Uttar Pradesh Electricity Regulatory Commission (UPERC) has approved the power sale agreement (PSA) for Noida Power Company (NPCL) to procure from intermediary procurer SJVN 100 MW firm and dispatchable power from ISTS-connected renewable energy projects with energy storage systems developed by Tata Power Renewable Energy.

The Commission approved the power procurement at a tariff of ₹4.38(~$0.052)/kWh with a trading margin of ₹0.07(~$0.0008)/kWh.

SJVN must provide the renewable energy generator with an escrow agreement or irrevocable unconditional revolving letter of credit. Otherwise, the trading margin will be limited to ₹0.02(~$0.0002)/kW.

Background

SJVN floated a request for selection on June 20, 2023, to select a renewable energy developer to supply 1.5 GW of firm and dispatchable energy (FDRE) with an energy storage system with a greenshoe option for an additional 1.5 GW capacity.

SJVN selected seven bidders for the 1,184 MW contracted capacity and an additional greenshoe option for six bidders for the same capacity.

NPCL agreed to offtake 100 MW, subject to the Central Electricity Regulatory Commission (CERC) approval. To finalize the PSA, SJVN shared the tariff discovered, project capacity awarded, and CUF proposed to bidders.

The CERC granted in-principle approval, and both parties entered into a 25-year PSA on March 15, 2024, at a tariff of ₹4.38(~$0.052)/kWh and trading margin of ₹0.07(~$0.0008)/kWh.

Further, on May 3, 2024, SJVN signed a PPA with Tata Power Renewable Energy (TPREL) for the contracted capacity of 460 MW, of which 100 MW will be allocated to NPCL.

Upon CERC’s directions, SJVN approached the Commission for tariff adoption. The Commission was also asked to justify charging a trading margin of 0.07(~$0.0008)/kWh despite the back-to-back payment security mechanism from NPCL mitigating SJVN’s financial risk.

SJVN told the Commission that, as per CERC trading license regulations and bidding guidelines, it was bound to charge a mutually agreed-upon trading margin of ₹0.07(~$0.0008)/kWh.

NPCL argued that it requires cheaper power at a capacity utilization factor of over 70% to meet its renewable purchase obligations.

NPCL also submitted that the Commission had approved a tariff of ₹4.38(~$0.052)/kWh for TPREL for an initial contracted capacity of 200 and under the greenshoe option of 260 MW.

Commission’s Analysis

The Commission observed that it had given NPCL an in-principle approval for long-term power procurement, noting that this could lower NPCL’s Average Pooled Power Purchase Cost and considering the guidelines for the Resource Adequacy Planning Framework for India.

After evaluating the tender process, the Commission observed  that the tariff was discovered through a transparent bidding process.

The Commission also observed that while both NPCL and SJVN have relied on CERC Trading Licensee Regulations, 2020, for maintaining a ₹0.07(~$0.0008) trading margin, the transacting party should decide mutually, provided it falls within the ceiling of ₹0.07(~$0.0008)/kWh.

It noted that reducing trading margins could also reduce the burden on state consumers. The Commission said that it cannot take any call on interstate trading margins.

In August 2024, UPERC approved a petition by the Uttar Pradesh Power Corporation (UPPCL) to procure 2,000 MW of solar power.

The UPERC amended the gross/net metering regulation of the rooftop solar grid-interactive system in 2019, extending the net metering facility to government and private educational institutions.