Karnataka Stakeholder Comments Invited on Removal of Banking Facility for Renewables

The Karnataka Electricity Regulatory Commission (KERC) has issued a discussion paper on wheeling charges and banking facilities for renewable projects.

The Commission noted that there was a need to revise the transmission and wheeling charges applicable to non-REC (renewable energy certificate) route based renewable power projects and examine the banking facility extended to them.

The Commission has invited comments and suggestions from interested stakeholders on or before September 23, 2020.

Background


The Commission, in its order dated May 14, 2018, had revised the wheeling charges for renewable power projects, which was effective from April 01, 2018, and was challenged by various renewable generators.

The government of Karnataka had requested the Commission to remove the banking facilities given to renewable energy generators.

The government had said that the present provision under banking that allowed energy generated during off-peak periods to be used at peak periods, forced electricity supply companies (ESCOMs) to buy costly power, and the payment of the banked energy was at 85% of the generic tariff. So, the government had requested the Commission to remove the banking facility and amend the wheeling and banking agreement (WBA).

Consecutively, through its letter dated January 09, 2018, the Commission reduced the banking period from one year to six months. It further ordered that the energy banked by the non-REC route based renewable projects during the peak time of the day could be used only during the peak time of day hours. The generators challenged this order, and the Appellate Tribunal for Electricity (APTEL) remitted the order back to the Commission and requested the Commission to pass fresh orders.

In the latest discussion paper, the Commission proposed to levy 50% of the normal transmission and wheeling charges payable in cash, as determined by the Commission from time to time. This charge would be applicable for those renewable sources transmitting or wheeling electricity using the network of the transmission licensee or the distribution licensee.

In addition to this, applicable losses, as approved by the Commission, would be deducted from the net injected energy to arrive at the amount of wheeled energy.

The Commission also proposed to discontinue the banking facility extended to solar, mini hydel, and wind power projects, for both REC and non-REC route-based projects. Any energy banked and unutilized at the end of each month will be considered to have been supplied to the concerned entity, it added.

The proposed changes will apply to all renewable energy generators who will enter into an agreement from the date of the order by the Commission. It will exclude those projects that have been commissioned on or before March 31, 2018, and have not completed ten years from the date of the commercial operation date (COD).

The above proposals will apply to those projects that have completed the initial term of the wheeling agreement and desire to renew it.

The control period for the wheeling charges will be from the date of the order up to March 31, 2022. The removal of the banking facility will also be effective from the date of the issuance of the order by the Commission or any government order in the matter, whichever is earlier.

According to Mercom’s India Solar Project Tracker, Karnataka has an installed large-scale solar capacity of over 7.3 GW. It has a development pipeline of ~343 MW, making it the leading solar state of the country.

Recently, the Government of Karnataka held a meeting to discuss the banking and wheeling charges for grid-connected renewable projects in the state. In the meeting, the government decided that for grid-connected captive solar projects, the consumer will be required to enter into an agreement for the wheeling and banking charges.