TNERC has issued Draft Tamil Nadu Electricity Regulatory Commission (Forecasting, Scheduling and Deviation Settlement and related matters for Wind and Solar Generation) Regulations, 2023 and invited public comments by 10th October, 2023 which was later extended to 25th October, 2023.

The recent CERC’s DSM regulations 2022 has done away with the concept of frequency linked deviation charges and introduced the new concept of charges for deviation. Additionally, it was felt that multiple QCAs within the State warrant multiple interaction points for SLDC for operationalizing the Scheduling and Deviation Settlement which is complicated and impractical. Considering these developments at the state and central level and increasing RE penetration at state and central level making reliable grid operation more challenging, the proposed regulation has been brought out at the right juncture.

Our comments on the proposed regulations broadly cover following aspects:

1. Concept of Single QCA for the State: The regulations have proposed a possibility of a ‘single QCA’ for the whole state. While this seems to be a new and novel innovative proposal, it opens several questions and is not very clear in its articulation. There is a need to re-draft these provisions such that there is no room for confusion or non-clarity in terms of the mandatory or voluntary nature of this idea of single QCA.
2. Review of Regulations: A mid-term review of any regulations is a welcome step and we encourage it. We suggest that the review of regulations should be done based on an analysis of absolute error of generators during the implementation of these regulations over the next two years. Such data backed analysis should also be accompanied by the study of impact of DSM mechanism for solar-wind generators on state grid operation and deviation of state at national grid level. This analysis and data should be made public in the form of a report based on which a consultation could be held subject to which regulations could be appropriately amended.
3. Amending definition of Absolute error – a step in the right direction: We welcome the initiative by the Commission in transitioning from AvC based error calculation to schedule based determination of absolute error. This will provide better understanding of deviation from schedules and will be a good signal for improving forecasting mechanism by the generators or QCAs, as the case may be.
4. Change Payment & Accounting from actual to schedule basis: Deviation penalties for inter-state transactions and for regional entities are parameterised (linked to tariff under their PPAs or linked to market rates), while those for intra-state transactions are based on absolute value (absolute value in Rs/kWh such as Rs 0.25/kWh etc). Such absolute values need careful attention and regular revision in line with the wind and solar market prices. Charges are being retained at same level decided four years ago while market prices of wind, solar and wind-solar hybrids have reduced in real terms in that period. Hence ideally, Tamil Nadu should move to intra-state ABT framework-based accounting and align the state framework for RE forecasting and scheduling in line with the CERC framework for regional entities. Or else there might arise a situation in which deviation charges under these two frameworks may vary quite widely, even when projects are situated next to each other geographically.
5. Changes needed in Deviation Charges: In terms of the DSM charges, one has to decide two things, 1) the error bands and 2) the deviation charges for each error band. It should be noted that the state-level aggregation of deviations will result in much lower deviation errors and hence, different and lower deviation band should be provided in case aggregation is being done at state level. However, the Commission is also proposing a new error formula with respect to scheduled generation which is likely to increase the absolute errors at the pooling sub-stations. As an example, Gujarat already has a much lower zero charge deviation band of 7% and 12% for solar and wind respectively. In order to reduce the impact of RE deviation on grid management, the zero-charge deviation band should be much tighter and lower in case aggregation is carried out in practice at the state level. In case such aggregation does not happen in practice and the new absolute error formula is accepted, then the proposed error bands could be appropriate for individual pooling sub-stations. Appropriate changes in the deviation settlement charges linked to PPA/market rates would also need to be done.
6. Do away with proposed idea of capping the annual deviation charges levied on generators: Prima facie, the notion of a cap on DSM charges is counter to whole notion of generators being fully responsible for the deviation they cause on the system. Putting in a cap on DSM charges and socializing this cost across other entities would weaken the F&S framework and can act as a deterrent to whole mechanism proposed by the commission. Instead, there is a need to increase the responsibility of RE generators towards stable state grid operation. Under the existing framework in the state, the DISCOMs bears the cost of deviation penalties by wind and solar generators up to 15% absolute error (and now proposed 10% tolerance limit for solar). Until few years ago, while RE generation was low and high cost, an exemption from DSM charges up to a limit was necessary and appropriate. However, it is time that the deviation caused due to wind and solar generation should be fully borne by these generators.
7. Public and timely data reporting by SLDC: Data reporting by SLDC in the public domain is entirely missing in the regulation. We suggest that the commission should include a provision for data reporting related to forecasting and scheduling in the public domain.