Falling solar power cost lead to pricing disputes
The steep fall in the cost of producing solar power in recent years is now causing conflicts between different arms of state and central governments over the buying price of solar power.
On November 2, the Appellate Tribunal for Electricity (Aptel) intervened with a stay order on a dispute between Karnataka’s power regulator and its discoms over the tariff at which to buy solar power from the Solar Corporation of India (Seci), an arm of the ministry of new and renewable energy (MNRE).
Seci sought a tariff of Rs 4.50 per unit, but Karnataka Electricity Regulatory Commission’s (Kerc) refused approval for state discoms to buy at that rate, saying discoms should pay no more than Rs 4.36 per unit.
Seci appealed against the order to Aptel, which in turn has stayed the matter pending a final decision, and in the interim, directed the discoms to pay Rs 4.50 per unit as Seci wanted.
In 2016, Seci conducted auctions for 970 MW of solar projects in Karnataka at which the discovered tariff was Rs 4.43 per unit. With the projects now complete, Seci sought to sign power sales agreements (PSAs) with four of Karnataka’s discoms, including Bangalore Electricity Supply Commission (Bescom) and Hubli Electricity Supply Comission (Hescom), to buy the power at Rs 4.50 per unit.
In a letter on September 20, however, to all the four discoms, Kerc’s secretary declared that the commission had “examined the issue and noted that the PSAs do not reflect the tariff as discovered in the transparent bidding process”.
“The commission has decided to allow a provisional tariff of Rs 4.36 per unit as payable to Seci for the energy supplied pending a decision on the matter,” the letter said.
The tariff of Rs 4.36 per unit originates from an order Kerc had passed in May 2017, setting the feed in tariff at which Karnataka’s discoms should buy power. “On the basis of the approved parameters…the commission hereby determines the tariff of Rs 4.36 per unit for all new grid connected MW scale solar PV plants entering into power purchase agreements (PPAs) on or after 1st April, 2017 but before 1st April, 2018,” the order said.
But Seci is naturally unwilling to sell power at a lower tariff than it was bought.
Seci and Kerc were unavailable for comment.
A solar power developer said a similar problem had arisen earlier this year between Kerc and the discoms over power from NTPC as well. Kerc had insisted the discoms pay no more than Rs 3 per unit for thermal power from NTPC, and Rs 3.71 per unit for bundled power (thermal and renewable power together). When NTPC disagreed, the Karnataka government had asserted itself on NTPC’s behalf.
“Though Kerc is an autonomous body, the state government can, under Section 109 of the Electricity Act, direct it to accept the tariff,” said the developer who requested not to be named. “But the state government has not taken a stand so far (on the dispute between Kerc and Seci),” he said.