Gujarat Solar Power Policy 2015

Gujarat came up with its new solar power policy on 13th August 2015, which would be operative up to March 31, 2020. This new policy intends to facilitate and promote large scale promotion of the solar power generation capacities in the state and the interests of all the investors, developers, consumers and various other stakeholders.

The main features of the Policy are as follows:

-The minimum size of a MW scale project shall be 1 MW and 1 Kw for KW scale projects.

-Any company or group of individuals shall be eligible for setting up a solar generating plant, irrespective of whether they or not fall under REC mechanism in accordance with Electricity Act 2003.

-There are project based provisions and incentives provided for Rooftop solar PV systems with net metering depending on the type of consumers. The same are listed in the table below (Click on the table for a larger view) :

The state is blessed with several natural resources of energy that augments its renewable energy growth. Through its proactive planning on capacity addition front it has successfully managed to eliminate the demand supply deficit. In sync with the solar power policy the Government has also launched the Industrial Policy 2015, through which Government would encourage private participation in all energy generation to meet the growing demands in the state.

The Gujarat power policy document can be accessed here.

The CEA installation and operations of meters regulation 2014 can be accessed  here.

The Industrial Policy document can be accessed here.

REC TRADE RESULTS AUGUST 2015

August trading session saw a stagnant response from the Non-Solar demand side. However the Solar RECs saw a huge recovery from rise in demand during trading session. A sum total of 149,209 RECs were redeemed in this session, compared to 173,223 in July. Demand took a fall of approx. 14 % w.r.t July.

Analysis of Trading:-

Non Solar – Clearing ratio in exchange were at 0.92% and 0.75% in IEX and PXIL respectively for Non Solar RECs. A total of 107,281 RECs were redeemed in this trading session. There was a fall of approx. 30 % in the current trading session w.r.t to July.

 Solar – Clearing ratio stood at 1.52% and 1.86% in IEX and PXIL respectively. Solar RECs rose staggeringly from 17,952 in July to 41,928 this trading session, a rise of 133%. This was good signs for solar, as it has recovered again from major fall last MONTH,

Over the longer term, increasing focus on RPO both from the courts and from regulators is expected to increase demand. Over the last several months many developments have taken place, including the draft Electricity Act, orders from the ApTel and from the Supreme Court. The most recent development was the release of the draft of Renewable Energy Act 2015. An analysis of the Act can here

Maharashtra: RPO Compliance and target for 2015-16

The Maharashtra Energy Development Authority submitted the RPO settlement data for MSEDCL on 14th September, 2014. There have been major shortfalls in meeting RPO targets. As for the total RPO targets set, a comparison below shows that MEDA had exceeded the NAPCC expectations in RPO for states.

The status of achievement of RPO targets by MSEDCL, based on the revised details provided by MEDA, MSEDCL and MSLDC for FY 2010-11 to FY 2013-14 are depicted in the graphs below.

Regarding Solar RPO targets, the Commission has allowed MSEDCL to cumulatively fulfil its Solar RPO targets by FY 2015-16. The Commission observed that MSEDCL has shortfall of 684.89 MU for FY 2012-13 in meeting their Non-Solar RPO targets. After considering the surplus of 386.52 MU of previous years, there is still a shortfall of 298.37 MU in FY 2012-13. Thus MSEDCL was allowed to meet its Non-Solar RPO shortfall of 298.37 MU for FY 2012-13 in FY 2013-14 on cumulative basis. The shortfall in Hydro should also be fulfilled by 2015-16.

MSEDCL was directed by commission to constitute a separate ‘RPO Regulatory Charges Fund’, to purchase Solar and Non-Solar RECs and/or to procure power, to meet the shortfall against RPO targets by the end of March, 2016.

The relevant order can be accessed here.

 


Punjab Regulatory takes Strict note on RPO complaince of PSPCL

The PSERC (Punjab Electricity Regulatory Commission) in response to a petition filed by Punjab State Power Corporation Limited (PSPCL) pertaining to RPO compliance of FY 2014-15, in which the PSPCL has requested before the commission for carrying forward the compliance of RPO to next financial year (FY 2015-16).

Earlier the commission provided carry forward to the PCPCL for unmet RPO of FY 13-14 to FY 14-15 which were be met along with the RPO for FY 2014-15. PSPCL in its petition provided the status of its RPO compliance for FY 14-15 including for FY 2013-14, which is given in the table below:

PSPCL in its petition for carry forward of RPO cited various reasons for non-compliance of RPO. The reasons cited by PSERC were:

  1. Delay in the commissioning of the Project during FY 14-15.
  2. Financial constraints to purchase RECs.
  3. And also stated that it was due to factors beyond control of PSPCL and RPO targets being set by the commission are unachievable.

PEDA in its submission stated that PSPCL misconstrued the RPO targets fixed by commission, as RPO targets can be met through alternate channels and not only by way of RE purchases.

The commission in its order stated that it does not accept that the RPO targets were unachievable and that the shortfall in compliance was not out of control. The commission also stated that it does not accept the argument of alleged financial constraints of PSPCL and its inability to purchase RECs.

The commission also cited the APTEL Judgment which has issued directions to State Electricity Regulatory Commissions and Joint Electricity Regulatory Commission to enforce RPO, and Thus the Commissions are bound to enforce their respective RPO Regulations.

The commission in its judgement has provided the carry forward to FY 15-16 and has taken strict not for the Non-compliance of the RPO, directing the PSPCL to comply with the RPO obligations latest by 30th Dec 2015 and communicated that failing which further action as per Regulations may be initiated.

REC Trade Results July 2015

July’s trading session saw a stagnant response from the demand side. Though, the current demand while comparing it to previous year’s session of July was 3 times higher in Solar and 5 times in Non Solar segment, it indicated a lower compliance when comparing it to trading sessions of 2015. A sum total of 173,223 Lakh RECs were redeemed in this session. Demand took a fall of approx. 5 % w.r.t June.  The demand in last two trading sessions was due to the judgment by Supreme Court.

 Analysis of Trading:-

 Non Solar – Clearing ratio in exchange were at 1.33% and 1.15% in IEX and PXIL respectively for Non Solar RECs. A total of 155,271 RECs were redeemed in this trading session. There was seen a fall of approx. 4 % in the current trading session w.r.t to June in Non Solar RECs.

 Solar – Clearing ratio stood at 0.84% and 0.29% in IEX and PXIL respectively. Solar RECs remained at 17,952, which is a show towards a downfall in the demand in the solar RECs segment; it shows a fall of 5640 RECs from June trading session.

Over the longer term, increasing focus on RPO both from the courts and from regulators is expected to increase demand. Over the last many months several developments have taken place including the draft Electricity Act, orders from the ApTel and from the Supreme Court. The most recent development was the release of the draft of Renewable Energy Act 2015. An analysis can be read here.

Team REConnect

GERC RPO Regulation Applicable on Captive and OA consumers

The Gujarat Electricity Regulatory Commission (GERC) in a notification dated 1st July 2015, has made  RPO (Renewable Purchase Obligation) regulation applicable on captive and Open Access consumers of the state.

The quantum of RPO applicable on the OA and Captive users will be same as for the distribution licensee. The percentages of RPO targets applicable in the state are shown in the graph below:

Earlier the RPO regulation was not applicable for Captive and OA users as there were ambiguities among the regulations of various states and the pending court cases by affected stakeholders, caused the major issues for applicability of RPO on such consumer.  But with the recent Supreme Court Judgement (Read here) on the issue has cleared all the major doubts, and as results we have seen good response in the recent trade sessions and also some states coming forward and enforcing RPO regulation on the OA and captive users.

The recent Notification of the GERC can be read here.

 

REC Trade Results – June 2015

The June trade session remained below expectations compared to May’15 month performance. However, if we compare the performance with Jun’14, the response was still far better. After the announcement of an important judgment by Supreme Court, the market looks upbeat and we can expect better demand in upcoming trade sessions.

Analysis of Trading:

Non-Solar – Total 161,845 RECs were cleared in this trading session. IEX and PXIL had a clearing ratio of 1.6% and 0.84% respectively. Total RECs redeemed this month was approx. 1 Lakh RECs lower w.r.t May’15.

Solar - RECs redeemed this month remained at 23,648 RECs. The clearing ratio was 1.4% and 0.17% in IEX and PXIL respectively. Solar REC traded this month were approximately 60 (sixty) thousand lower w.r.t to May trading session.

The REC trade results in the FY 2015-16 are summarized below for your reference.

MPERC Proposes RPO Targets till FY 18-19

The Madhya Pradesh Electricity Regulatory Commission (MPERC) through a draft notification dated 30th May 2015, has proposed the amendment to RPO regulation 2010. The draft amendment proposes RPO targets for the upcoming years (till FY 18-19).

The details of the RPO targets being proposed are as in the graphs below:

Earlier on 15th May 2015, the commission in a notification finalized the RPO targets for FY 15-16 at 7% (Solar-1%, Non Solar-6%) and now the commission has come with its draft which proposes RPO targets for coming years. The commission through a separate public notice has invited comments and suggestion on the said draft latest by 22nd June 2015.

The commission’s notification is available here.

MPERC Finalizes RPO Targets for FY 15-16

The Madhya Pradesh Electricity Regulatory Commission (MPERC) on 08th May 2015 has finalized new Renewable Purchase Obligation (RPO) target for FY 15-16. The notified amendment finalizes RPO target for FY 15-16, the details are in the table below:

The MPERC in its previous order dated 19th November 2010, had defined targets till FY 14-15. In the new order the targets hasn’t been increased I.e. it is same as it was for the last financial year FY 14-15. The graph below shows the RPO targets defined by MPERC till date.

The commission could have defined higher targets, keeping in mind that some of the neighbouring states like Rajasthan, Gujarat and Maharashtra has defined higher solar and wind RPO targets. Also the state is having good potential for solar and wind energy generation and it is expected that the state might get some of big solar projects under Mega Solar Project scheme of central government.

The final gazette notification can be accessed here.

Analysis of Supreme Court Judgment on Applicability of Renewable Purchase Obligations

On May 13, 2015 the Supreme Court pronounced a landmark judgment on the applicability of Renewable Purchase Obligations (RPO) regulations. The case in question is Hindustan Zinc vs Rajasthan Electricity Regulatory Commission (RERC).

Background

In August 2012, the Rajasthan High Court had dismissed an appeal by Hindustan Zinc Ltd., Ambuja Cements Ltd., Grasim Industries Ltd. and 14 other companies that challenged RPO regulations enacted by the state regulator (Rajasthan Electricity Regulatory Commission; RERC).

The key points contested by captive (CPP) and open access (OA) users in the petition were:

  • RERC did not have the authority to pass the order of RPO and impose surcharge (penalty) as CPP and OA were completely de-licensed activities under the Electricity Act 2003 (EA 2003)
  • EA 2003 only allows RPO on the ‘total consumption in the area of the distribution licensee’ and therefore intends to apply RPO on distribution licensees only

The High Court rejected the petition stating:

  • The word ‘total consumption’ has been used in the EA 2003, and should be considered as total consumption in the area of distribution licensee in all modes. Total consumption has to be seen by consumers of distribution licensee, captive power plants and on supply through distribution licensee. It cannot be inferred by mention of area of distribution licensee that only consumers of the distribution licensee are included.
  • The objective behind imposition of RE obligation is in the greater public interest. The constitution casts duty on the Regulatory Commission to protect and improve the natural environment. This duty can be imposed on CPP and OA as well.

The above order of the Rajasthan High Court was challenged in the Supreme Court.

 

Order of the Supreme Court

In its order, the Supreme court dismissed the appeal of the petitioners, and upheld the RPO regulations made by RERC.

The court stated several important points in its judgment:

  • Imposing RPO is desirable in the larger public interest. The court observed that:

“…The Right to live with healthy life guaranteed under Article 21 of the Constitution of India, it has also been interpreted by this Court. It includes the Right to live in a pollution free environment and laid down the law in a catena of cases…”

and

“The impugned Regulations fall within the four corners of the Act of 2003 as well as Electricity Policy, 2005. The object of imposing RE Obligation is protection of environment and preventing pollution by utilising Renewable Energy Sources as much as possible in larger public interest.”

And further:

“The Coal dominates the Thermal Power Generation which results in Green House Gases resulting in global warming. The said facts were brought to our notice that the same would certainly justify the case of the RERC in framing the impugned Regulation to achieve the object of the Act and the Constitution by imposing RE obligation on the captive gencos.”

  • RPO applicability on captive and open access consumers is well within the ambit of the Electricity Act 2003.

“The High Court has considered the submissions of the appellants and has rightly rejected the same on the ground that the RE obligation imposed on the captive gencos under the impugned Regulations is neither ultra vires nor violative of the provisions of the Act of 2003 and cannot in any manner be regarded as a restriction on the fundamental rights guaranteed to the appellants under the Constitution.”

  • Cost of fulfilling the obligation cannot be held above the larger public interest.

“The purchase of nominal quantum of energy from renewable resources cannot adversely affect the cost effectiveness of the Captive Power Plant. Moreover, the object being reduction of pollution by promoting renewable source of energy, larger public interest must prevail over the interest of the industry….”

As a result of the above findings, the court dismissed the appeal.

“Upon consideration of the rival submissions by the well-reasoned order, the High Court has rightly upheld the validity of the impugned Regulation and we do not find any reason to interfere with the impugned judgment. All the appeals are dismissed as the same are devoid of merit.”

Implications of the order

This order is likely to have far-reaching implications on the enforcement of RPO regulations.

  • Stay by HC in various states may become redundant: Till date, the enforcement of RPO regulations has been lax due to various reasons. One of the reasons has been the stay granted by various High Courts like in the case of Gujarat (recently vacated), MP and Tamil Nadu, among others. With the Supreme Court now ruling in favour of imposition of RPO, the existing stay may become redundant.
  • Enable stronger enforcement: Further, the order is likely to provide support to the state electricity regulators to impose RPO regulations more forcefully and effectively.

Media coverage: Bloomberg & Business Standard.

For recent APTEL order on RPO click here.

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