The Rajasthan Electricity Regulatory Commission (RERC) recently allowed  Rajasthan Urja Vikas Nigam (RUVNL) to pay the arrears to renewable energy developers who had supplied solar and wind power to the DISCOM beyond the power purchase agreements (PPAs).

The Commission ruled that the arrears have to be settled within 90 days for the wind power procured at ₹2.44 (~$0.029)/kWh and solar power at ₹2.24 (~$0.027)/kW for the period beyond March 31, 2019, and in case of late payment, a surcharge would be applicable.

RUVNL had filed a petition for tariff determination for procurement of power from renewable sources (wind and solar) beyond March 31, 2019, at ₹2.44 (~$0.029)/kWh for wind and ₹2.24 (~$0.027)/kWh for solar.

Background

RUVNL entered into PPAs with renewable power developers up to March 31, 2019, and the tariff was determined at the Average Power Purchase Cost (APPC) rate set by the Commission.

On March 5, 2019, the Commission modified the Regulatory Framework for Renewable Energy Certificates and Renewable Purchase Obligation (RPO) Compliance.

In response to these changes, renewable energy developers expressed dissatisfaction and brought their concerns to the Rajasthan High Court. They wanted an annulment of the amendments and an extension of the PPAs beyond March 2019.

Initially, the Coordination Committee of the DISCOMs decided to sign PPAs at the rate of ₹3.14 (~$0.038)/kWh.

However, DISCOM did not sign the PPAs. The developers approached the High Court, seeking quashing of the amendments.

RUVNL said the DISCOMs needed renewable energy to fulfill their Renewable Purchase Obligation (RPO), covering both wind and solar energy. It presented a plan to secure power utilizing the RPO framework at ₹2.44 (~$0.029)/kWh for wind power and ₹2.24 (~$0.027)/kWh for solar power.

The DISCOM contended that the developers had agreed to enter into PPAs under the RPO mechanism. These agreements entailed a tariff of ₹2.44 (~$0.029)/kWh for wind-based projects and ₹2.24 (~$0.027)/kWh for solar-based projects.

Based on the understanding between RUVNL and the developers, the High Court approved the withdrawal of written appeals by the latter. The court authorized RUVNL to approach the Commission for approval of the power procurement.

However, the developers were not paid against the power injected from their projects from April 1, 2019.

Commission’s analysis

The Commission observed that the DISCOM had to meet its shortfall in meeting its RPO of the earlier years until FY 2021-22 and that the RPO targets for FY 2022-23 and 2023-24 are even higher.

The Commission had issued an order instructing the DISCOM to take all actions to meet the overall RPO targets and to address the accumulated backlog.

The state regulator said that it was prudent to permit power procurement under the RPO framework considering the current deficit in RPO fulfillment and the imperative of achieving higher RPO in the future. This procurement would occur at a tariff of ₹2.44 (~$0.029)/kWh for wind projects and ₹2.24 (~$0.027)/kWh for solar projects.

It said the developers had endured delayed payment of energy charges and directed RUVNL to ensure the complete settlement of the principal amount owed to the developers until June 30, 2023.

The tariff to be paid for the power purchase would not have any escalation or consideration of ‘Change in Law.’

The Commission added that the DISCOMs and the renewable developers could enter supplementary PPAs for the remainder of the renewable energy projects from April 1, 2019.

In January this year, RERC granted permission to RUVNL to extend the PPAs with six wind projects for five years at a tariff of ₹2.44 (~$0.029)/kWh.

Subscribe to Mercom’s real-time Regulatory Updates to ensure you don’t miss any critical updates from the renewable industry.