In its recent order, the Uttar Pradesh Electricity Regulatory Commission (UPERC) has shed light on what qualifies to be a captive generation project and when they can withdraw banked energy.
Amplus Green Power Private Limited is in an advanced stage of setting up a 50 MW ground-mounted solar project in Mirzapur. Previously, its sister firm Amplus Energy Solutions Private Limited had entered into an agreement with the government of Uttar Pradesh for setting up 500 MW of solar projects.
Amplus Power had requested the power consumed from the project be considered as consumption for own use, and the withdrawal of banked energy by captive users should be allowed, as previous regulations have said that captive projects can withdraw banked power.
In April last year, UPERC had issued new regulations titled “Captive and Renewable Energy Generating Plants (CRE) Regulations, 2019.” These regulations are applicable for captive generation, renewable sources of generation, and co-generation. In the case of captive generation projects, these regulations are applicable for 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.
Amplus Green Power Private Limited had filed a petition seeking clarifications on the following points:
- Withdrawal of banked energy by captive renewable energy projects for own use.
- The permissible term to avail banking facility by a renewable project under CRE regulations, 2019
- The requirement to obtain a license for establishing, operating and maintaining a dedicated transmission line
The Commission observed that to be declared a captive generating project, the project must meet all conditions specified in the Electricity Rules, 2005. A generating project can only be notified as a captive generating project if it meets all the requirements of equity and actual power consumption on an annual basis.
The petitioner had also claimed incentives for the banking facility for the entire life of the project as the time period was not specified in the policy. The petitioner had submitted that the incentive for partial or full exemptions in wheeling and transmission charges are covered in the UP Solar Policy incorporated in the CRE Regulation, 2019.
The UP Solar Policy states:
“Banking of energy in every financial year should be permitted subject to the verification by the officials of the concerned state distribution company as per banking provisions of UPERC CRE Regulation, 2014 and as amended from time to time.”
Citing the above clause, the Commission stated that no direction was received from the government of Uttar Pradesh to provide banking, for an open-ended period. Further, the period for CRE Regulation, 2019, is only five years, and there cannot be provisions made in regulations that are beyond this period.
The petitioner had claimed that there is no need of a license for establishing, operating, and maintaining a dedicated transmission line as per an order issued by the Ministry of Power (MoP), which states:
“A company or a person setting up a captive generation project should not require to obtain a license under the Act for establishing, operating, or maintaining a dedicated transmission line.”
Whereas, the CRE Regulations, 2019, say that a generating project will have to obtain a license for establishing, operating, and maintaining a dedicated transmission line, which is in contradiction with the order of the MoP. The Commission noted the discrepancy and observed that the MoP’s order would prevail over the CRE Regulation, 2019, provided that the conditions mentioned in the order are met.
When questioned by the Commission, whether the project qualified as a captive project, the petitioner replied that as on date, it has just set up the solar project and does not meet the conditions set out in the rules to be notified as a captive power project.
The Commission dismissed the petition as immature and noted that the petitioner had not exhibited undisputable eligibility to claim various benefits and concessions in line with the state’s regulations.
In December last year, UPERC came up with open access regulations that state that long-term open access customers will have the highest priority, followed by the medium-term open access customers, and then short-term open access customers.
Previously, the state had issued draft regulations for forecasting, scheduling, and deviation settlement of solar and wind projects.
In a comprehensive article published last year, Mercom analyzed if captive solar projects make for an attractive market in the country.