The Rajasthan Electricity Regulatory Commission (RERC), in a recent order, granted approval to Rajasthan Urja Vikas Nigam (RUVNL) to extend the power purchase agreements (PPAs) with 12 wind power generators by five years.

It said that the tariff for the extended period will be ₹2.44 (~$0.029)/kWh as mutually agreed between RUVNL and the 12 wind power generators.

The state regulator said that RUVNL and the generators might sign supplementary PPAs to extend their earlier PPAs.

Background

RUVNL had filed a petition seeking the extension of PPAs with 12 wind power generators per the terms of Tariff Determination Regulations 2020.

In its submission, the DISCOM said that it had executed PPAs with 12 wind power generators for projects in different parts of Rajasthan, which had expired or were going to expire. So, as per the terms of Tariff Determination Regulations 2020, it had requested the Commission to extend the PPAs.

RUVNL said that the generators had agreed to extend the PPAs at a tariff of ₹2.44 (~$0.029)/kWh.

It added that the extension will help achieve renewable purchase obligation (RPO) targets, which the state DISCOMs are struggling to meet for now.

The generators also submitted that per Regulation 10 of the Tariff Regulation of 2020 and the PPA, the period can be extended up to five or ten years. They submitted a fresh letter for an extension of the term of the PPA up to ten years for the Commission to consider while deciding the matter.

Commission’s analysis

The Commission observed that the DISCOM might procure power from renewable energy projects at its discretion; however, before doing so, it may have to consider three aspects:

• The overall energy requirement and energy availability from various sources.
• To meet RPO targets for the year.
• The tariff for such procurement is equivalent to the latest tariff discovered through competitive bidding for relevant technology.

However, for this extension, the DISCOM has to enter into an agreement with the renewable energy project developer during the extended period at mutually agreed terms to be approved by the Commission.

The Commission noted that by going through the RPO compliance status, the DISCOMs have to meet their shortfall in RPO targets of the earlier years, and RPO targets fixed for them for the financial year (FY) 2022-23 and FY 2023-24 were even higher. Out of all the previous years, the solar RPO target was only met in FY 2019-20.

Regarding the request of some of the generators for a ten-year extension, the Commission stated that PPAs can only be extended to match the useful life of wind power projects as specified in the Tariff Regulations 2020.

Further, it added that all the projects had completed or were going to be completed 20 years from their respective commercial operation dates. Thus, the PPAs of the respondents can be extended only by five years. In view of this, the Commission rejected the request of some of the generators for an extension of ten years.

The Commission observed that the tariff of ₹2.44 (~$0.029)/kWh, as proposed by RUVNL for the extended period of the PPAs and agreed upon by the wind generators, was the lowest tariff discovered through a tariff-based competitive bidding process conducted by the Solar Energy Corporation of India (SECI) for wind power projects.

Accordingly, the Commission said that it was satisfied with the mutually agreed tariff of ₹2.44 (~$0.029)/kWh for a five-year extension period of the PPAs, and it was reasonable for the procurement of power by RUVNL.

Last month, RERC allowed  RUVNL to pay the arrears to renewable energy developers who had supplied solar and wind power to the DISCOM beyond the PPAs.

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