The Tamil Nadu Electricity Regulatory Commission (TNERC) issued an order on August 1, 2024, concerning a petition filed by M/s. Walwhan Renewable Energy Ltd. and M/s. Walwhan Solar TN Ltd. The petitioners sought compensation for the loss of revenue due to the curtailment of power generation by the Tamil Nadu Generation and Distribution Corporation Ltd. (TANGEDCO) and related entities.
The petitioners operate multiple solar power plants in Tamil Nadu, generating a total of 249 MW of power. They entered into Energy Purchase Agreements (EPAs) with TANGEDCO, which stipulated the terms and conditions for the supply of solar power. However, since the inception of these projects, the petitioners have faced significant financial losses due to frequent instructions from the Tamil Nadu State Load Despatch Centre (TNSLDC) and the Tamil Nadu Transmission Corporation Ltd. (TANTRANSCO) to reduce or halt power generation.
These curtailment instructions were often given without written confirmation and were allegedly issued for economic reasons rather than technical necessity. The petitioners argued that these actions violated the ‘Must Run’ status accorded to solar power plants under the Indian Electricity Grid Code and resulted in substantial under-recovery of tariffs. The estimated generation loss until September 2020 was 114.17 million units, translating to a revenue loss of approximately INR 78.73 crores.
The petitioners contended that TNSLDC and TANTRANSCO failed to fulfill their statutory obligations to ensure smooth and efficient power transmission. They also claimed that TANGEDCO breached the EPAs, which entitled them to compensation under the Indian Contract Act. Despite multiple attempts to resolve the issue amicably, the petitioners received no satisfactory response, prompting them to seek the Commission’s intervention.
The petitioners requested the Commission to treat the loss of generation as ‘deemed generation’ and direct TANGEDCO to pay the corresponding charges. They also sought a declaration that any future curtailments should be reimbursed similarly and that TNSLDC and TANTRANSCO should maintain the ‘Must Run’ status for their projects.
The Commission considered the submissions from both sides, including the respondents’ arguments. The respondents, represented by their standing counsel, defended their actions, citing various operational and safety concerns. They argued that the curtailments were necessary to maintain grid stability and were not driven by economic motives. The Commission examined the relevant provisions of the Electricity Act, the terms of the EPAs, and the regulatory framework governing renewable energy.
After a thorough review of the evidence and arguments, the Commission issued its order. It acknowledged the financial impact of the curtailments on the petitioners and the importance of supporting renewable energy projects. The Commission directed TANGEDCO to compensate the petitioners for the loss of deemed generation, as claimed, and to ensure that future curtailments are minimized and justified with proper documentation.
The order emphasized the need for coordination among the respondents to improve the transmission infrastructure and support the seamless integration of renewable energy into the grid. The Commission also stressed the importance of adhering to the ‘Must Run’ status for solar power projects, as mandated by the national and state policies.
This decision underscores the regulatory commitment to promoting renewable energy and protecting the interests of power producers. It also highlights the challenges faced by renewable energy projects in ensuring consistent and predictable power generation amidst infrastructural and operational constraints. The order is expected to have significant implications for the future handling of similar disputes and the overall development of the renewable energy sector in Tamil Nadu.