India:
A Solar Power Park Developer Has The Power To Restrict Excess Generation By A Solar Power Developer Beyond The Rated Capacity Under The Agreement: APTEL
07 January 2022
Khaitan & Co
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Introduction
In a recent Judgement dated 21 December 2021 in Appeal No.
69 of 2021: Saurya Urja Company of Rajasthan Limited (Saurya Urja)
vs. Rajasthan Electricity Regulatory Commission (RERC) &
Ors., the Appellate Tribunal for Electricity (APTEL) set aside
RERC’s Order dated 08 December 2020 in Petition No. 1783 of
2020: ACME Jodhpur Solar Power Private Limited & Anr. vs.
Saurya Urja (ACME) & Anr., and clarified that:
- State Electricity Regulatory Commission (SERC) does not have
the jurisdiction under Section 86(1)(f) of the Electricity Act,
2003 (Electricity Act) to adjudicate upon a dispute between the
Solar Power Park Developer (SPPD) i.e., Saurya
Urja and the Solar Power Developer/Generator (SPD)
i.e., ACME, since the SPPD is neither a ‘Generating
Company’ nor a ‘Licensee’ under the Electricity
Act; - as per the Guidelines for Development of Solar Parks
(Guidelines) notified by Ministry of New and Renewable Energy
(MNRE), SPPD has been entrusted with the
development of the transmission network within the solar park as a
captive/dedicated transmission system of the SPDs of the park and
thus, is not a ‘Transmission Licensee’; and - as per the Implementation Support Agreement dated 03 January
2018 (Agreement) entered into between the SPPD and SPD (a) any
dispute between the SPPD and the SPD is to be resolved through
arbitration and (b) the SPPD is empowered to
restrict excess generation by the SPD beyond the
rated capacity and the SPD is mandated to forego
the excess generation and reduce the output to the rated capacity.
The said provisions of the Agreement are in addition to and not in
conflict with the Electricity Act or the Rules/Regulations framed
thereunder.
Brief Background
- The SPD set up 2×100 MWac solar power projects under
MNRE’s National Solar Mission (NSM) Scheme and executed the
Agreement with the SPPD, which is a Joint Venture Company between
the Government of Rajasthan and IL&FS Energy Development
Company Limited. The SPPD was incorporated with the objective to
plan, develop and operate solar parks in the State of Rajasthan
under the Guidelines. Saurya Urja was authorized as the SPPD by
MNRE for obtaining and maintaining connectivity and long-term
access in inter-state transmission system and to carry out other
associated works for development of Bhadla-III Solar Park at
Bhadla, Tehsil Bap, Jodhpur District, Rajasthan (Solar Park).
- Eventually, the SPDs commissioned their projects and started
generating and injecting power into the State Grid through the
electrical grid commissioned by the SPPD. However, the SPPD on 15
January 2019 wrote to the SPDs regarding the over-injection of
power into the grid, as informed by the Regional Load Despatch
Centre (RLDC). Pursuant thereto, the SPPD by way of its e-mail 25
May 2019, once again wrote to the SPDs inter-alia stating
that the peak load capacity recorded at 13:11 hrs on 25 May 2019 is
higher than the rated capacity and asked the SPDs to reduce the
power flow accordingly.
- Being aggrieved by the e-mail issued by the SPPD, the SPDs
approached RERC vide Petition No. 1783 of 2020 under Sections
86(1)(c), 86(1)(k) and 86(1)(e) of the Electricity Act
inter-alia seeking directions to be issued to the SPPD for
not obstructing the generation and evacuation of the actual
instantaneous solar power upto 110% of the project’s rated
capacity. RERC vide its Order dated 08 December 2020
inter-alia (i) upheld its jurisdiction qua
adjudication of a dispute between the SPPD and the SPD; (ii)
directed the SPPD to not obstruct the SPD’s evacuation of solar
power upto 110% of the project’s rated capacity; and (iii) laid
down that if the power injected by the SPD creates any grid
disturbance, the State Load Despatch Centre (SLDC) and/or the
Distribution Company (Discom) is empowered to issue any direction
to the SPD.
- Thereafter, the aforesaid Order dated 08 December 2020 was
challenged by the SPPD before the APTEL by way of Appeal No. 69 of
2021 on the grounds that (a) RERC does not have the jurisdiction
under Section 86 of the Electricity Act to adjudicate upon a
dispute between a SPPD and SPD as Section 86(1)(f) restricts the
powers of RERC to adjudicate upon disputes between
‘Licensees’ and ‘Generating Companies’ and to refer
any dispute for arbitration; and (b) SPPD, under the Agreement, is
empowered to direct the SPD to maintain grid discipline within its
Solar Park in case the output goes beyond the permissible limits.
APTEL, pursuant to having undertaken a detailed analysis of the
Agreement, Guidelines and Section 86(1)(f) of the Electricity Act,
set aside RERC’s Order in entirety by way of its
afore-mentioned Judgement dated 21 December 2021.
Conclusion
While there is scope for a further Appeal from the Judgement
before the Supreme Court, the Judgement assumes significance as it
settles and defines the contours and scope of the jurisdiction of
an SERC under Section 86(1)(f) of the Electricity Act in the
context of a dispute between an SPPD and SPD. The Judgement
clarifies that an SERC does not have the powers to adjudicate upon
a dispute between an SPPD and an SPD under Section 86(1)(f) of the
Electricity Act as an SPPD is neither a ‘Licensee’ nor a
‘Generating Company’ and even its transmission
responsibility is limited to within the solar park. APTEL also laid
down that any such dispute can only be resolved under the
provisions of the Agreement executed by the parties in line with
the Guidelines notified by MNRE.
The Judgement reiterates the well-settled legal principle that a
contract is to be interpreted according to its purpose and thus,
clarifies that by virtue of the Agreement, the SPPD is empowered to
restrict the excess generation by the SPD beyond the rated capacity
to prevent any damage to its transmission system due to
over-injection by the SPD. However, the Judgement is silent on the
aspect of interplay between an SPPD and the SLDC/RLDC, which is
entrusted with the function to ensure integrated grid operations in
the State/Region and issue backing-down instructions for grid
security/safety of any equipment or personnel under the Electricity
Act read with the Grid Code Regulations.
The content of this document do not necessarily reflect the
views/position of Khaitan & Co but remain solely those of the
author(s). For any further queries or follow up please contact
Khaitan & Co at [email protected]
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