The Uttarakhand Electricity Regulatory Commission (UERC) has issued an order extending the control period for benchmark capital costs and generic tariffs as a one-time exception. This is for 10,000 of upcoming 25 kW grid-connected solar projects totaling 250 MW in the state to create income opportunities for youth who had to migrate back home due to the COVID-19 lockdown.

Background

Uttarakhand Renewable Energy Development Agency (UREDA) is launching a special program providing employment opportunities to the youth and small and marginal farmers for enhancing their income through the sale of power to Uttarakhand Power Corporation Limited (UPCL).

These projects are part of the state government’s proposal to help provide employment to migrants who had left the state amid the COVID-19 crisis but have slowly started coming back. The state had directed UREDA to organize the program.

The size of the projects is up to 25 kW projects to be allotted to unemployed youth and low-income residents of the state. UREDA believes that a competitive bidding process for projects this small may defeat the purpose of the program. It proposed for these projects to be implemented based on the tariff set by the UERC for ground-mounted solar projects. It said that these projects might take up to March 31, 2022, to be completed.

UREDA had filed a petition with the UERC asking it to extend the control period of benchmark capital costs and generic tariffs as declared by the Commission for 10,000 of its upcoming 25 kW grid-connected solar projects totaling 250 MW. It sought the deadline to be extended to March 31, 2022, from September 30, 2020, set previously.

In its response, the UPCL said that the program proposed by the state is not yet finalized and that UREDA’s petition was premature. It added that the projects under the proposed program do not fall within the state’s Solar Policy, 2013.

UPCL further explained that as per the regulations, the generic tariff for solar energy has been reviewed annually and has seen improvements over time. It explained that costs need to be assessed annually to ensure that renewable energy is promoted fairly and also so that consumers are not unnecessarily burdened.

In light of this, extending the benchmark capital cost and accepting it without any reverse bidding for capacities as large as 250 MW would lead to an undue burden on the end consumer, it said. It concluded that extending the control period would defeat the very purpose of reverse bidding and would not be in the best interest of the end consumer as well as for UPCL.

Commission’s Analysis and Order: 

The Commission, after examining the arguments presented by both parties, said it had observed the UPCL’s concerns about the ambiguity surrounding the program, which has not yet been finalized. It clarified that the UPCL, which is to purchase power from the projects at the levelized generic tariff determined by the UERC without having to competitively place bids, would be eligible to use the power from these projects to meet their renewable purchase obligation (RPO) targets.

The UERC, however, noted that the program was floated by the UREDA as per the state government’s directives to provide revenue opportunities to small developers. UERC found no default with UREDA’s proposal but pointed out that UPCL did not object during the meetings held with government officials regarding the program.

It further highlighted the fact that the program was introduced to help migrant workers amid the COVID-19 crisis and that a rate has to be specified to help interested developers plan accordingly.

In its final order, the Commission allowed the extension of benchmark capital cost and generic tariff for FY 2019-2020 up to March 31, 2022, as a one-time exception for these projects. It reiterated that the program was meant to help create employment avenues for those affected by the COVID-19 crisis and that a competitive bidding process works against this goal.

It directed the UPCL to procure power from these projects at the rates previously set by the Commission. It further directed the UPCL and UREDA to support eligible applicants in developing these projects so that they can be commissioned before March 22, 2022.

According to Mercom’s Renewable Energy Regulatory Updates, the UERC extended the validity of benchmark capital cost and levelized generic tariffs for solar projects to March 31, 2021. The Commission had previously extended the validity of the benchmark capital cost and levelized generic tariffs for solar projects up to September 30, 2020, back in May 2020.

A little earlier, the Commission had approved a generic tariff of ₹3.48 (~$0.047)/kWh for rooftop solar projects up to 10 kW, ₹3.14 (~$0.043)/kWh for projects above 10 kW, and up to 100 kW, ₹2.90 (~$0.039)/kWh for projects above 100 kW and up to 500 kW, and ₹2.85 (~$0.039)/kWh for projects above 500 kW and up to 1 MW.

Image credit: Grendelkhan / CC BY-SA (4.0)