The Ministry of New and Renewable Energy has defined the fixed charge to be paid by a power distribution company (Discom) to a renewable energy power generator in the event of an offtake default.
According to the memorandum issued by the Ministry, the fixed charge for renewable energy players will be calculated on the basis of the capacity utilisation factor specified by the generators in the power purchase agreements.
“For projects having more than one year operation, the power not dispatched shall be calculated on the basis of pro-rated actual energy generated in the last 12 months,” the memorandum said. The move is significant as till now, there was no definition of a fixed charge that was to be paid to solar and wind power generators by the Discoms.
This move also gains prominence as from August 1, the Discoms will have to provide a letter of credit as a payment assurance before power is dispatched through the load dispatch centre. If the Discom is unable to provide the LC, the Centre has directed the dispatch centre not to supply power. But the Centre had also said that the fixed charge as defined under the power purchase agreement will have to be paid by the Discom to the power generator even if power offtake does not occur.
Renewable energy players were worried that since there is no definition of a fixed charge for them, they might be asked not to supply power and will get no compensation for it either.