GUVNL Seeks Tariff Adoption For 1,125 MW Solar Projects In Gujarat Amid Regulatory Scrutiny

Summary

Gujarat Urja Vikas Nigam Limited (GUVNL) has petitioned the Gujarat Electricity Regulatory Commission (GERC) to adopt tariffs discovered through a competitive bidding process for 1,125 MW of grid-connected solar photovoltaic power projects. This request pertains to the projects set to be developed in the Gujarat State Electricity Corporation Limited’s (GSECL) renewable energy park at Khavda.[1] Despite the tariff’s competitive nature, GERC’s scrutiny over the bidding process and tariff variations has led to regulatory delays.

Case Timeline

• January 29, 2024: GUVNL issues the Request for Selection (RfS) No. GUVNL/1125 MW/Khavda/Solar (Phase XXIII) for procuring power through a competitive bidding process, followed by an e-reverse auction.
• February 2024: The tariff discovered ranges from Rs. 2.62 to Rs. 2.67 per unit.
• April 6, 2024: The matter is set for hearing, with representatives from GUVNL present but some respondents absent.
• May 2, 2024: GERC conducts another hearing, reserving the matter for an order while directing GUVNL to submit additional details within ten days.

Issue Raised

GERC raised concerns regarding the higher tariffs discovered in the recent bidding compared to previous ones. Specifically, they questioned the discrepancy between the Rs. 2.62 to Rs. 2.67 per unit tariffs discovered in the current process and the Rs. 2.54 to Rs. 2.55 per unit tariffs from a previous tender (RfS No. GUVNL/600 MW/Khavda/Solar (Phase XXI)) issued on July 4, 2023.

Appellant’s Arguments

GUVNL argued for the adoption of the tariffs discovered through the transparent competitive bidding process. They highlighted that the tender was floated in national newspapers on January 31, 2024, and emphasized the integrity and transparency of the bidding process, including the subsequent e-reverse auction. GUVNL requested the Commission to approve the tariffs, stressing that they were competitive and reflective of current market conditions.

Respondent’s Arguments

Notably, representatives from Engie Energy India Pvt. Limited and SJVN Green Energy Limited were absent during the hearings, while NHPC Limited and JSW Neo Energy Limited did attend. NHPC and JSW did not present any significant objections or arguments against the petition during the hearings.

Judgment

The GERC, presided over by Chairman Anil Mukim and members Mehul M. Gandhi and S.R. Pandey, directed GUVNL to provide a detailed justification for the tariff differences between the two bidding processes. The Commission noted that GUVNL must submit an affidavit within ten days, explaining the higher tariffs in the latest tender. The matter was reserved for order pending the submission of this affidavit, with the urgency application (IA No. 12 of 2024) being disposed of accordingly.

Analysis

The GUVNL’s petition highlights the complexities and regulatory challenges involved in the adoption of tariffs for large-scale renewable energy projects. While the competitive bidding process aims to ensure transparency and cost-effectiveness, the fluctuating tariffs underscore the volatile nature of the solar power market. Factors such as solar module prices, market demand, and technological advancements can significantly impact the tariffs discovered in different bidding rounds.

GERC’s insistence on a detailed justification for the tariff increase reflects its commitment to protecting consumer interests and ensuring fair pricing. This scrutiny serves as a check against potential inconsistencies and ensures that the discovered tariffs truly reflect market conditions. However, the regulatory delays resulting from such scrutiny can impact the timely implementation of renewable energy projects, highlighting a need for a balanced approach that safeguards consumer interests while facilitating the growth of renewable energy infrastructure.

[1] https://gercin.org/wp-content/uploads/2024/05/2345-of-2024-IA-No.-12-of-2024-GUVNL-Vs.-Engie-Energy-India-Pvt.-Limited-Others.pdf