MERC Examines if Fossil Fuel-Based Cogeneration Projects Can be Exempt from RPO

The Maharashtra Electricity Regulatory Commission (MERC) dismissed JSW Steel Limited’s plea seeking exemption from the requirement to meet its renewable purchase (RPO) targets to the extent of its consumption from its cogeneration plants. The company has two fossil fuel-based cogeneration projects at Dolvi in Maharashtra.

Background

The company owns a manufacturing unit located at Dolvi in Maharashtra, and it established a captive power project at its unit. The exhaust flue gases produced during the iron making process has its inherent heat capacity, which is utilized to produce 53.5 MW. It also has a gas expansion turbine of 14 MW (earlier 6.5 MW).

JSW Steel had filed another petition in September 2013 asking the Commission to declare that the electricity produced and consumed by the petitioner from its cogeneration projects of 6.5 MW and 53.5 MW would meet its RPO target.


The Commission in its order dated May 04, 2018, had said:

“… Based on the data submitted by MEDA, the Commission finds a shortfall against the cumulative RPO target to the extent of open access consumption. The Commission directs the consumer to fulfill its RPO target cumulatively for the period from FY 2010-11 to FY 2013-14 by the end of FY 2018-19.”

JSW Steel, in its submission, said that no opportunity was granted by the Maharashtra Energy Development Agency (MEDA) to explain its compliance with the RPO targets for FY 2010-11 to FY 2013-14.

In its latest petition, the petitioner cited the Appellate Tribunal for Electricity’s (APTEL) previous order in a similar case to lend support to the petition.  In its order dated April 09, 2019, on a similar issue. APTEL held that the cogeneration projects could not be fastened with any RPO as long as the cogeneration is more than the RPO.

JSW Steel, in its submission, said that as per APTEL’s order, JSW Steel’s cogeneration projects should be treated on par with renewable energy, and it is not liable to comply with RPO targets so long as the energy produced is more than the of the RPO targets.

MEDA, however, replied that the fossil fuel-based cogeneration project is not a recognized source of renewable energy as per the list approved by the Ministry of New and Renewable Energy (MNRE). The generation from such a project cannot be considered for the fulfillment of RPO targets.

Later, MEDA classified JSW Steel as an open access consumer and reported a shortfall in RPO on energy consumed through open access sources.

MEDA then asked the Commission to direct JSW Steel to fulfill its RPO target for:

  • Energy generated from fossil fuel-based cogeneration plant for the period applicable under RPO regulations 2016
  • Open access power for the period applicable under RPO regulations 2010 and 2016.

Based on the data submitted by MEDA, the Commission found a shortfall against the cumulative RPO target for open access consumption. The Commission directed the petitioner to fulfill its target cumulatively for the period from FY 2010-11 to 2013-14 by the end of FY 2018-19. However, the information shared by MEDA and the submissions made were inadequate to evaluate the RPO compliance concerning its cogeneration consumption.

So, the Commission directed the consumer to submit the necessary information and documentary evidence for this period during the next RPO compliance verification proceedings.

MERC noted that JSW Steel’s main contention is that its cogeneration power should be allowed to be used for meeting the RPO of its group companies. However, JSW Steel’s cogeneration is not a renewable source, and it cannot be used for meeting RPO on open access energy consumed by its group companies.

The only relief JSW Steel can seek is to get an exemption from RPO on energy consumed from the cogeneration projects during the applicability period under MERC RPO Regulations, 2010. But then this exemption was also removed in the MERC regulations, 2016. So, fossil fuel-based cogeneration projects are subject to the RPO regime starting FY 2016-17.

Recently, MERC directed the Oil and Natural Gas Corporation (ONGC) to comply with its renewable purchase obligation (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.

Previously, Mercom reported that if the states do not strictly adhere to their RPO targets now, the country’s renewable energy targets and its aim to become self-reliant could seem too far-fetched.