthan; and strike by Patwaris from January 15, 2021, until last week of April 2021.

According to the respondents, if a change in law event occurs up to the scheduled commercial operation date of the project, the developers would be entitled to compensation, provided that the appropriate Commission recognizes the change in law event.

The respondents also added that if a change in rates of safeguard duty (SGD), Goods and Services Tax (GST), and BCD after October 28, 2020, impact the project cost, such change will be treated as a change in law event. The proportion of compensation payable on account of change in rates of such duties would be provided to the affected party, provided that the appropriate Commission recognizes such provisions at the time of tariff adoption.

Commission’s view

According to the Commission, the role of the Commission in case of tariff discovery through a competitive bidding process is confined to tariff adoption, on being satisfied that the bidding process was transparent.

Thus, the Commission adopted the 1,070 MW solar project tariff as mentioned in the power sale agreement between SECI and RUVNL.

The Commission also stated that it is appropriate to not investigate the merits of the issues raised by the successful bidders regarding the declaration of change in law and force majeure events. However, the Commission added that the parties are at liberty to file fresh petitions to raise such issues at the appropriate time.

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Rahul is a staff reporter at Mercom India. Before entering the world of renewables, Rahul was head of the Gujarat bureau for The Quint. He has also worked for DNA Ahmedabad and Ahmedabad Mirror. Hailing from a banking and finance background, Rahul has also worked for JP Morgan Chase and State Bank of India. More articles from Rahul Nair.