Regulatory Glitches in Wind Project Switching Over from PPA to Captive Mode

Regulator rules contracted power cannot be considered for wheeling to captive use

October 6, 2021

/ Wind
thumbnail

The Rajasthan Electricity Regulatory Commission (RERC) has rejected the petition of a wind energy generator to continue power purchase agreement (PPA) of a project that has been canceled. The generator had earlier requested to switch over the projects from PPA to captive mode. But since the PPA was cancelled without switching over to captive mode, the generator has asked for reinstating the PPA again.

Background

Maharaja Shree Umaid Mills filed a petition with the Commission for adjudication of dispute on the termination of a PPA with Jodhpur Vidhyut Vitran Nigam Limited (JVVNL) in August 2014 to supply power on preferential tariffs. The company has two wind power projects in the Jaisalmer district of Rajasthan. The facilities were commissioned on March 30, 2012.

In 2017, the company requested the Rajasthan Renewable Energy Corporation (RREC) to switch over the wind power projects from PPA mode to captive mode. It had additional power requirements and wanted to use all power generated by the wind projects for its textile manufacturing facility in Rajasthan.

In February 2017, RREC forwarded its request to Rajasthan Urja Vikas Nigam Limited (RUVNL). However, RUVNL did not respond to the company’s multiple requests for almost three years.

In December 2019, RUVNL intimated the company for terminating the PPA. However, it did not say anything about the switch over to captive mode.

In its petition, the company contended that RUVNL could not terminate the PPA in isolation unless the switchover to captive mode was allowed. Therefore, the termination was void.

Following the lockdown due to COVID-19, the manufacturing unit was shut and the power requirements had come down drastically. The company was forced to reduce its contract demand with JVVNL to 6.5 MW from 14 MW.

In its petition, the wind power generator said that it was compelled to withdraw the request to switch over to captive mode and restore the PPA due to the abnormal delay in permitting the switchover.

The company informed the Commission that a commitment could always be withdrawn before being accepted. Therefore, it exercised its rights to withdraw the application for switching over to captive mode and continue with the PPA.

The wind power generator also said that RUVNL had stopped paying for the injected power from the date of the termination of the PPA.

In its response, RUVNL said the company signed a 25-year PPA with JVVNL to supply 3 MW power from its two wind power projects at a tariff of ₹4.46 (~$0.060). However, the company requested a switchover from the PPA to captive mode twice.

Therefore, RUVNL accepted the request and allowed the company to terminate the PPA. It informed the Commission that the company also agreed to the termination through an undertaking in December 2019. Thereafter, RUVNL decided to allow the company to switch over its wind power to captive mode.

Commission’s analysis

 The Commission observed that Maharaja Shree Umaid Mills submitted a request to migrate the PPA to a captive mode in 2017, which RUVNL did not accept. The company also requested the switchover in 2019. It noted that the company had agreed to the PPA termination.

The regulator said that RUVNL had rightly initiated the PPA termination as contracted power could not be considered for wheeling to captive use. It also observed that the company never disputed the termination of PPA until June 22, 2020. Therefore, the company was aware of the termination of PPA and its consequences.

The Commission dismissed the request of the generator to reinstate PPA saying that it was an afterthought. The PPA was already terminatied on January 1, 2020, so, the request to reinstate the PPA on June 22, 2020 was not agreed to by RUVNL.

In July 2021, the Chairman of the Rajasthan distribution companies (DISCOMs) and RUVNL issued an order, levying electricity duty of ₹0.60 (~$0.00081)/kWh on the consumption of power from captive solar projects, rooftop solar, and grid-connected small solar projects with the net metering facility.

Subscribe to Mercom’s real-time Regulatory Updates to ensure you don’t miss any critical updates from the renewable industry.

 

RELATED POSTS