Response to discussion paper on “determination of tariff in respect of solar power projects (including solar rooftop pv projects) for FY -22-24 “

PREAMBLE:

The Karnataka Electricity Regulatory Commission (KERC), in the exercise of the enabling powers conferred under the Electricity Act, 2003 has issued a discussion paper on Revision of tariff in respect of solar power plants (including solar rooftop PV projects) for FY -22-24

The Commission has invited suggestions/comments/ views of the stakeholders and the general public on the topics covered in the discussion paper.

Below are my comments and suggestions on the points mentioned in the discussion paper.

RESPONSE 1 ; PROCEDURAL:

SCENARIO :

As mentioned in the paper, the off-take of RTV projects among domestic consumers is very low. There may be many reasons for it including high CAPEX. Though high Capex is one of the reasons for the poor off-take of solar, there are many other administrative challenges in the implementation of rooftop solar plants.

It will be prudent now to take a look at the data published by BESCOM on their website on the list of commissioned SRTPV Installations.

The BESCOM website as of 18 March 2019 has the following figures (It is a Screen-shot from the then BESCOM Website )

As of 30 June 2021, the capacity installed has grown to 157 MW as per the Bescom website.

Let us look at the table carefully and analyze the data.

 

Sl No	Years	No of Installations (A)	Capacity in MWp (B)	Indicative capacity of each installation [(B x 1000)/A] in KWp	Percentage increase in Capacity year on year	Percentage increase in No of installations year on year
1	2014-15	27	0.32	11.85
2	2015-16	330	7.74	23.45	95.87%	91.82%
3	2016-17	507	44.39	87.55	82.56%	34.91%
4	2017-18	553	32.88	59.46	-35.01%	8.32%
5	2018-19	329	18.08	54.95	-81.86%	-68.09%
6	2019-21	1439	53.616	37.26	33.14%	38.57%
	Cumulative	3185.0	157.03

  

As seen from the table;

1.   In the years 2017-19, Capacity of rooftop installations in BESCOM circle is decreasing year on year whereas the cost of solar panels is falling year on year. Prices of solar panels have fallen nearly 40% in the years 2017-19. But the capacity of solar installations instead of doubling has halved.

2.   The increase in capacity on the years 2019-21 is not significant when viewed from the angle of immense solar potential and falling solar panel prices.

3.   The average size of a rooftop installation is around 35 KW. This means that domestic consumers form a very negligible proportion of the total installations.

The target set by the GOI is 40 GW for the rooftop solar segment by the end of the year 2022. Bangalore is one of the most progressive cities in India was expected to contribute a lion's share in the 40GW basket. It is reasonable to expect at least 1 GW from a bustling city of Bangalore to the national target of 40 GW. 157 MW is unfortunately is not even 20% of what a city like Bangalore should have contributed.

Suggestions :

In our experience of handling domestic consumers, most domestic consumers are willing to install solar plants for two main reasons;

• To offset their energy bill and to hedge against any future increase in energy cost.
• To be as environmentally friendly as possible.

In the above scenario, a better feed-in tariff is definitely welcome. However, there are much more procedural changes that are needed to give a much-needed fillip to the domestic consumers. Most installers and consumers in the domestic segment are stressed out by the time and cost over-runs dealing with BESCOM.

In our opinion, the following are needed urgently.

 1.Ease of application and Approvals:

 Every installer and every SRTPV consumer are irritated by long and lengthy procedures and series of approvals required for SRTPV installations. There is an urgent need for the rationalization of processes.

Plenty of precious time is wasted waiting at BESCOM offices for concerned officials. A minimum of 5  7 visits to the BESCOM office is required for one rooftop installation.

 Suggestions:

• 1    Bescom website gives a timeline for various approvals. But it is nowhere mentioned what must be done or what is the next step if the timeline is not adhered to.
• 2   Submission of completion report (Format 5) is made online which is a very good step. However, Bescom officials still ask for many documents even after successfully submitting the work completion online. There is no point in uploading the work completion details online if the officials still ask for physical documents.
• 3  If BESCOM officials find any deviation or discrepancy in installation, the same must be put up online within a time frame.
• 4  The delay in commissioning (If any) after submission of work completion report (Format 5) must be documented and monitored.
• 5  There is no timeline fixed for meter calibration and testing from BESCOM. There is no system in place to check the progress or status as well. One has to keep visiting the BESCOM lab to check the status and one is just lucky to really get an update. How can the installer adhere to a installation timeline when the BESCOM labs cannot commit on the timeline for meter calibration? 
• 6  Hybrid inverter empaneled by BESCOM have a different grid interconnection Topology. Many BESCOM officials are not accepting this grid interconnection Topology though the inverter is empaneled. This is causing many delays and cost and time overrun.
• 7  It is good to have a single point of contact for all SRTPV approvals. That is notwithstanding the sub-division, there must be a single point of contact in BESCOM office for all SRTPV approvals.

2.Billing issue:

Almost all SRTPV consumers are having a tough time with billing. Following are few of the major issues regarding billing:

• Most consumers are not receiving the SRTPV bills on time.
• Some consumers are not receiving bills for months together.
• Payment is not happening on time.
• Meter readers are unable to take the EXPORT and IMPORT readings.
• In spite of installing the SRTPV system, the consumer is receiving normal bills with arbitrary readings.
• The meter reader is sometimes confused with the generation side meter. There are scenarios where the meter reader has taken the check meter (generation side meter) reading and billed the consumer for the solar energy generated.
• More than 60% of the consumers who have installed SRTPV are unhappy with the system/Technology because they have to run around to get their bill corrected.

Suggestions:

• BESCOM must pay interest if there is a delay in payment or even delay in meter reading. (This is mentioned in the PPA but not respected)
• Meter reading along with meter serial number must be available online for customers to cross-check.
• Call center (1912) must also handle SRTPV complaints.
• ALL SRTPV bills must be only online.

 

NOTE:

Consumers who are putting their hard-earned money into SRTPV are in a way doing a great service to the nation and the environment. If they cannot be incentivized, at least they must not be troubled or harassed or made to run from pillar to post for billing issues. Their due must be paid on time.

 

3.OTHER ISSUES:

A. Captive consumption or ZERO EXPORT:

At present, there is no clarity on the captive consumption of energy. One who wishes to connect to the grid but consumes the energy that he generates has no provision in the current policy. Permitting captive consumption will eliminate a lot of bottlenecks in the SRTPV implementation

B. Inverter Empannelment Issue:

For some strange reason, The ESCOMS in Karnataka has a system of inverter empanelment. No other state has this policy. All BIS-approved inverters can be used for grid integration. This inverter empanelment and subsequent renewal every year is having a negative impact on the solar installations. Top brands and the world’s leading companies have walked out of Karnataka leaving the solar developers with poor quality inverters.
This system of inverter empanelment must be immediately stopped and all BIS approved inverters must be allowed for grid connectivity.  

    

RESPONSE 2: NEED FOR COMPETITIVE TARIFF

Scenario:

Feed-in tariff is too low and it is un-just. The argument definitely has water. The fact is “BESCOM is buying power from the ‘rooftop solar’ owner at a much lower rate than what they are selling to them or other consumers”. That is, the current feed-in tariff is rupees 3.99 / 3.82 per unit while the average selling price of BESCOM is well above rupees 6 or 7 a unit (or even more). Also, there is no escalation clause in the power purchase agreement (PPA).

 

This is an unfair proposition. On the other hand, BESCOM revises its selling rate almost every year at an average rate of about 7 to 8 percent.In the net metering scenario, The SRTPV (solar rooftop photo-voltaic) consumer buys at a rate higher than the rate he sells power to BESCOM.

 

Given that any excess feed in from an SRTPV consumer is almost consumed within the immediate grid, it will be prudent to assume minimum or nil T and D losses from the power generated from a SRTPV unit. So, an SRTPV owner is giving clean power to BESCOM with almost Nil T & D losses with CAPEX coming in entirely from the SRTPV Owner.

 

[Note:  The SRTPV consumer and the installer goes around the pillar to post for all the approvals and commissioning to end up selling power way lower than market prices].

Suggestion:

·       The details of the cost incurred by BESCOM for purchasing power is given in their website

·       As per the details available on the website, the average cost incurred by BESCOM for purchasing power in the year 2018 is as follows

Sl No	Month	PP Cost (INR/KWh)
1	Jul-18	₹ 5.42
2	Jun-18	₹ 5.73
3	May-18	₹ 5.51
4	Apr-18	₹ 5.23
5	Mar-18	₹ 4.67
6	Feb-18	₹ 4.98
7	Jan-18	₹ 4.82
	Avg	₹ 5.19

 

·       Average power purchase cost by BESCOM is rupees 5.19 rupees per unit.

·       At an inflation of 3% year on year, the cost of power purchase by BESCOM for the The next 20 years will be as follows

YEAR	PP Cost (INR/KWh)
1	₹ 5.19
2	₹ 5.35
3	₹ 5.51
4	₹ 5.68
5	₹ 5.85
6	₹ 6.02
7	₹ 6.20
8	₹ 6.39
9	₹ 6.58
10	₹ 6.78
11	₹ 6.98
12	₹ 7.19
13	₹ 7.41
14	₹ 7.63
15	₹ 7.86
16	₹ 8.09
17	₹ 8.34
18	₹ 8.59
19	₹ 8.84
20	₹ 9.11
AVG	₹ 6.98

·       So, in the most optimistic of scenario, the average power purchase cost by BESCOM over the next 20 years will be rupees 6.98 a unit.

·       Currently Bescom tariff varies from 4.5 rupees to 8.15 Rupees a unit depending on the tariff slab.

·       So, in a scenario where the consumer does not have an SRTPV unit in his premises, BESCOM is charging him or her rupees 5 a unit (This is a very safe assumption since most domestic consumers who can afford SRTPV units fall in the higher slabs).

·       In other words, BESCOM charges at a rate of 5 rupees per unit for any domestic consumer.

·       At an escalation of 4% every year, the unit rate of BESCOM power for the domestic the consumer is as follows.

YEAR	Tariff (INR/KWh)
1	₹ 5.00
2	₹ 5.20
3	₹ 5.41
4	₹ 5.62
5	₹ 5.85
6	₹ 6.08
7	₹ 6.33
8	₹ 6.58
9	₹ 6.84
10	₹ 7.12
11	₹ 7.40
12	₹ 7.70
13	₹ 8.01
14	₹ 8.33
15	₹ 8.66
16	₹ 9.00
17	₹ 9.36
18	₹ 9.74
19	₹ 10.13
20	₹ 10.53
AVG	₹ 7.44

 

·       So, in a 20-year time scale scenario, assuming ambitious very little inflation, BESCOM is buying power from KPTCL , NTPC and others at rupees 6.98 a unit and selling to the consumer at 7.44 rupees a unit.

·       So ideally, BESCOM must pay any producer of electricity a minimum of rupees 6.98 a unit.

·       However, BESCOM would say that the SRTPV consumer is using the BESCOM infrastructure free of cost. This is however not true. In a NET metering scenario, BESCOM recovers the infrastructure costs as demand charges. So, notwithstanding SRTPV, the consumer is paying for the infrastructure. For example, with or without SRTPV a consumer having sanctioned load of 5 KW pays (1x85) + (4x95) = 465 rupees a month. This is also subject to revision every year.

·       BESCOM recovers its T and D losses in the profit earned. In an SRTPV scenario, the SRTPV owner is giving good clean power at nil T and D.

·       BESCOM however loses a paying consumer, so to be fair to BESCOM and to account for cross-subsidy, rupees 1.25 or 125 paise per unit of electricity can be pegged to account for losing a paying customer and for cross-subsidy.

·       So rationally, any SRTPV consumer injecting excess energy into grid must be paid a rational price of (698-125) = 573 paise a unit or rupees 5.73 a unit.

·       Competitive tariffs for SRTPV owners will also encourage more installations and at the same time bring pressure on KPC and other companies to reduce rates and increase efficiency. 

RESPONSE 3 ; TARIFF DETERMINATION

The commission in the discussion paper has considered many variables in the determination of tariff. Here, we wish to enlist our responses to some of the variables considered by the honorable commission in arriving at the tariff.

Please note that the responses given here are only applicable to rooftop solar plants less than 10 KW.

Life of the plant (i)(Page:7)

On page 7 of the discussion paper, it is mentioned that the life of the plant considered is 25 years since the module manufacturer gives a warranty of 25 years on the panels.

Response :

It is true that the module manufacturer gives a warranty of 25 years on the panels. However, another significant part of the system is the inverter. Inverter manufacturers give a warranty of 5 years to 10 years depending on the technology and quality control protocol of the respective manufacturer. The discussion paper does not talk about the replacement of the inverter after the warranty period. We wish to bring to the notice of the honorable commission that the cost of replacement of the inverter (including inflation in prices) must be incorporated while arriving at the feed-in tariff.

 

Capacity Utilization factor (III)(Page:8)

In page 8 of the discussion paper, it is mentioned that the CUF considered for rooftop solar plants as 19%.

Response :

•    While a CUF of 19% is very optimistic while still achievable at utility-scale, in rooftop segment particularly in urban areas with high dust levels and shadows of trees and neighboring buildings, a CUF of 19% is almost impossible to achieve. We request the commission to take a note of this and revise the CUF for rooftop plants to 17%.
•    When degradation is considered for the PV plant, Reduction in CUF must also be considered.
•    Since the yield of the plant reduces year on year, CUF must also reduce year on year.

Capital Cost (v)(Page:9)

In page 9 of the discussion paper, it is mentioned that the capital cost of RTPV plants up to 10 KW as 43,760 per KW.

Response :

•    We request the honourable commission to kindly publish how this capital cost is arrived at. This would allow us to give a more detailed response and better participate with our views.
•    The cost of panels which was falling till the year 2020, is now increasing.
•    At the outset, the cost of 43,760 is too low and most system integrators will agree that it is impossible to install a small rooftop solar plant (up to 10KW) at this cost. Hence, we request the honourable commission to relook at the capital costs.

Depreciation (iX)(Page:11)

In page 11 of the discussion paper, it is mentioned that the depreciation considered for SRTPV plants to be 5.38%.

Response :

•   The depreciation is applicable only for companies and individuals cannot avail of depreciation benefits.

TIMELINES (Xiii)(Page:13)

Page 13 of the discussion paper mention various timelines for the SRTPV process.

Response :

•    The timelines were given in the previous orders as well.
•    While this is a welcome step, there is no mention in the paper on what is the redressal mechanism if these timelines are not complied with.
•    With our experience, we have been making multiple trips to ESCOM offices for approvals and commissioning.
•    One of the activities missing in the discussion paper is the bi-directional meter calibration. At present, ESCOMS accepts the new meter for calibration only after the PPA is approved. There is no timeline for meter testing and no way to get an update from ESCOM on the status of the meter. Installers have to make multiple trips and spend long hours at BESCOM Labs.