KERC new tariff upsets solar power sector

While the clean energy companies are awaiting the court judgment over an order passed by the Karnataka Electricity Regulatory Agency (KERC), imposing transmission and wheeling charges on solar projects, they felt such measures will badly hit solar energy sector.

They felt the retrospective change in the policy could lead to creating an adverse environment for investors.  The developers claim that the order was a breach of the claim by the KERC that had made it clear that there would be no change in transmission charges till March 31, 2018.

Until now, the solar developers using open access in the state were exempt from paying wheeling charges, but with the new decision taken by the KERC, all the developers should pay 25% of the transmission or wheeling charges.

The KERC further said that renewable energy developers would also have to pay for the line losses in case they are not able to provide the power they had promised. This regulation was not there earlier.

The developers opine that the order from the KERC came unexpectedly, after the end of the solar policy, which in 2008 had exempted the developers from paying wheeling charges.

“This was a classic case of retrospective change of government policy. The projects had already been financed and commissioned, and dozens of Power Purchase Agreement (PPA) with private parties signed, on the basis of the 2014 policy, which specifically and unequivocally exempted these charges for a period of ten year,” one of the officials from a leading solar company said.

Since the PPA and the financial closure of these projects assumed the policy would not be changed retrospectively, there is apprehension that the imposition of charges would render several commissioned projects unviable.

“Governments want to promote renewable energy, but when they believe that developers have got a good deal, they do not hesitate to cancel tenders or change policies unexpectedly. This understandably makes investors and lenders very nervous, and makes it difficult for developers to do business in the face of such uncertainty,” the official added.

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