CERC Allows Compensation To RE Firm For Higher Duties On Solar Cells

Highlights :

  • CERC accepted the demand of Eden Renewable to consider increase in import duties of solar cells as a ‘change of law’ event.
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In its latest judgment, the Central Electricity Regulatory Commission (CERC) allowed compensation to a renewable energy company against the imposition of increased import duties on solar cells. The case was related to a Rajasthan-based solar project. 

On July 30, 2018, the Indian government imposed higher duties against the import of solar cells into India. On July 30, 2020, the government issued a notification to continue the duties. Aggrieved by the increased import duties, Eden Renewable Cite, a New Delhi-based renewable energy company, petitioned before the CERC. Eden Renewable owns a 300-megawatt (MW) solar project in the Jaisalmer district of Rajasthan. 

It tied up with the Solar Energy Corporation of India (SECI), allowing the latter to act as an intermediary procurer. The green energy was to be sold to BSES Rajdhani Power Limited (BRPL) and BSES Yamuna Power Limited (BYPL). In its petition before the CERC, Eden Renewable said that it incurred additional expenses due to the government notification of 2020 on increased duties. The firm appealed to the CERC to consider such a decision as a ‘change of law’ event and compensate the firm accordingly. 

While hearing the petitioner, SECI, and the discoms, the CERC ruled in favour of the renewable firm. It accepted the increased duties as a ‘change of law’ event and accordingly ordered compensations.

“The Petitioner is entitled to compensation (pre-COD & post-COD) on account of Change in Law as per the terms of Article 12 of the PPA due to the impugned notifications viz. Safeguard duty Notification No. 2/2020-Custom (SG) dated 29.07.2020,” the order said. 

The CERC order also ordered compensation to be paid at the discount rate of 9% and an annuity of 15 years. “The liability of SECI/ Discoms for ‘Monthly Annuity Payment’ shall start from the 60th (sixtieth) day from the date of this order or from the date of submission of claims by the petitioner, whichever is later. Late payment surcharge shall be payable for the delayed period corresponding to each such delayed Monthly Annuity Payment(s), as per respective PPAs/PSAs,” it said. 

The CERC order also directed the concerned parties to pay the carrying cost starting from the date when the actual payments were made to the authorities. 

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