The Chhattisgarh State Electricity Regulatory Commission (CSERC) has issued an amendment to its regulation for captive generating projects.

These regulations deal with the renewable purchase obligation (RPO) targets to be achieved by obligated entities as a percentage of total consumption.

As per the amendment, the captive generating projects, commissioned before April 01, 2016, will have an RPO target of 1% for solar and 6.25% for non-solar for the financial year (FY) 2015-16.

For those commissioned after April 01, 2016, the RPO targets as specified in these regulations or by the Ministry of Power (MoP) (whichever is higher) will be applicable.

Also, if the capacity of the captive projects has been augmented, the RPO for the increased capacity will be what’s mentioned in these regulations for the year in which the capacity was added.

Background

In February 2019, the Ministry of Power, after considering the concerns raised by various stakeholders regarding capping of RPO for captive power projects, issued a clarification to the effect that RPO of these projects should be pegged at the level applicable in the year in which the captive project was commissioned. As and when the company adds to the capacity of the project, it will have to provide for additional RPO as obligated in the year in which new capacity is commissioned.

Then in October 2019, the MoP had issued a notification on capping of RPO for captive power projects.

For those captive projects which were commissioned before April 1, 2016, the RPO applicable will be at the level as mandated by the Commission for the year 2015-16. For projects commissioned from April 1, 2016, onwards, the RPO applicable will be as mandated either by the Commission or by the Ministry of Power, whichever is higher, for the year of commissioning of the project. If the company has made an addition to the capacity, then the RPO for the additional capacity will be the RPO applicable for the year in which the project was expanded.

The state commission underlined that some industries having captive projects had expressed difficulty in complying with the RPO trajectory specified in the regulations and submitted that the clarification of the Ministry of Power if adopted, will provide them some relief.

In a similar move, Assam also recently amended its RPO regulations in line with the MoP amendments.

Recently, the MoP issued a draft proposal for the amendment of the Electricity Act 2003, under which another sub-section is added to address the non-compliance of renewable and hydropower purchase obligation. The penalty proposed is ₹0.50 (~$0.006)/kWh for the shortfall in purchase in the first year of default. If the shortfall in purchase continues in the second, then the person is liable to pay ₹1 (~$0.013)/kWh. The penalty will be ₹2 (~$0.026)/kWh, for the shortfall in purchase continuing after the second year.