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APTEL Orders Karnataka DISCOMs to Refund Safeguard Duty, IGST on Excess Solar Modules

In a significant judgment, the Appellate Tribunal for Electricity (APTEL) has directed Karnataka’s distribution companies (DISCOMs) to refund safeguard duties and Integrated GST (IGST) incurred by Adyah Solar, a ReNew subsidiary, for excess solar modules installed before the commissioning of a 50 MW project in Pavagada Solar Park. The refund includes carrying costs from 2018 until reimbursement.

This marks a precedent for how “change in law” events are interpreted, as APTEL ruled that such claims are valid even for excess modules not explicitly covered by the power purchase agreement (PPA), as long as they were installed prior to commissioning. It rejected the Karnataka Electricity Regulatory Commission’s (KERC) earlier decision to limit compensation only to modules required for achieving the guaranteed capacity utilization factor (CUF) of 15.76%, instead recognizing the project’s higher declared CUF of 27.76%.

However, the Tribunal upheld KERC’s denial of a tariff increase based on the declared CUF, affirming that tariff adjustments should align only with the guaranteed CUF under the PPA. It also confirmed the petitioner’s right to install excess modules up to the project’s maximum DC capacity.

The Tribunal’s order may have broader implications for future renewable energy disputes involving safeguard duties, tax changes, and capital costs, especially where developers seek relief for higher-than-mandated performance. Carrying costs awarded in this case are subject to Supreme Court approval.