Developers Bear the Cost of Mismatch in Long-Term Access & Solar Project Commissioning
Ministry of Power had ordered ISTS charges waiver for all renewable projects with a scheduled commissioning date on or before June 30, 2025
April 14, 2022
Renewable energy project developers have been burdened with delay charges imposed by the Central Transmission Utility of India (CTU) for the mismatch between the deployment of long-term access to transmission and the project commissioning date.
CERC needs to officially address the issue to ensure CTU abides by the orders of the Ministry and waves off the charges arising from the mismatch.
Procedure for securing long-term access
Renewable energy developers need long-term access and the right to use the inter-state transmission system to evacuate the power generated by the project to the grid. The application for long-term access is submitted to the CTU once the power purchase (PPA) and power sale agreement (PSA) is signed and the power injection and offtake points are identified. Since the availability of the transmission network is a challenge, developers need to ensure the PPA and PSAs are signed in time to apply for long-term access. Long-term access is generally provided to the developers for 25 years from the scheduled commissioning date of the project.
Confusion with the operationalization of the long-term access
But with the disruptions due to the COVID-19 pandemic, the scheduled commissioning dates of many projects have been moved. Also, there is confusion about the start date of the long-term access. While the CTU says that the long-term access is operational once it is issued, the developers note that the long-term access should be considered from the scheduled commissioning date of the project up to 25 years. According to the developers, the operationalization and commencement date of the long-term access must both be the same – the scheduled commissioning date of the project.
The Ministry of Power had previously clarified that when a renewable energy project is granted an extension on its scheduled commissioning date by the concerned implementing agencies, there must be a corresponding change in the commencement and period of long-term access. Such realignment of long-term access was considered to exempt renewable developers from any liability for periods of mismatch in the commissioning of the renewable energy project and the initial date when long-term access was supposed to start. This provision is also extended to projects eligible for the ISTS waiver that are granted an extension by the competent authority.
Why the delayed charges even though the ISTS charges are waived?
The Ministry of Power has provided for the ISTS charges waiver for solar and wind energy projects commissioned on or before June 30, 2025. The waiver is for 25 years from the date of commissioning of the projects. Then why the delayed charges for the mismatch?
According to the regulations, the ISTS charges are waived for the developers but socialized for the CTU. “Socialized” in this context means the charges are equally borne by the designated ISTS customers, including state transmission utilities and distribution licensees.
So, from the scheduled date of commissioning of the renewable energy projects and the operationalization of the long-term access, the ISTS charges are socialized for the CTU. This means other designated customers, including the DISCOMs, share the charges. But in the gap between the long-term access issue date and the scheduled commissioning of the project (mismatch), the ISTS charges cannot be socialized, which is a loss for the CTU. Hence, they levy these charges to be paid by the developer.
The Ministry has issued directions to Central Electricity Regulatory Commission (CERC) to amend the CERC (Sharing of Inter-State Transmission Charges and Losses) Regulations 2020. CERC was directed to make provisions for the CTU to extend the long-term access start date in a case where the scheduled commissioning dates of the renewable projects was extended, addressing the mismatch. But the CERC is yet to amend the regulations and notify it.
According to the developers, despite the Ministry’s orders, the CTU has been raising bills for the period of mismatch in commissioning a renewable energy project and the date of operationalization of long-term access in periods before commissioning such renewable projects.
A leading developer Mercom spoke to said that since the developers have a deadline extension to commission the projects, there will be a mismatch in the long-term access approvals.
“Developers were granted long-term access start dates based on the original commissioning date of the projects. Now, if the commissioning dates are moved, developers end up paying the penalty for no fault of theirs. The Ministry has directed CERC that long-term access also must be extended, but no order has been issued yet. This needs to be addressed immediately,” he said.
Developers claim CTU is proceeding on the understanding that none of the Ministry’s orders referenced above have any application whatsoever to bilateral mismatch liability. Even in cases where long-term access has been granted on existing margins, the CTU is raising bills on renewable power producers who are otherwise eligible for relief under the Ministry’s orders.