Ministry of Energy Releases Procedure for Implementation of Uniform Renewable Energy Tariff

Introduction

The protocol for the introduction of a Unified Renewable Energy Tariff (URET) for end power procurers, such as distribution companies (discoms) and open-access customers, has been announced by the Ministry of Power (MoP) on October 25, 2023. [1]

The proposed methodology outlines a systematic approach for classifying various central pools that are designed to accommodate distinct types of renewable energy sources. These sources encompass:

• solar power
• wind power
• hydro power
• solar-wind hybrid systems
• round-the-clock power (comprising solar-wind hybrid systems with energy storage)
• peaking power (comprising solar-wind hybrid systems with energy storage)
• firm and dispatchable renewable energy power

as well as any additional pool that may be designated by the central government.

The Procedure

According to the regulations, a specific entity known as the “Implementing Agency” is assigned the responsibility of calculating the “uniform renewable energy tariff” every month for every category within the central pool. The term “Implementing Agency” refers to the Central Agency, as designated by the Central Government, responsible for executing the standardised renewable energy tariff for the central pool.

According to the established protocol, it is possible to have multiple categories of central pools for solar-wind hybrid systems. These categories include round-the-clock power central pool, which combines solar-wind hybrid generation with energy storage, as well as peaking power central pool, which also incorporates energy storage. The specific categorization of these pools is determined by the central government, taking into account factors such as technology and generation mix. The utilisation rate (URET) for the central pool, as per these processes, will exclusively apply to the end procurers for their contracted capacity that constitutes a component of the central pool.

The Central Government will independently declare the commencement date for each central pool, with each pool being operational for five years. All capabilities that have entered into Power Sale Agreements (PSA) within this specified period will be included in the central pool, subject to meeting further eligibility criteria. After five years, there would be no further additions to the existing pool capacity, and the current capacity will persist until the termination of their separate agreements. After the completion of the first five-year period, it is possible that new centralised pools might be established to focus on certain renewable energy sources. These pools would include the participation of additional stakeholders.

The standard rate for renewable energy inside the central pool will only be applicable to end procurers for their contractual capacity within the same pool. The determination of the renewable energy tariff, which is paid to renewable energy providers by intermediary procurers under Power Purchase Agreements (PPA), will be unaffected by this.

In order to guarantee adherence to these regulations, intermediary procurers are required to align their bidding contracts, which include Power Purchase Agreements (PPAs) and Power Sale Agreements (PSAs), with the pertinent requirements outlined in the Electricity (Amendment) Rules of 2022. Additionally, they must also conform to the Standard Bidding Guidelines (SBG) established by the Central Government. Any modifications from the Standards-Based Grading (SBG) system would necessitate obtaining permits, which includes seeking authorization from either the Central Commission or the Central Government.

The URET will be calculated by the Implementing Agency every month, and intermediate procurers will generate invoices appropriately. Furthermore, the Implementing Agency will provide monthly account statements to facilitate the adjustment of surplus or deficit tariffs among intermediate procurers. If payment is not made within the specified timeframe, carrying fees will be incurred.

Conclusion

The aforementioned regulations represent a notable advancement towards establishing a structured and fair renewable energy market in India, fostering a favourable atmosphere for the expansion and financial support of sustainable energy initiatives. The Grid Controller of India Limited would assume a crucial role in ensuring the successful implementation of these regulations, albeit with restricted responsibility.

[1]https://powermin.gov.in/sites/default/files/webform/notices/Approval_of_Procedure_for_Implementation_of_Uniform_Renewable_Energy.pdf