The Delhi Electricity Regulatory Commission (DERC) approved the power sale agreement (PSA) signed between the Tata Power Distribution Limited (TPDDL) and the Solar Energy Corporation of India (SECI) for the procurement of 200 MW of solar power. The Commission said that the trading margin of ₹0.02 (~$0.0003)/kWh would apply to the agreement.

TPDDL had filed a petition with the Commission to approve the power sale agreement executed with SECI for the procurement of 200 MW of solar power on a long-term basis.

Background

The DISCOM was mandated to procure electricity from renewable sources to achieve the minimum percentage of the total consumption as prescribed under the renewable purchase obligation (RPO) regulations.

The RPO regulations stated that TPDDL could meet its RPO target by way of its generation or purchase from other sources or by way of purchase of renewable energy certificates.

The DISCOM envisaged procurement of 300 MW of solar power from SECI to meet its RPO targets.

SECI had floated a tender for procurement of 1,200 MW of power generated from interstate transmission system (ISTS)-connected solar power projects in February 2019.

On March 02, 2019, SECI informed TPDDL that it was offering power to the extent of 200 MW to it at the maximum possible fixed tariff of ₹2.61 (~$0.035)/kWh plus the trading margin of ₹0.07 (~$0.0009)/kWh.

The petitioner entered into a power sale agreement on June 26, 2019, with SECI for the procurement of 200 MW of solar power on a long-term basis.

Commission’s Analysis

The Commission noted that the petition was filed for approval of the PSA signed by TPDDL with SECI, for procurement of power through SECI being an intermediary procurer.

The trading margin for long-term transactions must be mutually agreed upon between the parties subject to the ceiling trading margin, wherever applicable. Still, it had to be approved by the state electricity regulatory commission concerned.

The Commission said that the Central Electricity Regulatory Commission (CERC) while deciding the matter of tariff, had not approved the trading margin of ₹0.07 (~$0.0009)/kWh and held that such trading margin should be mutually decided.

Accordingly, CERC cannot fix or adopt a trading margin for long-term transactions under trading margin regulations’ provisions. Therefore, it was up to the contracting parties to agree on the trading margin in long-term transactions.

“The trading margin in case of long-term contracts has to be less than that of short-term contracts. CERC, in its trading margin regulations, 2010 had specified ceiling for trading margin as ₹0.04 (~$0.0006)/kWh on short-term transactions wherein the tariff is less than ₹3 (~$0.041)/kWh. CERC, in its trading margin regulations, 2020 had specified ceiling for trading margin as ₹0.02 (~$0.0003)/kWh for long-term transactions,” the Commission said.

After considering all the facts, the Commission approved the trading margin of ₹0.02/kWh subject to the condition that CERC should approve the applicable tariff.

Last year, DERC approved a tariff of ₹2.54 (~$0.035)/kWh as requested by TPDDL to procure 100 MW of solar power from SECI. TPDDL had filed a petition to purchase 100 MW of solar power from SECI, based on the competitive bidding process per the guidelines laid down by the Ministry of Power.

Earlier, DERC had approved a PSA between SECI and TPDDL to procure power from 20 MW of solar photovoltaic (PV) projects. The procurement was towards meeting TPDDL’s RPO targets.

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