Delhi Metro’s Solar Plans Hit Roadblock

Ministry Of Power Says Only Distribution Companies Eligible for ISTS Waiver; DMRC & Madhya Pradesh Government Ask MNRE To Intervene
  • Delhi Metro Rail Corporation (DMRC) had signed to procure power from the 750 MW Rewa Solar Power Project at 3.30 INR ($0.051) per kWh
  • With the Ministry of Power allowing inter-state transmission charges waive off only for distribution companies, DMRC may end up paying 0.91 INR ($0.0141) more per kWh
  • Madhya Pradesh state government and DMRC have approached Ministry of New and Renewable Energy to intervene
  • It argues this will discourage institutional customers from opting for renewable energy
  • India's Ministry of Power is yet to take a call on this request by MNRE

The Delhi Metro Rail Corporation (DMRC) may have to pay extra to procure solar power from the 750 MW Rewa Solar Power Project located in the state of Madhya Pradesh. It may end up paying 0.91 INR ($0.0141) per kWh more, increasing its overall tariff of 3.30 ($0.051) INR to 4.21 INR ($0.065) per kWh, reported Indian business daily Mint.

On June 21, 2017, the Ministry of Power had issued an order that waived inter-state transmission charges and losses on transmission of solar and wind energy. It was a modified version of the order issued in September 2016 (see Transmission Charges Waived In India). Later in June 2017, the ministry extended the same to solar power projects commissioned until December 2019 (see India Extends Solar Waiver Period).

The order clearly stated that such waiver only applies to sale of electricity to distribution companies to help them comply with their renewable purchase obligation (RPO). That means, DMRC, which is not a discom, will have to pay these inter-state transmission system (ISTS) charges.

The tender for 750 MW Rewa Solar Power Project had recorded one of the lowest tariffs in India with 2.97 INR ($0.0444) per kWh (see Record Low Tariff Of 2.97 INR/kWh In India). DMRC and Madhya Pradesh Power Management Company Limited (MPPMCL) had been planning to buy power from this IFC supported project.

DMRC and Madhya Pradesh's government approached India's Ministry of New and Renewable Energy (MNRE) to intervene, as the PPAs for the project were signed when exemption on ISTS charges and losses were available on all inter-state transmission of renewable energy, according to the Mint report.

This incident, fears the state government, would discourage other institutional customers from opting for renewable energy. MNRE has in turn requested the Ministry of Power to exempt those projects that have already entered PPAs with inter-state consumers other than discoms and are not paying inter-state transmission charges. PPAs for the Rewa project were signed on April 17, 2017.

Mint quoted Manish Karna of ACME Solar Holdings as saying that DMRC comes under the definition of Railways as per a Delhi High Court order of 2008, which means it can claim to be a distribution company like the Indian Railways.

All eyes are now on the Ministry of Power.

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