Key Policy Updates for Solar and Other Renewables from November 2019

The month of November witnessed some key policy announcements and modifications in the domestic renewable industry, especially solar. During the course of the month, the central and state government agencies made some critical policy moves that are likely to have significant implications for the renewable energy sector.

In one such announcement, the Ministry of New and Renewable Energy (MNRE) issued amendments to its guidelines for the competitive bidding process. The latest changes issued by the government seem to be an attempt to provide relief to solar energy developers in the country by tackling issues such as payment security mechanism, curtailment of power, land acquisition, timely tariff adoption, among others.

The following are some of the other key announcements made in the month of November:

Center



The Ministry of Power (MoP) advised the state electricity regulatory commissions (SERCs) to establish the reduction of generation or transmission tariffs in cases of full or advance payments by the distribution companies (DISCOMs) and procurers to the generating stations or transmission companies. The MoP had written a letter to the Central Electricity Regulatory Commission (CERC), SERCs, and Joint Electricity Regulatory Commissions (JERCs) about the decrease in the cost of power due to prepayment in the entire value chain of the power sector. The ministry had also suggested that the retail tariff for the consumers should also be reduced in case the DISCOMs pay the tariff in advance.

The MoP also made an announcement that said that the interstate transmission system (ISTS) charges and losses on the transmission of electricity generated from solar and wind energy projects would be waived as long as they are commissioned before December 31, 2022. In a previous order issued in February 2018, the ministry had said that the charges for the transmission and losses would be waived for projects which were commissioned before March 31, 2022. These charges would be waived for a period of 25 years, provided that the projects are supplying power to entities (including DISCOMs) to meet their respective renewable purchase obligations (RPO).

The MNRE issued guidelines to implement Component-C of Pradhan Mantri Urja Suraksha evam Utthaan Mahabhiyaan (PM KUSUM) program that aims to promote solar in agriculture with the help of grid-connected pumps. Under Component-C of the program, one million grid-connected agricultural pumps of individual capacity up to 7.5 HP are targeted to go solar by 2022.

The MNRE issued an advisory that clarified that as long as a solar PV project is in accordance with the contracted alternating current (AC) capacity and meets the range of energy supply based on its capacity utilization factor requirements, its design and installation on the direct current (DC) side should be left to the developer.

The MNRE has revised its National Wind-Solar Hybrid Policy to state that the RPO contribution of obligated entities that consume energy from hybrid wind-solar sources must be relatively proportional to the power contributed by each source. The calculation will be based on the declared capacities of each source in the power purchase agreement (PPA), according to the MNRE’s notice.

The ministry has written to the Solar Energy Corporation of India Limited (SECI) about granting an extension to wind projects (tranches 1 to V) that have been affected by changes in land policies. This extension will be “subject to the condition that the application for land allotment should have been made within 30 days of the effective date of the PPA,” the MNRE has clarified.

The Central Electricity Regulatory Commission (CERC) has issued a draft regulation for sharing inter-state transmission charges and losses. The commission stated that the regulations would apply to all the designated inter-state transmission system (ISTS) customers, inter-state transmission licensees, national load despatch center, regional load despatch centers, state load despatch centers, and regional power committees. According to the draft, the transmission charges will be shared among the designated ISTS customers so that the yearly transmission charges are fully covered, and any adjustment on account of the revision is recovered.

States

The government of Andhra Pradesh issued a notification amending the state’s policy for wind, solar, and wind-solar hybrid projects, taking away some vital incentives from the renewable generators. The amendments have changed or canceled many existing provisions in these policies that deal with transmission charges, energy banking, and tariff determination. As per the latest amendment, transmission and distribution charges will be determined by the Andhra Pradesh Electricity Regulatory Commission (APERC) for connectivity to the nearest central transmission utility through the state transmission utility (STU) network for the inter-state wheeling of power, and only through the STU for intra-state wheeling of electricity.

Maharashtra came up with a draft regulation for grid-interactive rooftop solar projects that says that the state could go back to gross metering, rolling back net metering for all segments except residential. Further, the cumulative capacity of all renewable energy generating systems under net metering or net billing arrangements connected to a distribution feeder of the DISCOM will only be up to 40% of its rated capacity. However, the draft regulation was met with significant backlash, and later, Chandrasekhar Bawankule, the state’s energy minister, has requested the commission to discard the proposed draft regulations and continue with the previous regulations until the state’s target of 4.7 MW of renewable energy installations is achieved.

The Tamil Nadu Electricity Regulatory Commission (TNERC) has passed an order granting an exemption to high tension consumers installing rooftop solar projects for parallel operation and captive use without the export of power to the grid. However, the commission mentioned that this would be subject to technical feasibility, safety norms, and collecting parallel operation charges as applicable.