The Telangana State Electricity Regulatory Commission (TSERC) has refused to impose  Grid Support Charges (GSC) on rooftop solar installations, whether operating under net-metering or gross-metering arrangements.

It held that GSC should only be applied to captive power plants and solely for the power utilized by the co-located load.

Moreover, considering that retail supply tariffs have already been set for the fiscal year (FY) 2023-24 and the year is coming to a close, the Commission decided not to determine GSC for FY 2023-24.

Instead, it instructed state distribution companies (DISCOMs) to submit a separate request for GSC determination for FY 2024-25, following its methodology.

The Commission has established the GSC calculation as follows: Grid Support Charges (GSC) = Power consumed by the co-located load x Rate of GSC (₹/kW/month). The Rate of GSC is set at ₹15.50 (~$0.18) per kW per month.

Background

The Southern Power Distribution Company of Telangana and the Northern Power Distribution Company of Telangana had filed petitions on November 30, 2022, for the determination of aggregate revenue requirement, retail supply tariff along with cross subsidy surcharge and GSC for the retail supply business for FY 2023-24.

The DISCOMs proposed imposing GSC on captive consumers based on the methodology outlined in a previous Andhra Pradesh Electricity Regulatory Commission. These charges are intended to reflect the benefits enjoyed by captive power plants.

The Commission had instructed the Grid Coordination Committee (GCC) to examine the Parallel Operation of Captive Power Plants and the consequent imposition of GSC.

The GCC analyzed the impact of captive power plants connecting to the grid in its report and assessed whether grid support is necessary for their parallel operation. This analysis was done using the Power System Simulator for Engineering (PSS/E) software.

It also examined the behavior of captive power plants to evaluate their short-circuit capacity and stability under two different scenarios using the PSS/E software:

• Captive plants connected in parallel with the grid
• Captive plants operating in isolation

Subsequently, the Commission decided to refer the matter of grid support charges/parallel operation charges back to the GCC due to changes in the methodology for levying GSC. The GCC submitted its report on October 7, 2023.

Commission’s Analysis        

Grid networks represent a cost-effective and efficient means of serving areas with high-density loads. These networks offer maximum reliability and operational flexibility. By drawing power from multiple transmission lines, grid-connected consumers experience minimal outages during scheduled maintenance of transmission lines.

Moreover, integrated grid operation enhances voltage regulation, allowing for smoother power flow to consumers. The grid manages sudden load changes and disturbances associated with the starting of large motors, mitigating severe voltage fluctuations.

Additionally, the robust grid network’s high inertia ensures that a fault in one unit does not cause voltage disruptions beyond acceptable limits for sensitive loads.

Consumers with high contracted loads who utilize captive plants to fulfill some or all of their demands need to typically reduce their contracted demand with distribution licensees. Captive power plants continue to operate in parallel with the grid for several reasons:

Consequently, the grid serves as the backbone for captive plants to ensure their efficient electrical performance. Initially, consumers relied on contracted demand to meet peak demand, covering fixed charges for infrastructure provided by utilities.

However, as consumers installed captive plants and reduced contracted demands, utilities faced revenue losses while the plants benefited from grid support at minimal or no cost.

iii) Unbalanced loads generate negative phase sequence current, significantly higher at common coupling points than generator output terminals. Grid connection reduces stress on captive generators by channeling this current.

vii) Grid connection prevents captive generator tripping due to sudden load disconnections.

viii) Grid connection absorbs transient loads, enhancing system stability.

Grid support, an essential service utilities provide to consumers, warrants charges imposed on captive power plants benefiting from this support.

The Commission ruled that GSC cannot be levied on:

• Captive power plants (both renewable and conventional) that are not co-located
• Independent power producers (IPP) (both renewable and conventional)
• Rooftop solar installations
• Generators with power purchase agreements with Telangana DISCOMs

The rationale for the non-applicability of GSC to the above is provided below:

The Commission noted that according to the APTEL, GSC cannot be applied to the entire installed capacity, as doing so would entail levying it on capacity sold to third parties.

Recently, TSERC issued the draft Intrastate Open Access Regulations 2023, allowing consumers with a contracted demand or sanctioned load of 100 kW or higher to avail of green energy open access.

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