The Karnataka Electricity Regulatory Commission (KERC) has declared that the cancellation of a power purchase agreement (PPA) between the Bangalore Electricity Supply Company (BESCOM) and a rooftop solar project operator was valid and prescribed a reduced tariff for the project following a delay in implementation.
The KERC received a petition asking it to set aside a notice issued by BESCOM, canceling a PPA with a rooftop solar owner. The petitioner also asked the Commission to direct BESCOM to issue an approval for the evacuation of power from their rooftop solar project.
The petitioner had applied for availing grid connectivity for 1 MW of rooftop solar systems they had set up on their poultry farm. Following this, a PPA was signed between BESCOM and the petitioner wherein a tariff of ₹9.56 (~$0.13)/kWh was agreed upon for the net energy injected into the grid as per the Generic Tariff order dated October 10, 2013.
As per the PPA, the petitioner was expected to complete the installation of the rooftop solar system within 180 days from the date of the PPA. However, they were unable to complete the project within the specified period due to delays in acquiring funds, materials, and other equipment for the project. The petitioner subsequently sought a one-year extension from BESCOM on April 18, 2016.
The petitioner submitted that BESCOM granted this extension in a letter dated April 30, 2016, but later revoked the extension as they neared the completion of the project. In an official memorandum issued on December 29, 2019, the one-year time extension, which was granted earlier, was revoked, and the PPA was canceled because the project was not completed in time.
The petitioner stated that BESCOM’s notice canceling the PPA allowed them to revive the PPA if they agreed to a new tariff, but they had already completed 90% of the work towards the rooftop solar system. They claimed that they were not in a position to accept the new terms of the PPA or abandon the project. They asked for the Commission to deem the withdrawal of the extension and the cancellation of the PPA as illegal and arbitrary.
In their response, BESCOM stated it did not dispute the execution of the PPA and the one-year time extension for the projects. It cited the provisions of the generic tariff order, which stated that delayed rooftop solar projects were not entitled to a tariff of ₹9.56 (~$0.13)/kWh and that the PPA was canceled purely based on the delay in project completion.
BESCOM also stated that the petitioner had set up the rooftop solar system on a fabricated steel structure and not on their poultry farm, as claimed. It said that this was not in line with the specifications of the Solar Policy, 2014-21 and that this project cannot be treated as a rooftop solar project. It explained that the cancellation of the PPA on these grounds was proper and valid.
BESCOM also denied the petitioner’s claim of having spent ₹75 million (~1 million) to set up the rooftop solar system and sought the dismissal of the petition.
In its analysis, the Commission stated that BESCOM did not get its approval before granting the one-year extension and declared that this move was not valid or legal. It, however, said that BESCOM’s decision to cancel the PPA was justified, noting that even if it had not been canceled, the petitioner would only be entitled to a reduced tariff as per guidelines on account of the delay in project implementation.
In its final order, the Commission declared that the petitioner was entitled to a tariff of ₹3.57 (~$0.048)/kWh for the net energy injected into the grid for 25 years from the date of commissioning of the project. It directed the parties to execute a new PPA within two months from the date of issue of this order. It added that the petitioner was not entitled to any other reliefs claimed in its petition.
In June, Mercom reported that Karnataka ranked third in terms of rooftop solar projects with a 9% share of overall installations in the country as of Q1 2020. It was also the top state for large-scale solar in the country. The state gets 63% of its installed power capacity from renewables, and 25% of this comes from solar.
According to Mercom’s India Solar Project Tracker, Karnataka’s installed rooftop capacity stood at 234 MW as of June 2020.
Image credit: Unsplash
Nithin Thomas is a staff reporter at Mercom India. Previously with Reuters News, he has covered oil, metals and agricultural commodity markets across global markets. He has also covered refinery and pipeline explosions, oil and gas leaks, Atlantic region hurricane developments, and other natural disasters. Nithin holds a Masters Degree in Applied Economics from Christ University, Bangalore and a Bachelor’s Degree in Commerce from Loyola College, Chennai. More articles from Nithin.