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GERC Adopts Tariff With Change In Law Clause For 500 MW Solar Power

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Recently, Gujarat Electricity Regulatory Commission (GERC) adopts discovered tariff under competitive bidding process conducted by Gujarat Urja Vikas Nigam Limited (GUVNL) for procurement of power from 500MW solar PV power project in the state of Gujarat.

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Here the petitioner, GUVNL initiated tendering process on behalf of its four DISCOMs namely Uttar Gujarat Vij Company Limited (UGVCL), Madhya Gujarat Vij Company Limited (MGVCL), Dakshin Gujarat Vij Company Limited (DGVCL) & Paschim Gujarat Vij Company Limited (PGVCL), for procurement of 500MW power from Solar PV project vide RfS dated 03.01.2022. GUVNL submitted that initially ‘Change in Law’ clause in the tender document, was restricted to i).anti dumping duty safe-guard duty & custom duty on solar PV modules, ii). the incorporation of tax or surcharge or levies on generation of electricity. Subsequently, Ministry of Finance increased rate of GST on solar modules from 5% to 12% vide notification dated 30.09.2021. Accordingly, solar developers or bidders demand for inclusion of GST rate change as ‘change in law’ event in tender document.

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After e-reverse auction, following tariff rates were discovered for total 500MW capacity.

Sl.No.CompanyRs/UnitQuoted Capacity (MW)Allocated Capacity (MW)
1M/s SJVN Ltd2.29100100
2Solar XL Alpha Energy Pvt Ltd2.29200200
3AMSA Solar Energy Pvt Ltd2.298080
4Hinduja Renewable Energy Pvt Ltd2.29240120

Further, after analyzing solar deveoper’s or bidder’s inputs and Ministry of Power’s (MoP) regulation, GUVNL included change in GST rate as a ‘change in law’ event in draft PPA which to be signed between petitioner and successful bidder. GUVNL argued that the inclusion of rate of GST in draft PPA without commission’s approval is permissible in view of MoP’s guidelines for ‘change in law’ provisions are very wide to include change in taxation, duties , cess etc as pass through in tariff with restitution principle.

Petitioner also argued that discovered lower tariff of Rs.2.29/unit with modified ‘change in law’ clause including GST on solar module, is in overall interest of the consumers. GUVNL further claimed that 500MW solar energy which is being procured by them , is towards fulfilment of their renewable purchase obligation (RPO) requirement till FY 2021-2022 as given below.

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YearMin quantum of % wind Min quantum of % solarOther (%)Total (%)
2018-197.954.250.5012.70
2019-208.055.500.7514.30
2020-218.156.750.7515.65
2021-228.258.000.7517.00

Commission’s analysis & decision :

After analyzing petitioner’s submission, commission gave the following orders.

1. Commission adapts the discovered tariff rate at Rs 2.29/unit as under.

Sl.No.CompanyRs/UnitQuoted Capacity (MW)Allocated Capacity (MW)
1M/s SJVN Ltd2.29100100
2Solar XL Alpha Energy Pvt Ltd2.29200200
3AMSA Solar Energy Pvt Ltd2.298080
4Hinduja Renewable Energy Pvt Ltd2.29240120

2. Apart from the directives of the Commission in this Order, the Petitioner to sign the Power Purchase Agreement (PPA) with the successful bidders with allocated capacity and tariff as per above table.

3. Commission also ordered the petitioner to take prior approval before incorporating any changes in the future bidding documents.

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