Blanket Extension for Renewable Energy Projects
On August 13, 2020, the Ministry of New and Renewable Energy (MNRE) issued an office memorandum (OM) regarding extension of time in Scheduled Commissioning Date of Renewable Energy (RE) Projects considering disruption due to lockdown resulting from COVID-19. The OM supersedes the OMs dated April 17, 2020 and June 30, 2020.
What are the features of the OM?
- All implementing agencies of the MNRE are to treat lockdown due to COVID-19 as Force Majeure.
- State Renewable Energy Departments (including agencies under Power/Energy Departments of States, dealing in renewable energy) may also treat the lockdown as Force Majeure and consider granting appropriate extension of time on account of such lockdown.
- All RE projects under implementation as on March 25, 2020 (date of commencement of the lockdown) through implementing agencies designated by the MNRE or under various schemes of the MNRE (RE Projects) will be given a time extension of 5 months from March 25, 2020 to August 24, 2020. Such blanket extension, if invoked by the RE developers will be given without case to case examination and no documents / evidence will be asked for such extension.
- The timelines for intermediate milestones of a project may be extended within the extended time provided for commissioning.
- Developers of RE Projects under implementation as March 25, 2020 may pass on the benefit of time extension, by way of granting similar time-extensions to other stakeholders down the value chain like Engineering Procurement Construction (EPC) contractors, material, equipment suppliers, Original Equipment Manufacturers (OEMs), etc.
Our view: The MNRE had, vide OM dated March 20, 2020 inter alia directed the grant of suitable time extension for RE projects on account of COVID-19, subject to the production of evidence/documents by developers. The latest OM, which supersedes the earlier OMs, stipulates that a blanket extension would be given without requiring any examination of the circumstances or documents. Such blanket extension would offer a relief to the RE developers.
MERC's order rejecting grace period sought by renewable energy generators for regulatory delays
- On August 12, 2020, the Maharashtra Electricity Regulatory Commission (MERC) passed an order in a petition (Petition) filed by Gajalaxmi Industries HUF and 27 other petitioners (Petitioners) against Maharashtra State Load Dispatch Centre (MSLDC) and Manikaran Analytics Limited.
- The Petition was filed in respect of non-compliance of the directives given to MSLDC in MERC's order dated September 30, 2019. The Petitioners sought a trial/grace period to assess the challenges faced in compliance with the MERC (Forecasting, Scheduling and Deviation Settlement for Solar and Wind Generation) Regulations, 2018 (Forecasting Regulations) and amended procedure dated December 19, 2019 relating to scheduling and forecasting (Amended Procedure). They also prayed that no penalty be levied for any deviation during the grace period.
What were the submissions of the Petitioners?
In support of their Petition before the MERC, the Petitioners broadly contended as follows:
- They were unable to avail of the 6-month trial period post the implementation of the Forecasting Regulations due to MSLDC's delay in issuing the Amended Procedure.
- There was a lack of clarity regarding the calculation of Deviation Settlement Mechanism (DSM) charges at the State periphery.
- The data requirements for the calculation of deviation charges and DSM charges at the State periphery were not provided by the MSLDC. This led to difficulties in calculating the charges for renewable energy (RE) generators.
- There was difficulty in collecting metering data by the qualified coordinating agencies (QCAs).
The aforesaid contentions of the Petitioner, including the alleged non-compliance were refuted by the MSLDC.
What was the decision of the MERC?
- The MERC rejected the prayer of the Petitioners for additional trial/grace period for implementation of the Forecasting Regulations. It directed that MSLDC compute the impact of State periphery charges as per existing procedure and held that while issuing RE DSM bill to QCAs, only the RE DSM Charges at Pooling Sub-Stations level will be made applicable.
- The MERC directed the DSM Working Group to:
- undertake detailed scrutiny of the computation of impact of the State periphery charges vis-à-vis the requirements laid down under the procedure and the Forecasting Regulations;
- complete the analysis of the sample RE DSM bills already issued by MSLDC within 3 months from the date of issuance of the order and submit its report to the MERC.
- The MERC further observed that, based on the outcome of the analysis of the DSM Working Group, it would determine the further course of action with respect to component of RE DSM State periphery charges already collected and to be collected in the future bills by MSLDC.
Our view: The order of the MERC clarifies that a mere delay in notifying the Amended Procedure will not be construed as a non-compliance when the requisite diligence for implementing the forecasting and scheduling framework under the Forecasting Regulations has already been done by the stakeholders.
Waiver of ISTS charges and losses on transmission of electricity generated from solar and wind sources of energy
On August 5, 2020, the Ministry of Power issued an order (Order) regarding waiver of inter-state transmission system (ISTS) charges and losses on transmission of the electricity generated from solar and wind sources of energy.
What are the features of the Order?
- The Order directs waiver of ISTS charges and losses for a period of 25 years from the date of commissioning of the power plants.
- The following eligibility criteria has been set out for availing the aforesaid waiver:
- Power plants using solar and wind sources of energy (including solar-wind hybrid power plants with or without storage) commissioned till June 30, 2023 for sale to entities having renewable purchase obligations (RPO), irrespective of whether the power is within the RPO or not. In the case of distribution licensees, the power is required to be procured competitively under the guidelines issued by the Central Government.
- Solar photovoltaic (PV) projects commissioned under the second phase of the Central Public Sector Undertaking Scheme of the MNRE.
- Solar PV projects commissioned under the Solar Energy Corporation of India Limited's manufacturing-linked capacity scheme for sale to entities having RPO, irrespective of whether the power is within RPO or not.
Our view: The RE Sector has witnessed unprecedented challenges in the wake of the pandemic. In this backdrop, the waiver of ISTS charges provides welcome relief to stakeholders and is an important step towards filliping the growth of the RE sector.
Originally published 11 September 2020
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