The Rajasthan Electricity Regulatory Commission (RERC) has rejected a petition filed by Shree Cement seeking the grant of a load factor rebate by Jaipur Vidyut Vitran Nigam (JVVNL) for electricity consumption at its Jobner cement unit.

The Commission held that the company’s captive solar project qualifies as a behind-the-meter installation and is therefore not eligible for load factor computation under the applicable tariff order.

The regulator held that JVVNL had acted in accordance with the regulatory framework while excluding captive solar generation from the load factor calculation.

Background

Shree Cement operates several cement units across Rajasthan, including a grinding unit at Jobner. The Jobner unit has a contracted demand of 7.40 MVA and is supplied with electricity by JVVNL. Within this unit’s premises, the company has also installed a 7.08 MW captive solar project, commissioned in March 2023.

For the billing month of December 2024, the Jobner unit consumed over 31.6 million units of electricity. Of this, approximately 23.9 million units were supplied by the distribution company, while around 7.75 million units were met through captive solar generation.

JVVNL computed the load factor solely based on grid-supplied power, resulting in a load factor of about 43%. Based on this calculation, the consumer was billed at a higher applicable tariff.

Shree Cement argued that if captive solar consumption were also included, the combined load factor would exceed 57%. The company relied on a provision in the RERC tariff order that allows industries to qualify for a lower tariff if they achieve a minimum load factor of 40% from the distribution company’s supply and a combined load factor of 50% when captive or rooftop solar consumption is added.

According to the petitioner, JVVNL failed to follow the Commission’s explicit directions by refusing to consider captive solar generation in the load factor calculation. The company maintained that the tariff order did not distinguish between captive solar projects based on location or metering configuration, and that denying the benefit solely because the project was behind the meter was arbitrary and contrary to the renewable energy promotion objectives.

Shree Cement also noted that its captive solar project was operating in parallel with the grid under a permission granted by the state transmission utility. It argued that this approval established grid connectivity and invalidated the distribution company’s claim that the project was not connected to the grid.

JVVNL opposed the petition arguing that the dispute was essentially a billing matter between a consumer and a distribution licensee and should have been taken before the consumer grievance redressal mechanism rather than under Section 142 of the Electricity Act.

On merits, the distribution company maintained that the tariff provision cited by the petitioner applied only to grid-connected rooftop solar systems under net metering and to captive solar projects connected to the grid with proper energy accounting and settlement. It stated that Shree Cement’s solar project was entirely behind the meter, did not export power, did not have net metering, and was not subject to grid-level energy accounting. Therefore, captive generation from such a project would not qualify for a load factor rebate.

The distribution company clarified that permission for parallel operation only allows technical synchronization with the grid and does not automatically entitle a consumer to tariff incentives. It noted that behind-the-meter systems typically attract grid support or parallel operation charges rather than rebates.

Commission’s Analysis

The Commission acknowledged that the tariff order was intended to ensure that power-intensive industries installing rooftop or captive solar projects are not denied concessional tariffs merely because of partial substitution of grid power. However, it emphasized that regulatory benefits linked to tariffs are inseparably connected to metering, energy accounting, and settlement at the grid interface.

It ruled that the transmission utility’s approval for parallel operation was purely technical. Such approval enables synchronization of captive generation with the grid to ensure system safety and reliability. It does not establish that the project meets the regulatory requirements necessary to be treated as a grid-connected captive generating station for tariff-related incentives.

The Commission observed that the tariff order shows that the load factor rebate was intended for rooftop solar systems operating under net metering and for captive solar projects that are grid-connected, typically through open access arrangements.

It clarified that when regulatory instruments refer to captive solar projects without further qualification, the prevailing interpretation in the sector is that they refer to non-co-located captive projects. If behind-the-meter captive projects were intended to be included, the tariff order would have explicitly stated so, as is done in other regulatory provisions.

The Commission also noted that behind-the-meter systems already enjoy structural advantages, including exemptions from open-access charges, transmission charges, and other grid-related levies.

In contrast, captive projects located elsewhere must bear multiple charges to access the grid. Given this fundamental difference, the two categories cannot be equated for tariff incentives unless the regulations expressly provide otherwise.

The Commission also referred to the broader renewable energy regulatory framework, which clearly distinguishes between grid-connected systems that are metered and energy-accounted and behind-the-meter systems that operate internally within consumer premises. Tariff-linked benefits are generally extended only to the former category, unless explicitly stated otherwise.

Based on this analysis, the regulator concluded that JVVNL was correct in treating Shree Cement’s solar project as a behind-the-meter installation and excluding its generation from load factor computation.

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