Renewable Energy Projects in Central Pool to Have Uniform Tariff for DISCOMs

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The Ministry of Power has amended the Electricity Rules providing guidelines to implement the uniform renewable energy tariff for the central pool of projects connected to interstate transmission systems (ISTS).

A uniform renewable energy tariff is expected to encourage distribution companies (DISCOM) to sign power purchase agreements (PPAs) and promote the development of the renewable energy sector. Currently, DISCOMs often delay entering PPAs or force developers to renegotiate tariffs due to discovered tariffs being higher or lower than previous PPAs.

The uniform tariff will also help catalyze the wind sector which is experiencing a slowdown due to low tariffs discovered in reverse auctions.

The implementation of the central pooling mechanism will necessitate the upgrade of transmission infrastructure to increase the capacity of transmission corridors, which will facilitate the development of more renewable energy ISTS projects.

Tariff calculation

The uniform renewable energy tariff will be determined by dividing the total amount to be paid under the power supply agreement for a given month by the total amount of electricity supplied.

However, intermediary procurers, which is likely to be Solar Energy Corporation of India (SECI), would be allowed to sell any unsold power to open access consumers at a price that is at least equal to the uniform renewable energy tariff. Any additional profits made from these sales above the uniform tariff must be adjusted for in the uniform renewable energy tariff for distribution licensees.

This could hint at the entry of SECI into the commercial and industrial (C&I) segment, as the agency could don the role of both intermediary and implementing agency for central pooling.

During a panel discussion at Mercom India’s C&I Clean Energy Meet in Ahmedabad, Ajay Kumar Sinha, Additional General Manager of SECI, said that SECI had held discussions with large businesses to assess the C&I market.

“C&I consumers have relied mainly on private developers for their renewable needs. SECI’s entry into the segment underlines the government’s push to promote renewables,” Sinha had said. “Adopting clean energy for C&I consumers might be a choice now but will soon become a compulsion due to its favorable economics for businesses.”

Contractual obligations

All contractual obligations like liquidated damages, penalties, extension charges, and dispute resolutions between power generators, intermediary procurers, and end procurers will be governed by the relevant bidding documents and will not affect the uniform renewable energy tariff.

Any changes to the tariff due to changes in the law will be reflected in the pooled tariff and will be in accordance with the relevant bidding documents.

Commission’s role

The uniform tariff will only apply to power procured by end procurers and will have no effect on the renewable energy tariff discovered through the tariff-based competitive bidding process which is paid to generators according to their PPAs.

An appropriate commission can adopt the tariff determined through the competitive bidding process carried out by intermediary procurers. This adopted tariff for one category of renewable energy power will be included in the respective category of the central pool, provided that an application has been made by the intermediary procurer or end procurer.

End procurers, except open access consumers, must obtain approval from the concerned State Commission to purchase electricity from a pool at the uniform renewable energy tariff established by these rules.

Bilateral scheduling between renewable energy generators and end procurers will be done directly according to the terms of their power supply agreements. Scheduling, accounting, and deviation settlements will be in accordance with the regulations of the appropriate commission.

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