Solar Federation Seeks Exemption from Charges Levied on Renewable Energy Developers
50% exemption for seven years on transmission and wheeling charges sought till March 2023
January 13, 2021
The National Solar Energy Federation of India (NSEFI) has written to the Electricity Department of Rajasthan with comments and suggestions on the Rajasthan Electricity Regulatory Commission’s (RERC) renewable energy tariff policy.
An important suggestion NSEFI has made is for a 50% exemption for seven years on intra-state transmission and wheeling charges for renewable energy projects installed between the date of issue of the policy and March 31, 2023, or for projects with a capacity of 500 MW.
This exemption is sought for captive projects or projects supplying power to a third party under Open Access. The exemption must be allowed for the first seven years of operation from commissioning the project. Since the state’s Solar and Wind Hybrid Energy Policy, 2019, provided for these exemptions, the federation noted that the exclusion of this exemption in the tariff policy was in direct contrast to the solar policy released by the government. It said that government policy and applicable regulations must be aligned with each other.
It also suggested allowing captive renewable energy project developers the freedom to choose the capacity of new projects (including projects installed behind the meter) instead of limiting them to 100% of the contracted demand. It proposed this provision given that the project’s capacity does not exceed the contracted demand of the distribution company (DISCOM) after including the minimum capacity utilization factor (CUF).
The federation said that since the CUF of renewable projects usually ranges between 30% and40%, restricting a consumer to install a project capped at or below the contracted demand would result in them meeting only 30-40% of their power requirements due to the lower CUF of renewable energy projects. It cited examples of states like Maharashtra, Karnataka, and Tamil Nadu, which allow renewable energy to be installed beyond the contracted capacity.
The federation contended that the clause setting the maximum permissible limit on energy to be consumed and banked from new renewable energy captive projects at 5% over the minimum CUF was “arbitrary and unfair.” The CUF depended on multiple other factors that were not considered in the policy, it said.
The maximum permissible limit on energy to be banked and consumed should be left to the developer’s discretion.
In another recommendation, NSEFI said that the clause about the lapsing of unused banked energy at the end of a financial year for which no compensation would be provided must be modified. This energy should be deemed a purchase by the DISCOM and compensated for at the lowest tariff discovered in the competitive bidding process. It argued that energy requirements vary and are not in the developer’s control, and therefore, it would be unfair if they are not compensated for this energy.
DISCOMs must compensate developers for this energy since they would use it to meet their renewable purchase obligations and generate revenue. It was only fair for developers to be compensated at a fair cost at the end of the financial year, it said.
In November 2020, RERC issued regulations for determining tariffs for renewable energy-based power sources for 2020. A vital regulation included a 100% exemption of intra-state transmission and wheeling charges for solar power projects supplying power to electric vehicle charging stations.
In another letter, NSEFI asked Haryana’s Department of New and Renewable Energy for an exemption on imbalance charges due to reductions in scheduling and contract demand for inter-state renewable energy transactions with the state’s consumers.
It said that independent power producers supplying solar renewable-based power to Haryana from outside the state face a financial burden due to imbalance charges on account of scheduling and contract demand reduction requirements.
The agency cited the Haryana Electricity Regulatory Commission’s renewable energy tariff policy’s provisions, which said these imbalance charges would not apply to intra-state renewable generators. It held that these charges should be exempted for inter-state renewable energy generation and consumption.
It explained that renewable projects, whether outside or inside the state, were subject to intermittency issues inherent in renewable power generation. Scheduling power for every time block in a day was impossible.
The federation said that the government should not discriminate between interstate and intra-state renewable energy generation and extend the same benefits to generators located outside the state.
Haryana released draft regulations for the forecasting, scheduling, and deviation settlement of solar and wind power generation back in 2018. It had imposed deviation charges on developers and procurers for under and over injection of power into the grid. The regulations were implemented in April 2019.
Recently, NSEFI wrote a letter to the Principal Secretary (Energy), Government of Maharashtra, listing its suggestions for the ‘Unconventional Energy Generation Policy’ of the state.
Nithin Thomas is a staff reporter at Mercom India. Previously with Reuters News, he has covered oil, metals and agricultural commodity markets across global markets. He has also covered refinery and pipeline explosions, oil and gas leaks, Atlantic region hurricane developments, and other natural disasters. Nithin holds a Masters Degree in Applied Economics from Christ University, Bangalore and a Bachelor’s Degree in Commerce from Loyola College, Chennai. More articles from Nithin.