Maharashtra Regulator Relaxes RPO Target for Captive Power Projects
The Commission prescribed an RPO target of 9% for captive projects commissioned before April 1, 2016
October 6, 2020
The Maharashtra Electricity Regulatory Commission (MERC) has ruled in favor of the Captive Power Producers Association seeking relief under the Commission’s renewable purchase obligation (RPO) regulations for projects commissioned before April 1, 2016.
The Captive Power Producers Association (CPPA) had filed a petition with the MERC seeking relaxation or a waiver of certain clauses of the MERC Regulations, 2016, for captive projects. The petition was filed in light of notifications from the Ministry of Power (MoP) concerning capping RPO targets for captive power projects.
The association asked the Commission to relax or waive the provisions under the MERC RPO Regulations, 2016, and to implement the MoP’s circular to ensure that RPO targets were capped as per the ministry’s directives.
It submitted that as per the 2016 regulations, the RPOs for captive power projects commissioned before April 1, 2016, would be set at 9%. They also provided for the RPO targets for those commissioned after this date would be set based on the target application for the year during which the project was commissioned.
However, as per the MoP’s notification from October 1, 2019, the RPO target for projects commissioned before April 1, 2016, were to be set as prescribed by the appropriate Commission at the RPO targets for 2015-16.
Subsequently, the MERC issued its RPO Regulations for 2019, which stated that the RPO target for captive power projects commissioned before April 1, 2016, would be set at 9%. However, the association said that these provisions came into effect starting April 1, 2020, and that the Commission should incorporate similar provisions for projects under the regulations of 2016.
The Maharashtra Energy Development Agency (MEDA), in its response, sought the Commission to separate the 9% RPO target in terms of solar and non-solar sources and asked it to issue guidelines accordingly.
The Commission observed that the 2016 regulations pegged the RPO targets of captive power projects commissioned before April 1, 2016, between 11% – 15% for FY 2016-17 to FY 2019-20. It noted that these were much higher than the 2019 regulations which set the composite RPO target at 9% for FY 2020-21 to FY 2024-25.
It said that these targets resulted in a much higher target being set for previous projects than for current and future projects. The MERC explained that this was not an ideal situation and that RPO targets are supposed to gradually increase over time. It stated that this case was fit for intervention, which allowed it to exercise its “Power to Remove Difficulties” under the RPO regulations.
In conclusion, the Commission ruled that the composite RPO targets for captive power projects commissioned before April 1, 2016, would be set at 9% for the operating period of the regulations. It added that for projects commissioned after this date, the composite target would be the target for the year in which the project was commissioned.
MERC also separated the 9% target in terms of solar and non-solar sources and prescribed rates of 0.5% and 8.5%, respectively.
Earlier this year, the Chhattisgarh State Electricity Regulatory Commission issued an amendment to its regulation for captive generating projects. These regulations deal with the renewable purchase obligation (RPO) targets to be achieved by obligated entities as a percentage of total consumption. As per the amendment, the captive generating projects, commissioned before April 01, 2016, will have an RPO target of 1% for solar and 6.25% for non-solar for the financial year 2015-16.
Previously, Assam also amended its RPO regulations for captive projects in line with the Ministry’s amendments.
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Nithin Thomas is a staff reporter at Mercom India. Previously with Reuters News, he has covered oil, metals and agricultural commodity markets across global markets. He has also covered refinery and pipeline explosions, oil and gas leaks, Atlantic region hurricane developments, and other natural disasters. Nithin holds a Masters Degree in Applied Economics from Christ University, Bangalore and a Bachelor’s Degree in Commerce from Loyola College, Chennai. More articles from Nithin.