BENGALURU: Renewable energy developers in Karnataka are agitated over an order passed by the state power regulator imposing “transmission and wheeling charges” on them retrospectively – on solar projects from end-March 2017, on wind projects from October 2013 and on mini hydel projects from January 2015. This applies, however, only to “open access” transmission – those selling the power directly to a corporate entity, and not to a state utility. They claim that earlier orders of the Karnataka Electricity Regulatory Commission (KERC) had made it clear there would be no change in transmission and wheeling charges till end-March 2018, and the new order is a breach of that promise.
So far, solar developers using open access were fully exempted from paying transmission and wheeling charges, while non-solar renewable power generators paid 5% of the tariff they charged for their power. KERC has now decreed that they should all pay 25% of the charges applicable to conventional power transmission. In its new order, passed in mid-May, it has noted that its earlier orders on the matter starting June 2005 had exempted or provided concessions to renewable energy developers for the first 10 years after commissioning of their projects because they “cannot compete with conventional sources of energy”. But the order adds that the situation had since changed. “With the cost of wind and solar reducing substantially, renewable energy sources can compete with conventional sources of energy,” it says, emphasizing that concessions were only being partially discontinued, since renewable energy developers were being asked to pay only 25% of what conventional power producers did.
The same order also states that renewable energy developers would have to pay for any “line losses” due to their inability to provide the power they had promised, which they did not have to earlier. While this will further add to renewable developers’ costs, the order notes the additional charges were being imposed following pleas from the state discoms which “had expressed that concessional wheeling and banking charges for renewable energy projects, fixed by this Commission, were resulting in a strain on their finances.”
“The state had promised exemption in principle for 10 years from 2008,” said a leading solar developer. “All projects that came up were on the basis of this expectation. Putting the economics aside, if a government explicitly promises something, it is wrong to change later. This is what scares off investors and lenders. We set up projects, signed power purchase agreements and got financing on the basis of a policy, which is now being changed midstream. It’s a violation of the promise retrospectively.”
The solar developer claimed that the new order would increase his costs by Rs 1.19 per unit of power produced. However, in its detailed order, KERC has calculated that the increase on the imposition of transmission and wheeling charges would be 37 paise, while line loss costs would be another 14 paise, both in “the worst case scenario”. The burden on non-solar renewable energy developers would be even less as they were already paying 5% of their tariff.
Source: economictimes.indiatimes
