NLCIL Could Face 31% Tariff Cut for its 400 MW of Delayed Solar Projects
NLCIL said it had failed to commission its 400 MW solar power project before March 31, 2018 because of unforeseeable circumstances
December 14, 2018
The Tamil Nadu Electricity Regulatory Commission (TNERC) has rejected the plea made by Neyveli Lignite Corporation India Limited (NLCIL) for a tariff protection of ₹4.41 (~$0.062)/kWh for 400 MW solar power projects under force majeure clauses. The Commission has agreed on tariff of ₹3.05 (~$0.043)/kWh (with AD benefit) for these projects.
NLCIL cited unforeseeable events like land registration issues, agitation of local people, rain, Ockhi cyclone and High Court order, all of which stayed the development work of its solar projects. In its petition, NLCIL cited these as the reasons for a delay in project commissioning.
NLCIL had proposed to develop 2×200 MW and 1×100 MW solar power project at Neyveli Mine I & Mine II dump yards and township area respectively. Energy Purchase Agreements (EPA) were signed with Tamil Nadu Generation and Distribution Corporation (TANGEDCO) with a levelized tariff of ₹4.56 (~$0.064)/ kWh.
But the above tariff was applicable only if the project had been commissioned during the control period on or before March 31, 2017. However, the projects could not be commissioned on time due to environmental constraints and project sites being changed to various locations in Tamil Nadu. NLCIL took the approval of TANGEDCO for change of the project sites from the originally proposed locations.
After the tendering process, the project commissioning date was scheduled for March 31, 2018. Then, NLCIL filed the petition before the commission to extend of the validity of the agreed tariff of ₹4.56 (~$0.064)/ kWh till March 31, 2018. It was rejected by the commission on the pretext that it had consciously prescribed the control period, March 31,2017.
The state commission, in its order notified the tariff of ₹4.50 (~$0.063)/kWh without AD and ₹4.41 (~$0.062)/ kWh with AD for the solar PV projects commissioned up to March 31, 2018.
Accordingly, TANGEDCO extended the project time period up to March 31, 2018 with a tariff of ₹4.41 (~$0.062)/ kWh with AD.
However, the projects could not be commissioned on time due to force majeure issues described above.
The respondent, TANGEDCO, argued that NLCIL had only asked for approval of the change of location and not the extension of time to commission the project. Therefore, NLCIL didn’t require any time extension to commission its projects, argued TANGEDCO.
TANGEDCO also stated that out of the total capacity of 500 MW, NLCIL had commissioned 1×100 MW solar power project at Chelliyanallur Village on March 30,2018. Therefore, this project will be entitled to avail a tariff of ₹4.41 (~$0.062)/ kWh.
NLCIL had sought the extension to commission the remaining 400 MW solar PV projects till September 30, 2018.
Based on the request by NLCIL, the time extension was granted for commissioning of the balance 400 MW solar PV power projects. But there was a condition: Since the due date for commissioning the power projects falls under the control period of 2018, the power purchase tariff of ₹3.05(~$0.043)/kWh (with AD benefit) will be applicable for these 400 MW of solar power projects.
The DISCOM said in its plea to the commission:
“If the petitioner is allowed to avail the tariff of ₹4.41 (~$0.062)/ kWh for their proposed 400 MW solar PV power project against the applicable tariff of ₹3.05(~$0.043)/kWh, every generator who is not able to commission the project would state its own reasons and consequently TANGEDCO will be put into great hardship with huge additional financial burden by the way of paying higher tariff over the entire agreement period of 25 years.”
The commission noted that the control period cannot be extended in project specific cases. It said, “An extension of control period of general nature is permissible but not the extension of control period on project specific basis.”
The commission observed that the law on the question of extension of control period is well settled and except for reasons to land acquisition, rain, power evacuation etc., the petitioner has failed to come up with enough reasons to convince us. It further added, the reasons for change of locations was already mentioned in the EPA, and therefore do not fall within force majeure.
Now, an appeal against this order can be made before the Appellate Tribunal for Electricity within a period of 45 days from the date of receipt of a copy of this order.
Recently, the Karnataka Electricity Regulatory Commission (KERC) passed an order stating that Welspun Renewables Energy Private Limited is entitled to a tariff of ₹7.01 (~$0.098)/kWh for its 16 MW solar project, while a tariff of ₹6. 51 (~$0.091)/kWh will apply to another 34 MW of solar project.
The petitioner had asked the commission to accept the delay in commercial operational date (COD) as they were due to force majeure events.
Nitin is a staff reporter at Mercomindia.com and writes on renewable energy and related sectors. Prior to Mercom, Nitin has worked for CNN IBN, India News, Agricultural Spectrum and Bureaucracy Today. He received his bachelor’s degree in Journalism & Communication from Manipal Institute of Communication at Manipal University and Master’s degree in International Relations from Jindal School of International Affairs. More articles from Nitin Kabeer