The Indian wind industry has taken the Government of India to the High Court of Delhi over the new ‘deviation settlement mechanism’ regulations, which the industry feels are arbitrary and unfair in their retrospective application.
The DSM is a means to enforce grid discipline by penalising suppliers and consumers of electricity who stray from the schedule given to the grid operator. There has to be a balance of supply and draw of electricity on the grid, or else equipment at the receiving end would go kaput.
The DSM has been in force since 2014, but in January 2022 the government brought in tighter regulations, leaving the renewable energy industry unhappy. Essentially, it is difficult for wind energy companies to stick to schedules because nobody can predict wind flows accurately.
The older regulations allowed a wind developer to “over-inject up to 100 per cent”, namely double what it said it would inject into the grid every 15 minutes, and be paid for it. Beyond 100 per cent, there would be no payment. The new regulations, however, allow only up to 10 per cent over-injection.
Similarly, earlier if the wind developer put in up to 15 per cent less energy than promised, there would be no penalty. The 2022 regulations reduced it to 10 per cent, that too with retrospective effect.
The government’s argument is that predicting winds has become more accurate with advancement in technology, but the industry disagrees.
M P Ramesh, a wind industry expert and a former Director of the National Institute of Wind Energy (NIWE), told businessline that, under the previous rules, of the 35,040 15-minute periods in a year, the industry would not face penalty for about 32,000; but under the new rules that number is down to around 22,000 — forcing the industry to either forgo revenue or pay penalties.
“It is more about atmospheric sciences where the processes are chaotic, rather than deterministic,” says Ramesh. “They have to understand that generators are not atmospheric scientists, nor do they have any control over atmospheric processes.”
The petition states that existing projects won in tenders through tariff bids would become unviable with the new regulations, since they were based on the previous regulations. “It is settled law that penal measures can only be applied prospectively,” the petition notes.
Meeting with minister
In the meantime, Union Power Minister RK Singh called the industry for a meeting on Wednesday, but later postponed it. The industry is worried the minister might ask it to withdraw the petition ahead of negotiations, as happened earlier, an industry source said.
“Who has the guts to say ‘no’ to a minister?” observed an industry insider.
Sources point out that the wind industry — a crucial component of India’s carbon emission reduction commitments — is dying. After hitting a high of 5,502 MW in 2016-17 (because of expiring incentives), the highest wind installation in subsequent years was 2,118 MW in 2019-20. Today, the country’s total wind installed capacity is 41,844 MW; yet the government’s Draft National Electricity Plan hopes to add 40,500 MW in 2022-27.