New Delhi Advances Renewable Energy with 90 MW Solar Power Project

Posted On - 30 May, 2024 • By - King Stubb & Kasiva

Summary

The Delhi Electricity Regulatory Commission (DERC) recently issued an order addressing the procurement of renewable energy, specifically solar power, by BSES Yamuna Power Limited (BYPL).[1] This order, related to Petition No. 42/2021, focuses on the approval of a Power Sale Agreement (PSA) dated July 20, 2021, between BYPL and the Solar Energy Corporation of India (SECI). The agreement facilitates the procurement of 90 MW of solar power from SECI’s Inter State Transmission System (ISTS) IX Project, a significant step towards meeting Delhi’s Renewable Purchase Obligation (RPO) targets.

Background and Regulatory Framework

The petition was filed under Section 86(1)(b) and Section 63 of the Electricity Act, 2003. BYPL, a joint venture company serving East and Central Delhi, sought approval for the PSA in line with the DERC (Renewable Purchase Obligation and Renewable Energy Certificate Framework Implementation) Regulations, 2012, and the DERC Comprehensive Conduct of Business Regulations, 2001.

The SECI, established under the Companies Act, serves as the nodal agency for promoting solar power in India. It conducts tariff-based competitive bidding for solar projects and enters into Power Purchase Agreements (PPA) with developers and Power Sale Agreements with distribution licensees like BYPL to help them meet their RPO targets.

Key Submissions and Provisions

BYPL’s petition outlined several critical elements:

  • Approval of PSA: BYPL sought approval for the PSA with SECI for procuring 90 MW of power from the ISTS-IX Project.
  • Adoption of Tariff: The petition requested the adoption of a discovered tariff of Rs. 2.37/kWh from the e-Reverse Auction process, plus a trading margin of Rs. 0.07/kWh for SECI.

The petition also highlighted the regulatory history, including:

  • The issuance of RPO targets by the DERC for various control periods.
  • The Ministry of Power’s guidelines for transparent solar power procurement through competitive bidding.
  • The waiver of inter-state transmission charges for solar and wind energy, making renewable energy more cost-effective.

Implementation and Impact

The ISTS-IX Project, involving a 2000 MW solar power setup, saw successful bidding from companies like Avikiran Surya India Pvt. Ltd., which entered into a PPA with SECI. The SECI then entered into a PSA with BYPL, ensuring a streamlined process from generation to distribution.

The project faced challenges, including the imposition of Basic Customs Duty (BCD) on solar modules and cells from April 2022. However, agreements and communications ensured that the impact of BCD would be absorbed by developers if agreements were promptly signed.

Commission’s Order and Future Outlook

The DERC’s order, dated May 1, 2024, granted approval for the PSA, allowing BYPL to procure 90 MW of solar power at the agreed tariff. This approval aligns with Delhi’s ambitious RPO targets and supports the transition to sustainable energy. The detailed timeline for the project’s commercial operation dates (COD) was also noted, ensuring a phased and systematic rollout of the solar power supply.

The decision underscores the importance of renewable energy in Delhi’s energy mix and sets a precedent for future renewable energy projects. By adopting competitive tariffs and ensuring regulatory compliance, the DERC facilitates the efficient and cost-effective integration of renewable energy into the grid, benefiting consumers and promoting environmental sustainability.

Conclusion

The DERC’s approval of the PSA between BYPL and SECI marks a significant milestone in Delhi’s renewable energy journey. It highlights the collaborative efforts between regulatory bodies, distribution companies, and renewable energy developers to meet RPO targets and provide cleaner, greener energy to the citizens of Delhi. This order not only aids in achieving sustainable energy goals but also sets a framework for future renewable energy procurements in the region.

[1] https://www.derc.gov.in/sites/default/files/Order%20in%20Petition%20No%2042_2021%20-%2001.05.2024.pdf