Valid Energy Purchase Agreement Crucial to Grid Safety: Maharashtra Commission

The wind project developer sought for grid reconnection and compensation for power supplied without a valid EPA

July 15, 2020

/ Wind

The Maharashtra Electricity Regulatory Commission (MERC) has dismissed a petition by a wind developer seeking the reconnection of disconnected wind projects and relief for power supplied without a valid energy purchase agreement (EPA).

Orange Maha Wind Energy Private Limited, a wind power developer, filed a petition with the MERC asking it to quash a communication from the Maharashtra State Electricity Distribution Company Limited (MSEDCL) to disconnect its 2 MW wind turbine generator in the Tasgaon taluka of the Sangli district.

The company explained that it signed EPAs with the MSEDCL for 32 MW out of the 34 MW of the wind projects that it used to schedule and supply power to the distribution company (DISCOM).

The developernoted that EPAs for 2 MW of projects were not executed as its registration was pending with the Maharashtra Energy Development Agency (MEDA). As per the state’s Renewable Energy Policy 2015, wind projects are required to get registered with MEDA before executing EPAs with MSEDCL. It said that MEDA has still not registered these projects even though all permissions and compliance have been met.

The wind developer explained that it has been using 34 MW of projects to schedule and supply power to the MSEDCL for several years now, regardless of the pending registration and that the DISCOM has not paid for 20.17 million units (MU) of power from the disputed 2 MW project. It said that the MSEDCL has refused to issue credit notes for the energy supplied from the disputed 2 MW of projects from the date of their commissioning.

Further, the petitionalso pointed out that there was no order by the high court directing MSEDCL to cancel the arrangement for the procurement of power from the disputed projects, refrain from issuing credit notes, or to disconnect the projects. It said that the MSEDCL issued its notice for the disconnection of these projects without any reasoning or justification.

It argued that the absence of an EPA would not result in grid stability issues and that the MSEDCL’s decision to disconnect the projects was illegal. It explained that there is no correlation between the execution of EPA and the safety of the grid as long as power is supplied after being duly forecasted and scheduled.

Amidst this, the developerfiled another miscellaneous application on June 9, 2020, after it got an oral communication from the MSEDCL that they would be visiting the project site to disconnect the disputed projects.

The company claimed that despite informing MSEDCL about its petition with the Commission and asking them not to take any coercive steps until it was dealt with, representatives of the DISCOM entered the site premises and forcibly disconnected the projects. In itsmiscellaneous application, the wind generatorasked the Commission to direct MSEDCL to reconnect the 2 MW project and resume power supply. It also asked for the Commission to declare the actions of the MSEDCL as illegal and arbitrary.

In its response, the MSEDCL said that there was no valid agreement for these projects and that Orange Maha Wind had failed to finalize the registration with MEDA as per the state’s Renewable Energy Policy 2015. Further, MSEDCL added that the communication it had issued to the generatordid not guarantee the purchase of power. It noted that the communication also said that permission for commissioning the disputed project was subject to MEDA’s clearance for the projects within 15 days.

Upon analysis, the Commission refuted Orange Maha Wind’s claim that the lack of an EPA would not affect grid safety.

“For the safe and secure operation of a power system, any power flow must have an identified generator who injects power into the grid and consumers (distribution licensee, open access consumers, or self-consumption) that draw such power from the grid. Without these two important components in the power flow or transaction, it would be impossible to run power systems safely and securely,”the Commission explained.

It further reiterated that the power injected without a valid contract would lead to deviations in withdrawal from or injection into the grid and would result in penalties under the deviation settlement mechanism (DSM) to enforce grid discipline. Without a valid contract, it would be difficult to identify whom to impose these penalties on in case of deviations. The Commission emphasized that to avoid these issues, injection of power without a valid EPA needs to be discouraged.

The Commission also said that in cases like these, if the state load despatch center – the Maharashtra State Load Despatch Center (MSLDC) in this instance – issues instructions to the DISCOM to disconnect the project without valid EPAs from the grid, they are bound to follow up on these instructions. In this case, the MSEDCL was obliged to act upon the MSLDC’s instructions.

The Commission added that it did not find anything wrong with the MSEDCL’s decision to disconnect the 2 MW project without a valid EPA from the grid.

The MERC said that without registration of the project with MEDA, a wind generator could not sell electricity to distribution licensees, open access customers, or under the renewable energy certificate (REC) mechanism. Since the developerdid not have the requisite registration for the disputed 2 MW project, it would be premature to deal with any claims arising out of power injected from this project.

In conclusion, the Commission said that if the generator receives registration from MEDA for the project and submits all bills and necessary documents to the MSEDCL for inspection, it would then be eligible for compensation without any carrying costs for the power supplied over the specified period.

The Commission subsequently rejected the petition filed by the wind developer.

In a similar order issued recently, the state Commission had reiterated that injection of energy without a valid EPA would not be compensated to the developer. Bothe Windfarm had filed a petition asking the Commission to direct the DISCOM to sign the due EPA and reimburse it for the power consumed.

Previously, the Commission had directed the MSEDCL to procure wind power through the competitive bidding route from wind power projects whose EPAs with MSEDCL had expired. In that order, the Commission had mentioned that as the wind generators had their EPAs with MSEDCL for several years and their projects were already commissioned, MSEDCL may take appropriate deviations from provisions of the competitive bidding guidelines with prior approval. The rate discovered in the bidding process would be dealt with by the MERC during the tariff adoption process for meeting the requirement of fulfilling its non-solar RPO.