APERC Sets Aside PPA Terminations, Denies Reconnection of Excess DC Modules

Summary:

The Andhra Pradesh Electricity Regulatory Commission (APERC) recently ruled on two petitions (OP. Nos. 7 and 8 of 2024) filed by solar power generators Greenko Solar Power (Dharmavaram) Ltd. and SEI Arushi Private Ltd. against the Southern Power Distribution Company of Andhra Pradesh Limited (APSPDCL).[1] The dispute revolved around the termination of Power Purchase Agreements (PPAs) by APSPDCL due to alleged excess Direct Current (DC) module installations. The termination was due to the alleged installation of additional solar modules with capacities of 9.28 MWp and 5.13 MWp, respectively, which were added after the initial commissioning of the projects.  The APERC set aside the terminations but denied the petitioners’ request to reconnect the excess modules.

Case Timeline:

• PPAs Executed: 2014
• Commissioning of Projects: 2017
• Vigilance Enquiries by APSPDCL: 2019
• MNRE Clarification on DC Capacity: November 2019
• APSPDCL’s Demand for Payment for Surplus Power: March 2020
• APERC Order Directing Module Disconnection and Payment Release: February 2023
• APTEL Stay on Disconnection Notices: May 2023
• APSPDCL Termination Notices: July 2023
• APTEL Directs APERC to Re-Examine: February 2024
• Current APERC Order: May 2024

Issues Raised:

• Whether the impugned Notices issued by the respondent terminating the PPAs of the petitioners are legal and valid?
• Whether the petitioners are entitled to reconnection of the Additional DC modules of 9.28 MWp and 5.13 MWp respectively in terms of the MNRE Advisory and whether the petitioners are entitled to appropriate directions to the respondent in this regard?

Appellant’s Arguments:

• The petitioners argued that they are entitled to install additional DC modules as long as they do not exceed the contracted Alternating Current (AC) capacity.
• They relied on the MNRE clarification, which allows for excess DC capacity under certain conditions.
• They claimed that they had disconnected the excess modules at the time of synchronization due to pressure from APSPDCL officials.

Respondent’s Arguments:

• APSPDCL contended that the PPAs specifically prohibit the addition of extra solar modules beyond the installed capacity at commissioning.
• They argued that the MNRE clarification does not supersede the terms of the PPAs.
• They emphasized that the petitioners had not connected the additional modules at commissioning and, therefore, cannot reconnect them later.

Judgment/Order:

The APERC set aside the termination of the PPAs by the Southern Power Distribution Company of Andhra Pradesh Limited (APSPDCL) but denied the petitioners’ request to reconnect the excess DC modules. The commission gave the following reasoning behind the order:

• Termination Set Aside Due to Undertakings: The primary reason for setting aside the termination was the petitioners’ willingness to dismantle the excess DC modules, as evidenced by their undertakings. This addressed the immediate concern of APSPDCL regarding the violation of the PPAs’ terms on capacity addition.
• No Reconnection Allowed Due to PPA Provisions: The APERC denied the request for reconnection based on the clear prohibition in the PPAs against adding extra solar modules beyond the installed capacity at commissioning. The petitioners had not connected the disputed modules at commissioning, and the PPAs did not allow for later additions.
• MNRE Advisory Not Applicable: The petitioners relied on an MNRE advisory allowing excess DC capacity under certain conditions. However, the APERC clarified that PPAs take precedence over such advisories. The specific clause in the PPAs prohibiting extra modules overrode the advisory’s provisions.
• Respondent’s Right to Fresh Action: The APERC acknowledged that the termination was set aside due to the petitioners’ undertakings. It reserved the right for APSPDCL to initiate fresh action if the petitioners failed to dismantle the modules or attempted to reconnect them without proper approvals.

Analysis:

This decision highlights the importance of adhering to contractual obligations in PPAs, especially those related to capacity additions. It also clarifies that while MNRE advisories can be persuasive, they cannot override specific contractual terms. The petitioners’ willingness to dismantle the excess modules played a crucial role in the APERC’s decision to set aside the termination notices. However, the denial of their request to reconnect the modules underscores the limitations imposed by the PPAs. This case serves as a reminder for solar power generators to carefully consider contractual terms and potential regulatory hurdles before making any modifications to their projects.

[1] https://aperc.gov.in/admin/upload/CommonOrderinOPNos.7and8of2024.docx.pdf