HPERC Declares APPC for FY 14-15

Himachal Pradesh Electricity Regulatory Commission (HPERC) in latest order dated 28th August 2014 has finalized the Average Pooled Power Purchase Cost (APPC) for the financial year 2014-15.

The definition of APPC followed by HPERC can be read as – “Pooled Cost of Purchase means The weighted average pooled price at which the distribution licensee has purchased the electricity including cost of self-generation, if any, in the previous year from all the energy suppliers long-term and short-term, but excluding those based on renewable energy sources, as the case may be.”

The APPC for FY 14-15 has been determined as Rs. 2.24 per Unit, which is 3.2% higher as compared FY 13-14.

The APPC’s determined by HPERC over last three years is shown in the graph below:

The HPERC APPC order can be accessed here.

Our previous blog on HP APPC can be read here.

Contributed By Dheeraj Babariya.

REC Trading Report August-2014

REC trading session of August-14 was conducted on 27th August 2014.  Below is a summary of the result:-

Demand continues to be lack-lusture. Overall demand was 50681 for non-solar RECs, and 1163 solar RECs. Overall market clearing ratio for Non-solar RECs was 0.58%, and for Solar RECs was 0.35%. Summary is given below in the table below.


  • Non Solar REC:

Though the Total RECs redeemed this month increased over previous month, it was due to poor demand in July. The demand picked up by 60% from the month of July. The supply rose marginally by 5% w.r.t July. Non Solar price remained at 1500 INR (Floor Price).

Clearing ratios at IEX were 0.40% and PXIL were 0.73%.



  • Solar REC:

Demand fell significantly over previous month. However, demand was exceptional last month due to purchase by a Discom.. The Total supply grew by 15% with respect to July. Only 1163 RECs were traded this month which was next to lowest as of in this year.

Clearing ratios at IEX were 0.24% and PXIL were 0.43%.


Contributed By: Cigil & Vibhav Nuwal


Rajasthan Finalizes Solar Tariff for FY 14-15

Rajasthan Electricity Regulatory Commission (RERC) in its order dated 21st August 2014, has finalized solar tariff for FY 14-15. Earlier commission proposed a draft for the same and invited comments and suggestions, following which the commission has given the final order.



There is a discontinuity in the financial year wise tariff represented in the graph above, as there was no tariff approved by RERC for the year 2011-12.

Also it is visible that the tariff for the Solar PV has significantly reduced over the period. The reason behind such decline in tariff, is the reduction in the capital cost of the Solar PV projects,  from Rs. 13-14 crore per MW in 2010-11,  to approx. Rs. 7 crore/MW in 2014-15. Such reduction in capital cost is mainly due to reduction in the cost of Solar PV cells. The prices of the solar cells is expected to reduce further, as Finance Ministry has decided not to levy the Anti-Dumping duties on imported solar panels.

The RERC Solar Tariff order can be accessed here.

Our Previous Blog post on Rajasthan APPC can be read here.

Contributed By Dheeraj Babariya.

APTEL’s Judgement on Solar Tariffs in Gujarat

Gujarat Urja Vikas Nigam Limited (GUVNL), had filed a petition before Gujarat Electricity Regulatory Commission in 2013, asking for revision in Solar Tariffs determined by the commission in its order dated 29th January, 2010. The state commission, after hearing the parties, had dismissed this petition.

Aggrieved by this, GUVNL appealed to the Appellate Tribunal for Electricity (APTEL) against the stand taken by GERC. APTEL, after hearing all parties, gave its judgement, on 22nd August 2014, that the petition filed by GUVNL does not hold merit and rightly stands dismissed by GERC.

The following are some of the reasons cited by APTEL for its judgement:

  1. GUVNL quoted reduction of Customs and Excise duties in 2010, to justify reduction in tariff, but it did not approach the commission in 2010. The projects were commissioned by end of 2012, after which GUVNL appealed in 2013.
  2. There is no ‘Change in Law’ clause in the PPA agreement between GUVNL and the project developers.
  3. GERC, while determining the tariffs in 2010, was conscious about the change in environment, and thus fixed the tariff for 25 years, with multiple control periods, so as to review and determine tariffs for each control period as and when required.
  4. Generic tariff order on normative parameters cannot be reviewed for changes that occour during project development.
  5. The project developers have acted as per the tariff order, and withdrawing the incentives now is not justified, as the projects are already running.
  6. PPA can be opened only for giving thrust to renewable energy projects, and not for curtailing the incentives.

As per the Solar Tariff order dated 29th January, 2010, the tariff determined is shown below:

The APTEL judgement can be accessed here.

Gujarat order on Solar Tariff can be accessed here.

Contributed by: Siddhartha

APERC Proposes Draft Amendment for RPO Regulation

Andhra Pradesh Electricity Regulatory Commission (APERC), joint commission for the Andhra Pradesh and Telangana, has proposed separate drafts for the amendment in its Renewable Purchase Obligation (RPO) Regulation 2012, for Andhra Pradesh and Telangana.

The summary of the proposed amendments for the both the states is as below:

  1. According to the proposed draft, the commission proposed to remove the .25% solar purchase obligation for distribution licensee & captive generating plants out of the total of 5% RPO, and has proposed that RPO shall be fulfilled by purchase of any renewable source of energy.
  2. The commission has proposed that the Lapsed Banked Energy (Renewable) as according to Open Access regulation 2006 shall be considered towards the RPO of the distribution licensee.
  3. Consumption from captive co-generation power plant, is exempted for levy of RPO.

The commission has also proposed changes in eligibility of and registration for REC’s, which are highlighted below –

  1. The power generating plant shall be of 1 MW and above capacity for obtaining accreditation from the state agency.
  2. A roof top or ground mounted solar power plant of 100 kW and above, shall be eligible for obtaining RECs for the entire generation from such plant.
  3. The entire electricity generated from Captive Power Plant & Co-Generation Plants based on Renewable Sources of Energy, including self-consumption shall be eligible for issue of REC’s.
  4. In case of pre-mature termination of the power purchase agreement (PPA) with a consumer or DISCOM, a generator will not be eligible for REC’s for three years, starting from the date of termination of the agreement.

The proposed draft will directly affect the solar power generators as the Solar RPO has been merged with Non-solar RPO in the state. In our opinion, since the floor price of solar REC’s are much higher, the obligated entities will not purchase solar REC at all.

In contrast to Tamil Nadu, which has moved to Supreme Court, with a clear objective of implementing Solar Purchase Obligation (SPO) of 6% in the state, APERC does not seem to be in favour of incentivising solar power by having separate RPO status for solar in the two states. In addition to this, the cap of 1 MW on Non-Solar and 100 KW on Solar projects, will only deter smaller projects from coming up in future.

The commission through separate Public notices for Telangana and Andhra Pradesh, has invited the comments and suggestions by 08th September 2014.

The Draft Proposed for Andhra Pradesh can be accessed here

The Draft Proposed for Telangana can be accessed here

Contributed by Dheeraj Babariya


KERC: No CSS, Wheeling and Banking charges for Solar power generators

Karnataka Electricity Regulatory Commission (KERC) in its order dated 18th August has exempted Solar Power generators from Cross Subsidy Surcharge (CSS), Wheeling and Banking charges.

On the basis of the comments received by the commission on the discussion paper released by the commission on 7th July 2014, the commission has given this final order. The Summary of the order is as below:

  • All solar power generators in the State achieving commercial operation between 1st April 2013 and 31st March 2018 are exempted from payment of wheeling and banking charges and cross subsidy surcharge for a period of ten years from the date of commissioning. This is also applicable for captive solar power plants for self-consumption within the State.
  •  Captive solar power plants opting for Renewable Energy Certificates shall pay the normal wheeling, banking and other charges as specified in the Commission’s Order dated 9th October 2013.

The table below illustrates the high CSS applicable for commercial consumers availing RE (Non-Solar), under Third Party Sale (For Group Captive consumers CSS = 0). All values in Rs/KWh.

This will bridge the gap between the Solar tariff and Non-Solar RE tariffs prevalent in the state, and encourage more competition between them.

The Commission said that there is need for encouraging solar generation, as only 41 MW of installed solar capacity is existent in the state, whereas the Karnataka Solar Policy aims to achieve 2000 MW of Solar capacity by 2018.

As per earlier order, solar power generators are also exempted from paying transmission charges and are also exempted from wheeling and transmission losses.

The KERC Order can be accessed here

Our previous blog post on the KERC Wheeling charges can be read here.

Contributed by Dheeraj Babariya & Nikhil Dhamankar.

TN Govt. Approaches Supreme Court against APTEL Order

Tamil Nadu Government has filed a petition in Supreme Court against the order of the Appellate Tribunal for Electricity (APTEL) dated 21st January 2014. The order says that state government cannot specify solar power obligation (SPO) for special category of consumers (applicable for all obligated entities except TANGEDCO), when there already exists Renewable Purchase Obligation (RPO) for the consumers in the state.

Background – The Govt. of Tamil Nadu drafted its solar policy (announced in 2012), mandating certain consumer to buy solar power, which was finalized by the Tamil Nadu Electricity Regulatory Commission (TNERC) in its order dated 7th March 2013. The order stated that – “As prescribed in the Solar Policy, 6% SPO starting with 3% SPO till December 2013 and 6% from January 2014 is applicable”.

The Tamil Nadu Spinning Mills Association appealed to APTEL for the removal of the Solar Purchase Obligation as RPO does mandate purchase of solar power.

The APTEL in its judgment said that the state commission cannot impose any other obligation such as SPO, as RPO already exists in the state. So the State Govt. has moved to the Supreme Court challenging this , as it clearly intends to impose SPO under its Solar Policy.

It is also worth noting that TNERC has mandated RE purchase to a total of 9% under its RPO regulation, which is one of the highest in India, with 0.05% Solar RPO and 8.95% Non-Solar RPO. The commission in its draft RPO Regulation 2014, has increased the solar RPO to 2% and total to 11%, to bolster Solar Power in the state in case SPO is not implemented.

Our Previous Blog Post on the same matter can be read here.

The recent media Article can be read here.

Preceding APTEL Order is available here.

Contributed by Dheeraj Babariya.

GERC Takes Strict Note on RPO Compliance

Gujarat Electricity Regulatory commission (GERC), has initiated the Suo-Motu proceedings to verify the RPO compliance by the distribution licensees of the state. The Petition has been notified on 11th August 2014, and comments and suggestion have been invited by 30th August 2014 through public Notice. The public hearing will take place on 06th September 2014.

The commission has initiated the Suo-Motu proceedings in response of a petition filed by Torrent Power limited, in which it requested the commission to revise the minimum target of RPO percentage for FY 13-14, to the actual level of compliance achieved by him.

The commission has said that, based on the data furnished by the DISCOM’s it has been observed that the DISCOM’s have complied with the RPO target partially. So the commission has asked DISCOM’s to submit the reasons for their non-compliance of RPO.

In its judgment, the commission gave the reference of a Judgment of honorable APTEL dated 25.04.2014, which can be read as –

“After completion of the financial year, the State Commission has to review the actual performance in respect of RPO and pass necessary direction as per the Regulation either suo-motu or on a petition filed by a party. Such review should be subjected to public notice to invite suggestions and objections of all the stakeholders. Thus, in separate proceeding for annual review of RPO or otherwise by the State Commission either suo-motu or on application from a party, the suggestions and objections of the public should be invited. Accordingly, directed for future.”

The commission may take strict action, if the DISCOMs don’t furnish genuine reasons for their non-compliance.

The GERC Sou-Motu petition can be accessed here

The GERC order on Torrent Power petition can be read here

Contributed by Dheeraj Babariya.

REConnect Newsletter Volume 43 – OPEN ACCESS

Dear Reader,

We are pleased to present Open Access Vol 43 – our monthly newsletter covering RECs and regulatory and market developments in the renewable energy space.

The main article covers:

The government announced the re-introduction of Accelerated Deprecaition for wind projects. This was a major announcement for the Renewable energy industry. Our main article provides a detailed analysis of the impact of this change, and the relative merits and de-merits of investing in wind or solar projects.

This issue also covers:

– Details of the next batch of bidding for solar projects announced in JNNSM

– Details of the FOR meeting that took up the need for strong RPO enforcement

– Various other regulatory developments in Maharashtra, Rajasthan, Chattisgarh, Karnataka, and other states

Past newsletters can be accessed here – http://www.reconnectenergy.com/newsletter/past-newsletters/

For latest news and updates, please visit our blog at – http://reconnectenergy.com/blog/

 As always, we will love to hear your feedback on the newsletter.

– Team REConnect

Reinstatement of Accelerated Depreciation benefit for wind and its impact on the Renewable Energy Industry

Earlier last month, when the Union Budget was presented, there was a mention of reinstatement of Accelerated Depreciation ( AD ) for Wind Energy generators, in the Hindi version of the budget, whereas it found no mention in the English version. This caused confusion in the RE industry circles. However, the government clarified that AD has indeed been brought back on wind investments.

Wind Power development in India started in the early 90s. As per Section 80(J) of Income Tax Act 1961, industries were allowed 80% depreciation on capital invested. Since then till 2012 (when the benefit was removed), Wind Power development and growth has always relied primarily on Accelerated Depreciation (AD).

New wind capacity additional peaked in 2011-12 at about 3,200 MW, falling sharply to 1,700 MW the next year as AD benefits were removed. The argument put forward at that time by policy makers was that wind industry had matured, and the focus needed to shift to solar. This fits well with the objectives of the National Solar Mission.

The decline in wind investment due to withdrawal of AD coincided with healthy growth of close to 60% in Solar Power in 2012-13 and 2013-14. The market momentum had definitely shifted in favor of Solar. Our analysis suggests that Wind AD market had an investing capital of close to 7300 crores. This shifted to Solar AD market which saw increase in investments worth Rs 7500 crores during 2012-13.

The new government has announced that it was reintroducing AD (80%) in 2014, much to the delight of Wind Power stakeholders. We believe that the investment momentum will shift again to wind due to more mature policies and attractive tariffs.

Wind tariff in recent years have become very attractive and are close to solar tariff in many states. In Rajasthan, Maharashtra and MP, tariff in the range of Rs. 5, whereas solar tariffs are generally in the range of Rs. 6, leaving a very small gap.

With this, there will certainly be a diversion in investments from Solar to Wind power in the times to come.

These can also be understood from the table and graph below.

The green dots represent the advantage to the sector.


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