The Haryana Electricity Regulatory Commission (HERC) approved the draft power purchase agreement (PPA) to be executed between LR Energy Private Limited and the Haryana Power Purchase Center (HPPC) for the purchase of 20 MW of solar power for 25 years. The regulator’s order said that the open access solar project would supply power to the state DISCOMs.

The Commission directed LR Energy to file a separate petition for the determination of the tariff.

The HPPC is a joint forum created and owned by the state distribution licensees, namely, Uttar Haryana Bijli Vitran Nigam Limited (UHBVN) and Dakshin Haryana Bijli Vitran Nigam Limited (DHBVN).

Background

HPPC had filed a petition to approve the draft PPA with LR Energy to purchase 20 MW of solar power for 25 years at a tariff to be determined by the Commission. The project is being developed in Haryana’s Bhiwani district as an open access/captive power project. The project achieved final connectivity for the sale of power under open access on October 10, 2019. The construction of the project is in the advanced stages, nearing completion.

The HPPC noted that with its current arrangements, it would have a total installed capacity of 1.19 GW of solar and 1.5 GW non-solar renewable energy power by the end of the financial year (FY) 2021-22 to meet its renewable purchase obligation (RPO) targets. Considering the anticipated upward revision of solar RPO targets beyond 10.5%, additional solar power will be required to fulfill the anticipated solar RPOs for FY 2022-23.

The state DISCOM further said that since the project is close to being commissioned, it can immediately supply power that will count towards meeting RPO from FY 2020-21 onwards.

The Commission has the power to determine a project-specific tariff for the solar project if the developers opt for it.

The HPPC added that the project was conceptualized as an open access/captive power project. In case this project starts selling power under the captive route, this will lead to loss of cross-subsidy surcharge and additional surcharge from the industrial consumers who will be the captive users of the project. At this stage, these charges amount to ₹1.77 (~$0.02)/kWh, and that will be a direct loss to the DISCOMs, which will be ultimately borne by the end consumers.

“In the overall interest of the consumers of the state, it may be preferred that the project sells power to the DISCOMs rather than selling to consumers under captive route,” said the state DISCOM.

Besides this, with the project being set up in Bhiwani, power distribution losses would also be low, the developer said. It will also generate employment for the local population.

Commission’s Analysis

In its order dated June 01, 2020, the Commission had already noted that the DISCOMs had defaulted in meeting their solar RPO targets. The shortfall in meeting the solar RPO up to FY 2018-19 was 1,850 million units (MUs). Further, during FY 2019-20 (until December 2019), the shortfall in their solar RPO stood at 1,532 MUs.

The Commission noted that though the state had decided to waive off the backlog due to the ongoing pandemic, it had directed the DISCOMs to make every possible effort to meet the RPO targets.

The Commission cited the case of Amplus Sun Solutions, where it had approved HPPC’s draft PPA with Amplus Sun Solutions Private Limited. The PPA was signed for 50 MW of solar power from its project in Bhiwani. Interestingly, this decision to procure 50 MW of solar energy from Amplus has landed in court. The Punjab and Haryana High Court has ordered this petition would be treated as public interest litigation.

After considering all the facts, the Commission approved the draft PPA to be executed with LR Energy Private to purchase 20 MW of solar power for 25 years. It directed the generator to file a separate petition for the determination of tariff.

Mercom’s Renewable Energy Regulatory Updates cites a similar order in which the HERC approved a draft PPA by HPPC. The draft PPA was to be executed with LR Energy for 10 MW of solar power on a short-term basis for three months. The order allowed HPPC to issue the letter of intent and sign the PPA. Both parties can extend the contract up to March 31, 2021, at ₹2.70 (~$0.036)/kWh.