TARIFF FRAMEWORK FOR PROCUREMENT OF POWER BY DISTRIBUTION LICENSEES AND OTHERS FROM WIND-SOLAR HYBRID PROJECTS AND OTHER COMMERCIAL ISSUES FOR THE STATE OF GUJARAT

Order No. 04 of 2021

In the Matter of: Tariff framework for Procurement of Power by Distribution Licensees and Others from Wind-Solar Hybrid Energy Projects and Other Commercial issues for the State of Gujarat.

INTRODUCTION
Background
In exercise of the powers conferred under Sections 3 (1), 61 (h), 62 (1) (a), and 86 (1) (b)& (e) of the Electricity Act, 2003, National Electricity Policy, 2005, and Tariff Policy, 2016 and all other powers enabling it in this behalf, the Gujarat Electricity Regulatory Commission (GERC or Commission) presents this Order on the tariff framework for procurement of power by Distribution Licensees and others from Wind – Solar Hybrid Power Projects to be commissioned prospectively.

The Electricity Act, 2003

The following provisions of the Act provide the enabling legal framework for promotion of Renewable Sources of energy by the State Electricity Regulatory Commissions (SERCs):

Section 61 (h) of the Act provides that, while specifying the terms and conditions of determination of tariff, the Commission shall be guided by the objective of promotion of co- generation and generation of electricity from renewable sources of energy. Section 62 (1) (a) of the Act provides for determination of tariff for supply of electricity by a generating company to a distribution licensee.

Section 86 (1) (b) of the Act regulates the procurement process of electricity by the distribution licensees as under:“regulate electricity purchase and procurement process of distribution licensees including the price at which electricity shall be procured from the generating companies or licensees or from other sources through agreements for purchase of power for distribution and supply within the State;”

Section 86 (1) (e) of the Act mandates promotion of co-generation and generation of electricity from renewable sources of energy.Section 3 (1) of the Act requires the Central Government to formulate, inter alia, the National Electricity Policy in consultation with the Central Electricity Authority (CEA) and State Governments for inter-alia, development of the renewable sources of energy. The provision is quoted below:

“The Central Government shall, from time to time, prepare the National Electricity Policy and tariff policy, in consultation with the State Governments and the Authority for development of the power system based on optimal utilisation of resources such as coal, natural gas, nuclear substances or materials, hydro and renewable sources of energy.”

National Electricity Policy (NEP)
Clause 5.2.20 of the NEP stipulates the need for fully exploiting the feasible potential of non-conventional energy sources, as reproduced below: “5.2.20 Feasible potential of non-conventional energy resources, mainly small hydro, wind and bio- mass would also need to be exploited fully to create additional power generation capacity. With a view to increase the overall share of non-conventional energy sources in the electricity mix, efforts will be made to encourage private sector participation through suitable promotional measures.”

Tariff Policy 2016

In compliance with the Section (3) of the Act, the Central Government has notified the revised Tariff Policy on 28th January, 2016. The Tariff Policy elaborates the role of Regulatory Commissions, the mechanism for promoting renewable energy, the time-frame for implementation, etc. Clause 5.2 of the Tariff Policy provides as under: “Provided also that the State Government can notify a policy to encourage investment in the State by allowing setting up of generating plants, including from renewable energy sources out of which a maximum of 35% of the installed capacity can be procured by the Distribution Licensees of that State for which the tariff may be determined under Section 62 of the Electricity Act, 2003.”

National Wind-Solar Hybrid Power Policy 2018

The Ministry of New and Renewable Energy (MNRE) notified the National Wind-Solar Hybrid Policy on 14th May 2018. “2.1 The main objective of the policy is to provide a framework for promotion of large grid connected wind-solar PV hybrid system for efficient utilization of transmission infrastructure and land. It also aims at reducing the variability in renewable power generation and achieving better grid stability”. “2.2 Policy also aims to encourage new technologies, methods and way-outs involving combined operation of wind and solar PV Plants.”

Gujarat Wind-Solar Hybrid Power Policy 2018

‘Gujarat Wind-Solar Hybrid Power policy-2018’ notified by Government of Gujarat on 20th June, 2018 aims to harness the huge RE potential of the state through “hybridization” of the two sources of energy. Solar and Wind energy potential of the state is mostly concentrated in the areas of Saurashtra, Kutch and North Gujarat region.

Renewable Purchase Obligation in Gujarat

The Gujarat Electricity Regulatory Commission (Procurement of Energy from Renewable Sources) (Second Amendment) Regulations, 2018, (Notification No. 01 of 2018) dated 21stApril, 2018 has specified the minimum renewable power purchase by the obligated entities for the financial year (FY) 2017-18 to 2021-22 as shown in Table below.

Renewable Purchase Obligation in Gujarat FY 2017-18 to 2021-22

Further, this Regulation recognises the certificates issued within the scope of Central Electricity Regulatory Commission’s (CERC) Notification No. L-1/12/2010-CERC dated 14thJanuary, 2010 as the valid instruments for the discharge of the mandatory obligations set out in these regulations for the obligated entities to purchase electricity from renewable energy sources termed as Renewable Energy Certificates (REC).

Objections of the Stakeholders
GE South Asia and GE Renewables submitted that for captive and third-party models, the power contracted from the hybrid project shall be capped to 100% of the sanctioned load of consumer since:the Gujarat Hybrid Policy allows Developer the choice/ discretion of capacity mix between wind and solar; and a Project qualifies as a hybrid project under the MNRE Policy and Gujarat State Policy both if the rated power capacity of one resource is at least 25% of the rated power capacity of other resource.

Security Deposit 2.14.1 Proposed in Discussion Paper

The Hybrid Power Developer setting up new project (Type-B) shall be required to provide Bank Guarantee @ Rs. 3 lacs per MW to GETCO based on allotment of transmission capacity and in case the Developer fails to commission the Hybrid capacity within the time period mentioned hereunder, GETCO shall encash the Bank Guarantee. The Developer shall commission new Hybrid capacity at least 10% of the allotted capacity within one month of charging of evacuation line, failing which, the Developer shall be liable to pay long term transmission charges for 10% of allotted capacity till such 10% of allotted capacity is commissioned.


7Security Deposit

Provided that GETCO may issue extension on case-to-case basis to the Developers if they fail to commission the entire evacuation line along with bays and metering system within the stipulated time period due to unforeseen reasons.”

Security Deposi

The Hybrid Power Developer setting up new project (Type-B) shall be required to provide Bank Guarantee @ Rs. 3 lacs per MW to GETCO based on allotment of transmission capacity and in case the Developer fails to commission the Hybrid capacity within the time period mentioned hereunder, GETCO shall encash the Bank Guarantee.

The Developer shall commission new Hybrid capacity at least 10% of the allotted capacity within one month of charging of evacuation line, failing which, the Developer shall be liable to pay long term transmission charges for 10% of allotted capacity till such 10% of allotted capacity is commissioned.

Security Deposit

Provided that with prior approval of the Commission GETCO shall issue extension on case to case basis to the Developers if they fail to commission the entire evacuation line along with bays and metering system within the stipulated time period due to unforeseen reasons.In case of state level bid, the Commission shall approve the bid / PPA documents when the same shall be submitted before Commission for approval. Long term transmission charges are applicable as decided by the Commission in the GETCO tariff order, time to time.

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