Karnataka Regulator Reduces Tariff for a Delayed 1 MW Rooftop Solar Project

The Karnataka Electricity Regulatory Commission (KERC) issued an order in favor of the Bangalore Electricity Supply Company Limited (BESCOM) and asked Applied Solar Technologies Private Limited to revise its rooftop solar tariff to ₹5.20 (~$0.07)/kWh from the ₹9.56 (~$0.13)/kWh tariff it claimed.

The Commission also noted that the developer was not entitled to any relief sought in the petition.

Background

Applied Solar had filed a petition requesting the Commission to direct BESCOM to make payments from December 2016 at the rate of ₹9.56 (~$0.13)/kWh, which amounted to ₹5.8 million (~$77,567). It had requested the Commission to declare that it was entitled to a tariff of ₹9.56 (~$0.13)/kWh for the energy supplied. Applied Solar had installed a solar rooftop project of 1 MW capacity on a rooftop at Hogalagare in Karnataka. The developer entered into a power purchase agreement (PPA) with BESCOM to connect and operate the project for the sale of power at ₹9.56 (~$0.13)/kWh.


The Commission approved the PPA on October 30, 2015. The rooftop project was successfully synchronized with the grid on July 23, 2016, and the petitioner started supplying energy to BESCOM at ₹9.56 (~$0.13)/kWh.

Applied Solar, in its submission, said that BESCOM unilaterally reduced the tariff to ₹5.20 (~$0.07)/kWh from December 2016 to July 2017. It also reduced the differential amount paid for the bills raised from July 2016 to November 2016. It added that BESCOM has been making the payment at the rate of ₹5.20 (~$0.07)/kWh from August 2017 despite the tariff being  ₹9.56 (~$0.13)/kWh under the PPA.

Applied Solar further added that BESCOM illegally and unilaterally revised the tariff without issuing any notice.

BESCOM argued that Applied Solar had requested for an extension of one year to commission its project on April 18, 2016, which BESCOM approved. After this, the extension of time granted was withdrawn.

BESCOM said that Applied Solar, as per the terms of PPA, was entitled to a tariff ₹9.56 (~$0.13)/kWh, provided the project was commissioned within 180 days. If there is a delay in the commissioning of the project for more than 180 days, a revised tariff will apply as per the Commission’s previous order.

Applied Solar then filed a rejoinder in which it requested the Commission to ask BESCOM to pay backlog amounting to ₹18 million (~$240,726) calculated at the rate ₹9.56 (~$0.13)/kWh and ₹4.5 million (~$60,181) when calculated at the rate of ₹5.20 (~$0.07)/kWh for the period from November 2018 to January 2020.

The Commission noted that as per the guidelines issued for the rooftop solar program, the time stipulated for completion of these projects is 180 days from the date of issuance of approval for the installation. KERC said that the standard PPA is a part of the guidelines for the installation of the rooftop projects, and the developer was aware of this.

The Commission noted that the PPAs entered with the tariff determined under the generic tariff order dated October 10, 2013, would be governed by the lesser tariff, as stated in its order dated May 02, 2016.  Therefore, for any delay in the commissioning, there cannot be any extension of time, for any reason, and the project would invariably fall under the lesser tariff.

The Commission also said that BESCOM had no power to provide the extension of time for commissioning the projects. The ‘Solar Policy 2014-21’ of the state provides that the tariff orders issued by the Commission from time to time will apply to the projects. Therefore, Applied Solar’s claim that it is entitled to a tariff of ₹9.56 (~$0.13)/kWh is not acceptable.

Further, the order underlined that BESCOM acted as per the guidelines and order of the Commission and reduced the tariff rate. So, it cannot be said that it acted unilaterally and arbitrarily, as claimed by the petitioner.

In another similar order, KERC issued an order in favor of BESCOM and directed Emmvee Solar to downward revise the tariff for a 1 MW rooftop solar power project. Emmvee Solar Systems Private Limited had stated in its petition that it was entitled to a tariff of ₹9.56 (~$0.13)/kWh as the project was commissioned within the timeline of one year as stipulated in the power purchase agreement.

Previously, Mercom had reported that KERC announced the generic tariffs for grid-connected solar rooftop units between 1 kW and 10 kW installed by domestic consumers. While the generic tariff without capital subsidy was fixed at ₹4.15 (~$0.06)/kWh, the tariff with capital subsidy was set at ₹3.08 (~0.044)/kWh.

According to Mercom’s Q2 2020 Solar Market Report, Karnataka accounts for approximately 234 MW of rooftop solar against the target capacity of 2.4 GW by 2022.