JSW Steel’s Fossil Fuel-Based Cogeneration Projects Exempted from RPO Compliance

The Appellate Tribunal for Electricity (APTEL), in a recent order, ruled that JSW Steel be exempted from the renewable purchase obligation (RPO) compliance regarding its Dolvi unit in Maharashtra for the period between financial year (FY) 2010-11 and FY 2015-16, as long as the power generated from the cogeneration projects was more than the RPO target.

The Tribunal also exempted the generator from meeting the RPO targets for the subsequent years (the period covered by the MERC RPO Regulations, 2016) as long as the power generated from the cogeneration projects was more than the RPO target.

JSW Steel had filed an appeal with the APTEL, challenging the earlier order passed by the Maharashtra Electricity Regulatory Commission (MERC), in which the Commission had rejected the power generator’s request seeking exemption from the applicable RPO regulations for FY 2010-11 to FY 2013-14 and subsequent years concerning its manufacturing unit located at Dolvi in Maharashtra.

Background


JSW Steel is a manufacturer of steel and allied products in India and owns a steel manufacturing unit at Dolvi in Maharashtra. JSW Steel has two captive power projects at Dolvi, including a gas expansion turbine of 14 MW capacity (previously 6.5 MW) and a waste-gas-based cogeneration project of 53.5 MW capacity.

In September 2013, JSW Steel had filed a petition before the Commission seeking to declare the electricity produced and consumed from its cogeneration projects of 6.5 MW and 53.5 MW would meet the corresponding RPO target of its units in Maharashtra.

The company, in its submission, said that its project at Dolvi, being a cogeneration project, ought to have been treated at par with renewable sources of energy, even though the heat generated in the steel-making process was derived from fossil fuels.

MERC, in its reply, said that the appellant had submitted that the electricity produced and consumed from its cogeneration projects would offset the corresponding RPO targets for the units located in Maharashtra. However, the Maharashtra Energy Development Agency (MEDA) submitted that JSW’s cogeneration project was a fossil-fuel-based project, which was not recognized as a source of renewable energy by the Ministry of New and Renewable Energy (MNRE) and could not be considered for the fulfillment of RPO.

MERC, in the reply, emphasized that in terms of the MERC RPO Regulations, 2010, an ‘obligated entity’ has to procure energy from renewable energy sources as recognized and approved by the MNRE or purchase renewable energy certificates for meeting its RPO.

Tribunal’s analysis

The Tribunal noted that the power generator had requested MEDA to certify that the Dolvi unit of the generator had complied with the RPO targets based on generation and consumption of power from its cogeneration projects.

This Tribunal, following the earlier judgment of JSW vs. the Tamil Nadu Commission, opined that cogeneration plants could not be tied with any RPO obligation so long as the cogeneration was more than the RPO target.

The Tribunal stated that it was not in dispute that the steel manufacturing unit situated at Dolvi fulfilled its power requirement from the cogeneration captive power projects.

The Tribunal further added that since the generation and consumption from its cogeneration project were over the RPO targets corresponding to the open access consumption, the appellant was compelled to file the petition.

“On more than one occasion, this Tribunal has held that irrespective of the fuel used in a cogeneration project, the cogeneration project has to be treated as a separate category of generation of power from that of renewable energy source category. The cogeneration project could not be fastened with the RPO targets to purchase energy from renewable sources, irrespective of the fuel used by the cogeneration plant,” APTEL added.

Taking cognizance of all the facts, APTEL stated that JSW Steel should be exempted from the RPO targets for its Dolvi unit for the period between FY 2010-11 and FY 2015-16 (period during which MERC RPO Regulations of 2010 were applicable) as long as the power generated from the cogeneration projects was more than RPO targets. Also, the Tribunal ruled that the appellant was exempted from the RPO targets for the subsequent years (the period covered by the MERC RPO Regulations, 2016) as long as power from cogeneration was more than the RPO targets.

In January this year, the Jharkhand State Electricity Regulatory Commission said that additional electricity produced through cogeneration could not be tied with the RPO. The Commission dismissed the petitioners’ request for cogeneration to be considered on par with renewable power and the obligated entity to be exempted from meeting the RPO targets.

Earlier, MERC had directed the Oil and Natural Gas Corporation to comply with its RPO target of 9% as per state regulations. The ONGC had filed a petition with the Commission seeking clarification on its RPO targets for 59.2 MW of its cogeneration projects.

Similarly, West Bengal Electricity Regulatory Commission said that any power purchased from fossil fuel cogeneration projects would not be counted for RPO compliance.

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