GERC Issues Tariff Framework For Procurement of Solar Power By Distribution Licensees

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The Gujarat Electricity Regulatory Commission (GERC) issued tariff framework for procurement of power by distribution licensees and others from Solar Energy Projects and other commercial issues for the State of Gujarat

The Commission had issued the previous generic Tariff Order on 17th August 2015, for procurement of power by Distribution Licensees from Solar power projects in Gujarat. The Control Period of GERC Solar power Tariff Order 2015 expired on 31 March 2018. This Order details the tariff framework for the prospective period as well as the intervening period.

It is clarified in the recent order that the intent of the Act, Policies, and Regulations is also to prefer competitive bidding for renewable energy in the future to maintain reasonable and competitive tariff. It is, therefore, in the interest of the consumers that such solar energy is procured by the licensees at the most competitive rates. As regards Additional Rs. 0.20 per unit is not cost-competitive.the Commission retains the approach for tariff determination as proposed in the Discussion Paper, with minor modification and to provide more clarity as under: “The power generated from the small scale Solar Power Projects having size 0.5 MW or above but below 5 MW, the procurement price of energy shall be at the rate of tariff discovered under the competitive bidding process and adopted by the Commission in the different period of 6 months of the year plus additional 20 paisa per kWh thereon for the projects located outside the solar park as under:

 The average tariff, available as on 1st April (as discovered in the competitive bidding by GUVNL during the previous six months October-March and adopted by the Commission) shall be applicable for the project commissioned during April-September. Similarly, the average tariff, available as on 1st October (as discovered in the competitive bidding by GUVNL during the previous six months April-September and adopted by the Commission) shall be applicable for the project commissioned during October-March.In case the average tariff is not available for a particular 6 months period then the latest average tariff available for 6 months period as discussed above shall be considered.”

The Commission has modified the Clause of Control Period as “The new control period of the tariff framework approved in this Order shall be effective from the date of this Order to 31st March 2023.”.It also stated that Solar Power Projects established with only new Plants and Machinery would be eligible for the benefit of tariff approved within the scope of this Order and solar power projects commissioned and PPAs signed during the new control period will be eligible to sell power to distribution licensees of Gujarat at the tariff approved by the Commission under this Tariff framework.

Looking to the present status of Solar PV installations and its impact on the grid and other electricity consumers, the Commission decides to continue present arrangement of the cap of 50% installation for consumers other than MSME (Manufacturing) Enterprises and to make exiting Regulation aligned to State Government Policy for MSME (Manufacturing) Enterprises, they are allowed to install Solar PV system above 50% of its sanctioned load/ contract demand subject to 15-minute settlement mechanism. 

The commission stated that the Solar Power Project Developer shall commission the Solar Power Project of at least 10% of the allotted capacity within one month of charging of evacuation line, failing which, the Developer shall be liable to pay long-term Transmission Charges for 10% of allotted capacity till such 10% of allotted capacity is commissioned.

The Commission final Tariff Framework for Solar Power Projects is as under:

The tariff for all prospective Solar Power Projects shall be determined based on the rates discovered through competitive bidding. The tariff for Solar Power Projects below the threshold limit of eligibility for participating in Competitive Bidding shall be purchased by the distribution licensee having linkage with the tariff rate discovered under the competitive bidding process. The power generated from the small scale Solar Power Projects having size 0.5 MW or above but below 5 MW, the procurement price of energy shall be at the rate of tariff discovered under the Competitive Bidding process and adopted by the Commission in the different period of 6 months of the year plus additional 20 paisa per kWh thereon for the projects located outside the solar park as under: The average tariff, available as on 1st April (as discovered in the Competitive Bidding by GUVNL during previous six months October-March and adopted by the Commission) shall be applicable for the project commissioned during April-September. Similarly, the average tariff, available as on 1st October (as discovered in the Competitive Bidding by GUVNL during the previous six months April-September and adopted by the Commission) shall be applicable for the project commissioned during October-March. In case the average tariff is not available for a particular 6 months period then the latest average tariff available for 6 months period as discussed above shall be considered. The distribution licensees shall place on its website the applicable tariff at which it will buy the energy generated from Small Scale Solar Power Projects of the capacity of 0.5 to 5 MW. The rate will be updated every 6 months. For Solar Thermal Technology, the Commission is of the view that Solar Thermal Technology has failed to achieve the same economies of scale as compared to Solar PV technology. Further, several projects commissioned in earlier years have failed to perform satisfactorily, showing that the technology is not yet mature for Indian conditions. Thus, owing to large variations of technology and their respective costs, it is difficult to determine a generic tariff. Therefore, the Commission shall determine project-specific tariffs for Solar Thermal Technology for power generation. The Solar power plants irrespective of plant capacity shall be considered as ‘MUST RUN’ power plants and shall not be subjected to ‘Merit Order Dispatch’ principles.

The maximum capacity for solar power projects shall be up to a maximum of 50% of consumer’s sanctioned load for captive use, Third-party sale, power projects set up under NSM with the sale of power to consumers within the State. However, MSME (Manufacturing) Enterprise is allowed to set up a Solar Power project of any capacity irrespective of their sanctioned load/contract demand. the Solar Power Project Developers have to furnish a Bank Guarantee of Rs 5 Lakh/MW to GETCO/DISCOMs based on the allotment of evacuation capacity, and in case the Solar Power Project Developer fails to commission the entire evacuation line along with bays and metering system.

According to the notice, the commission has decided that this Order shall come into force from the date of issue of this Order.

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