Uttar Pradesh Proposes 6% Banking Charges for Solar and Wind Energy

The main objective is to promote electricity generation from renewable energy sources

September 11, 2019


The Uttar Pradesh Electricity Regulatory Commission (UPERC) has issued draft regulations for captive and renewable energy generating projects in the state.

These regulations will be effective beginning April 1, 2019, up to March 31, 2024.

The main objective of these regulations is to promote the generation of electricity from renewable sources, facilitate connectivity of renewable power projects with the grid, and ensure the sale of electricity to any person.

The proposed regulations will apply to all the generating stations based on captive generation, renewable sources of generation, and co-generation, which existed in the state before April 1, 2019.

The proposed regulations are also applicable to small hydro projects, biomass power, non-fossil fuel-based power, cogeneration projects, solar photovoltaic projects, and wind-based power projects. However, these regulations will take effect only if the projects fulfill the eligibility criteria as specified in the regulations.

Regarding the generating projects commissioned on or after April 1, 2019, where the generating project or company has adopted clean development mechanism (CDM), the proceeds of carbon credit from approved CDM project will be shared as below:

The project developer will retain 100% of gross proceeds on account of CDM during the first year of the commercial operation of the generating project.

During the second year of the commercial operation, the share of the power procurer will be 10% which will increase by 10% every year until it reaches 50%. After it touches the 50% mark, the proceeds will be shared in equal proportions by the generating company and the procurer.

According to the UPERC, the eligibility of renewable energy-based power projects—namely, solar photovoltaic, wind power, and biomass projects, must be approved by the Ministry of New and Renewable Energy (MNRE) from time-to-time.

Regarding the sale of power, the new regulations state that all the existing renewable energy-based power projects which have their PPA approved by the commission should be allowed to sell power to the distribution licensee in whose area the project is located.

The renewable energy-based generating power project will also have the right to ‘open access’ for transmitting electricity from its project to the destination of its use by using transmission or distribution system or associated facilities.

The project seeking ‘open access’ within or outside the state through the grid will be under regulations specified by the commission.

In case the power generated from a renewable energy project is supplied to a consumer, then the consumer will have to pay the charges as per the provisions mentioned in the UPERC open access regulations.

All renewable energy projects (except small hydro and municipal solid waste) would be under the availability-based tariff (ABT) mechanism. The renewable energy projects are to provide ABT compliant special energy meters capable of energy accounting for each block of 15 minutes.

Banking of energy up to 100% is allowed depending on the agreement between the distribution licensee and the renewable generator and the technical feasibility of evacuation. Banking charges for solar and wind projects would be 6%. For all other sources of renewables, the banking charges will be 12%.

As the share of renewable energy in the generation mix is increasing in the Indian states, an increasing number of state regulatory commissions are now either coming up with new open access regulations or amending the old ones. In July 2019, the UPERC had issued draft open access regulations, 2019.

In January 2019, Mercom had reported that the UPERC issued a concept paper to amend its Captive and Renewable Energy Generating Projects (CRE) Regulations 2014.

Image credit: EDF Renouvelables

Anjana is a news editor at Mercom India. Before joining Mercom, she held roles of senior editor, district correspondent, and sub-editor for The Times of India, Biospectrum and The Sunday Guardian. Before that, she worked at the Deccan Herald and the Asianlite as chief sub-editor and news editor. She has also contributed to The Quint, Hindustan Times, The New Indian Express, Reader’s Digest (UK edition), IndiaSe (Singapore-based magazine) and Asiaville. Anjana holds a Master’s degree in Geography from North Bengal University, and a diploma in mass communication and journalism from Guru Ghasidas University, Bhopal.