Uttar Pradesh to Amend Regulations for Captive and Renewable Energy Generating Projects
Existing feed-in tariff structure does not promote economic efficiencies and therefore needs to be revised, observes UPERC
The Uttar Pradesh Electricity Regulatory Commission (UPERC) has issued a concept paper to amend its Captive and Renewable Energy Generating Projects (CRE) Regulations 2014. The UPERC wants to incorporate the benefit of maturity and learning of the sector to address new perceived challenges and to make existing regulatory framework reflective of the current conditions in the sector.
The current five-year control period from financial year 2014-15 to FY 2018-19 is scheduled to expire on March 31, 2019. However, recently the Central Electricity Regulatory Commission (CERC) specified a control period of three years for renewable energy regulations. Himachal Pradesh, Assam, and Haryana have a control period of three years for renewable energy regulations. The concept paper hints at keeping the control period down to three years from the previous five years duration.
According to the concept paper, “During the control period of 2014-19, the UPERC observed that the renewable energy market has now reached a level of maturity particularly for solar, bagasse and biomass-based generation and co-generation.”
According to the document, existing feed-in tariff structure does not promote economic efficiencies and therefore needs to be revised. There can be a three-part tariff structure for renewable generation covered under Section 62 of the Electricity Act, similar to the proposed tariff structure of the CERC for conventional power projects providing only partial recovery of fixed cost for the amount falling short of targeted plant load factor (PLF).
The concept paper also suggests that for existing captive and renewable energy projects, and for their fixed cost component, a levelized tariff for their remaining useful life can be set. Whereas, the variable cost component can be specified on coal equivalent basis – weighted average coal price of pit head projects for last quarter of previous financial year which will be applicable for that year.
Capital cost, debt-equity ratio, loan tenure, interest on loan, rate of depreciation, return on equity, operation and maintenance expenses (and its annual rate of escalation), working capital, interest on working capital can be reviewed for renewable energy according to the concept paper.
It has also been suggested that renewable energy can be brought under availability-based tariff (ABT) regime, to help remove the different deviation settlement mechanisms for renewables at the inter-state and intra-state levels as currently proposed by the Forum of Regulators (FOR).
To facilitate the banking of renewable energy, the commission has also contemplated providing ABT compliant special energy meters. It has also considered the monthly settlement of energy sales to be based on power banked during the month as well as monthly settlement for the balance energy supplied by the project at the specified rate. The commission is in view of considering the power withdrawn by the renewable projects as calculated by these meter readings which are not against the banked power, to be considered as power purchased by the project.
Prior to this, in April 2018, the UPERC amended its Captive and Renewable Energy Generating Projects (CRE) Regulations 2014 with changes that were expected to reduce the cost of solar power procured from standalone projects in the state.