Solar Generator’s Plea to Get Compensation for Power Supplied Over 19% CUF Turned Down

The Tamil Nadu Electricity Regulatory Commission (TNERC) has rejected a solar power generator’s petition seeking compensation for power supplied over the contracted amount. It directed the developer to limit annual generation to the prescribed capacity utilization factor (CUF) of 19% specified in the power purchase agreement (PPA).

CUF refers to the ratio of actual output from a power project to its maximum possible output over a year under ideal conditions.

Background

Cresent Power Limited filed a petition with TNERC asking it to set aside a circular issued by the Tamil Nadu Generation and Distribution Company (TANGEDCO) against making payments for excess generation over the specified 19% CUF limit. The notification also contained instructions for solar generators not to supply power over the contracted capacity.


The generator argued that neither the PPA nor the regulations and orders contain any provisions restricting payment for excess generation over the prescribed CUF. It argued that the risk of lower generation is borne by the developer, who should therefore be allowed to enjoy the benefits from the excess generation.

Crescent Power noted that TANGEDCO did not specify that payments would only be made for the CUF limit earlier. It said that it had invested and designed its solar projects optimized for maximum output within the specified technical and operational parameters.

In its response, TANGEDCO argued that while the guidelines for tariff-based competitive bidding for solar power had provisions to set tariffs for excess energy and a penalty for supplying energy less than the contracted CUF, the Central Electricity Regulatory Commission (CERC) had specified a CUF of 19%. It said that the injection of power over the 19% CUF is “beyond the technical limits and is a blatant violation of open access approval.”

It explained that compensating all generators for excess energy supplied would burden the distribution company (DISCOM). It explained that the financial implication for every 1% increase over the prescribed CUF would be between ₹446,000 (~$6,084) and ₹614,000 (~$8,376).

TANGEDCO stated that generators would add more solar panels to their projects if no restrictions are in place and always supply at a higher CUF. It further explained that solar projects under the Indian Renewable Energy Development Agency’s (IREDA) Rooftop and Other Small Solar Power Generation Plant (RPSSGP) Program and the Jawaharlal Nehru National Solar Mission (JNNSM) contracted at a tariff of ₹18.45 (~$0.25)/kWh was prescribed only for a CUF of 19%.

Commission’s Decision

The TNERC said that if the CUF considered during tariff determination is 19%, developers must design their project to enable a maximum output accordingly.  It held that the petitioner’s contention of financial loss and unfeasibility does not hold up because the generic tariff was determined with the developers’ return on equity in mind.

It said that PPAs between developers and distribution licensees were designed around a CUF of 19%, and the prescribed tariff would only apply for energy generated up to this limit. It added that the tariff orders are designed to promote renewable energy generation and renewable purchase obligation (RPO) compliance.

If generators wanted to be compensated for surplus generation, they would have to settle for lower tariffs for the entire energy generated as per the contracted capacity, and tariffs in these cases must be re-determined, TNERC said.

It also ruled that the alternating current (AC) capacity of a solar project must correspond with the contracted AC capacity and not be more than this capacity.

In another ruling, the TNERC had asked TANGEDCO to pay for the unutilized banked energy to Arulmozhi Spinning Mills Private Limited. It said that the payment for unutilized energy and cross-subsidy surcharge collection were unrelated issues.

Previously, the state Commission issued a tariff order for solar power procurement by distribution licensees. It permitted solar power procurement by distribution licensees to meet their renewable purchase obligations through the competitive bidding route.