Policy and Legal

BSNL To Use Solar Backup Technology in Remote Areas of Himachal

As the nation got stumped by the Covid-19 pandemic, the internet is the only option we are left with, to connect the world virtually. However, some remote or far-flung areas of various states are still struggling with poor bandwidth or broadband signals.

The same happened in the Indian state of Himachal Pradesh (HP) and the HP High Court has directed the government-owned BSNL to replace the outdated solar backup technology to redress the problem of inadequate bandwidth due to erratic electricity supply in far-flung areas of the state.

BSNL (Bharat Sanchar Nigam Ltd.) provider of telecom services and network management from the erstwhile Central Government Departments of Telecom Services (DTS) and Telecom Operations (DTO), is the largest & leading PSU providing a comprehensive range of telecom services in India.

The court has ordered the BSNL to prepare a roadmap for installing the latest solar panels initially concerning 191 towers, which are situated in extremely backward areas of Himachal Pradesh, and thereafter get the same approved from the quarters concerned within one month from Monday and report compliance on the next date of hearing. This comes after a statement from a division bench of Justices Tarlok Singh Chauhan and Chander Bhusan Barowalia, that says, “We are informed by the officials of the BSNL that even though they have a solar backup but the same is based on outdated and obsolete technology using the lead-acid battery.”

The bench stressed one of the major reasons behind the poor bandwidth or broadband signal, that is the erratic supply of electricity in backward and far-flung areas of the state, more particularly the tribal areas. “In the given circumstances, we are of the considered view that old and outdated technology needs to be phased out gradually and the batteries need to be replaced with the latest technology in a phased manner,” ordered the bench of Justices.

The matter has been extended till the next hearing on July 26, 2021. And the judges also found that the rates for laying cables in the state were probably the highest in the country at Rs. 1,600 per meter. Along with this, the Advocate General of Himachal Pradesh, Ad. Ashok Sharma has been granted four weeks to notify the court concerning this aspect.

KERC Rejects BCCL Plea, But Penalises KSEB For Tardy Billing

In an order that should set a useful precedent for the law of limitation, as far as claims go, the Kerala State Electricity Regulatory Commission (KERC) has issued an order favouring Kerala State Electricity Board Limited (KSEB Ltd), which had charged Bennett Coleman & Co Ltd, or the Times of India Group (BCCL) with HT IV – Commercial tariff. The commission has, however, quashed the arrears bill of Rs 32,40,602 that KSEB had calculated for the period since 2014, and asked KSEB Ltd to issue a new bill to collect the amount it is owed.

The case started with BCCL submitting a petition in March this year, claiming that the 2014 Tariff Circular categorizes printing presses, including presses engaged in printing dailies as LT IV (A) Industrial and does not categorize them under HT Commercial or HT Industrial. Even while admitting that it only does prepress activities at its address, while actual printing is done at another media firm’s presses.

The Mumbai-based media conglomerate requested the commission to grant it the applicability of the lower cost industrial tariff for its media services (pre-press activities) and to waive the retrospective demand charges slapped on it by KSEB Ltd. for the period between 2014 to 2020 after the state electricity board revised the tariff category for BCCL from ‘industrial’ to ‘commercial’ following its new agreement. The petitioner wished to be exempted from being considered a commercial consumer and instead be extended the benefits that an industrial consumer is entitled to, which have been effectual since August 2014. This would save the company Rs 32,40,602 in demand charges which were raised by KSEB Ltd. in April last year. KSEB Ltd submitted to the commission that the printing of the newspaper is not carried out at the media offices and is outsourced to a different press located at Mathrubhumi Printing & Publishing Co Ltd. Thus, offices in which ‘no printing activity’ has been carried out in the same premise, are not eligible for industrial tariff. After careful consideration of the facts of the case, the commission concluded that the tariff applicable to the petitioner consumer from the date of connection (December 2011) will be HT IV – Commercial and the tariff fixed by KSEB Ltd. in the new agreement will be considered correct and in order.

BCCL and similar industries can raise their concern regarding the tariff categorization, if any, during the tariff determination process for finalizing the tariff for the next 5 year control period (2022-2027), said KERC.

The commission, however, quashed the arrear bill of Rs. 32,40,602 issued to BCCL and asked KSEB Ltd. to issue a new demand notice/ supplementary bill to the petitioner for collecting the arrear for the revision of tariff, limiting the prior period to two years from 02/2020, without any penal charges. BCCL should remit the revised amount within the next 30 days of issue of the demand without fail, said KERC. In ding this, the commission stuck to various rulings, including a Supreme Court judgement that limits such claims on arrears to a maximum of two years, to prevent misuse by firms sitting over their claims.

GERC Proposes to Limit Net Metering Till 10 kW for Rooftop Solar

The Gujarat Electricity Regulatory Commission (GERC) has released a draft notification that is aimed at amending the Gujarat Electricity Regulatory Commission (Net Metering Rooftop Solar PV Grid Interactive Systems) Regulations, 2016. The new regulations will come into force with effect from the date of their publication in the Official Gazette.

Net metering is a utility billing mechanism available in most states that offers a credit to residential and business customers who are making excess electricity with their solar panel systems and sending it back to the grid.

According to the proposed changes, all the electricity generated from the rooftop solar PV system will be injected into the grid as sale to the licensee at the tariff rate determined by the commission. Any individual or company will be eligible to set up solar power systems for personal use or selling electricity to the distribution licensee or a third party.

Net metering will be allowed for loads up to 10 kW and gross metering for loads above 10 kW. The installed capacity must be between 1 kW and 1 MW. Solar projects set up by residential consumers on their rooftop plus incentives under existing schemes will be allowed irrespective of consumer sanctioned load. No capacity restrictions will be applicable for captive consumers and projects set up under third party sale.

For the projects setup under REC mechanism for captive use or third party sale, installation of solar projects will be allowed up to sanctioned load or contracted demand. Consumers will be allowed to set up projects to fulfil their RPO requirements regardless of their sanctioned load, etc.

Connected load of eligible consumers should be above 100 kW/kVA and the connectivity level should be 11 KV, 3 Phase, 50 Hz. For each billing period, the licensee will be required to show the (i) quantum of electricity injected by Eligible Consumer from Solar PV system in the grid, (ii) electricity supplied by the Distribution Licensee, (iii) net billed electricity for payment by the consumer and (iv) net exported energy after adjustment against the consumption separately.

The draft rules make it clear that the energy generated by earlier projects will be governed by the provisions of net metering regulations under which they were commissioned. However, in case of additional capacity, the earlier project arrangement will be considered distinct and a fresh agreement under existing regulations will be signed.

CERC Notice To Power Trading Firms For Failing to Maintain Net Worth

For National Energy Trading Services Limited, and Atria Energy Services Private Limited, a weak balance sheet submitted to the Central Electricity Regulatory Commission (CERC) for downgrading their energy trading licenses has landed both in a hot soup. In both cases, the Central Regulator, after going though the documents on record, has seen a fit case to impose penal provisions for not maintaining net worth requirements, forget a simple downgrade to a lower category as requested. Both the orders were delivered yesterday, July 8.

This Gurugram based firm had filed an application for downgradation of its inter-State trading license in electricity from Category ‘I’ to Category ‘III’.

Categories are broadly summarised as below: Electricity Trading License Categories

NETSL thus, had applied for a move to a category where the minimum net worth requirements are Rs 20 crores, and trading limit is 4000 million units of electricity.

However, the CERC found, based on the documents submitted to it (a special balance sheet of 28.2.2021), that the firm had an actual negative net worth of Rs 18.69 crores. making it worse was the picture from the 2019-20 financials, which indicated a final negative net worth of 18.13 crores on March 31, 2020. The CERC also points out that the Applicant company has the current ratio of 0.68:1 and liquidity ratio of 0.67:1, both well below the required 1:1 ration that has to be maintained as per regulations. Thus, it became a fit case for rejection, as far as downgrading the license goes, and a stronger case for a notice on why penal csts should not be imposed on the firm. Bengaluu based Atria faces a similar issue. The firm made a plea for downgrade from a category IV to category V license. The commission observed that “as per audited special balance sheet as on 30.9.2020 submitted by the Respondent, it had a net worth of only Rs. 166.27 lakh. Therefore, the Respondent does not meet requirements of net worth for any category of trading licence as prescribed under Regulation 3(3) (a) of the Trading Licence Regulations”. That has, in the eyes of the commission, made Atria a fit case to have its application rejected, and also liable for penal action. So Just What Can The CERC Do Now ?

The CERC has quite a few options to consider now.

Regulation 19 of the Trading Licence Regulations provides for penalties for contravention by the licensee as under:

“19. Penalties for Contravention and non-compliance: Where the charge of contraventions is established against the Trading Licensee, the Commission may: (1) give warning to the Trading Licensee subject to such conditions as may be deemed fit in the facts and circumstances of the case; or (2) direct that the Trading Licensee shall pay, by way of penalty, a sum which shall not exceed rupees one lakh for each contravention and in case of a continuing failure with an additional penalty which may extend to six thousand rupees for every day during which the failure continues after contravention of the first such direction; etc.

MERC Signals Go Slow On AEML’s RE Procurement Plans for Mumbai

The Maharashtra Electricity Regulatory Commission (MERC) has issued a new order, allowing Adani Electricity Mumbai Ltd (AEML) to initiate the bidding process for the procurement of power upto 500 MW on round the clock (RTC) basis from grid connected renewable energy power projects, complemented with other non-renewable energy source.

The commission has partly accepted AEML‘s petition, which it had earlier filed to seek approval for the procurement of 1000 MW of power.

AEML had said in its petition that due to the termination of a power purchase agreement (PPA) with Vidarbha Industries Power Limited (VIPL), its share of short-term power procurement had increased, which was not sustainable in the longer run. Further, it had signed a longterm contract for 700 MW wind plus solar hybrid power, which is expected to be available from FY 2021-22 and will meet peak power & part of load curve, at about 50 -55% CUF.

The major portion of its proposed power was expected by the company to get absorbed in the initial 2-3 year time. In order to ensure reliable power at competitive rates, fulfilment of renewable purchase obligation (RPO) targets and to ensure certainty of scheduling, AEML proposed to procure 1000 MW RTC power from grid-connected RE power projects, complemented with firm power from thermal power project having domestic coal linkage, under tariff-based competitive bidding.

While scrutinizing AEML’s demandsupply projections, the commission noted that for the period of FY 2020-21 to FY 2024-25, the company has assumed a higher annual growth rate of 5% as against 2% annual growth rate considered by the commission in (Multi Year Tariff) MYT Order. AEML has not explained or suitably justified such higher rate of demand projection. Thus, AEML’s demand projections based on which it has arrived at the power requirement of 1000 MW is on the higher side, at least in the MYT control period, and hence needs to be revisited by them, said MERC.

The commission also opined that AEML is correctly proceeding in the direction of replacing its short-term power dependency with longer duration contracts for ensuring reliable availability of the power for meeting its consumer demand. However, before taking final decision on procurement of 1000 MW, AEML must have carried out detailed and proper due diligence and its operational and financial impact (esp that of surplus power in the initial years).

Upon considering all the different factors, the commission concluded that AEML must bid for its requirement in a phased manner. To start with, AEML is allowed to bid for capacity upto 500 MW. Thereafter, on detailed study and realistic demandsupply projections, if AEML requires to contract additional capacity, then it can approach the commission with a detailed study justifying such requirement for initiating fresh process for additional power procurement. Alternatively, MERC said, AEML can carry out a detailed analysis based on the observations of the commission and

resubmit a petition justifying the requirement of 1000 MW vis-à-vis the financial sensitivity analysis. In this case, subject to approval of the commission, AEML can consider the tender of 1000 MW with a green shoe option (500 MW+500MW) based on the discovered tariff, as was opted in the long term power procurement contract of 700 MW.

Either way, the renewable power procured by AEML from this project will be counted towards its RPO targets for the respective periods, said the commission.

Rajasthan HC Cancels Land Allotment To Adani Project

Delivering its judgement in a case filed in 2020, the Rajasthan High Court has cancelled the land allotment adding up to 1452 bighas in Jaisalmer district that was provided to AREPRL, an Adani group firm set up for these projects. The court has also directed state agencies to conduct survey of the land parcels allotted to AREPRL and Essel Surya Urja Company of Rajasthan Ld (ESUCRL) in three villages – Naden, Ugras and Nagnechinagar. The judgement follows a petition filed by villagers in the area, who had contended that the process that was followed did not adhere to any guidelines. They claimed that not only was the grazing land declared barren in 2017 to expedite the allotment, but villagers’ objections were also overruled . Giving the state government six weeks to complete the process of cancellations and proper survey, the High Court effectively put under the scanner close to 10000 MW of planned projects in the region. The order covers the allotment of the land surrounding the lands of the petitioners, other khatedar tenants and the land of public utilities. The review will ensure that their rights are not infringed on account of land allotments to Essel Surya Urja Company of Rajasthan Ltd (ESUCRL) and Adani Renewable Energy Park Limited (AREPRL). The high court case itself had followed a long trail for the petitioners, when a single judge bench of the same HC approved the allotment earlier in 2018-19. Land troubles seem to be piling up in what are considered prime lands for solar development in India now. Close to 30 GW are planned across Rajasthan and Gujarat, and cases are at the Supreme Court too, for different reasons. It seems increasingly inevitable that the low price advantage these regions offer with their high irradiation and cheap land, will have to cede at least partly to special cesses for compensation or for specific facilities as envisaged in the case of the great Indian bustard habitat.

R.K. Singh Acknowledges Tariff, Non-Tariff Barriers To Stay For Solar Equipment

In what seems to be a clear ramp up of pressure to buy locally and block imports, Power and MNRE Minister R.K. Singh has categorically referred to both tariff and non-tariff barriers as a way to achieve this objective.

Speaking at an industry event on selfreliance in renewable energy manufacturing organised by the Confederation of Indian Industry (CII), Singh said, “If you want to sell in India, you will have to set up manufacturing here. If you don’t set up manufacturing here, I can give it to you in writing that you will not qualify for entry into that approved list of models and manufacturers, (ALMM).”

The ALMM list in question has increasingly been cited by many multinational players as a non-tariff barrier, considering the impractical terms it lays down for approval. A key one being a physical inspection of the manufacturer’s plants, something that is clearly meant to make it both expensive, and in these times of travel restrictions, virtually impossible. Then there is the refusal to accept any of the globally recognised certifications over the domestic BIS certifications, of course. Ever since the last version was released in March this year, comprising exclusively domestic manufacturers, the list has not been updated with fresh names. What’s more, the minister’s assertion seems to fly in the face of claims by some of the larger domestic players especially Adani Green, that a separate list would be brought out for foreign suppliers too.

Singh added that other countries had also placed such non-tariff barriers and that it was necessary that India keep the jobs created by the country’s rapid addition in renewable energy capacity.

The remarks assume significance considering the continued dominance of Chinese origin imports. Bidders at recent successful tenders have also shrugged off the apparent ambiguity on the issue, going by the bids at recent auctions, which have continued to come in at fairly attractive prices. Considering that the ALMM rules squarely apply to equipment being used for these projects, it does make one wonder if there is something the bidders know that others don’t.

While actual imports for these projects will start late next year, by which some more capacity is set to be added in India too, when we spoke to bidders (who did not necessarily emerge winners), we had been

given the distinct impression that a blanket ban was not on the cards.

However, with the combination of customs duty from April 1 and the assertion on ALMM list, it seems we have a situation very close to that, as far as government backed projects go.

An option that has been cited is to import cells at the 25% duty, and assemble the modules in India. But even that assumes adequate capacity available to do that, besides ensuring the module manufacturer is from the ALMM list. Doesn’t sound like a great start to a negotiation on prices, does it?

For the largest Chinese exporters to India, it’s a decision that will need to be taken sooner than later. At least assemble in India, or miss the largest market outside China still available for them.

APTEL Overrides TNERC Judgement In Case of Solitaire BTN’s 100 MW Solar Plant

The Appellate Tribunal For Electricity (APTEL),has ruled strongly in favour of a solar developer Solitaire BTN (BTN) against the state regulator of Tamil Nadu, discom, transmission firm. In overriding the previous judgement of the state regulator, APTEL has probably shown up the risks of working directly with state discoms like nothing else. The judgement was delivered on July 5.

The case, involving Delhi-based Solitaire BTN Private Limited versus the Tamil Nadu Electricity Regulatory Commission (TNERC), Tamil Nadu Generation And Distribution Corporation (TANGEDCO), and Tamil Nadu Transmission Corporation (TANTRANSCO) among others, is a story of poor communication, compounded by lack of accountability from the utilities involved. If anything, it makes a strong case to start holding individual officials accountable for such a poor approach.

The case background

On June 15, 2017, BTN Solitaire Solar responded, to a 1.5GW TANGEDCO tender to supply solar power to the state, by establishing projects in the state. It identified three locations in Virudhunagar district of Tamil Nadu, to supply a total of 150 Mw of solar power.

On July 06, 2017, a negotiated tariff of Rs 3.47 /kWh was finalised. On September 28, 2017, the PPA with TANGEDCO was signed for 100 MW of power, after the firm scaled back its plans to 100 MW due to issues with land acquisition.

The PPA had the usual obligation to commission the project’s total capacity on or before 24 months from the date of signing the PPA dated September 28, 2017, which was September 25, 2019.

Now, the story gets really interesting. As the PPA specified that it would be the developers job to arrange for evacuation of power, with TANTRANSCO bound to support it, BTN made a request for the same with them, and received a ‘conditional’ approval. In the sense that the firm made it clear that approval was subject to at least 4 other transmission enhancement projects being completed. Amazingly, 2 of these pending works were not completed even on March, 2021, months after even the extended SCOD of the project. !This was the first point of the TN utilities that was shot down by the APTEL bench, as they had tried to go back to deny this conditional approval.

To quote from the judgement, “These assertions (Of being able to evacuate the entire 100 MW capacity) are not only false to the knowledge of the persons that have deposed the affidavits, these assertions are not sustainable upon a simple reading of the diverse letters and internal reports that clearly conclude that it is not possible to evacuate the entire 100 MW Contracted Capacity, even as of today”

The TNERC Order

To the issue of the state commission (TNERC) denying any relief in terms of extension due to the delays, the APTEL bench noted that “The PPA was signed on 28.9.2017 and the maximum permissible time of 34 months ended on 27.07.2020. The blanket exemption of 5 months granted by MNRE is for the lockdown period from 25.03.2019 – 24.08.2020 and this period fall in the PPA period. Therefore the decision of the State Commission not to allow relief to the Appellant on the ground that the Covid 19 pandemic occurred outside the period of PPA is wrong and set aside. “The maximum time of 34 months takes into account the extra time before bank guarantees are encashed, and further, for payment of liquidation damages. Thus, this order of the state commission was simply set aside. On Force Majeure In This Case

On the applicability of Force majeure clause by BTN, the court noted that “the Respondents TANTRANSCO/ TANGEDCO were obligated to provide evacuation of entire output of 100 MW (full rated capacity) of the solar PV plant of the Appellant but the Respondents have not fulfilled the obligation. ” So it allowed the same, since it was not in control of the appellant.

Thus, the bench allowed BTN an extension of ten months’ time on account of Force Majeure event of unavailability of transmission system and further five months extension of time on account of Force Majeure event of lockdown due to corona pandemic.

Accordingly the scheduled commissioning date was extended from 27.09.2019 to 27.12.2020 without the encashment of Performance Bank Guarantee and payment of Liquidated Damages.

The bench also observed that the entire capacity of 100 MW achieved readiness on 29.10.2020 and received CEIG certificate for the same on 19.11.2020 but was not synchronised with the grid for reasons beyond the control of the Appellant. The fact that the balance capacity of 50 MW was declared ready for commissioning on 29.10.2020/19.11.2020, convinced the bench that the appellant made available the entire capacity of 100 MW of the appeal No. 67 of 2021 solar PV plant by the extended Scheduled Commissioning Date of 27.12.2020.

TheFinancials

Thus, it ordered TANGEDCO to forthwith return the Performance Bank Guarantee of Rs. 20 Crores and Additional

Performance Bank Guarantee of Rs. 7.6 Crores to the Appellant without any delay along with the cost of renewing such bank Guarantee. Finally on the issue of tariff applicable, where the state utility had argued for fresh negotiations, the bench granted full tariff of Rs. 3.47 per unit for the balance 50 MW w.e.f. 08.02.2021 onward i.e. the date on which this capacity was synchronised with the grid with Respondent TANGEDCO to pay the Appellant the differential tariff withheld along with carrying cost calculated as per the late payment surcharge as provided for in the PPA/TNERC Regulations/ CERC Regulations.

While we have captured the key points of the judgement, a deeper reading of the whole case will showcase just how tortuous a journey the solar developer has traversed. And at not time has this been a case of poor intent from the developer, as state utilities are wont to blame. That someone who has invested in hundreds of acres of land , project guarantees, additional expenditure to provide transmission utility with land for a sub station of its own account would be accused of having poor intentions and not being serious is a travesty of doing business. The inability of state firms to appreciate the financing conditions that are subject to unambiguous commitments in terms of connectivity and evacuation is also shocking. It would be the easiest thing to attribute ulterior motives to the actions of the officials, clearly unafraid ot eh massive losses their actions force upon private players. We will desist from that here, as the complainant will obviously not want to say anything, now that it has received justice at the APTEL bench.

BSES Discoms 510 MW Hybrid Purchase Signals Demand Recovery For Renewables

The decision by the Delhi BSES discoms, BRPL and BYPL, to enter an agreement with SECI to purchase 510 MW of solar plus wind power signals a welcome return to demand recovery for renewable projects awaiting PPA’s.

This is on the back of two key events, one that has happened, and another, that might be in place soon.

First was the CERC (Central Electricity Regulatory Commission) decision to allow discoms to exit PPA’s where the thermal power supply plant has existed beyond 25 years. Within a year. In other words, exit agreements, or an obligation to renew agreements, with older thermal power plants. BSES is doing just that, exiting its PPA with NTPC’s Dadri 1 thermal power plant. Besides 6 other thermal plants around the city which are more than 25 years old.

Second is the imminent passage of the Electricity (Amendment) Act in the current session of parliament. Should that happen, then much stricter laws will come into force as far as renewable purchase obligations go (RPO), as well as penalties linked to failing to met those.

India’s large metros with their own dedicated discoms have a special obligation to set the standards, to to say, and that is what we might be seeing with the BSES move too. Of course, it is also a fact that much like neighbouring Punjab, say, Delhi had one of the higher power purchase costs, thanks to high cost thermal, and renewable options today offer a more than competitive option, helping drive down costs in fact. Going forward, the pressure on costs might actually come from Hydro Purchase obligations, as Hydropower costs have been far more sticky above Rs 3-4 than wind and solar energy.

The Reliance Infrastructure-owned BSES discoms — BRPL and BYPL — are the first in Delhi to ink an agreement for hybrid power The solar and hybrid power PPA is also for 25 years, and expected to be available 18 months after signing of the agreement at a very competitive tariff of Rs 2.44 per unit for solar and Rs 2.48 per unit for hybrid. A BSES spokesperson

confirmed that these were replacing thermal power priced at Rs 5.50/kWh.

Keep in mind that due to capacity utilisation differences, chances are every MW of thermal capacity that is replaced will need firm deals for 4-5 MW of renewable power capacity. A serious shift in India’s biggest cities could comfortably create space for the 16 plus GW of well priced renewable projects that were last reportedly awaiting PPA’s.

With some of the largest renewable players like the Adani Group, Tata Power running distribution in cities like Mumbai and Delhi, the trend should only pick speed soon.