Concerns Over Maharashtra’s Plan to Impose Grid Support Charges on Rooftop Solar

MSEDCL recently submitted a petition rallying for grid support charges


The Maha Solar Sangathan (MSS) raising concerns over the proposed grid support charges (GSC), requested the Maharashtra Electricity Regulatory Commission (MERC) to ask the state DISCOM (MSEDCL) to explain that when the total handling cost of electricity is ₹0.70 (~$0.01)/kWh, why has the DISCOM proposed a hefty grid support charge to the tune of  ₹8.66 (~$0.12)/kWh.

In January, the MSEDCL proposed considerable grid support charges for net metering rooftop solar systems with a capacity of over 10 kW. MSEDCL, in its petition, said that though net metering helps in meeting the renewable purchase obligations (RPO) targets, the adverse impact of net metering is much more on other consumers of MSEDCL due to the under-recovery of its infrastructure costs for such systems.

According to the MERC Grid-Interactive Rooftop Renewable Energy Generating Systems Regulations, 2019, “the Commission may determine in the retail tariff order such grid support charges to be levied on the generated energy under net metering systems which should cover balancing, banking, and wheeling cost after adjusting the RPO benefits avoided distribution losses and any other benefits accruing to the distribution licensee. These grid support charges would be determined consumer tariff category wise, based on the proposal of the distribution licensee in its retail supply tariff petition, supported by adequate justification.”

Maharashtra’s net metering regulations 2019 also say that the consumers with a sanctioned load up to 10 kW will be exempted from the payment of grid support charges for net metering systems. Such loss from the exemption, says MSEDCL, should be recovered from the consumers having a sanctioned load above 10 kW to avoid the burden on the consumers that do not have net metering.

The solar association has opposed the formula used for calculating the GSC. Alleging that the MSEDCL had “dumped” the Commission’s order, and has worked out its own reverse mechanism formula, “whereby they (MSEDCL) have calculated GSC by subtracting the nominal power purchase cost from the effective tariff to derive the amount of GSC.

The petition has requested the Commission to stand by its order and instruct MSEDCL to rework on the GSC with full facts and supporting proofs for all the numbers.

The association in its petition further stated that the average power purchase cost (APPC) proposed for the year 2020-21 is ₹4.47 (~$0.06)/kWh, whereas the average cost of supply is ₹7.24 (~$0.10)/kWh. Taking these points into consideration, the association argues that the total cost of MSEDCL including profit, infrastructure development, and its losses are ₹2.77 ($0.04)/kWh and the renewable energy certificate (REC) benefit from solar is around ₹2.40 (~$0.03)/kWh.

“Then, why such a high grid support charge,” ask the members of the solar association in the petition.

According to the MSEDCL’s proposal, the charges range from ₹4.46 (~$0.06)/kWh to ₹8.66 (~$0.12)/kWh for domestic consumers and between ₹5.06 (~$0.07)/kWh and ₹8.76 (~$0.12)/kWh for commercial consumers. For industrial consumers, the variation would be between ₹3.60 (~$0.05)/kWh and ₹4.08 (~$0.06)/kWh.

Further, the members of the association have alleged that when it comes to rooftop solar, the MSEDCL arbitrarily calculated its huge losses and misled the state.

“When it comes to open access, they are silent and show the open access charges as revenue,” they commented.

A small residential consumer who hardly uses the grid for a maximum of 20% of electricity is expected to pay ₹8.66 (~$0.12)/kWh but open access customers who inject power and use the grid for 100% power, are not required to pay the charges. This is the heart of the argument put forth before the Commission.

The MSEDCL has claimed that the agriculture category customers consume 30 % of its units. “When the agriculture category receives supply for 33% of the time (eight hours a day), then how can they consume 30% of the state’s electricity,” is the argument. The petition added that with the agri-peak demand of 5,000 MW (which is 25% of the grid peak), the agricultural customers could consume a maximum of 8.25% of the total electricity.

Advocate Aditya K Singh highlighted that the introduction of grid support charge was completely illegal as it was not mentioned in the draft regulations and was directly introduced in the final order without any public consultation which is mandatory as per the Indian Electricity Act 2003,” said  Vipul Joisher, the convener of Maha Solar Sangathan.

According to Aditya K Singh, an advocate at HSA Advocates, MERC rooftop regulations violate the requirement of section 181(3) of the Indian Electricity Act, 2003.

Quoting sub-section (3) of section 181, he stated that all regulations made by the Commission under the Electricity Act, 2003, will be subject to the condition of previous publication. Rule 3 of the Electricity (Procedure for Previous Publication) Rules 2005, known as Previous Publication Rules, requires consideration of the objection of stakeholders before notification of any rules.

Singh added, “The Commission should have published draft and should have considered objections. It is submitted that the draft regulation did not contain any provisions for grid support charges, and the Commission introduced it without any previous publication and without the invitation of any comment, which is not in conformity with the law. The mandatory requirement of previous publication is, therefore, contravened. In the draft regulation, there was not a single provision suggesting the imposition of a charge on the generating of the electricity by rooftop consumers; the Commission should have given previous notice for such modifications. There is a material difference in the draft published, and the regulation notified, and which will have a vital effect on the rights of the parties and may lead to the closure of the entire rooftop generation stations. The final regulations introduce something which is completely foreign to the draft.”

Earlier, it was reported that the MSEDCL highlighted that of the 288.8 MW rooftop solar capacity installed as of March 2019, only 11.13 MW (4% of the total capacity), has been installed by the residential segment while the other subsidized consumers have installed the remaining 96%.

In November 2019, Maharashtra came up with a draft regulation for grid-interactive rooftop solar projects, which said that the state could go back to gross metering, rolling back net metering for all segments except residential. This created an uproar in the renewable energy sector, with solar installers vehemently opposing the suggestion.

Image credit: RGS Energy