GUVNL, Gujarat Discoms want to avail RECs For Solar Power Purchased by them from the Gujarat Solar Park Developers…

The Gujarat Discoms have filed an petition with CERC to grant Renewable Energy Certificates for the amount of solar power purchased by them from the Gujarat Solar Park Developers in excess of the Renewable Purchase Obligations; however the CERC has disposed off the petition stating that petition requires the amendment of the REC Regulations which can be persuaded only after a detailed consultation on the same.

GUVNL and the Gujarat Discoms have filed a petition to CERC stating the below arguments:

  • Subsequent to the notification of the Solar Power Policy by Government of Gujarat, GERC has determined the tariff for purchase of power from Solar Power Projects for the control period from 29.1.2012 to 31.3.2015. Pursuant to the GERC order the Discoms have entered into Power Purchase Agreements for an aggregate capacity of 971.5 MW (946.5 MW of solar PV projects and 25 MW solar thermal projects) with total 88 project developers. As on the date of filing the application, aggregate solar capacity of 857 MW has been commissioned and has commenced injection of power into the grid.
  • As against the solar capacity tied up by the Discoms, the RPO for solar power on the part of the distribution licensees as per the regulation notified by GERC is 1% for the year 2012-13 which works out to 380 MW. The Discoms have tied up significant excess solar capacity for procurement of solar power at the promotional tariff as against the requirement of 380 MW to meet 1% RPO.

  • As per the Central Electricity Regulatory Commission (Terms and Conditions for recognition and issuance of Renewable Energy Certificate for Renewable energy Generation) Regulations, 2010 (REC Regulations), the eligibility for REC does not extend to the distribution licensees procuring solar power from the solar power developers at the promotional tariff for the quantum in excess of the Renewable Purchase Obligations of such distribution licensees specified by the State Commission.

  • While the Discoms have been paying promotional tariff in respect of solar power purchases including in excess of the quantum of the RPO, they are not getting any benefit of solar power purchased in excess of the quantum specified as RPO. Such quantum of power purchased in the State of Gujarat gets completely excluded from the scheme of Renewal Energy Certificate (REC) or for any other benefit. On the other hand, the solar power developers, who have generated electricity and are consuming the same as CPP or selling through open access, are entitled to the benefit of REC and trading the same in the Power Exchange.

  • As per the scheme envisaged in the REC Regulations, the distribution licensees shall purchase solar power from the Solar Developers to the extent of the Renewable Purchase Obligations and thereafter, Solar Power Developers may sell further solar power quantum to the distribution licensees at the pooled power purchase cost of the licensee and become entitled to the Renewable Energy Certificates to be issued by the appropriate agency under the REC Regulations. If such solar power developer sells solar power to the distribution licensees at the same promotional tariff as applicable to the quantum of solar power sold to the distribution licensees towards fulfillment of the Renewable Purchase Obligations, the solar power developers will not get the Renewable Energy Certificates and at the same time the distribution licensees venturing to purchase excess solar power at the promotion tariff as in the case of the State of Gujarat are also not getting any benefit either in the form of the Renewable Energy Certificate or otherwise. The Discoms have submitted that this scheme creates a disincentive for the distribution licensees in the State of Gujarat who have taken initiative to promote solar power without restricting the purchase by the distribution licensees to the extent of the RPO only and also causes a financial impact on the consumers of the State who are required to pay higher tariff in regard to such purchase from solar power projects.

  • The local distribution licensees of the area where the Non-Conventional Power Projects including Solar Power Projects are established are best suited to purchase solar power generated from the solar project as compared with any other person including any obligated entities other than the local distribution licensees. In that event, all complications relating to open access, transmission, wheeling, system constraints, evacuation issues as well as dealing with various authorities get avoided. It would be in the interest of all concerned if the power is sold by the Solar Power Developers to the local distribution licensees of the area after fulfilling the RPO, provided such distribution licensees are issued with RECs.

  • The CERC may evolve a mechanism where under the distribution licensees in the State are recognized as eligible entities under Regulation 5 of the REC Regulations in regard to any quantum of renewable power purchased by them in excess of the RPO, allowing them to exchange the REC with the distribution licensees who are in deficit in the fulfillment of the RPO in regard to solar power.

Thus the Discoms have prayed as below:

“(a) Initiate a proceeding in pursuance to the above petition for inquiring into and deciding on varies matters concerning the solar power development as detailed herein above;

(b) Declare that the distribution licensees shall also be made as ‘Eligible Entities’ for the Renewable Energy certificate under the REC Regulations in respect of the purchase of solar power by them on promotional tariff in excess of the stipulated Renewable Purchase Obligation;

(c) Advise the Central Government on the issue of fixing uniform Renewable

Purchase Obligation of solar power across all the States;

(d) Other matters concerning the solar power development as mentioned herein above so as to implement an uniform policy across all the States; and

(e) Pass any such further order or order as this Hon’ble CERC may deem just and proper in the circumstances of the case.”

However as said by the CERC:

After going through the contents of the petition, it appears that the Discoms are seeking amendments to certain provisions of the REC Regulations in order to make the distribution licensees eligible for grant of REC for the power purchased by them in excess of their RPO.

According to the Discoms, this would enable the distribution licensees to meet their RPO and also encourage them to buy solar power in excess of the RPO. The Commission is of the view that the existing provisions of eligibility in the REC Regulations which is limited to generating companies is adequate at this stage of development of REC market. Without going into the merit of the issues raised, we intend to clarify that filing of the petition is not the proper process for initiating the amendment to the existing regulations.

The Commission under Section 178 of the Act has been vested with the power to make, amend and repeal the regulations on the subjects which have been authorized under various provisions of the Act. Action to make or amend the regulations is initiated when the Commission is satisfied that there is need for such regulations or amendment to the existing regulations. However, the Commission has taken note of the submissions and concerns of the Discoms regarding issuance of solar RECs to the distribution licensees in excess of their RPO. We direct the staff to examine the issues and submit a proposal to address the problems, if any, for consideration of the Commission.

With regard to Discoms’ prayer for rendering advice to the Central Government on the issue of fixing uniform RPO of solar power across all the States, it is clarified that the Commission vide its letter dated 28.12.2011 has already given its statutory advice to the Ministry of power in terms of Section 79 (2) of the Electricity Act, 2003.

The complete order can be downloaded from here.

Source: CERC

About Ritesh Pothan

Ritesh Pothan, is an accomplished speaker and visionary in the Solar Energy space in India. Ritesh is from an Engineering Background with a Master’s Degree in Technology and had spent more than a decade as the Infrastructure Head for a public limited company with the last 9 years dedicated to Solar and Renewable Energy. He also runs the 2 largest India focused renewable energy groups on LinkedIn - Solar - India and Renewables - India
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