Stricter penalties in Electricity (Amendment) Act: Piyush Goyal (Power Minister)

The Power Ministry will soon come up with the Amendment in the Electricity Act 2003, which will have strict penalties. The proposed amendment is likely to be presented in the parliament during ongoing winter session.

“We’re looking at presenting amendments to the Electricity Act in this session of parliament, for strengthening the penalty provisions manifold in the renewable purchase obligations, to make these more stringent,” said Mr. Piyush Goyal, Minister of Power, in a statement.

He said that the current renewable purchase obligation (RPO) is also being re-looked and added, “Earlier, we had certain set of targets till 2022, which we are bringing forward to 2019, we hope that 15 per cent of the renewable power purchase obligation can be enforced to 2015”.

The concept of RGO will also be introduced in the act, in which companies setting up new power projects will have obligation to generate 10% Renewable Energy component.

The amendment will focus on bringing RE into mainframe, as the REC market has not been performing well and there is little RPO compliance by the obligated entities. The RGO will help the govt. to meet its ambitious target of 100 GW solar power by 2022 with wind capacity addition of 10 GW per year.

The provision for forecasting and scheduling of Renewable Energy is expected in act. Also the concept of ‘Must Run’ and ‘Deemed Generation’ are also expected to be part of this amendment. The idea of ‘Hydro Purchase Obligation’ and the provision of giving Renewable status to large Hydro projects can also be included.

It will be interesting to see how this amendment affects the market performance, before the proposed Renewable Energy Act is passed early next year.

Media Articles:

Business Standard

The Economic Times

Indian Express

MoP at odds with proposal of Commerce Ministry on imposing solar duties

Power minister Mr. Piyush Goyal has reportedly given a statement which goes against the proposal of Ministry of Commerce to impose solar duties on imported equipments. An article in Bloomberg says that as per Mr. Goyal, solar duties will undermine PM’s vision of fostering solar generation in the country. He adds that India currently doesn’t have adequate solar manufacturing capacity to catch up with national targets. India’s transport minister Mr. Nitin Gadkari also holds same views.

The decision must have brought a lot of cheer to lobby and industry associations striving hard against imposition of such duties. A background of the case is detailed below –

Background –

Directorate general of anti-dumping & allied duties (DGAD) under Ministry of commerce and Industry had recommended to impose steep anti-dumping duties on import of solar products like US, China, Malaysia, Taiwan etc. By such levy of duties, DGAD wants to secure favourable market condition for domestic solar manufacturing cos. The DGAD has recognized that despite huge potential of manufacturing, India has negligible capacity operational.  To bolster the fate of Indian solar equipment manufacturers, India had introduced DCR in NSM, but following a dispute with US at WTO, some other means to check dumping was required.

Although DGAD paid heed to complaints raised by Indian manufacturing association, many solar experts across India fear that imposing of such duties is going to adversely affect the growth of solar sector in India.  Intense lobbying against such a decision has been observed. MNRE is also voting against imposing anti-dumping duties.

It is expected that anti-dumping duties are going to make projects selected under open category of NSM also unviable. On the flip side, Indian manufacturing still lags on technological front and the quality of products domestically manufactured is inferior to their imported counterparts. Solar power developers argue that both quality and price is going to be affected if the Min. of Commerce & Industry favours levy of anti-dumping charges.

Recent media articles can be accessed –

PV Tech

Hindu Businessline 

Moneycontrol

Economic Times

Govt mulling to introduce hydro tradable certificates

As per an article in Economic Times (refer), government is using an accelerated approach towards promotion of India’s hydro power assets. A recent progress on this pertains to introduction of tradable hydro certificates (on the lines of RECs). Demand for these tradable hydro certificates will be generated from a separate hydro power purchase obligation, a concept note on which has already been circulated among various stakeholders. A relevant amendment to Electricity Act,on the issue, is also likely to be tabled.

In India, hydro power has huge installed capacity in northern and north-eastern states. This unequal distribution can be fixed by making states procure a certain fixed quantum of hydro power.

India has 144320 MW of potential out of which only 40,000 MW has been commissioned.

Other relevant news on hydro power can be read here.

“Hydro Purchase Obligation” may be a reality

The power minister in a statement has given signs that hydro purchase obligation may be a reality as the minister said that the provision is being considered. The idea broke out first when the hydro sub-group had recommended the Power Ministry to declare hydro power (even that with capacity above 25 MW) as renewable, which the ministry had initially refuted. For previous blogpost on similar issue click here.

As per the latest article covered by the media (Business Standard), the ministry is considering of bringing in the concept of Hydro Power Obligation (HPO) aimed at providing a boost to hydro power generation segment.

Hydro Power – not renewable yet

Owing to sluggish capacity addition of hydro power projects in the country, the hydro sub group recently had recommended power ministry to declare all hydro power projects as renewable, which the later refuted.

Currently only those projects, having an installed capacity of less than 25 MW, are considered as renewable. As per the re-assessment studies carried out by central electricity authority (CEA), country’s hydro power potential is estimated at 148701 MW out of which only 34664 MW has been developed so far. Forty five (45) hydro projects having installed capacity of 10897 MW (25 MW & above) have been targeted for hydro power capacity addition during the 12thPlan, out of which 534 MW has already been commissioned till date. This slow growth of hydro power is attributed to the fact that hydro power projects have high capital costs, longer gestation periods and higher risk in implementation. Along with this inflated excise duties on steel, cement and service tax on construction services further adds to project developer’s woes.

A favourable consideration to the hydro sub group’s recommendation by the power ministry would have exacerbated the present situation of the REC market. Obligated entities would then have easily met their obligations by simply purchasing hydro power and eventually shying away from purchasing RECs from the market. This would have reduced demand of RECs further. The power ministry also refuted the rationale behind the demand for making it mandatory to buy certain percentage from hydro as RPO owing to weak implementation of RPO/REC framework.

For relevant media articles, visit the following links –

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