Andhra’s Draft Deviation Settlement Regulation for Solar, Wind Projects Draws Flak

Many developers have challenged the proposed amendment


Several renewable energy companies have challenged the changes in the draft amendment to the forecasting, scheduling, and deviation settlement regulations of the Andhra Pradesh Electricity Regulatory Commission’s (APERC).

In February 2020, the Transmission Corporation of Andhra Pradesh (APTRANSCO) had issued a notice to the APERC seeking amendments to the existing regulations for forecasting, scheduling and deviation settlement for variable renewable energy projects, as previously reported by Mercom.

The wind and solar companies across the country have questioned the legal and constitutional validity of forecasting, scheduling, and deviation settlement mechanism (DSM) mechanism regulations passed by the respective state electricity regulatory commissions (SERC) in various high courts. The companies have also stated that interim orders have been passed to the effect that no coercive actions be taken against renewable energy generating companies.

Developers who have challenged the regulations include, Hero Future Energy, Tadas Wind Energy, Sprng Energy Private Limited, Sri Surya Prakasa Rao, Statkraft, Sterling Agro Industries, Axis, Prayas Reconnect Energy, ReNew Power, Mytrah Energy, Solar Power Developers Association, NALCO, National Solar Energy Federation of India (NSEFI), Odysseu Logos LLP, Orient Green Power, Khandke Wind Energy, Kreate technologies, Vena Energy, and Manikaran Analytics Limited, to list a few.

Wind generating company, Tadas, argued that all the changes proposed such as a change in the error calculation formula, reducing the permitted deviation to 5%, disallowing any intra-day revisions and charging ₹2 (~$0.03)/kWh of deviation will result in a significant project cost increase and will potentially make the projects unviable.

These solar and wind companies have asked the Commission to substitute the term ‘absolute error’ with ‘forecast error,’ ‘availability capacity’ with ‘scheduled generation’ for calculating forecast error.

As per the APERC’s proposed amendment, considering the diversity factor as 0.7 and 250 MW deviation limit permitted under the Central Electricity Regulatory Commission (CERC) regulations, the allowable forecast error will approximately be 5%.

According to Sprng Energy Private Limited (SEPL), none of the existing forecasting agency is competent enough to maintain the deviations within the existing first band permissible limit of (+/- 15%). If the limit is reduced to 5%, then the consequences and liabilities on generators will be very significant, and it will be difficult for solar and wind power developers to make the projects economically viable.

“This will also affect the central government’s targets under the National Solar Mission (NSM) as the investing independent power purchasers (IPPs) may become reluctant to invest in the sector,” states SEPL.

Meanwhile, Manikaran Analytics Limited (MAL), one of the qualified coordinating agencies  (QCAs), has commented that the change in the formula for error would create serious prejudice against variable renewable energy as renewable is predictable to some extent. Still, its forecasting and scheduling accuracies cannot be treated at par with the conventional energy generators.

“For instance, in case of a wind generating project, an error of 0.5 m/s (meter per second) in wind speed may result in a 12% to 15% variation in terms of power generated. 0.5 m/s is the minimum error observed worldwide, and on an average error observed for a wind project is around 0.7 m/s,” stated MAL.

Meanwhile, Statkraft has requested the Commission to continue with the existing regulations.

“The objective of APERC forecasting and scheduling regulation is to facilitate large-scale grid integration of solar and wind energy generating stations while maintaining grid stability and security and not the generation of revenue. The prevailing regulation is fulfilling the state’s objective,” it stated.

Meanwhile, Hero Future Energy has requested the APERC to reject the proposed amendment “outright.”

The company said that based on the proposed amendment, the DSM charges would approximately equal to ₹0.58 (~$0.008)/kWh for solar.

“We state that the financial implications of the proposed amendments are so prohibitive that it makes it apparent that what the state government could not achieve directly in its attempt of seeking reduction of tariff by the government order bearing (GoRT No. 63 of 2019), the same objective is being sought to be achieved indirectly by way of introducing these so-called amendments by APSLDC,” states Waaneep solar Private Limited, a subsidiary of Hero Future Energy.

Likewise, ReNew Power Private Limited, stated that the proposed amendments would have a significant impact both on the large-scale integration of renewable energy resources and the long-term viability of the renewable energy generators in the state.

The company has raised some concerns and suggestions.

ReNew Power has stated that throughout the report, the APSLDC has misled the Commission “by intentionally using the phrase ‘variable renewable energy (VRE) generation.”

“It is also misleading to say that the “uncertainties of VRE are affecting the reliability of conventional power as well,” the company quoted.

The company has suggested that to ensure the smooth functioning of the large-scale integration of renewable power; it is essential that Renewable Energy Management Centers (REMC) are put in place to provide real-time forecasts/schedules to the state load dispatch centers (SLDC).

It also pointed out that it is unreasonable for the Andhra Pradesh State Load Despatch Center to say that they are unable to manage the integration of large-scale renewable projects, due to significant variations in power generation from renewable resources like wind and solar.

Criticizing the APSLDC, it has stated that the APSLDC has failed in its statutory function and is now shifting the blame to renewable generators.

“APSLDC should first produce the results of the exercise undertaken by it if at all, to forecast wind and solar power and subsequent planning for balancing of such generation. Till such time the APSLDC does not produce credible data that it has fulfilled its responsibility, as required under the extant Regulation No.4 of 2017, it cannot propose any amendment which is detrimental to the interest of wind and solar generators,” states ReNew Power.

Earlier, it was reported that the APSLDC made a detailed report highlighting the difficulties they face in everyday operations because of the existing regulations. The distribution company said that offering generation forecasts a day ahead daily has become challenging because of several factors.

It also filed a review petition before the state’s high court against Power system Operation Corporation Limited’s (POSOCO) appointment to look into the reasons behind the curtailment of renewable energy in the state, due to it being an independent central agency.

The state high court in its order dated January 27, 2020, had asked the Power System Operation Limited to investigate the reasons behind the curtailment of renewable power in Andhra Pradesh

Meanwhile, the National Solar Energy Federation of India requested the APERC asking it to withhold from a public hearing until the proposed amendment to the state’s forecasting, scheduling, and deviation settlement of solar and wind generation, is made.

Renewable energy sources like solar and wind projects come with inconsistencies because the availability of sunlight and wind is inconsistent and unpredictable. This leads to spikes and dips in the amount of power generated, especially in shorter periods.

This, along with other inconsistencies like intra-day changes in forecasts, significant variations in the day ahead forecast and the actual power generated, unavailability of intra-day power because of unexpected changes in power generation, and thermal project limitations have made day-ahead forecasting a challenge.