TNERC Orders Compensation for Solar Curtailment Losses in TN

The Tamil Nadu Electricity Regulatory Commission (TNERC) issued a ruling on August 1, 2024, regarding a petition from Walwhan Renewable Energy Ltd. and Walwhan Solar TN Ltd.

These companies, operating a total of 249 MW in solar power projects across Tamil Nadu, sought compensation for revenue losses resulting from frequent curtailments imposed by Tamil Nadu Generation and Distribution Corporation Ltd. (TANGEDCO) and related entities.The dispute centered around the curtailment of power generation at the petitioners' solar plants.

It may be noted that Under Energy Purchase Agreements (EPAs) with TANGEDCO, the companies were entitled to sell solar power at agreed rates. However, since the inception of these projects, they have faced substantial revenue losses due to repeated instructions from the Tamil Nadu State Load Despatch Centre (TNSLDC) and Tamil Nadu Transmission Corporation Ltd. (TANTRANSCO) to either reduce or halt power generation.

According to the petitioners, these instructions were often issued without written confirmation and, were driven more by economic considerations than by technical necessity. The petitioner’s argument was grounded in the assertion that these curtailments violated the 'Must Run' status accorded to solar power plants under the Indian Electricity Grid Code. This status mandates that solar power plants receive priority in grid access and are only curtailed under exceptional circumstances.

The petitioners said that this caused huge financial impact with the estimated generation loss until September 2020 amounted to 114.17 million units, translating to a revenue shortfall of approximately INR 78.73 crore. In their petition, Walwhan Renewable Energy and Walwhan Solar further argued that the TNSLDC and TANTRANSCO had not fulfilled their statutory obligations to ensure efficient and smooth power transmission.

They also claimed that TANGEDCO had breached the terms of their EPAs, which, under the Indian Contract Act, entitles them to compensation for the losses incurred. Despite multiple efforts to resolve the issue through negotiations, the petitioners reported receiving inadequate responses, prompting them to seek intervention from the TNERC. They requested the Commission to recognize the loss of generation as 'deemed generation,' which would necessitate TANGEDCO’s payment for the lost revenue.

Also, they sought assurances that any future curtailments would be reimbursed similarly and that their projects would maintain the 'Must Run' status as per regulations. The Commission conducted a thorough examination of the submissions from both parties. The respondents, represented by their legal counsel, defended their actions, arguing that the curtailments were necessary for maintaining grid stability and were not economically motivated. They cited operational and safety concerns as reasons for the frequent curtailments. After careful consideration of the evidence and arguments presented, the TNERC issued its order.

The Commission recognised the significant financial strain that the curtailments had imposed on the petitioners and underscored the importance of supporting renewable energy projects. TNERC directed TANGEDCO to compensate the petitioners for the deemed generation losses, as claimed, and mandated that future curtailments be substantiated with proper documentation and minimized wherever possible.

The Commission also emphasised the need for enhanced coordination among TNSLDC, TANTRANSCO, and TANGEDCO to improve transmission infrastructure and facilitate the seamless integration of renewable energy into the grid. The order reinforced the necessity of adhering to the 'Must Run' status for solar power projects, as stipulated by national and state policies.

This ruling marks a significant moment for the renewable energy sector in Tamil Nadu, reflecting the regulatory body’s commitment to resolving disputes and promoting the growth of sustainable energy sources. The decision is expected to have broad implications, influencing how similar issues are addressed in the future and shaping the development of renewable energy projects in the state.