The Maharashtra Electricity Regulatory Commission (MERC) rejected a petition filed by a renewable energy consultant seeking the abolition of grid support charges imposed on rooftop solar systems with capacities above 10 kW and below 1 MW.

The Commission ruled that grid support charges are a valid regulatory tool implemented through due legal and consultative processes and cannot be scrapped based on the contentions raised in the petition.

It emphasized that the existing charges are not discriminatory and serve a critical function in enabling the distribution license to recover legitimate costs related to grid infrastructure and service provisioning.

Background

The petition was filed by a renewable energy consultant, Sudhir Budhay, challenging the provision of Grid Support Charges as outlined in the MERC (Grid Interactive Rooftop Renewable Energy Generating Systems) Regulations, 2019.

He contended that these charges were unnecessary, given that banking charges already allow Maharashtra State Electricity Distribution Company (MSEDCL) to recover losses associated with energy exported to the grid under net metering arrangements.

The petitioner argued that the imposition of grid support charges only on consumers with sanctioned loads above 10 kW and below 1 MW was discriminatory. Consumers with a capacity below 10 kW were exempt, and those above 1 MW fell under open access regimes, which exempted them from grid support charges. However, they still paid other charges, such as cross-subsidy and wheeling charges.

He argued that due to the technical design of rooftop solar systems and the nature of energy flows within local distribution networks, intra-state transmission charges and other components factored into grid support charges were not applicable.

He also highlighted that the wheeling losses were already compensated by banking charges, as agreed upon by stakeholder groups during public consultations.

In response, MSEDCL argued that the petition was premature, pointing out that the grid support charges would only come into effect after the state’s cumulative rooftop solar capacity crosses 5,000 MW, per the First Amendment to the 2019 regulations.

The distribution company maintained that grid support charges were formulated after thorough public consultation and legal review and that they include components beyond what banking charges cover. These include balancing, standby support, and grid stability maintenance costs.

MSEDCL clarified that open access consumers are subjected to a completely different set of regulatory charges, and the comparison was therefore misplaced. It also submitted that high-end consumers using rooftop solar and net metering reduce their demand from the grid, affecting cross-subsidy mechanisms and the financial viability of the utility.

Commission’s Analysis

The Commission reiterated that grid support charges were introduced through the Principal Regulations, 2019, which were developed in line with the Electricity Act, 2003, following extensive public consultation. The grid support charges are intended to recover costs incurred by the distribution licensee in maintaining grid infrastructure, providing banking and standby services, and ensuring grid balancing, especially when energy is injected into the grid from decentralized sources, such as rooftop solar.

On the claim of discrimination, the Commission explained that consumers under different regulatory frameworks could not be treated on par. Net metering users and open access consumers are subject to distinct rules, charges, and eligibility conditions.

The Commission had chosen to exempt consumers with loads of up to 10 kW from grid support charges, encouraging rooftop solar adoption among residential and low-load consumers, in line with the national policy and the financial assistance programs.

Similarly, open access consumers pay additional surcharges, wheeling fees, and other costs that justify their exemption from grid support charges.

The Commission noted that rooftop solar installations in the state had not yet reached the threshold of 5,000 MW required for the activation of grid support charges under the amended regulations. Hence, the petition was premature.

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