Transmission, Wheeling, Cross-Subsidy Charges for Captive and Renewable Projects in UP

The Uttar Pradesh Electricity Regulatory Commission (UPERC) has issued new regulations titled “Captive and Renewable Energy Generating Plants Regulations, 2019,” which will be enforced from April 1, 2019, through March 31, 2024, unless reviewed or extended by UPERC.

These regulations will apply to captive generation, renewable sources for generation and co-generation. Provision of availability-based tariff (ABT) as applicable to conventional generation projects will apply to these projects.

In case of captive generation projects, these regulations will apply to all existing captive generating projects as well as proposed captive generating projects with an installed capacity of 1 MW or above irrespective of their connectivity with the grid. These projects will be under obligation to comply with the directions issued by state load despatch centers (SLDCs) and pay fees to SLDC as specified by the UPERC.

Transmission Charges, Wheeling and Cross-Subsidy Charges

A captive project will have to pay the transmission and wheeling charges for carrying the generated electricity to the destination of its use or for the use of its members. In case of supply of power to a consumer or to a person other than its members, such consumer or person will have to pay cross-subsidy surcharge over and above transmission and wheeling charges as determined by the UPERC. If the energy is supplied to a distribution licensee, no cross-subsidy surcharge will be payable.

All renewable energy projects other than small hydro and municipal solid waste will be governed by the deviation settlement mechanism. All renewable energy generating projects will be subject to a day ahead scheduling. For large-scale stand-alone solar projects set up for sale of power to distribution company or third party or captive use, there will be an exemption of 50% on wheeling charges/transmission charges on the intrastate sale of power. For such projects, a 100% exemption on intrastate transmission system on interstate sale of solar power will be provided.

Banking of Energy

Banking of energy up to 100%, will be allowed, subject to technical feasibility regarding evacuation. Banking charges will be 12% of the energy banked except for solar and wind for which it will be 6% of the energy banked.

The tariff of the captive generating projects (conventional) will be 85% of plant load factor (PLF). For supply at PLF above 85%, incentive at the rate of 50 paise (~$0.0072) per unit will be paid.

Biomass and Bagasse-based Renewable Energy Projects

For bagasse-based renewable energy projects, the tariff will be based on competitive bidding. For supply at PLF above 50%, an incentive at the rate of 50 paise (~$0.0072) per unit will be paid. For biomass (rice husk)-based projects the tariff will be based on competitive bidding. For supply at PLF above 80%, incentive at the rate of 50 paise (~$0.0072) per unit will be paid.

Municipal Solid Waste-Based Energy Projects

UPERC will determine project-specific tariff for municipal solid waste-based energy projects commissioned on or after April 1, 2019. The tariff should not exceed ₹7 (~$0.1006)/kWh. For supply at PLF above 70%, an incentive at the rate of 50 paise (~$0.0072) per unit will be paid.

Solar Projects

The levelized tariff for solar photovoltaic (PV) projects commissioned in FY 2014-15 will be ₹7.06 (~$0.1015)/ kWh. For solar PV project of capacity 5 MW and above, the tariff will be discovered through competitive bidding. For solar PV projects of capacity less than 5 MW, the tariff will be the weighted average tariff of solar PV projects above 5 MW discovered through competitive bidding in the last fiscal.

For wind and hydro projects commissioned on or after April 1, 2019, UPERC will determine project-specific tariff.

Through the new regulations, UPERC aims to address new perceived challenges to make the existing regulatory framework reflective of the current conditions in the sector. In January 2019, the UPERC had issued a concept paper to amend its Captive and Renewable Energy Generating Projects (CRE) Regulations 2014.

Before this, in April 2018, the UPERC amended its Captive and Renewable Energy Generating Projects (CRE) Regulations 2014 with changes that were expected to reduce the cost of solar power procured from standalone projects in the state.

Image credit: UPNEDA

Saumy Prateek Saumy is a senior staff reporter with covering business and energy news since 2016. Prior to Mercom, Saumy was a copy editor at Thomson Reuters. Saumy earned his Bachelors Degree in Journalism & Mass Communication from the Manipal Institute of Communication at Manipal University. More articles from Saumy Prateek.