Regulator to Reconsider Decision to Slash Tariff of Rooftop Solar Project by 46%

The Appellate Tribunal for Electricity (APTEL), in a recent order, directed the Karnataka  Electricity Regulatory Commission (KERC) to review its earlier order regarding the tariff reduction for the delayed rooftop solar projects and pass the order within three months from the date of the judgment.

The petition was submitted by Jyothi Enterprises and Jyothi Bio Fuels engaged in the business of storage of dry husk and briquette manufacturing to supply to various industries. The petition was against the earlier order passed by the Commission to reduce the tariff of the rooftop solar projects from ₹9.56 (~$0.13)/kWh to ₹5.20 (~$0.07)/kWh for the life of the power purchase agreement (PPA).

The petitioner had also requested APTEL to direct the Bangalore Electricity Supply Company (BESCOM) to pay the amount outstanding against electricity charges at the agreed rate of ₹9.56 (~$0.13)/kWh from the date of supply along with the agreed-upon interest.

Background


The petitioner had obtained permission to convert agricultural land for industrial purposes to carry out business in the storage of dry husk on April 20, 1994.

In 2013, the state Commission had passed an order wherein the Commission had determined tariffs for various kinds of solar power projects, including rooftop solar projects in Karnataka. The tariff order was applicable for projects entering into PPAs on or after April 1, 2013, and commissioning up to March 31, 2018. KERC determined the tariff of ₹9.56 (~$0.13)/kWh for such projects.

The petitioner entered into PPAs with BESCOM to connect and operate the rooftop solar systems to sell solar power to BESCOM for 1,000 kW capacity on January 8, 2016, 499 kW capacity on February 11, 2016, and 499 kW capacity on March 21, 2016.

The two 499 kW projects were completed on August 10, 2016, i.e., within six months. However, BESCOM delayed the grant of commissioning by around four months, and both the projects were synchronized and commissioned on December 22, 2016.

According to the petitioner, the impugned order reduced the tariff of the projects from ₹9.56 (~$0.13)/kWh to ₹5.20 (~$0.07)/kWh stating that the project was to be commissioned within six months and not 12 months.

The petitioner added that the regulator had failed to consider that the commissioning of the project within one year was duly validated by all the officials concerned at all levels.

The petitioner further added that it was completely unjustified on the part of BESCOM and the Commission to have disallowed the tariff of ₹9.56 (~$0.13)/kWh for the two projects of 499 kW each since the work concerning those two projects were completed even before six months.

BESCOM, in its submission, said that the Commission, through its generic order dated May 2, 2016, had determined the tariff for rooftop solar projects to be ₹5.20 (~$0.07)/kWh.

The DISCOM further added that it had submitted that the petitioner had failed to commission its projects within the stipulated timeframe, i.e., 180 days from execution of PPA.

Also, the Commission in its earlier order dated November 7, 2017, had direct that the tariff of ₹3.57 (~$0.048) be applied to rooftop solar projects that were set up in violation of the policy and norms.

Tribunal’s analysis

The Tribunal observed that the State Commission, in its impugned order, had upheld the termination of PPA by the DISCOM on the ground that there was a breach of PPA by the petitioner.

The Tribunal observed that the Commission had determined the tariff for various solar projects, including rooftop solar systems, through the tariff order dated October 10, 2013. Under the said tariff order, the Commission had determined the tariff for rooftop solar projects as ₹9.56 (~$0.13)/kWh.

The Tribunal said that the PPA only talks about setting up solar projects on the rooftops. There is no mention that the solar projects could not be installed by retrofitting or strengthening the existing roofs. There is also no mention of the commissioning time allowed to install solar systems on the rooftops.

The Tribunal also noted that the tariff order dated October 10, 2013, Karnataka Solar Policy, 2014, and the PPAs do not give any commissioning date for installing rooftop solar projects.

After taking cognizance of all the facts, the Commission noted that the decision of the state Commission to uphold the termination of PPA by the DISCOM was against the Karnataka Solar Policy and the spirit of Electricity Act, 2003, to promote renewable energy sources and was therefore bad in law.

The Tribunal set aside the Commission’s earlier judgment and directed the Commission to consider the matter afresh, keeping in view the opinion expressed in this judgment.

The Tribunal also asked the Commission to pass the consequential order within three months from the date of pronouncement of the judgment.

KERC has been harsh on slashing tariffs for rooftop solar projects with higher tariffs. In similar cases earlier, the KERC had issued directions for a new PPA to be signed for a 1 MW rooftop solar system at a revised tariff of ₹5.20 (~$0.07)/kWh in the case of an incomplete and delayed project by a rooftop solar developer. It had also ruled in favor of the BESCOM and asked to reduce the tariff for a 1 MW rooftop solar system developed by Emmvee Solar. In another case the tariff of a 1 MW rooftop solar project by Srishyla Educational Trust was also reduced to ₹5.2 (~$0.07)/kWh.

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