In its latest order, the Gujarat Electricity Regulatory Commission (GERC) has dismissed a petition requesting it to purchase surplus energy from open access solar projects set up for captive use or third-party sale at the lowest tariff discovered through competitive bidding or average power purchase cost (APPC).

The commission stated that solar projects set up in the state of Gujarat and the capacity utilization factor (CUF) set up in other states vary from site to site and therefore are not comparable. The commission also stated that the solar projects set up for captive use or third-party sale and solar rooftop set up primarily for self-consumption could not be compared with solar projects set up exclusively for sale of electricity to the distribution licensee. So, the procurement rate for surplus energy injected into the grid from such projects after self-consumption has to be treated differently. The Commission said that it would decide on this issue while revising the regulations relating to monetary compensation in such cases.

Background of the case

The Gujarat Urja Vikas Nigam Limited (GUVNL) had proposed that the surplus energy available from the open access solar projects set up for captive use or third-party sale be procured by the distribution licensee at the lowest tariff discovered either through competitive bidding or average power purchase cost (APPC). It was also proposed that the rate of purchase be decided on six months’ basis in which the plant is commissioned.

GUVNL, along with its four subsidiary distribution companies, had filed a petition asking for the modification in the relevant regulations with regards to the purchase of surplus energy by distribution licensees from solar projects set up for captive use or third-party sale availing open access.

For this request, the Commission observed that the proposed rate for the purchase of surplus power is not fixed in nature, and it is difficult to decide given the conditions of the competitive bidding. In competitive bidding, there will always be two rates required to be determined by the Commission, and then, the lowest of them will have to be applied for surplus energy purchased by the licensees.

The Commission also noted that the determination of tariff through competitive bidding was a process that cannot be compared to the determination of APPC. It also added that the tariffs of other states could not be considered for Gujarat.

GUVNL had also requested for changes in the clause relating to the interconnection agreement between the distribution licensee and rooftop solar project owners which provides that consumers (other than residential consumers) should ensure the capacity of rooftop solar does not exceed 50% of their contracted load during the initial two years in their connectivity agreement.

The commission observed that any permission granted to set up more than 50% of capacity after two years by such consumers would affect the licensee’s financial position and affect the other consumer’s tariff. Therefore, a 50% cap for setting up the solar rooftop projects by non-residential consumers during the life of the project needs to be relooked.

The petitioner had also requested the commission to initiate proceedings for bringing modifications to the GERC regulations for net metering and a 2017 order dealing with tariff determination for the procurement of power by the distribution licensees from solar projects.

The petitioner had also submitted that there is an inconsistency in regulations of the GERC for net metering. While Regulation 5 says that cumulative capacity to be allowed on a particular distribution transformer should not exceed 65% of the peak capacity of the distribution transformer, Regulation 7 (5) provides that solar installations could be restricted up to the transformer capacity.

The petition also sheds light on the incongruence of two of the state regulations. One of the regulations states that the electricity consumed by the consumer who is not defined as an obligated entity from the rooftop solar PV system under the net metering arrangement should qualify towards the compliance of RPO (renewable purchase obligation) for distribution licensee. On the other hand, the clauses regarding the interconnection agreement provide that in case of eligible consumers who are not defined as obligated entities, the purchase of surplus energy will only be allowed to meet the RPO obligations of the DISCOMs.

The commission has acknowledged the ambiguity in the regulations regarding these clauses and stated that the matter would be further examined.

The commission further noted that the proposed amendment by GUVNL needs to be revisited to avoid ambiguity and bring clarity to the matter.

Earlier this year, the state commission passed an order stating that no additional surcharge will apply to consumers of four of Gujarat’s DISCOMs for utilizing power through open access between April and September 2019.

Last year, it had issued an order stating that an additional surcharge of ₹0.44 (~$0.0060)/kWh will be applicable in case of open access consumers who avail power through open access from any source other than their respective distribution companies and for open access transactions from October 1, 2018, to March 31, 2019.