Gujarat MSMEs With Third-Party Solar Power Sale May Attract Normal Open Access Charges

The solar projects should be above 50% of the contracted demand


The Gujarat Electricity Regulatory Commission (GERC) has issued a draft order to implement changes to the tariff framework to procure power from distributed solar power projects in the state.

The stakeholders can submit their suggestions and comments by July 15, 2020.

In its submission, the Gujarat Urja Vikas Nigam Limited (GUVNL) had noted that it received requests from solar developers for the signing of power purchase agreements (PPAs) under the policy to develop small-scale distributed solar projects.

According to GUVNL, the policy provides a period of 12 months from the date of signing PPAs to commission the distributed solar projects, and PPAs could not be signed without a set tariff. GUVNL had requested modifications in the tariff order in line with the Gujarat policy for the development of small-scale distributed solar projects.

The Commission stated that the tariff as on the 1st April of the year (discovered by the GUVNL during the previous six months from October-March) would be applicable for the projects commissioned under PPAs signed during April-September.

Similarly, the tariff as on 1st October (discovered during the past six months from April to September), will apply to projects commissioned under PPAs signed during the October-March period.

The Commission further clarified that the useful life of 25 years would apply to the solar projects that will be commissioned with their PPAs signed during the new control period. According to the previous clause, it was not necessary to sign the PPAs before the commissioning of the project.

The Commission also substituted the eligibility criteria with a new criterion. The new clause states that the solar power projects to be commissioned with PPAs signed during the new control period would be eligible to sell power to distribution licensees of Gujarat at the tariff approved by the Commission. Providing clarity on the new clause, the Commission stated that the PPAs must be signed before the commissioning of the project, which should take place within 12 months from the signing of the PPA.

Also, 100% of cross-subsidy surcharge and additional surcharge as applicable to normal open access consumers would be levied on solar projects set up by micro, small, and medium enterprises (MSMEs) above 50% of the contracted demand in case of a third-party sale. Earlier, there was no clause for the sale of power to a third party. As per the previous clause, for solar power projects set up by MSMEs above 50% of their contracted demand, 100% of cross-subsidy surcharge and additional surcharge were applicable to all open access consumers. Now, the charges are applicable for third-party sale transactions only.

Recently, GERC issued the tariff framework for the procurement of solar power by distribution licensees in the state. The Commission noted that the new control period of the tariff framework would be effective from the date of this order up to March 31, 2023.  The Commission added that solar power projects established with only new machinery would be eligible for the tariff approved in this order.

In August last year, GERC had passed an order allowing GUVNL and the other distribution companies in the state to procure power from small solar projects of capacity up to 4 MW to meet their renewable purchase obligations.