Court Upholds Deemed Generation Claims for Hydro Power Projects

Background

In a significant ruling, the Uttarakhand Electricity Regulatory Commission (UERC) faced an appeal from Uttar Bharat Hydro Power Private Limited regarding deemed generation claims for its hydroelectric projects, Sarju -III and Sarju -II. The core issue revolved around the denial of deemed generation for the fiscal years 2016-17 and 2017-18, attributed to the non-availability of evacuation capacity by the Uttarakhand Power Corporation Limited (UPCL).

Arguments

The Appellant, Uttar Bharat Hydro Power, argued that UPCL's failure to maintain adequate evacuation infrastructure directly impacted their ability to generate and deliver electricity. They claimed that despite being ready to supply the full capacity of 10.5 MW from Sarju -III, UPCL restricted evacuation to as low as 3.5 MW due to ongoing infrastructure issues. The Appellant sought compensation for the unutilized generation capacity, citing regulatory provisions that support deemed generation claims under such circumstances.

Conversely, UPCL contended that the restrictions were due to the Appellant's own enhancements in generating capacity, which outstripped the existing evacuation system's capabilities. They argued that the deemed generation provisions should only apply when the existing system is entirely unavailable, not when it is simply insufficient.

Court's Analysis and Reasoning

The court meticulously analyzed the arguments, focusing on the interpretation of Regulation 47 of the Renewable Energy Regulations, 2013. It emphasized that the regulation encompasses both scenarios: when the evacuation system is entirely unavailable and when it is insufficient to handle the generation capacity. The court criticized UPCL for its failure to provide adequate evacuation facilities despite being aware of the Appellant's capacity enhancements.

The court also noted that the Appellant had not relinquished its right to deemed generation compensation merely by agreeing to temporary capacity restrictions during meetings with UPCL. Furthermore, it highlighted that UPCL's inaction in maintaining the necessary infrastructure constituted a breach of its obligations under the Power Purchase Agreement (PPA).

Decision

Ultimately, the court ruled in favor of Uttar Bharat Hydro Power, stating that deemed generation claims due to insufficient evacuation capacity and outages must be recognized. The UERC was directed to reassess the claims in light of the court's findings, reinforcing the responsibility of distribution licensees to ensure adequate infrastructure for renewable energy projects. This decision underscores the importance of regulatory compliance and the protection of renewable energy developers' rights in the face of infrastructural challenges.