CERC Adopts Tariff for SECI’s Manufacturing Linked Solar Tenders

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The Central Electricity Regulatory Commission (CERC) has accepted Solar Energy Corporation of India Limited’s (SECI) request for the adoption of tariff for 8800 MW of solar power plants connected to inter-state transmission system (ISTS) linked with setting-up of solar manufacturing plant, selected through competitive bidding process as per the official guidelines issued by Ministry of Power (MoP).

The approval follows an extended delay in the process to kickstart these projects, caused by factors ranging from the Covid pandemic to SECI’s struggle to find buyers for the power that will be generated. Eventually, it has taken a lot of give and take in the form of lower prices or Tariff markdowns accepted by the two winning bidders, Adani Green and Azure Power, to make the process move.

The above mentioned guidelines refer to the ‘Guidelines for Tariff Based Competitive Bidding Process for Procurement of Power Grid Connected Solar PV Power Projects’ issued by MoP in August 2017.

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During the hearing, Payyaula Keshav, an individual not party to the petition, raised certain objections against SECI’s submissions, which CERC dealt with as below:

Objection No.1: RfS is contrary to the provisions of the Act as there exists no Guidelines for combining Solar Power Plants and Solar Manufacturing Plant.

“It is evident from the above that there is nothing prescribed under Section 63 of the Act with regard to type of bid structure to deny the Central Government from issuing Guidelines as it may deem fit. Therefore, contrary to the submissions made by the objector, there is no bar on linking Solar Manufacturing Plants with PPAs for Solar Power Plants,” said CERC while dismissing this objection.

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Objection No.2: The tariff put forth for adoption has been revised after conclusion of the bid, which is clearly not permissible under any provision of the Act.

“While any upward revision of tariff after conclusion of the e- reverse auction by the Petitioner shall be against the principle and objective of Guidelines leading to undue benefit to the successful bidders, any downward revision of tariff by the successful bidders benefits the consumers in terms of lower tariff. Therefore, the reduction of tariff by the successful bidders on voluntary basis does not violate the Guidelines,” stated CERC as it found no merit in the objection.

Objection No.3: RfS runs contrary to the provisions of the Guidelines dated 3.8.2017 along with subsequent amendments.

“It emerges that selection of the successful bidders has been done and the tariff of solar power projects has been discovered by the Petitioner, SECI, through a transparent process of competitive bidding in accordance with Guidelines dated 3.8.2017 issued by Ministry of Power,” found CERC.

Thus, the commission ruled, “Therefore, in terms of Section 63 of the Act, the Commission adopts the individual tariffs for the solar power projects, as agreed to by the successful bidder(s), and for which PPA has been entered into by SECI on the basis of the PSAs with the distribution licensees, which shall remain valid throughout the period covered in the PPA and PSAs.”

SECI was further granted liberty to approach the commission for the adoption of tariff in respect of the balance capacity once such capacity is tied up and PPAs and PSAs for such capacity are executed.

Additionally, SECI had sought the approval of trading margin of Rs.0.07/kWh agreed to by the distribution companies in the signed PSAs. CERC agreed that this was in accordance with the Trading Licence Regulations. “However, in case of failure by SECI to provide escrow arrangement or irrevocable, unconditional and revolving letter of credit to the solar generators, trading margin shall be limited to Rs.0.02/kWh,” added the commission.

The complete order can be accessed here.