Commission Allows Avadh Sugar and Energy to Inject Slop-Based Power into the Grid

UPERC also added that the DISCOM would release the payment to Avadh Sugar and Energy after the adoption of tariff and approval of PPA

January 19, 2021


The Uttar Pradesh Electricity Regulation Commission (UPERC) has directed the Uttar Pradesh Power Corporation Limited (UPPCL) to allow Avadh Sugar and Energy to inject slop-based power into the grid from two of its units- Hargaon Unit Distillery in Sitapur and Seohara Unit Distillery in Bijnor, Uttar Pradesh.

Slop, also known as ‘vinasse,’ is an acidic effluent from the fermentation of sugarcane molasses in distilleries.

The order also added that UPPCL would release the payment to Avadh Sugar and Energy after adopting the tariff and the approval of the purchase power agreement (PPA) by the Commission.

The Commission had heard two petitions filed by Avadh Sugar for each of its distilleries. In its petitions, Avadh Sugar requested the Commission to permit the evacuation of 3.5 MW and 2 MW power from its slop and bagasse-based cogeneration plants, based in Hargaon and Seohara, respectively. It requested for a ten year long PPA term.

In its petitions, Avadh Sugar and Energy mentioned that the UPPCL sought the Commission’s consent to enter a ten year PPA with six slop-based cogeneration power plants, which included two Avadh Sugar distillery units (Hargaon and Seohara). The mutually agree tariff was ₹2.899 ($0.40)/kWh.

According to the UPERC order, the Commission had earlier directed UPPCL to engage in competitive bidding for power procurement from the six units. UPPCL was further directed to approach the UPERC seeking tariff adoption after the bidding process concluded.

However, the bidding process was not initiated by the UPPCL. Some applicants approached the Commission to direct UPPCL to expedite the bidding process while allowing the petitioners to supply surplus power from their cogeneration plants to the grid in the meanwhile since the projects were ready to be commissioned.

The Commission, in this case, had permitted the cogeneration projects to inject power into the grid subject to the condition that the applicants will submit an undertaking that they will participate in the bidding process initiated by the UPPCL – not above ₹2.899 (~$0.040)/unit –  and the payment would be released after the tariff is discovered through competitive bidding.

Avadh Sugar participated in the bidding process and matched the lowest bid of ₹2.798 (~$0.038)/kWh. However, it was not allowed to inject surplus power into the grid pending completion of the competitive bidding process. The UPPCL submitted that the financial bids had been opened, and the matter is before the board for approval.

Considering all these factors, the Commission ruled in favor of Avadh Sugar and Energy, allowing them to inject power into the grid subject to the release of payment by UPPCL on adopting the tariff and approval of PPA by the UPERC.

In August 2020, the UPPCL had issued a tender for a 20 MW (± 25%) slop-based power project in the state.

In January 2020, UPERC had approved the amended power purchase agreement (PPA) for bagasse-based power signed between DSCL Sugar, Hariawan, and the Uttar Pradesh Power Corporation Limited (UPPCL). The Commission has also approved the tariff of ₹4.78 (~$0.067)/kWh in line with the amended PPA.

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Rahul is a staff reporter at Mercom India. Before entering the world of renewables, Rahul was head of the Gujarat bureau for The Quint. He has also worked for DNA Ahmedabad and Ahmedabad Mirror. Hailing from a banking and finance background, Rahul has also worked for JP Morgan Chase and State Bank of India. More articles from Rahul Nair.