Solar developers seek dismissal of GUVNL’s tariff-cut petition

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The solar developers have strongly objected to the petition submitted by the state power distribution company, Gujarat Urja Vikas Nigam Ltd (GUVNL), which sought a reduction in solar tariff claiming that developers were making windfall gains at the current rate.


Demanding a dismissal of the petition filed before the Gujarat Electricity Regulatory Commission (GERC), the solar developers maintained that, once concluded, the tariff cannot be revised unless by mutual consent or due to failure of commissioning of the project on time. None of the instance is applicable in present case.

GUVNL had filed the petition with the state regulator last month citing unjustified tariff charged by solar developers, who had signed power purchase agreements (PPA) for 971.5 Mw for a period of 25 years.

Most of the 75 solar developers made their arguments on the first day, while the remaining developers and GUVNL will put their arguments in the next hearing scheduled on August 5.

‘Significant investment of around Rs 15,000 crore in the state is at stake. These solar developers took the risk upfront with the upfront promise of the agreed tariff from GUVNL, who has backtracked after two years of contract,’ said Hemant Sahai, senior advocate from Delhi representing multiple solar developers at GERC.

‘The benefit, which GUVNL is objected to, is actually an incentive to the developers to be efficient and execute their project at the minimum cost. If someone is not efficient, he might spend even more than the estimated investment,’ he said.

GUVNL has found that the developers incurred capital costs in the range of Rs 10-13 crore per megawatt (MW) with weighted average working out to be around Rs 12 crore per Mw. In its petition, GUVNL had maintained that ‘there is no justification for any of the project developers to claim the capital cost of Rs 16.50 crore.’

Hence GUVNL maintained that the present average tariff of Rs 12.54 per unit, which is arrived upon after considering the higher capital cost is unwanted, unjustified and windfall gain to the project developers.

‘The developers are receiving the levelised tariff of Rs 12.54 per unit as against around Rs 9 per unit which is the reasonable and prudent tariff. The increased tariff of Rs 3.54 per unit is a direct burden on the consumers of the state,’ GUVNL’s petition said.

‘For a concluded contract between the parties, GERC cannot intervene as it would require a legislation or regulation. Hence, the petition filed by GUVNL cannot be submitted,’ said one of the lawyers representing solar developers at the hearing at GERC headquarters.

‘If this petition is admitted, it will be a body blow to the solar industry and will have serious repercussions on Gujarat’s business friendly image. In 2010, the same GERC order was much acclaimed and lauded throughout the country. Admitting such petition will set a wrong precedent,’ said Pranav Mehta, chairman, National Solar Energy Federation of India.

The developers include major energy players including Adani Enterprises, Tata Power, Essar Power and Moserbaer among many others.

Source: Business Standard

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