Captive Power Generator Directed to Purchase RECs to Meet RPO Targets

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The Uttar Pradesh Electricity Regulatory Commission (UPERC) recently directed a captive power generator to provide details of the energy that had been procured through open access for the financial year (FY) 2018-19 to FY 2021-22, and the renewable purchase obligation (RPO) compliance report.

The Commission directed the petitioner to purchase the required renewable energy certificates (RECs) from the exchange within three months to fulfill its RPO targets.

Shree Cement had filed a petition to allow the carry forward of RPO compliance requirement for FY 2018-19 to FY 2021-22 due to difficulty in complying with RPO targets of its cement grinding unit in Uttar Pradesh.

Background


Shree Cement is engaged in manufacturing cement and electricity generation. It has its cement manufacturing units in Rajasthan, Uttarakhand, Haryana, Jharkhand, Bihar, Chhattisgarh, Odisha, and Karnataka. It has captive generating units in Karnataka, Rajasthan, and Chhattisgarh.

The petitioner also has a cement grinding unit in Uttar Pradesh, which avails 12.24 MW of power under open access.

Shree Cement said that for FY 2018-19, the solar RPO deficit was due to the limited availability of solar RECs, which resulted in pro-rata allocation. This led to the allocation of a lower number of RECs by the power exchange.

Citing Regulation 5.4 of the UPERC RPO Regulations 2010, the company requested the Commission to allow the carry forward of the deficit from FY 2018-19 to 2021-22. It added that there was genuine difficulty in meeting RPO targets due to the non-availability of power.

Commission’s analysis 

The Commission noted that there was a long delay in filing the petition and wanted to know why no petition was filed during FY 2019-20 and FY 2020-21. It also sought details of the transactions that were made on power exchanges and other open access transactions to determine the RPO of the petitioner.

The petitioner submitted that the Appellate Tribunal for Electricity (APTEL) had ordered a stay on REC trading in FY 2020-21. It was one of the reasons for the petitioner’s inability to meet its RPO targets. It would be able to clear the deficit by FY 2022-23, it said.

Certain restrictions were also imposed in Karnataka on the sale of renewable power outside the state, which made it difficult to meet the RPO targets. It added that it would purchase the RECs required to meet its RPO requirements by the end of this year.

The Commission directed Shree Cement to provide the complete details of the energy procured through open access and the RPO compliance report.

It asked the captive power generator to purchase the required RECs within three months to meet its RPO targets or attract penalties.

Last June, UPERC directed Uttar Pradesh Power Corporation (UPPCL) to deposit ₹72.45 billion (~$978 million) in the RPO Regulatory Fund, including ₹14.59 billion (~$197 million) on account of a shortfall in RPO compliance until the FY 2020-21 and ₹57.85 billion (~$780.93 million) against projected RPO requirements for FY 2021-22.

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