Tariff Applicable at the Time of Commissioning will Apply to Delayed Solar Projects: RERC

RERC heard a petition filed by Arjun Green Power for its project located in Rajasthan


In a crucial order, the Rajasthan Electricity Regulatory Commission (RERC) has clarified that for projects delayed beyond their commissioning timeline, the tariff applicable will be the one that was chosen for the year in which the commercial project became commercially operational.

The commission heard a petition filed by Arjun Green Power Pvt. Ltd. for the adjudication of a dispute regarding the extension of commercial operations date (COD) of the solar project and the determination of tariff and liquidated damages under the power purchase agreement (PPA).

The respondents in the case were: Rajasthan Renewable Energy Corporation Ltd., Jodhpur Vidyut Vitaran Nigam Ltd., Rajasthan Vidyut Prasaran Nigam Ltd., and Rajasthan Urja Vikas Nigam Ltd.

The Case

Arjun Green Power Pvt. Ltd. had been selected by the Rajasthan Renewable Energy Corporation Ltd. to set up a 5 MW solar PV project and supply power for a period of 25 years. The PPA was signed on March 28, 2013.

According to the PPA, a developer should have attained commercial operation of the project within twelve months from the date of signing of the PPA. However, the 5 MW solar PV project could not be commissioned on the scheduled commercial operation date due to various force majeure conditions including the allotment of land without any encumbrance.

The scheduled date of the developer’s solar PV project was then extended by Rajasthan Renewable Energy Corporation to September 27, 2014, and again to September 30, 2015. Later, it was extended to March 31, 2016. Moreover, on request, the developer was given a provisional extension for the project until September 2016. After that, the date was extended to March 31, 2017.

While providing the final extension, Rajasthan Renewable Energy Corporation imposed liquidated damages and reduced the applicable tariff from ₹6.45 (~$0.092)/kWh to ₹4.85 (~$0.069)/kWh. The developer then approached the RERC regarding the change in tariff and the extension provided to it. At the time, a three-month extension was granted by the RERC. The RERC added that the change in tariff is valid and legal.

At that time, the commission stated that if the developer is not availing the accelerated depreciation (AD) benefit and satisfies the Rajasthan Renewable Energy Corporation with documented proof, then the tariff of ₹5.40 (~$0.077)/kWh (without AD) will be applicable.

The project was finally completed on February 21, 2018, after the expiry of the three-month extension approved by the RERC.

After the commissioning of the project, the developer raised the energy bills of May and June 2018 at the rate of ₹5.40 (~$0.077)/kWh, but Rajasthan Renewable Energy Corporation returned the invoices stating that the energy bill invoices should be submitted as per the applicable generic tariff of ₹3.93 (~$0.056)/kWh (without AD benefit) for the solar power project that was commissioned during FY 2018-19.

Commission’s Observations

After reviewing the submissions made by the parties, the RERC observed that it is the responsibility of the petitioner to complete the project within the time period allowed and give at least 60 days advance preliminary written notice and at least 30 days advance final notice of the date on which it intends to connect the project to the state grid system.

The commission further noted that the role of the respondents began only after the notices were issued. Therefore, after the issuance of notices, a reasonable time should be allowed for the respondents to conduct connectivity proceedings. However, the developer hadn’t produced any such notice issued within the time allowed.

In its order, the RERC stated that the consequence in the delay of commissioning of the project would change the tariff to the tariff applicable at the time of COD. The RERC ordered that the applicable tariff for the 5 MW solar PV project is the tariff determined for the projects commissioned during the FY 2018-19.

As reported by Mercom, recently, the commission finalized new regulations to amend its terms and conditions for the determination of tariff for renewable energy sources – wind and solar energy.