The Delhi Electricity Regulatory Commission (DERC) has issued the draft DERC (Renewable Purchase Obligation And Renewable Energy Certificate Framework Implementation) Regulations, 2024.

Stakeholders can submit their suggestions and comments by July 2, 2024.

The regulations will apply to all obligated entities, including distribution licensees (DISCOMs), open access consumers, and captive users within the National Capital Territory of Delhi.

Captive power project owners

Any person owning a grid-connected captive generating project based on conventional fossil fuels with an installed capacity of 1 MW or more (or other capacities as stipulated by the Commission) and using the electricity for personal consumption is subject to Renewable Purchase Obligation (RPO) for a percentage of the consumption from this source.

Open access consumers

Any person with a contract demand of at least 1 MW who consumes electricity from conventional fossil fuel-based generation through open access is subject to RPO for a percentage of the consumption from this source.

The Commission may modify the minimum capacities from time to time. Additionally, Green Energy Open Access Consumers are regulated under the Delhi Electricity Regulatory Commission (Terms and Conditions for Green Energy Open Access) Regulations, 2024.

RPO

From the commencement date of these regulations, there will be a uniform RPO for all obligated entities.

Entities, whether obligated or not, can choose to generate, purchase, and consume renewable or green energy according to their needs using the following methods:

Own generation from renewable sources

• There is no capacity limit for installing renewable energy power plants for self-consumption.
• These plants can be set up anywhere in India, and power can be transmitted using open access.
• The generating project can be set up by the entity itself or by a developer with whom the entity has a power purchase agreement.

Procurement through Open Access

• Renewable energy can be procured through open access from any developer.
• This can be done directly, through a trading licensee, or via power markets.

Wind RPO must be met by energy from Wind Power Projects (WPPs) commissioned after March 31, 2022. Wind energy consumed above 7% from WPPs commissioned until March 31, 2022, also counts towards RPO.

Hydro Purchase Obligation (HPO) must be met by energy from hydropower projects, including Large Hydro Projects (LHPs), Pumped Storage Projects, Small Hydro Projects (SHPs), Mini Hydro, and Micro Hydro Power, commissioned after March 8, 2019.

Other RPOs must be met by energy from any renewable energy project not included in Wind RPO or HPO categories. This includes hydropower projects commissioned before March 8, 2019.

Any shortfall in the “Other RPO” category can be met with excess energy consumed from WPPs commissioned after March 31, 2022, beyond the Wind RPO, or from eligible LHPs commissioned after March 8, 2019, beyond the HPO, or a combination of both.

Shortfalls in Wind RPO can be met with excess energy from hydropower plants beyond the HPO for that year and vice versa.

Renewable Energy Certificates (RECs) will be considered according to the Central Electricity Regulatory Commission (Terms and Conditions for RECs for Renewable Energy Generation) Regulations, 2022. Obligated entities may purchase RECs to cover any RPO shortfall within three months of the end of the financial year.

Hydropower imported from outside India does not count towards HPO. The HPO trajectory will be adjusted annually based on the revised commissioning schedules of hydro projects. Hydro Energy Certificate mechanisms can be used to comply with HPO requirements.

Targets specified for obligated entities for FY 2029-30 will be continued beyond FY 2029-30 unless specified by the Commission separately.

Wind energy component must be met by energy from WPPs commissioned after March 31, 2024.

Hydroenergy components must be met by energy from hydropower projects, including PSPs and SHPs, commissioned after March 31, 2024.This can also include free power provided to the State/DISCOM from hydropower projects commissioned after March 31, 2024. This can include energy from hydropower projects located outside India.

Distributed renewable energy components must come from renewable energy projects that are less than 10 MW, including solar installations (net metering, gross metering, virtual metering, group metering, behind-the-meter installations, etc.). Compliance is measured in energy (kWh units). If generation data is unavailable, the capacity is converted to energy using a 3.5 kWh/kW/day multiplier.

Other renewable energy components can include energy from any projects not covered in these components. This can comprise energy from all WPPs and hydropower projects, including free power, commissioned before April 1, 2024.

Shortfalls in wind renewable energy consumption can be met with excess hydro renewable energy and vice versa. Excess wind or hydro renewable energy can be counted towards the other renewable energy component. Excess energy in the other renewable energy component can be used to meet shortfalls in wind or hydro renewable energy.

Open access consumers and captive power plants must meet the total renewable energy target regardless of the non-fossil fuel source.

Targets can be met directly or through RECs as per the Central Electricity Regulatory Commission (Terms and Conditions for RECs for Renewable Energy Generation) Regulations, 2022. Obligated entities can purchase RECs for any shortfall within three months of the end of the financial year.

Other conditions for compliance

Power purchased from renewable energy sources registered for RECs under the Central Electricity Regulatory Commission (CERC) regulations will not count towards the RPO of Obligated Entities.

Obligated entities must provide an undertaking to the state nodal agency that the renewable component of purchased power has not been claimed for RECs by the generators.

Electricity generated by net metering consumers, eligible under DERC regulations or the Delhi Solar Energy Policy, will count towards the RPO compliance for the area’s DISCOM.

DISCOMs must procure 100% of the power generated from waste-to-energy plants in proportion to their overall power procurement or as approved by the Commission.

Renewable energy bundled with coal/lignite power from generating stations will count towards RPO compliance to the extent of the renewable power procured.

DISCOMs must submit quarterly progress reports to the Commission, including the RPO compliance status of open access consumers and captive users, and upload them on their website.

DISCOMs will issue green certificates annually to consumers for green energy supplied beyond the consumer’s RPO.

Green energy star rating

Consumers will be categorized based on the percentage of green energy purchased, using a five-star rating system:

Ratings will be displayed on consumer bills, online platforms, and energy monitoring interfaces and revised annually.

Open access consumers

Open Access Consumers receiving electricity from renewable sources are exempt from wheeling, transmission, cross-subsidy, and additional surcharges to the extent of their RPO compliance. These consumers must submit annual details of total electricity consumption and renewable energy purchases within 15 days of the notification of these regulations. Projections for the next financial year must be submitted by March 31.

• Bank Guarantee (BG) or Fixed Deposit Receipt (FDR): Open access consumers must provide a BG or FDR, valued based on the weighted average price of RECs from the past three months, by April 30 each year.
• Compliance and Reconciliation: Details of RPO compliance must be submitted within two months of the financial year’s end. The DISCOMs can encash the BG or FDR for any shortfall in RPO compliance and must purchase RECs within 30 days of receiving reconciled statements.

Captive users

Captive users must submit annual details of electricity consumption and renewable energy purchases within 15 days of the notification of these regulations. Projections for the next financial year must be submitted by March 31. The BG or FDR submission, compliance reporting, and reconciliation procedure follow the same steps as for open access consumers.

DISCOMs

DISCOMs can recover costs incurred to meet their RPO targets in their Aggregate Revenue Requirement (ARR). They must submit annual details of total electricity sales and REC purchases for RPO compliance within three months of the financial year’s end to the state nodal agency and the Commission. They must also report the compliance of other obligated entities in their supply area.

Penalty for RPO non-compliance

Non-compliance with the RPO will result in penalties as follows:

• DISCOMs: Subject to a reduction in ARR at a rate of ₹0.10/kWh for the cumulative shortfall in total renewable energy procurement target for each year.
• Other obligated entities: Subject to a penalty of ₹0.10/kWh for cumulative shortfall in total renewable energy procurement target for each year.

Adjustments for shortfalls in renewable energy procurement will be made by reducing ARR for DISCOMs and imposing penalties on other obligated entities.

If an obligated entity demonstrates that it could not meet RPO despite taking all possible measures, including procuring RECs, the Commission may reduce the penalty.

The penalty for open access consumers will be computed by the state nodal agency and billed by the DISCOMs. The state nodal agency will calculate penalties for other obligated entities, and the Commission will handle recovery mechanisms on a case-by-case basis. Penalties for DISCOMs will be determined by the state nodal agency and informed to the Commission for adjustment in the ARR determination process.

The Commission had issued the previous RPO and compliance regulations, establishing the RPO trajectory for the national capital territory until the financial year 2025-26, in April 2023.

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