COVID19 and RE Sector: Do we need knee-jerk reaction or foresighted response?

Do I need to emphasize upon explaining COVID19 or what should be done as an individual? Don’t think so. Everyday people like me and you are living inside, following lockdown norms, full of fear of this untoward crisis. Policymakers citing recession crisis, Industrialists quoting downfall of the economy, employees fearing of impending unemployment and general public fearing of uncertain times. I have the least of the intent to make you further dreadful. Instead, what we need at this juncture, is to remain positive in this uncertain times, this constructively as this is not the first time humanity has witnessed such crisis, and every time only the positivity, has pulled us out and we progressed with greater resilience.

For the past 40 days, attended so many webinars, discussions and in each and every one of it, one topic was common- fear about COVID19. I won’t say it is unexpected and unrealistic not to expect, however, I witnessed the knee jerk reaction response from speakers, stakeholders, and regret to say many suggested being opportunistic.

In the power sector, I feel only CERC has behaved as per their statutory responsibility, didn’t kneel down towards the unrealistic expectations and this is what we need today – a calculated and foresighted response.

The executioner is expected to react as there is a lot at stake for them at present and also have to make way for future but knee jerk reaction yields nothing more than damaging the fabric and structure that took years to get into present shape. Few of the actions which I couldn’t able to classify in which category it should be placed. Whether it belongs to a knee jerk reaction or it was a foresighted and legally tenable response. I felt it obligatory to share my understanding of such issues while analyzing key issues at hand.

ISSUE ANALYSIS

I tried discerning few facts as hereinbelow, which I feel people need to know:

• Grid Code is the document that carries the utmost importance w.r.t. power system and it specifies the guidelines all connected entities of the power system must adhere to. The Grid Code we know is a formulation by CERC as CERC (IEGC) Regulations 2010 and its subsequent amendments.
• The IEGC Regulations 2010 provide necessary guidance on technical and commercial rules, for people connected to the power system. In its own words, the IEGC Regulations defines as

“The IEGC also lays down the rules, guidelines, and standards to be followed by various persons and participants in the system to plan, develop, maintain and operate the power system, in the most secure, reliable, economic and efficient manner, while facilitating healthy competition in the generation and supply of electricity”

Though respective states are empowered to issue their respective grid codes, none of them shall carry provisions contrary to the principle Grid Code of CERC and everyone takes guidance from the same.

• A simple reading of the IEGC will let us understand that there is no word like ‘grid security’, ‘grid discipline’, or ‘grid safety’ is defined.
• Further, the word ‘grid security’ comes 7 times, and contrary to common belief the words ‘grid safety’ and ‘grid discipline’ didn’t even find mention in any of the provisions of the Grid Code. So if it is not there in the Grid Code, whether any consequential actions citing the same may be imposed upon, is something we need to explore.
• The IEGC defines the word ‘Grid Standards’ and bestows responsibility to define it further by CEA as part of CEA (Grid Standards) Regulations 2010. CEA Grid Standards Regulations define two aspects as ‘grid disturbance’ and ‘grid incident’, and as per the respective definition, these are something that causes the tripping of one or more elements of the power system.

So in wake of aforementioned issue analysis and problem statement, few pertinent questions are What is Grid Security and whether it can sustain for an indefinite period? And If there is a danger to grid standards, what elements of the power system are put in danger by RE Generation? and Whether respective DISCOMs can issue grid security instructions to RE generators? If you yet have not got the explicit answer, let me summarise the same for you as below:

1. There is no terminology defined in existing IEGC Regulations or Grid Code w.r.t. Grid Security or Grid Discipline so there can’t be any instructions using such terminology.
2. Even if Grid Security is read as a violation of Grid Standards, what elements are put into grid danger and by its own definition, it can't be continued or indefinite. Its consistent application justifies only one thing i.e. inefficient grid management and if the respective regulatory bodies do not take action to restore normalcy, then it questions their integrity as well.
3. As per IEGC Regulations, the responsibility to monitor and control the grid belongs to load despatch center of the control area and not to the distribution company so instructions can't be issued by respective DISCOM. One may argue DISCOM being the controller of their jurisdiction, it is not justified as even act demarcates and differentiates the responsibilities of distribution and load despatch functions.

SUGGESTED WAY FORWARD

In the wake of the above, I feel that developers must seek responses from curtailment instructions issuing authorities as below:

• What grid standards were violated because of RE generation, that prompted for curtailment instructions? What was the duration of such a grid incident? What power system elements were exposed to tripping due to such RE generation?
• What actions were taken by the curtailment instruction issuing authority to restore the grid standards? Were curtailment of RE generation was the only option to avoid grid incident?

If such responses are not received by developers and neither entertained by the respective regulatory commission, then they must resort to reach out Executioners e.g. MNRE or MOP, etc. Which in turn may consider issuing instructions to CERC under Section 108 of the Electricity Act 2003 to pass a clarificatory order on a suo-moto basis to direct respective state load despatch centers not to issue any curtailment instructions of RE and violation of such orders may attract penal provisions under Section 142 of the electricity act.

ISSUE ANALYSIS

• Few thoughts many would be knowing on Policy vs Regulations are as below:

“Regulations carry the weight of the law. They are directive in nature and any policy that conflicts with regulations would be default bow to regulations. A policy cannot super cede regulation”

“A regulation has the effect of law and is considered as a restriction that is imposed by authorities, to make people follow the desired code of conduct. Policies are generally aimed towards achieving a goal whereas regulations are restrictive in nature and impose sanctions for non-compliance. A policy may do this too, but the authority to do so generally comes from regulatory requirements.”

To be very frank, the aforementioned quotes are neither mine, nor I claim knowing person who said so, found it on Google. Nevertheless, it precisely defines the Regulation, Policy, and underlying conflict between the two. Further according to Black's Law Dictionary (Sixth Edition),

1. A regulation is "a rule or order prescribed for management or government; a regulating principle; a precept."
2. A Policy means “an assent, acquiescence or agreement to terms and conditions of policy”.
3. A regulation issued by an administrative agency interpreting or applying the provisions of a statute. Administrative acts having the force of law, designed to clarify or implement a law or policy

Now, do I need to clarify further the difference between the two and importance each hold, if so, I will prefer summarising that Regulation has force and Policies don’t!

• I can recall an instance where the RE stakeholders were deliberating upon the positives of state policy and were quite ecstatic and euphoric about the incentives and waivers that policy was offering and I was skeptical at that moment as there wasn't any regulatory provision affirming such policy benefits. As much as I know, unless the policy notifications are issued under section 108 of the statute, they cannot be obligatory on regulatory bodies to follow, which may after taking cognizance of the same, issue a requisite amendment of regulations to reflect the policy benefits. Not only this, but ERCs are also empowered even not to adhere to such requests if they deem it not fit for the sector.

SUGGESTED WAY FORWARD

Having positive policy measures create lucrative investment scenario, however, developers must hold their guns, unless the same measures are reflected in the applicable regulations. Initiating any investment without regulatory clarifications can be classified as nothing more than Knee-Jerk's reaction rather than a foresighted response to such investment decisions.

I will end my writing with this quote as below:

We must trust the institutions we have created. We must have foresighted response in business than mere knee jerk reaction to risk capital.

Disclaimer: This post shall be viewed solely as the viewpoint of the author and has nothing to do with the viewpoint/suggestion of present or past organization with which the author has been associated. The post is intended for the purpose of knowledge dissemination only and not to derive commercial gains.