Uttar Pradesh DISCOM Gets Approval to Call for Bids to Procure 400 MW of Hydropower

UPPCL had sought changes in the power purchase agreement

June 14, 2019


In a recent petition, the Uttar Pradesh Power Corporation Limited (UPPCL) had asked the Uttar Pradesh Electricity Regulatory Commission (UPERC) to allow some modifications in the power purchase agreements (PPA) for the procurement of 400 MW of hydropower.

The UPERC requested UPPCL to demonstrate the availability of power under existing PPAs and also the power expected from projects for which PPAs have been signed, including the proposed procurement of renewable power. The commission also directed that the demand scenario should be shown corresponding to the availability in different years.

After being directed by the commission, UPPCL prepared a presentation for the commission in which it was highlighted that the total contracted PPAs from all sources were around 22,800 MW and nearly 10,760 MW additional capacity is likely to be available in the next two years.

Further, UPPCL projected the average demand surplus up to FY 2027-28 but in the last two years, i.e., 2028-29 and 2029-30, a shortfall in availability. It also presented the projections of peak demand and availability, which shows a deficit in peak supply as compared to the demand in all the years starting from 2019-2020 to 2029-30. The presentation also showed the demand and supply mismatch in different hours during the 24 hours in all these years.

The commission noted that the future peak demand projections had been worked out on shorter duration of four years at about 11 % whereas, for six years, the compounded annual growth rate (CAGR) is 8.6%. At this rate, the average annual demand as of FY 2019-20 doubles in FY 2029-30. In FY 2019-20, there is virtually no increase in energy demand.

It was noted that UPPCL is already saddled with a huge burden of capacity charges, and therefore, there is a need for rationalization of the amount of proposed purchase of hydropower.

Further, the commission observed that merely for meeting the peak demand shortage, entering into long term PPAs could further accentuate the problem of capacity charge on underutilized capacity. The commission has therefore decided that UPPCL should opt for bidding for the procurement of only 400 MW additional hydropower.

Approving the petitioner’s request, the UPERC also asked UPPCL to make changes in the clauses of the PPA and submit a copy of the documents to the commission.

In May 2019, the Ministry of New and Renewable Energy (MNRE) issued a notification announcing the cancellation of 53 proposals submitted to the Ministry for central financial assistance (CFA) for small hydropower projects (SHP) in the private sector. Majority of these projects are located in Karnataka followed closely by Himachal Pradesh.

Recently, Mercom reported about whether the inclusion of large hydropower projects in India’s renewable mix was a good move. In March 2019, the Cabinet Committee on Economic Affairs (CCEA) approved the proposal put forward by the Ministry of Power to include large hydropower projects over 25 MW under the aegis of renewable energy.