CERC Examines Wind Developer’s Petition for Relief from Transmission Charges

Sprng Energy requested the Commission for exemption of transmission and PoC charges on account of force majeure

August 18, 2020

/ Wind

Renewable developer Sprng Renewable Energy Private Limited recently approached the Central Electricity Regulatory Commission (CERC) against the Power Grid Corporation of India Limited (PGCIL), seeking relief on the grounds of force majeure impacting the execution of a wind project.

The developer requested the Commission to resolve the discrepancies arising on account of the scheduled commercial operation date (SCOD) in the power purchase agreement (PPA) between the developer and the Solar Energy Corporation of India (SECI).

Sprng Energy also requested the Commission to grant exemption from payment of transmission charges and opening a letter of credit (LC) for the charges relating to the point of connection (PoC).

Sprng Energy was developing a 300 MW wind power project in Tamil Nadu and had executed a PPA with SECI on September 09, 2018. As per the PPA, the scheduled operation date for the project was February 29,2020. To evacuate the power generated from the project, Sprng Energy obtained connectivity and long-term access (LTA) from the central transmission utility (CTU) on the existing transmission system.

Later, the acquisition of the land for the project got delayed, which led to the delay in the completion of the project.

After being informed about it, SECI revised the SCOD of the project to August 28, 2020. But then, due to the COVID-19 pandemic, the SCOD of the project was further revised to December 04, 2020.

PGCIL requested Sprng Energy to open a line of credit (LC) toward the payment security mechanism for ₹169.8 million (~$2.27 million), that was later revised to ₹62.8 million (~$839,079) for the PoC charges calculated for the period from April 2019 to June 2019. Sprng Energy informed PGCIL about the extension granted by SECI and requested to link the operationalization of connectivity and LTA with revised SCOD.

Sprng Energy argued that the delay in the implementation of the project was due to force majeure events, and it was not obliged to pay transmission charges or open a line of credit.

The Commission noted that Sprng Energy, being a renewable energy generator, is required to open the credit line corresponding to transmission charges payable for the network on which the connectivity has been granted and not as per the PoC charges.

So, CERC directed the developer to serve a copy of the petition to PGCIL. It further directed PGCIL to file its reply by August 28, 2020.

Considering the submissions made by the petitioner, the Commission directed PGCIL not to take any action against the petitioner until the next date of hearing.

Transmission utilities and project developers have been locking horns over the delays in completion and the subsequent charges. The Ministry of New and Renewable Energy (MNRE) has also tried to address this. The MNRE has recommended that, if the project is delayed due to force majeure and the transmission system is commissioned before the commissioning of the projects, then the cost of transmission during that period of delay should be socialized. “Socialized” means the charges be equally borne by the designated inter-state transmission system customers, including state transmission utilities and distribution licensees.

Avikaran Solar India Private Limited, a subsidiary of Enel Group, filed a petition with CERC against PGCIL seeking relaxation of two years stipulated for the construction of the transmission system for its wind project in Gujarat.

Earlier, ReNew Wind Energy (TN) Private Limited, a subsidiary of ReNew Power, filed a petition with CERC asking it to issue orders restraining SECI from encashing its bank guarantee following delays in project implementation due to force majeure events.