Gujarat May Charge ₹0.5 Million_MW for Solar Projects to Build Evacuation Facility

The Gujarat Electricity Regulatory Commission (GERC) has invited public opinion on a draft paper discussing issues in establishing tariff for solar power procurement by distribution licensees.

The last date for sending comments and suggestions is March 4, 2020. The Commission has released the discussion paper for feedback to initiate the regulatory process for setting the solar power procurement tariff for the financial year.

Key Points from the Discussion Paper:

For the first time, the state has proposed that in the first year of the project, the developer can retain 100% of the gross proceeds on account of benefit from clean development mechanism (CDM). In the second year, the share of the beneficiaries will be 10%. This will increase by 10% every year until it reaches 50%, where the proceeds will be shared at an equal proportion between the generating company and the beneficiaries.


Another important proposal says that for all solar power projects, a security deposit of ₹0.5 million (~$700)/MW will be required for ensuring speedy and timely completion of evacuation facilities by solar developers failing which, the bank guarantee may be forfeited.

The Commission proposes to establish the tariff for all prospective solar power projects, based on the rates discovered through competitive bidding, and discontinue the practice of determining the generic tariff for solar power projects. The state recently proposed the same amendment for wind projects.

For power generated from small-scale solar projects below 5 MW, the procurement price will be based on the tariff discovered under the competitive bidding process during six months’ time, after which an additional ₹0.20 (~$0.003)/ kWh will be applicable.

For those solar projects which are not registered under the renewable energy certificate (REC) mechanism, the adjustment of the solar generation will be made from the consumer’s billing cycle. Also, the entire solar generation will be utilized for meeting the renewable purchase obligations (RPO) of that distribution licensee.

Banking of energy will be allowed within one billing cycle of the consumer, and peak charges will be applicable for consumption during peak hours.

In the event of any surplus solar energy not consumed (by a project not registered under REC mechanism), the excess electricity will be compensated by the distribution licensee at the rate ₹1.75 (~$0.023)/kWh. The surplus energy compensated by the distribution licensee will be utilized to meet the RPO of that DISCOM. The energy accounting will be carried out based on the 15-minutes time block. For energy accounting, solar generating projects will provide ABT (availability-based tariff) compliant meters at the interface points. Availability-based tariff metering is a frequency-based pricing mechanism currently employed in India for unscheduled electric power transactions.

For solar projects registered under the REC mechanism, unconsumed surplus solar energy will be compensated by the DISCOM at the rate of ₹1.50 (~$0.02)/kWh.

If a solar project set up for captive use or third-party sale is registered under REC, its transmission charges and losses will be the same as of open-access consumers. But if the projects for captive consumption are not registered under the REC mechanism, then 50% of wheeling charges and losses will apply to the consumers.

For projects that are set up for third-party sale and are registered under the REC mechanism, then 100% of wheeling charges and losses will apply to the consumers. If the owner of a solar power generator wishes to wheel electricity to more than two locations, then he will have to pay ₹0.05 (~$0.0007)/kWh for the energy fed into the grid.

Also, 100% of cross-subsidy surcharge and additional surcharge will apply to projects under the REC mechanism selling power to the third party. Projects that are set up by the Ministry of Micro, Small and Medium Enterprises (MSME) and are operating above 50% of its contracted demand, will also attract 100% of these charges. If projects are not registered under the REC mechanism, 50% of cross-subsidy surcharge and additional surcharge will apply to the consumer. If solar projects are set up for captive consumption for sale to either a distribution licensee or outside the state, then cross-subsidy surcharge and additional surcharge will not be applicable.

Previously, the state commission 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.

A few months ago, the state also proposed amendments for its net metering regulations for grid-connected rooftop solar systems.