Punjab State Electricity Regulatory Commission (PSERC) has approved a tariff of ₹2.36 (~$0.028)/KWh plus Solar Energy Corporation of India’s (SECI) trading margin of ₹0.07 (~$0.00084)/KWh to procure 300 MW of solar power in response to a petition filed by Punjab State Power Corporation (PSPCL).

Background

SECI had issued a tender to select project developers to set up 2,000 MW of inter-state transmission system (ISTS)-connected solar power projects anywhere in India, under Tranche-IX. The auction winners were Solarpack Corporacion Technologica, Avikiran Surya, AMP Energy Green, Eden Renewable Bercy, IB Vogt Singapore, Ayana Renewable Power, and ReNew Solar Power.

Subsequently, SECI filed a petition before the Central Electricity Regulatory Commission (CERC) seeking approval to adopt the discovered tariff. However, CERC only adopted the ₹2.37 (~$0.029)/kWh tariff quoted by Avikiran Surya for 300 MW.

SECI was instructed to approach the Commission to adopt tariffs for the remaining capacity once the necessary agreements were executed.

Following the CERC’s order, SECI entered into power purchase agreements with successful bidders. Power sale agreements were signed with the procurers for 1,400 MW. The approval status for 300 MW was pending.

The applicable tariffs include a tariff mentioned for the relevant successful bidder and a trading margin of ₹0.07 (~$0.00084)/kWh.

SECI then extended an offer to PSPCL to procure the 300 MW on a first-come, first-served basis. PSPCL agreed to procure the 300 MW at ₹2.36 (~$0.028)/kWh plus trading margin on a long-term basis.

PSPCL’s consent was subject to the condition that in the event of any Change in Law due to BCD and GST, PSPCL would bear the maximum impact of ₹0.29 (~$0.0035)/kWh.

PSPCL also stated that if the power sale agreement is entered into in December 2023, the project is expected to be commissioned by June 2025. The mentioned timeline is crucial, as it falls within the waiver period for ISTS transmission charges.

Also, the power procurement is seen as contributing to PSPCL’s fulfillment of renewable purchase obligations (RPO), as there is a concern that it may fall short of cumulative RPO compliance without the proposed power procurement.

In January, PSERC allowed the state distribution company to carry forward its RPO shortfall for the financial year (FY) 2022 and FY 2023 to FY 2024.

Commission’s Analysis

The Commission found the tariff of ₹2.36 (~$0.028)/KWh plus SECI’s trading margin of ₹0.07 (~$0.00084)/KWh to be reasonable. It acknowledged that CERC has approved the maximum impact of change in law in similar projects under the same program. Hence, the impact capped at ₹0.29 (~$0.0035)/ KWh is deemed reasonable in the current market conditions and is therefore permitted.

However, the Commissions set certain conditions to approve the tariff, including that PSPCL would not be required to bear any ISTS losses, as these are deemed not applicable to the program. PSPCL would also be exempted from paying ISTS Charges since the project is committed to being commissioned before June 30, 2025.

The agreed trading margin of ₹0.07 (~$0.00084)/KWh is allowed according to the CERC Trading Licence Regulations. However, if SECI fails to provide the stipulated escrow arrangement or an irrevocable, unconditional, and revolving letter of credit to the solar generators, the trading margin will be restricted to ₹0.02 (~$0.00024)/KWh.

The approved impact of Change in Law limited to ₹0.29 (~$0.0035)/KWh is contingent on PSPCL confirming that the developer or SECI has not granted any waiver for the same at any stage.

Subscribe to Mercom’s real-time Regulatory Updates to ensure you don’t miss any critical updates from the renewable industry.