Solar Generator's Plea to Compensate for Loss Due to Grid Unavailability Rejected

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The Maharashtra Electricity Regulatory Commission (MERC) has rejected a solar power generator’s plea seeking ₹6.722 million (~$84,693) as compensation for generation loss due to grid unavailability.

The Commission said it was not sufficiently concluded that the generation loss was only due to grid failure. The solar generator needs to re-examine its project design or equipment efficiency to improve its capacity utilization factor (CUF).

The solar developer was asked to improve the project performance and generate more energy for the Maharashtra State Electricity Distribution Company (MSEDCL) to procure at the tariff per the power purchase agreement (PPA) to compensate for the loss of generation due to grid unavailability.

WAACOX Energy, a special purpose vehicle (SPV) of Sangam Advisors, had filed a petition seeking generation compensation on account of grid unavailability as per the provisions of the PPA.


Background

The Maharashtra State Power Generation Company (MSPGCL) had issued a tender to develop two 2 MW grid-interactive solar power projects at Ralegansiddhi and Manjarda in Maharashtra on a build, own, and operate basis.

The petitioner had set up the projects under the ‘Mukhyamantri Solar Agricultural Feeder Program.’

WAACOX Energy connected the projects with the system of MSEDCL to deliver the generated power at the interconnection point.

The two commissioned projects had to generate solar energy with normative CUF per the PPA terms. The CUF achieved for the two projects was consistently below 19%.

The solar generator said that in the event of generation loss due to the grid’s temporary unavailability, the PPA provides that MSPGCL will procure any excess generation beyond the agreed CUF at the PPA tariff.

The solar generator said that MSPGCL and MSEDCL were jointly responsible for securing the system’s availability and liable to compensate for any loss caused by the grid’s non-availability.

MSPGCL clarified that on February 20, 2020, WAACOX Energy sent a letter to MSPGCL raising a claim for compensation for generation loss due to the non-availability of the transmission line. The claim was based on the number of hours for which the grid was unavailable.

Per the CUF data submitted by the solar generator, it was evident that in the last three years, WAACOX Energy had never achieved generation above the 22% ceiling CUF. To claim the compensation, the solar generator needed to carry out excess generation over and above the ceiling CUF (22%).

As there was no excess generation, the compensation claim was not tenable under the PPA provisions.

Commission’s analysis

The Commission said it was up to MSEDCL, which was the ultimate procurer, to decide how to settle generation loss compensation, if any.

The Commission noted that PPA and PSA documents stipulate a normative CUF of 19%. Except for the first year, even after adding up generation loss in the actual generation, projects have not been able to achieve the CUF of 19%. Hence, it cannot be sufficiently concluded that the generation loss is only due to grid failure.

“WAACOX Energy is not eligible for an alternative remedy for generation loss compensation. Instead, it should improve its performance and generate more solar energy, which MSEDCL can procure at PPA tariff to compensate for generation loss due to grid unavailability,” the regulator said.

Considering sustained trippings and the need to ensure the project’s financial sustainability, the Commission directed MSEDCL to take up a survey to create a dedicated evacuation system from project sites up to the nearest substation within three months and initiate construction immediately after that.

This ruling went against the precedence set last year when in a similar petition, the Karnataka Electricity Regulatory Commission directed Karnataka Power Transmission Corporation (KPTCL) to compensate a solar project developer for generation losses. KPTCL was directed to pay compensation at ₹4.43 (~$0.06)/kWh for generation losses suffered by Solitaire Powertech’s solar project.

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