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Renewable energy purchase obligation waiver for Gujarat power utilities

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Date:Aug 29, 2013
Gujarat Electricity Regulatory Commission finds reasons furnished by utilities for their inability to meet additional obligations genuine

The Gujarat Electricity Regulatory Commission has waived off the obligation imposed on state power utilities to buy additional renewable energy over and above what was required in the financial year 2012-13. The commission’s order passed on August 8 applies to Gujarat Urja Vikas Nigam Limited (GUVNL) and Torrent Power Limited who filed a petition with the commission early this year, seeking a the waiver on the additional purchase imposed on to them in view of the previous year’s shortfall in meeting the renewable purchase obligation (RPO) target. RPO is the obligation of power utilities and captive power producers to buy a certain percentage of renewable energy.

The commission noted that GUVNL purchased 4,601 million units of renewable energy (7.40 %) in 2012-2013 as against the required 4,354 million units (7.0 %), as per state regulation. But even the extra 247 million units bought could not cover the shortfall of 836 million units of the previous year which was carried over to 2012-2013.

This total shortfall to be covered, therefore, amounted to 589 million units. GUVNL had petitioned the regulatory commission to waive off this carry over obligation on the ground that there was no sufficient renewable energy available in the state to fulfill the requirement.  “Even after tying up almost the entire capacity of renewable energy commissioned in the state in 2012-13, RPO could not be met,” says GUVNL in the petition.

It says there was a shortfall in installation of renewable energy, especially wind energy, because of the withdrawal of incentives like Generation Base Incentive (GBI) and accelerated depreciation for wind projects in March 2012. The capacity addition of wind power in Gujarat was 207 MW till January 2013, which was less than the 290 MW capacity addition in 2011-2012. The nationwide installation of wind energy was 1,700 MW in the financial year ending March 2013, which was almost 50 per cent less than that of previous year. 

Renewable energy certificates too expensive

There is one more route to fulfill RPO—purchase of renewable energy certificates (REC). The renewable energy certificate mechanism promotes the sale of electricity from renewable sources to discoms at the prevailing conventional energy tariffs. While the amount is lesser than feed-in tariff, the remaining balance is recovered by selling the environmental attribute of generating this clean electricity in the form of renewable energy certificates (REC).

One non-solar REC is equal to one unit of electricity which has a floor price of Rs 1,500 per unit in the market. For solar, the REC floor price is Rs 9,000 per unit. GUVNL said that they could not buy power from the renewable energy certificates market to fulfill the obligation because the certificates were expensive and that the power cost would then have to be passed on to consumers.

Similar reasons were given by Torrent Power Limited (TPL) for not being able to fulfill its purchase obligations.
The commission in its order noted that there was shortfall to the tune of 1.9 % in case of GUVNL and 2.21% in case of TPL.

“But the shortfall was because of the genuine reasons of less capacity addition and unwillingness of wind power generators to sell at the tariff determined by the commission. This is beyond the control of petitioners. And, under such a condition, procurement of RECs would have unjustifiably burdened the consumers of the State,” said the order.

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