The Gujarat Electricity Regulatory Commission (GERC) has partly allowed a petition filed by Torrent Power seeking approval for deviations for procurement of firm and dispatchable renewable energy (FDRE) with energy storage.

The Commission approved two of the four deviations requested by the company.

The Commission permitted the removal of the 50% cap on the allocation of contracted capacity to a single bidder and allowed the inclusion of a provision addressing delays in project commissioning arising from transmission infrastructure readiness by the central transmission utility (CTU) or the state transmission utility (STU).

However, the Commission rejected the request to delete the 175-hour threshold for generation compensation. It also refused to modify the clause regarding delay in the commencement of power supply beyond the scheduled commercial operation date (SCOD).

The Commission also clarified that the in-principle approval only allowed the petitioner to proceed with the tendering process and did not constitute final approval of the requested deviations.

Background

Torrent Power filed the petition seeking regulatory approval for deviations while procuring firm and dispatchable renewable energy to meet future renewable purchase obligation (RPO) requirements.

The procurement framework is governed by the GERC (Procurement of Energy from Renewable Sources) Regulations, 2010, which prescribe minimum RPO targets for distribution licensees.

Subsequent amendments and national policy developments have increased the renewable procurement obligations for distribution companies. The Ministry of Power’s RPO trajectory for the period 2023–2030 has further raised renewable energy targets, creating additional procurement requirements for utilities.

Torrent Power informed the Commission that its portfolio includes 402.10 MW of wind power capacity, 645.88 MW of solar power capacity, and 450 MW of wind-solar hybrid capacity.

In addition, approximately 695.33 MW of rooftop solar capacity has been connected within its licensed area. The company also receives 15 MW of power from a municipal solid waste-based plant that was commissioned in October 2024.

Despite these existing arrangements, the utility stated that rising RPO targets will create a renewable procurement shortfall in the coming years, necessitating additional capacity procurement.

To address the anticipated gap, Torrent Power proposed procuring 200 MW of firm, dispatchable renewable energy with energy storage through tariff-based competitive bidding, with a greenshoe option to expand procurement by an additional 100 MW.

Under the proposal, 200 MW would be supplied for four hours during peak demand periods, 120 MW for eight hours during solar hours, and 50 MW for 12 hours during the remaining hours of the day.

The procurement is expected to generate between 646 million units and 861 million units of renewable energy annually. The company sought four deviations from the Ministry of Power’s bidding guidelines to facilitate this procurement.

Commission’s Analysis

The Commission examined each requested deviation in detail. On the issue of maximum capacity allocation to a single bidder, it observed that the 50% cap is primarily intended for larger tenders, typically ranging from 1,000 MW to 1,500 MW, to avoid excessive concentration of capacity with a single developer.

In the case of Torrent Power’s proposed procurement of 200 MW, the Commission held that strict application of the cap could restrict competition and potentially lead to higher tariffs.

Since the procurement process would be conducted through transparent tariff-based competitive bidding, the Commission approved the deviation allowing allocation beyond 50% to a single bidder if it results in the lowest discovered tariff.

The Commission rejected the request to remove the 175-hour threshold for generation compensation. It held that the threshold reflects a balanced risk allocation between generators and procurers by limiting compensation obligations for short-duration curtailment events.

On the issue of delay in commencement of supply, the Commission declined to modify Clause 14.3 of the guidelines. The clause provides for penalties for delays up to six months after SCOD and allows reduction or termination of uncommissioned capacity if delays exceed six months.

The Commission held that permitting discretionary extensions beyond this period would weaken contractual discipline and could adversely affect compliance with renewable purchase obligations.

It, however, accepted Torrent Power’s request to incorporate a provision addressing delays caused by transmission infrastructure readiness by CTU or STU.

The regulator noted that such delays are beyond the control of project developers, and penalizing generators in these circumstances would be inequitable and could increase tariffs due to risk premiums factored into bids.

Recently, GERC adopted tariffs in the range of ₹185,390 (~$2,034)/MW to ₹189,000 (~$2,074)/MW per month discovered under the competitive bidding process conducted by Gujarat Urja Vikas Nigam for the procurement of power from 2 GW/4 GWh standalone battery energy storage systems under Phase VII.

Subscribe to Mercom’s real-time Regulatory Updates to ensure you don’t miss any critical updates from the renewable industry.