Gujarat tribunal notices to solar energy developers

Move after appeal by state govt-run GUVNL seeking a cut in rate of power

The Appellate Tribunal for Electricity (Aptel) has issued notices to 80 Gujarat-based solar project developers on an appeal filed by Gujarat Urja Vikas Nigam (GUVNL), the state government-run utility. GUVNL is seeking a cut in the rate of power it will buy from the solar players on the grounds that the actual cost incurred by developers of these projects was 40 per cent less than initially assumed.

The utility is seeking a proportionate cut in the rate to Rs 9 a unit from the Rs 12.54 agreed under the power purchase agreements (PPAs). GUVNL has signed PPAs with 80 players, including the solar arms of Tata, GMR Essar and Welspun.

The dispute has put solar energy projects in Gujarat of Rs 14,000 crore under a cloud.

The tribunal admitted the appeal, with a rider on its maintainability. "Since the maintainability of the appeal as well as the petition filed before the state commission is questioned, we deem it fit to admit this appeal, subject to maintainability," Aptel said in its order on Monday.

The hearing is set for December 11.

In August, Gujarat Electricity Regulatory Commission (GERC), the state regulator, had dismissed a review petition. A reason was the petition had been made after three years, while the time allowed for such petitions was 60 days from the original order.

In 2009-10, GERC had determined the rate through a consultative process. "The Commission decides to adopt Rs 16.50 crore per Mw (Megawatt) as capital cost for Solar Photovoltaic (PV) Power Project and Rs 13 crore per Mw for Solar Thermal Power Project," it had said.

Based on these rates, GUVNL signed 88 PPAs for 971.5 Mw aggregate capacity, in two phases. 857 Mw of solar capacity has been established, according to GUVNL.

At the originally agreed cost of Rs 16.5 crore per MW, the cost of these projects work out to Rs 14,140 crore.

But, GUVNL argues that several developers it had checked had incurred between Rs 10 crore to 13 crore per MW. "The weighted average woks out to around Rs 12 crore per MW."

At this rate, the total project cost comes to Rs 10,284 crore or Rs 3,856 crore less.

This difference of Rs 3,856 crore is a windfall for the developers and will result in additional burden for consumers, the utility argued.

"The increased tariff of Rs 3.54 per unit is a direct burden on the consumers of the state and is an unwanted, unjustified and windfall gain to the project developers," the petition said.

Besides challenging the petition on its maintainability and other technical grounds, developers say that a fall in cost of solar equipment and other costs was taken into account even at the time of fixing the tariff and it was one of the factors that had attracted investment in the renewable energy sector.

Changing terms of the PPA long after it was finalised, will affect future investments in the sector, they argue.

SUNNY DAYS OVER?

• 88 PPAs signed between GUVNL and private developers
• 857-Mw solar capacity built in Gujarat
• Project cost pegged at Rs 16.5 crore an Mw by state regulator
• GUVNL says actual costs much less at around Rs 12 crore an Mw
• Wants proportionate revision in rate; tribunal hearing on December 11