SECI Seeks Regulatory Approval For ₹0.07/Kwh Trading Margin On 500 MW Solar Projects

Posted On - 29 May, 2024 • By - King Stubb & Kasiva

Summary

The Central Electricity Regulatory Commission (CERC) in New Delhi, presided over by Chairperson Shri Jishnu Barua and Member Shri Arun Goyal, issued an order on May 13th, 2024, regarding Petition No. 99/AT/2024.[1] The petition was filed by the Solar Energy Corporation of India Limited (SECI) under Section 63 of the Electricity Act, 2003, seeking the adoption of tariff for 500 MW solar power projects (Tranche-XI) connected to the Inter-State Transmission System (ISTS) and selected through competitive bidding process as per the guidelines issued by the Government of India.

SECI filed a petition under Section 63 of the Electricity Act, 2003, seeking the adoption of tariff for 500 MW solar power projects (Tranche-XI) connected to the Inter-State Transmission System (ISTS), following a competitive bidding process as per governmental guidelines. SECI conducted the bidding process in accordance with the Guidelines for Tariff Based Competitive Bidding Process for Procurement of Power from Grid Connected Solar PV Power Projects.

The bidding process attracted 14 bids, resulting in an aggregate capacity of 5050 MW, with successful bidders selected and issued Letters of Award for 2000 MW capacity. SECI signed Power Purchase Agreements (PPAs) and Power Supply Agreements (PSAs) for 600 MW, and subsequently, petitioned for the adoption of tariff at ₹0.07/kWh for the tied-up capacity. The commission’s consideration encompassed the transparency of the bidding process, validity of agreements, and adherence to regulatory requirements.

Case Timeline

  • SECI issued a Request for Selection (RfS) along with draft agreements for the selection of 2000 MW ISTS-connected Solar Power Projects (Tranche-XI) and received fourteen bids offering an aggregate capacity of 5050 MW.
  • Ten bidders were shortlisted for participating in the e-reverse auction, and six were selected offering an aggregate capacity of 2000 MW.
  • SECI signed Power Supply Agreements (PSAs) for 500 MW with Uttar Pradesh Power Corporation Limited (UPPCL) and Power Purchase Agreements (PPAs) for 600 MW with SAEL Industries Limited.
  • The remaining capacity of 1400 MW was yet to be tied up under PSAs and PPAs.
  • SECI signed additional PPAs for 500 MW with other successful bidders and PSAs with UPPCL.
  • SECI approached the Commission seeking adoption of tariff at ₹0.07/kWh for the tied-up capacity of 600 MW.

Issue Raised

The central issue before the commission revolves around Solar Energy Corporation of India Limited’s petition seeking approval for the tariff discovered in the competitive bidding process for 500 MW solar power projects (Tranche-XI) connected to the Inter-State Transmission System. The commission’s examination focuses on the adherence of the bidding process to governmental guidelines, the validity of signed agreements, and the necessity for tariff adoption in accordance with the Electricity Act, 2003.

Appellant’s Arguments and Respondent’s Arguments

SECI argued that the tariff discovery process was conducted transparently through competitive bidding in accordance with government guidelines. They presented the agreements signed with distribution utilities as evidence of tied-up capacity.

The respondents did not file any objections or replies.

Judgment

The Commission examined the petition and previous orders related to Tranche XI projects. They found that the tariff discovery process was conducted transparently and in accordance with guidelines. They adopted the tariff for the tied-up capacity of 600 MW as requested by SECI.

The Commission’s analysis delved into the factual background of the case, primarily focusing on the transparent competitive bidding process conducted by Solar Energy Corporation of India Limited (SECI) for solar power projects. It meticulously reviewed SECI’s adherence to governmental guidelines and regulations, emphasizing the robustness and fairness of the bidding process. The Commission noted SECI’s prior petition seeking tariff adoption for 600 MW capacity, approved based on signed Power Purchase Agreements (PPAs) and Power Supply Agreements (PSAs), setting a precedent for tariff adoption.

With SECI subsequently securing PPAs and PSAs for an additional 500 MW capacity, the Commission extended its approval, highlighting the contractual validity and competitive nature of the bidding process. Additionally, the Commission underscored the importance of complying with payment security mechanisms outlined in the agreements, ensuring financial stability and integrity in energy transactions.

Analysis

The Commission’s decision reaffirms the transparency and legality of the tariff discovery process for Tranche XI solar power projects. It underscores the importance of adherence to government guidelines in competitive bidding processes. The judgment provides clarity on the adoption of tariff for tied-up capacity and sets a precedent for future similar cases.

In addition to the adoption of tariff, the Commission approved the trading margin agreed upon in the signed PSAs, highlighting the importance of compliance with regulatory provisions.

Overall, the judgment ensures the integrity of the bidding process and promotes confidence in renewable energy procurement mechanisms in India.

[1] https://cercind.gov.in/2024/orders/99-AT-2024.pdf