The Delhi Electricity Regulatory Commission has announced the ‘Renewable Purchase Obligation and Renewable Energy Certificate Framework Implementation Regulations, 2021.’ The regulations are effective from April 13, 2021.
The rules govern obligated entities mandated to fulfill their renewable purchase obligation (RPO), which includes distribution licensee (DISCOMs), captive user, open access consumer, or any other entity in the National Capital Territory (NCT) of Delhi.
Renewable Purchase Obligation (RPO)
Every obligated entity must purchase electricity from renewable energy sources to fulfill the defined minimum percentage of the total consumption during the year, under the renewable purchase obligation, as specified below:
The targets specified for obligated entities for the financial year (FY) 2022-23 will be continued beyond FY 2022-23 unless specified by the Commission separately. The obligated entity has to comply with its RPO targets separately for solar and non-solar.
The RPO is inclusive of the purchases from renewable energy sources already developed by the obligated entity. On achieving the solar RPO compliance up to 85% and above, the remaining can be met by excess non-solar energy or non-solar REC procured beyond the non-solar RPO for that particular year.
On achieving other non-solar RPO compliance up to 85% and above, the shortfall can be met by excess solar energy or solar REC or eligible hydro energy purchased beyond the solar RPO or Hydro Purchase Obligation (HPO) for that year.
Meanwhile, ‘HPO benefits may be met from the power procured from eligible large hydropower projects above 25 MW capacity. DISCOMs can utilize the ‘Hydro Energy Certificates’ to meet their HPO compliance. Hydropower imported from outside India would not be considered for meeting HPO.
On achieving HPO compliance up to 85% and above, the shortfall can be met by excess solar or other non-solar energy consumed beyond the specified solar RPO or other non-solar RPO for that year.
Power purchase from the renewable energy-based generating station registered for issuing REC under the CERC (Terms and Conditions for recognition and issuance of Renewable Energy Certificate for Renewable Energy Generation) Regulations 2010 will not qualify for the obligated entities’ RPO.
Electricity generated by net metering consumers qualifies towards RPO compliance for the DISCOMs in the area.
DISCOMs can procure 100% power generated from all the waste-to-energy plants in Delhi, in the ratio of their power procurement from all sources, or as approved by the Commission.
Renewable energy procured by the obligated entity from renewable energy generating stations bundled with coal or lignite generating stations would be considered towards RPO compliance to the extent of the power procured from such renewable energy generating station.
DISCOMs will have to submit quarterly progress reports to the Commission and RPO compliance status of open access consumers and captive users. They have to upload the progress report on their website on capacity addition, generation, and electricity purchase from renewable energy sources and purchase of RECs.
The state nodal agency would regularly develop protocols to collect information from various sources such as renewable energy generating companies, obligated entities, and state load despatch center (SLDC) and compute the RPO compliance target of the obligated entities.
The agency will publish a monthly statement of renewable energy procurement and RPO compliance by the obligated entities on a cumulative basis by the 25th day of the next month on its website, along with a quarterly progress report.
Open Access Consumers
All open access consumers receiving electricity from renewable energy sources are exempted from the wheeling, transmission, cross-subsidy surcharge, and additional surcharge to the extent of the RPO compliance.
Generators using renewable energy sources will provide a certificate to obligated entities that no REC or RPO claim for the power has been made. The extent of RPO compliance only for computation of open access charges must be calculated for non-obligated open access consumers.
Open access consumers must submit details of the consumption of electricity and renewable energy purchase for the fulfillment of RPO every year to the DISCOM within 15 days from the notification date of these regulations.
DISCOMs must consider the projections submitted by the open access consumer to compute the value of bank guarantee or fixed deposit receipt for the financial year.
The open access consumer must submit a bank guarantee or fixed deposit receipt to DISCOMs before issuance of compliance report for completion of metering formalities. The bank guarantee or fixed deposit receipt must be valid up to three months from the completion of the financial year.
Open access consumers must submit the details of the RPO compliance for reconciliation to the DISCOMs of their area within two months from the completion of the financial year.
In case of partial or non-fulfillment of RPO of the open access consumer, DISCOM would encash the bank guarantee or fixed deposit receipt for the amount equal to shortfall units towards the RPO target.
DISCOMs would pay interest at the rate of 1% per month for the delayed period on the amount of bank guarantee or fixed deposit receipt to be released.
DISCOMs must purchase RECs within 30 days of receiving the reconciled statements from open access consumers from the amount realized from encashing bank guarantee or fixed deposit receipt. The balance, if any, is realized through the bill of open access consumer.
Captive users must submit the details of electricity consumption from the captive generating project and purchase of energy from renewable sources for RPO fulfillment every year within 15 days from the notification of these regulations.
DISCOMs must consider the projections submitted by the captive user to compute bank guarantee or fixed deposit receipt for the relevant financial year.
The cost incurred by the DISCOMs to meet their RPO target would not be allowed to be recovered in aggregate revenue requirement (ARR). After physical power procurement, the DISCOMs may be allowed the REC cost at a floor price if they are short of units to meet the RPO target.
However, if the floor price is zero, the REC cost may be allowed at an average of the floor price and forbearance price, as determined by CERC, for such shortfall of units which will be adjusted subsequently.
DISCOMs must submit the details of electricity sales of the consumers in their area and energy purchase from renewable sources to fulfill their RPO on an annual basis within three months from the completion of the financial year to the state nodal agency and the Commission.
RPO compliance is allowed through bank guarantee or fixed deposit receipt for other obligated entities in their respective supply area on an annual basis within three months from the completion of the financial year to the state nodal agency and the Commission.
Treatment of surplus shortfall of RPO Compliance
In case of genuine difficulty in complying with the RPO targets due to non-availability of RECs or delay in commissioning of tied-up renewable power projects, the obligated entity can file a petition before the Commission to carry forward the RPO in subsequent years.
Renewable Energy Pricing
A renewable energy project can adopt either the tariff pricing structure or the REC mechanism for pricing the electricity generated from the project. The projects opting for a tariff must continue with the same tariff pricing structure until the power purchase agreement (PPA) period.
Renewable energy projects can exercise their choice to select an appropriate pricing mechanism before executing the PPA with the DISCOM or with an open access consumer.
Penalty for Non-Compliance
Non-compliance of the RPO, other than HPO targets, by an obligated entity, will attract penalty at the rate of 10% of the weighted average floor price of solar and non-solar REC, specified by the Central Electricity Regulatory Commission (CERC) for the year, for the quantum of shortfall in RPO.
If the floor price specified by CERC is zero for the year, then the penalty will be levied at 10% of the weighted average forbearance price of solar and non-solar renewable energy for the quantum of shortfall in RPO.
The penalty imposed on the DISCOM due to non-compliance of RPO targets would be reduced from the ARR during the true-up of the financial year. The penalty levied on obligated open access consumers will be computed for the relevant year by the state nodal agency and communicated to DISCOMs.
The DISCOMs will bill such penal amount in the electricity bill of the open access consumers. The state nodal agency will compute the penalty levied on the remaining obligated entities for the year. The recovery mechanism will be dealt with by the Commission on a case-to-case basis.
Earlier, instead of penalizing the defaulters, the DERC would allow DISCOMs to carry the shortfall forward to the next year. As a result, the exemption did not include a penalty.
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Rahul is a staff reporter at Mercom India. Before entering the world of renewables, Rahul was head of the Gujarat bureau for The Quint. He has also worked for DNA Ahmedabad and Ahmedabad Mirror. Hailing from a banking and finance background, Rahul has also worked for JP Morgan Chase and State Bank of India. More articles from Rahul Nair.