CERC Overrides SECI To Allow Wind Developer Extra 5% Capacity Addition

CERC Overrides SECI To Allow Wind Developer Extra 5% Capacity Addition CERC Approves Trading Margin of Rs.0.07/kWh in SECI's PSAs with Distribution Firms

The CERC has given a nod to Green Infra Renewable Energy Limited (GIREL), which was looking to install an additional 5% capacity for its 249.90 MW wind power project located in Tuticorin District, Tamil Nadu and Kutch in Gujarat.

Green Infra Wind Energy Ltd (GIWEL) is the parent company of GIREL and had won the wind power project after it participated in the bidding process and was issued the Letter of Award (LoA). The Request for Selection was issued in 2016 by SECI, the nodal agency to implement the MNRE project. SECI had also selected Power Trading Corporation (PTC) as the trading agency for sale of wind power. The nodal agency had entered into the PPAs with the successful bidders. GIWEL itself is a subsidiary of Sembcorp Group, or Sembcorp Green Infra Limited.

The projects for which the PPAs were signed were in line with the scheme for setting up of 1000 MW ISTS – connected wind power projects issued by the Ministry of New & Renewable Energy. As per the MNRE guidelines for setting up of 1000 MW ISTS – connected wind power projects, project developers are allowed to install wind turbine generators of total rated capacity not more than 105% of project capacity that is assigned to them.

For the development of the project at Tuticorin District, Tamil Nadu, GIWEL incorporated GIREL as its subsidiary. GIWEL has executed the aforementioned 249.9 MW power project in Tuticorin District, Tamil Nadu and the 250 MW power project located in Gujarat.

In 2017, GIREL, had also entered into four Power Purchase Agreements (PPA), with PTC, which further signed agreements with BSES Rajdhani Power Limited, Uttar Pradesh Power Corporation Limited, Jharkhand Bijli Vitran Nigam Limited and North Bihar Distribution Company Limited.

SECI’s contention was that the RFS necessitates that the wind power developer is to declare the annual Capacity Utilization Factor (CUF) of their Project at the time of signing of PPAs. Further, it is permitted to revise the CUF once within first year of COD. Yet at the same time, it does not place any restriction on the timeline as to when the additional capacity of 5% can be exercised by the wind power developer.

In 2019, GIREL asked SECI revise its CUF to 33.12% from the initial 32.60%. Later, it once again asked SECI in 2021 to revise its CUF to 34.54% from 36%, which was shared at the time of bid submission.

SECI, however rejected GIWEL’s request for installation of additional capacity for the project in Tuticorin and Kutch. It based its rejection on the RfS, which allows the installation of 105% capacity at the time of installation and commissioning of the power project in the initial stage. Additionally, SECI said that as per the RFS, after 100% capacity has already been installed, any extra increase in the capacity amounts to a wind power developer taking advantage of the change in the equipment cost etc, leading to a tariff advantage.

The CERC, however, has said that there is no provision either in the MNRE guidelines or the RfS issued by SECI, which prohibits installation of additional capacity by the developers after the commissioning and COD of the project.

Moreover, SECI has also contended that additional capacity cannot be installed after the commissioning and COD of the Project. CERC has said that this amounts to imposition of new condition after the original contract has already been set in motion.  An SC judgement was quoted that new terms and conditions cannot be laid out when they were not there in the original contract.

THE CERC has thus concluded that the developers have the right to add to the capacity even after the commissioning and COD of the project has been achieved. This is subject to the ceiling of 105% of the assigned capacity. “This additional capacity, however, is subject to the condition that 5% of the allotted capacity shall be used to meet the auxiliary power consumption and losses up to inter connection point.” At the same, the developer shall not be allowed to inject nor sell than caapcity permitted in the PPA and SECI RFS.

The CERC also brought to the notice of the petitioner that SECI is the nodal agency for implementation of MNRE schemes for “developing grid connected wind power project and it is mandated to provide necessary support to facilitate the required approvals and sanctions, timely implementation and to approve commissioning of the projects.” The CERC rejected the developer’s claim that SECI’s permission is not needed for installation of additional capacity.

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