- August 26, 2016
- Posted by: Bicon Consultants
- Category: DISCOMs, Uncategorized
The Ministry of New and Renewable Energy (MNRE) has complained to the Central Electricity Regulatory Commission (CERC) that some discoms are not fully evacuating the solar power available to them, resulting in losses for solar developers. Discoms have been arbitrarily shutting off power from solar projects, for varying lengths of time, often during peak consumption hours.
“Some load dispatch centres (LDCs) are asking solar projects to back down due to various reasons,” says Tarun Kapoor, Joint Secretary, MNRE in a letter to Shubha Sarma, Secretary, CERC, on August 2.
‘Back downs’, or temporary disconnection of some power sources from the grid, sometimes become inevitable if there is oversupply to the extent that it strains the grid. It is up to the discoms’ LDCs to decide which power source should be blocked.
“Solar power projects have must run status as there is no fuel cost,” says Kapoor’s letter. “If any backing down is to be done, thermal projects should be asked to back down so that some fuel is saved.”
But discoms prefer to back down power from renewable sources such as solar and wind, since thermal power is usually cheaper. Also renewable energy supply, by the very nature of sun and wind, is erratic or infirm, unlike thermal power.
Though Kapoor’s letter does not name any discoms, industry sources said those in Rajasthan and Tamil Nadu were the main culprits. Sunil Bansal, General Secretary, Rajasthan Solar Association (RSA), said the problem had been plaguing the state for some time. “In fact, it has been increasing. On average, there are back downs of one hour a day during peak hours,” he said. “That amounts to 1200 MW of capacity remaining unused.”
Among the companies affected in Rajasthan are SunEdison, Mahindra, SolaireDirect, Fortum, and Reliance Power. “The Rajasthan Power Procurement Centre is shutting down its substations claiming it is being done for maintenance purposes,” said Bansal. “In fact, they are buying power from the power exchange. Our association has taken it very seriously as it will affect future tariffs. The RSA will soon submit a petition to the Ministry of Power in this regard.”
In Tamil Nadu, solar developers are considering approaching the Supreme Court for relief. “We have already petitioned the Tamil Nadu Energy Regulatory Commission (TNERC) through the National Solar Energy Federation of India, but TNERC told us it does not have the power to adjudicate in disputes with discoms,” said one of them. “This problem has been going on for the past two months. There are shutdowns for up to two hours a day, resulting in daily losses of several lakhs.” Companies affected in Tamil Nadu include SunEdison and Adani Green Energy.
Thermal power producers are paid a two-part tariff – one part for fixed costs incurred and the other for variable fuel costs. Thus even if discoms do not take their power, they continue to be paid for their fixed costs. Solar and wind developers do not have this benefit since their entire cost is primarily in installation. “When solar projects are asked to back down they do not even get the benefit of two part tariff and are not paid anything for the loss of energy they suffer,” said Kapoor’s letter. “This can make solar power unattractive particularly when projects are being awarded through competitive bidding and tariffs have come down drastically. Some solar power developers have now started asking for two part tariff for solar also.”
Kapoor’s letter noted that the CERC ought to emphasize solar energy’s ‘must run’ status. “Solar developers must be paid full tariff if they are forced to back down in rare cases,” the letter said. “It is requested that this issue is placed before the Forum of Regulators so that some consensus can be reached on the issue.”
Aug 08, 2016 – Economic Times