Haryana deals a low blow to open access

25 October 2020 |

Haryana electricity regulator, HERC, has recently adjudicated on two petitions by Cleantech Solar and LR Energy respectively, open access solar project developers in the state. Both developers had obtained all necessary approvals from the state nodal agency (HAREDA) and state transmission company (HVPN) to build and connect two separate 20 MW projects to the state transmission network. However, on completing construction of the projects, when the developers applied for final long-term access approval and execution of Connectivity Agreement, the DISCOMs declined to give approvals on various grounds.

  • Approvals are being denied to fully constructed projects on specious grounds only to serve DISCOM interests;
  • Haryana has amended its solar policy at every turn creating chaos in the sector – only 69 MW capacity has been commissioned in the last four years;
  • The blatant abuse of power by HERC and other state authorities is a warning sign for investors and consumers and does not bode well for the open access market;

In the case of LR Energy, HERC has simply noted that because of the company’s “dispute” with the state utilities including HAREDA, DISCOMs and transmission company, it is desirable that the company signs a PPA with the DISCOMs instead at a tariff to be approved separately. In Cleantech Solar’s case, where the company had argued against various objections raised by the DISCOMs and HAREDA relating to ‘captive’ nature of the company’s SPV and its shareholding structure, HERC has ruled against the company. The status of Cleantech Solar’s project is therefore unclear.

Similar issues had recently arisen in the case of Amplus Solar, which was denied final long-term access approval for a 50 MW open access solar project after construction was completed. Amplus Solar had no choice but to “agree” to sign a PPA with the DISCOMs at a tariff believed to be around INR 2.80/ kWh.

Haryana is probably the worst instance of ad hoc and inconsistent renewable policy formulation and implementation by states. The state had issued a very favourable solar policy in 2016 with a target of 3,200 MW solar capacity by March 2022 (50% capacity addition through rooftop solar). The policy, offering a complete waiver from all transmission and wheeling charges as well as CSS and other surcharges, was extremely favourable to open access projects. After a couple of amendments in 2017 and wrangling between different state agencies, HAREDA issued guidelines for approving projects under the state policy and received applications for projects aggregating over 1,000 MW capacity. The guidelines were further amended and the policy was finally notified and approved by HERC with multiple restrictions in 2019. The transmission and wheeling charges were waived only for 500 MW of aggregate ‘captive’ capacity. Unsurprisingly, only 69 MW of solar capacity has been commissioned in the state in the last four years.

Haryana’s case typifies problems faced by open access market. DISCOMs and other state agencies, under ever growing financial pressure because of weak demand, delayed payments from consumers and high T&D losses, are not only reversing favourable policies, but also refusing to give approvals and creating implementation hurdles.

Figure: Open access solar capacity addition, MW

Source: BRIDGE TO INDIA research

Consequently, growth in open access renewable market, which holds huge growth potential, has stalled in the last few years. DISCOMs in many states including Andhra Pradesh, Telangana, Gujarat, Rajasthan and Maharashtra remain opposed to open access, but Haryana has touched a new low and sent a warning to investors and consumers. Given growing financial problems of DISCOMs, prospects of this market may yet grow worse before getting better.

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