Court Overturns CERC Order on Solar Power Developers' Power Drawl Rights

Background

In a significant ruling, the court addressed appeals filed by three solar power developers—M/s. Arinsun Clean Energy Private Limited, M/s. Mahindra Renewables Private Limited, and M/s. Athena Jaipur Solar Power Private Limited—against an order issued by the Central Electricity Regulatory Commission (CERC) on April 25, 2022. The central legal question revolved around the ability of these developers to draw power from the grid during non-generation hours without entering into power purchase agreements with state distribution companies.

Arguments

The appellants argued that the CERC's directive to enter into power purchase arrangements was impractical and contrary to existing regulations. They contended that their projects were connected to the Inter-State Transmission System (ISTS) and that they had historically drawn power during non-generation hours under the Deviation Settlement Mechanism (DSM) without additional charges. Conversely, the Madhya Pradesh Power Management Company Limited (MPPMCL), the respondent, maintained that the developers should comply with state regulations regarding power drawl during non-generation periods.

Court's Analysis and Reasoning

The court analyzed the arguments presented by both sides, emphasizing the regulatory framework established by the DSM Regulations and the Indian Electricity Grid Code (IEGC). It noted that the CERC's previous order failed to recognize the established practice of solar developers drawing power during non-generation hours as unscheduled interchange, which is accounted for under the DSM Regulations. The court found that the CERC's requirement for the developers to enter into power purchase agreements was not only impractical but also inconsistent with the regulatory framework that governs power drawl for solar projects connected to the ISTS grid.

Decision

Ultimately, the court ruled in favor of the appellants, allowing their appeals and setting aside the CERC's order. The court clarified that the solar power developers could draw power during non-generation hours as unscheduled interchange under the DSM Regulations. This decision reinforces the rights of solar power developers and aligns with the broader regulatory practices observed across the country, ensuring that they are not unfairly burdened by additional compliance requirements that contradict established norms.