RAJASTHAN ELECTRICITY REGULATORY COMMISSION
Suo-Motu
In the matter of RERC (Power Purchase & Procurement Process of Distribution
Licensee) (3rd Amendment) Regulations, 2014.
Coram:
Sh. D. C. Samant, Chairman
Sh. S. Dhawan, Member
Memo on Statement of objects & reasons and consideration of
comments/suggestions, received from various stakeholders.
Date of Order
:
20-02-2014
1. The Rajasthan Electricity Regulatory Commission (RERC), in exercise of
powers conferred under Section 181 of the Electricity Act, 2003 (Act 36
of 2003) read with Section 86(1) (b) of the Act, framed the following
Regulations to amend Rajasthan Electricity Regulatory Commission
(Power Purchase & Procurement Process of Distribution Licensee)
Regulations, 2004:
Rajasthan Electricity Regulatory Commission (Power Purchase &
Procurement Process of Distribution Licensee) (3Rd Amendment)
Regulations, 2014
2. The draft regulations along with background note were placed on the
website of the Commission. Comments from the stakeholders were also
invited by the Commission through Public Notice published in the
following newspapers:
Times of India:
28-12-2013
Dainik Bhaskar:
28-12-2013
Dainik Navjyoti:
28-12-2013
3. The last date for submission of comments/suggestions by the
stakeholders/public was 21.01.2014. the list of stakeholders who offered
their comments/suggestions on the draft Regulations up to the said
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date and which have been considered by the Commission while
finalizing the Regulations, is placed at Annexure-I.
4. The hearing in the matter was held on 30.01.2014, and the list of
stakeholders who participated in the hearing is placed at Annexure-II.
5. The main comments and views expressed by the stakeholders through
their written submission as well as during the hearing and the
Commission’s views thereon have been summarized in the following
paragraphs.
Enhancing the proposed RPO targets
Comments/Suggestion of the stakeholders
6. , M/s Indian Wind Energy Association (InWEA), M/s Indian Wind Turbine
Manufacturers
Association(IWTMA),
M/s
National
Engineering
Industries(NEIL), M/s Renewable Energy Generation Pvt. Ltd (REGPL)
and M/s INOX Renewable Ltd have submitted that the NAPCC has set
the minimum target of 5% of total energy purchase (excluding
hydropower with storage capacity in excess of daily peaking capacity
or based on agriculture based renewable sources that are used for
human food) for FY 2009-10 with the targets increasing by 1% for next 10
years. The policy also visualized that SERCs may set target at higher
percentage than the minimum. Accordingly the targets for FY 16-17
works out as 12%. The Forum of Regulators (FOR) based on study
conducted through M/s CRISIL recommended RPO targets for
Rajasthan State for FY 16-17 as 13%, whereas the Commission has
proposed targets lower than recommended by NAPCC and FOR.
7. M/s InWEA also submitted that FOR recommended that there is need
to develop REC mechanism for achieving RPO targets. Further the
reduction in RPO targets in May 2011 has acted as barrier to investment
in wind power and
the reasons stated for reduction in RPO targets in
May 2011 have now been addressed.
The targets for wind RPO
estimated to be achieved in FY 13-14 is 6.27% against the prescribed
level of 5.8%. M/s InWEA further submitted that keeping in view the
estimated capacity addition in subsequent years, the RPO targets fixed
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by the Commission are lower and suggested targets for wind as 7.8% for
FY 14-15, as 8.45% for FY 15-16 and 9.1% for FY 16-17 with total RPO
targets as prescribed by NAPCC i.e.10% for FY 14-15, 11% for FY15-16
and 12% for FY 16-17.
8. M/s Indian Wind Turbine Manufacturers Association (IWTMA) also
submitted that the Commission due to less availability of biomass fuel
for power generation, increase in alternate commercial use of biomass
fuel and high biomass fuel price volatility has set the lower Biomass RPO
level which is convincible. In addition, the commission has set solar RPO
target higher than as stipulated in the National Tariff Policy. However in
our opinion the commission has not increased the wind RPO to the
extent it can be. There is no need for the State like Rajasthan to set
lower RPO target as the state has good wind potential and also the
state may meet RPO targets through REC purchase. They therefore
requested the Commission to revise the wind RPO target accordingly so
that the state can also set total RPO target in line with NAPCC RPO
target.
9. M/s National Engineering Industries Ltd (NEIL) also submitted that in view
of the spirit of Electricity Act, 2003 and for supporting RE generation and
keeping in line with NAPCC’s visualization, there is immense need to
promote Wind energy generation and RPO targets. NEIL suggested to
prescribe RPO targets for wind as 7% for FY 14-15, as 8% for FY 15-16 and
9.5 % for FY 16-17.
10. M/S Renew Power Ventures Pvt. Ltd. submitted that as per 2nd
amendment, the Commission had found merit in increasing the RPO
targets by 1.10% annually. This has been even acknowledged in
presently issued Draft Regulations. However, the RPO target for FY15 has
been proposed to be at 9% which is a lower target considering
increase of 1.10% over the RPO targets of 8.20% for FY 14. In spite of this
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deviation, they are fine with the RPO targets proposed by the
Commission for the period from FY15 to FY17. They thank the
Commission for specifying these targets.
11. M/s INOX Renewable Ltd. submitted that the approach of Hon’ble
commission was symmetrical in the year 2011 to 2014 but not in line with
NAPCC. The draft amendment has proposed an increase of 0.8%in RPO
in the year 2014-15, which is lesser than the previous year’s growth of
1.10%. It can be observed that during the 2011 to 2017, the set and
proposed RPO targets are never exceeded or meet the targets
proposed by NAPCC or targets recommended by Forum of Regulators
(FOR). The clause 4.2.2 of NAPCC states that a dynamic minimum
renewable purchase standard (DMRPS) may be set, with escalation
each year till a pre-defined level is reached, at which time the
requirements may be revisited SERCs may set higher percentages than
this minimum at each point in time. The above sub-provision stipulates
that RPO obligation can be fulfilled either by purchase of energy from
renewable sources or by REC Mechanism & it is Commission’s
prerogative to impose strict penalties on the licensees who fail to meet
their RPO targets. The growth rate of installed capacity of wind power in
the State of Rajasthan is exponential after 2009, with 34% CAGR during
2010-2013. But there is a sharp drop in the same in year 2013-14. Had
there been conducive policy and/or regulatory action in the state that
growth momentum could have been maintained keeping in view the
above the proposed RPO targets should be revised to 10.00%, 11.00% &
12.00% (including wind energy RPO to 7.30%, 7.70% & 8.10%) for the year
2014-15, 2015-16 & 2016-17 respectively, so as to align them to the
targets envisaged in the NAPCC.
12. M/s Renewable Energy Generation Pvt. Ltd (REGPL) also
submitted
that RPO targets proposed by the Commission falls short of targets set
by NAPCC & FOR by 0.6% to 1.6%. The Commission may consider the
FOR’s recommendation and in consideration to the Wind Power
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Generation
being
the
highest
contributor
to
RE-RPO,
consider
increasing total RPO and also Wind RPO by 0.6% for FY 14-15 and FY 1516 &by 1.6% for FY 16-17.
13. M/s Solar Power Association has stated that the Commission has
proposed 0.8% reduction in Biomass RPO which has been transferred to
wind and solar RPO. Up to 2013-14 annual increase in Wind RPO was
0.60% which has now been increased by 1.10% in 2014-15. Similarly the
annual increase in solar RPO was 0.25% per annum which has been
increased by 0.5% in 2014-15. They have requested that the solar RPO
for the year 2014-15 be kept as 2.1% and that of wind power would be
kept as 6.2%.
14. M/s Moser Baer supported the RPO target proposed by the Commission
up to FY 16-17 considering the same as progressive step for bringing
new investment in RE sector.
15. M/s Rudraksh Energy has submitted that the Commission has thoroughly
analyzed the situation of RPO targets and achievement for the last 3
years in a very lucid manner which is highly appreciated and the
decision for keeping the RPO targets are fully justified.
16. Shri G.L. Sharma has submitted that instead of increasing the
percentage of obligation in Rajasthan, it would be more advisable to
keep the percentage on lower side so that such power may flow to
other States and they may also be compelled to use RE power. The
total availability of RE power in the Country and total consumption of
the licensee in the State has to be ascertained. Till such time the
present percentage as being allowed be continued.
Commission’s view/ Decision:
17. The Commission observes that some of the stakeholders have
contended that the overall RPO targets proposed should be enhanced
to bring them at par with the minimum target set by NAPCC and in
particular requested to increase the wind RPO targets, whereas M/s
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Rudarksh Energy, M/s Moserbaer and M/s Renew Power Ventures Pvt.
Ltd have welcomed the proposed targets. However Shri G.L. Sharma
has requested to reduce the proposed RPO targets and restrict the
same at the level existing.
18. The Commission would like to state that while proposing the RPO
targets, it had taken into consideration the goal set by NAPCC and FOR
and also the capacity addition from RE sources i.e. Wind, Biomass and
Solar in the State in preceding years and expected capacity addition
from such sources as provided in respective policy issued by GOR. The
Commission therefore has tried to strike a balance between the
recommendation made by Agencies at National level, likely addition in
generation capacity from RE sources and achievement made till date.
The Commission has also taken consideration of the fact that while
reviewing the status of compliance, FOR in its 37th Meeting held on 21st
August, 2013 observed that against the weighted average non-solar
RPO of 5.45% for 2012-13 in the country, RPO to the extent of only 3.74%
was fulfilled on All India basis whereas Rajasthan by then had already
achieved RPO level of 6.54%.
19. The goal set by NAPCC has to be seen in the national context as an
endeavor of the Nation to promote clean energy and this national
obligation has to be achieved collectively by different constituent
States of the Nation. In view of this and considering the achievement of
NAPCC target by the country as a whole, the Commission is of the view
that RPO trajectory proposed in the draft Regulations is adequate and
it doesn’t need to be enhanced on the ground that the State RPO
trajectory would still be falling short of the year-wise RPO trajectory
envisaged in NAPCC.
20. The commission has already prescribed wind RPO as 6.8% for FY 14-15,
as 7.3% for FY 15-16 and 7.8% for FY 16-17 and the Commission do not
consider it appropriate to increase the wind RPO, as requested by
some stakeholders.
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21. As regard the Solar RPO targets, the Commission wish to state that the
National Tariff Policy has although envisaged that the targets for solar
RPO shall be 0.25% by 2012-13 extending to 3% by 2022 with an increase
of 0.25% per year, the Commission has prescribed the higher targets
due to reasons given in background paper at Para 7(c) and some of
them are as under:
(iv) The State of Rajasthan has enormous Solar Generation Potential
due to strong solar radiations particularly in desert and semi desert
areas, large number of sunny days and availability of land at
relatively lower rate in the Western Rajasthan. In fact, Rajasthan has
the best solar generation potential in the Country.
(v) The State Government has come out with a policy in year 2011 to
provide conducive atmosphere not only to increase Solar Power
Generation by leveraging maximum benefit from JNNSM but also to
establish large manufacturing capacity of solar and allied industries,
which in turn will boost the solar Generation capacity in the State to
provide long term sustainable solution for meeting energy needs
and reducing dependence on depleting fossil fuels like coal and
gas. The policy also provides frame work for development of large
solar parks for achieving reduction in cost of solar power
generation.
(vi) The Commission observes that the prices of coal & gas have
shown increasing trend, besides adding to global warming, whereas
the cost of generation from solar has been decreasing and in near
future it may achieve parity with the conventional sources of power
generation like coal & gas.
(vii) Although solar power is infirm, being linked with intensity of solar
radiation, this power is available almost for 300 days in year during
the day time, with quantum of generation of course varying in
consonance with movement of sun during different time of the day.
(viii)In recent past it is observed that the demand of power is shifting to
day time. Further, the state has substantial agriculture load, which is
being met in blocks rotating in day and night time. Additional solar
energy availability in day time would enable longer supply for
agriculture in day time.
22. In view of position brought out above, the Commission is not inclined to
consider any change in the proposed RPO targets for FY 14-15 to FY
16-17.
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Fulfillment of RPO targets for Biomass Power
Comments/Suggestion of the stakeholders
23. M/s Wind World (i) Ltd. and M/s REGPL submitted that as per
background note, the RPO targets likely to be achieved for Biomass for
FY 13-14 would be around 0.5% against target of 1.5%. This clearly
indicates that the power generation from Biomass source has not been
sufficient to be used to fulfill the shortfall in its RPO. The position is not
likely to improve as power consumption by Discoms is increasing @ 11%
per annum and no new Biomass power plant is in offing therefore
Commission should allow Discoms to fulfill envisaged shortfall in Biomass
generation through Wind power and for this purpose to contract
additional Wind power.
24. Rudraksh Energy submitted that while prescribing Biomass Energy RPO
targets,
the
Commission
has
analyzed
the
real
situation
and
accordingly proposed targets for ensuing years. They suggested that in
case, the renewable power from Biomass is not available to the
required quantity, the shortfall can be met by taking power from Solar
Projects. The solar power would be available to Discoms at a fixed rate
of Rs. 5.50/kWh during day time for 25 years by SECI under JNNSM
Phase-II. This power is going to be definitely cheaper than Biomass or
Wind Power, thus Discoms will not be burdened.
25. Rajasthan Discoms have not made any written submission. However,
during hearing their representative Sh. Rajesh Mathur, SE, suggested
that short fall, if any, in fulfillment of RPO targets for Biomass Energy due
to its non-availability may be allowed to be fulfilled through wind
Energy.
26. InWEA submitted that The Commission under Draft Regulations
proposed that the RPO percentage specified for biomass shall be
fulfilled only by purchase from bio-mass plants and not by purchase of
REC. The GOR in the Biomass Policy 2010 has envisaged various
incentives to the Biomass Generators which helped in an increase of
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28.2% in capacity as per background note in the FY 2010-11, therefore
no special treatment is required for the Biomass energy within the State
of Rajasthan. Further, Forum of Regulations have recommended that
there is a need to develop Renewable Energy Certificate (REC)
mechanism for achieving the RPO targets hence no specific conditions
should have been imposed on the Obligated entities to fulfill the RPO
only by purchase from Biomass. Further, other SERCs and CERC also
have not imposed such conditions on the obligated entities, only
special dispensation is provided to the Solar power producers, since the
Biomass technology is quite matured in the State of Rajasthan, hence
the Commission may modify the Special Dispensation provided in the
Draft Regulations and not to provide any special dispensation to any
specific RE technology other than Solar.
Commission’s view/ Decision:
27. The Commission under RERC (Renewable Energy Certificate and
Renewable Purchase Obligation Compliance Framework), Regulation
2010 has provided that for fulfilling of Renewable Energy Purchase
Obligation by a Distribution Licensee for the percentage specified for
power purchase from Biomass plant shall be fulfilled by purchase of
power from Biomass plants only and not by purchase of REC. It may be
mentioned that the provision being referred by the stakeholders relates
to RERC (Renewable Energy Certificate and Renewable Purchase
Obligation Compliance Framework), Regulation 2010 and it has been
incorrectly stated that any special dispensation has been proposed in
the draft regulations proposed. Therefore amendment in such provision
contained in another set of regulations cannot be entertained in this
regulatory exercise.
Enforcement of prescribed RPO targets
Comments/Suggestions of the stakeholders
28. M/s Renew Power Ventures Pvt. Ltd. has submitted that specifying RPO
target for coming years is a welcome step; however a true gauge of
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development of RE sector in the State would be through actual
fructification of such projects in the State, which in turn is reflected
through RPO compliance. This aspect assumes further importance
considering the fact that Rajasthan, which witnessed highest capacity
additions of wind power projects in FY13, has collapsed to the bottom
position in current FY 14 due to nil capacity additions because of the
policy uncertainty induced by the process of competitive bidding
which was initiated by RREC and which was later recalled. This would
lead to shortfall in RPO compliance for the current year and which
would need to be compensated in coming years. The Commission may
take note of this fact and take step to ensure strict enforcement of RPO
compliance
Commission’s view/ Decision:
29. The Commission has already discussed the status of compliance of
prescribed RPO targets by the Discoms for FY 11-12 to 13-14 in the
background note. Further the Commission has specified the detailed
procedure to ensure compliance of RPO targets by the obligated
entities along with mechanism to deal with cases of default under RERC
(Renewable Energy Certificate and Renewable Purchase Obligation
Compliance Framework), Regulation 2010. In the said regulation a State
Agency has also been designated for monitoring the compliance
status.
Specifying RPO targets for five years instead of three years
Comments/Suggestion of the stakeholders
30. M/s Renew Power Ventures Pvt. Ltd. has submitted that Commission
may specify the RPO targets for 5 years as it would help in providing a
longer term visibility. Accordingly, it would help the developers/
investors in suitably planning their investments in RE based power
projects in the State.
Commission’s view/ Decision:
31. The Commission considers that resource specific year wise targets for
longer duration are practically difficult to predict. It may be seen that
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Biomass sector is struggling as Biomass prices and its availability is still
uncertain. In case of Solar Energy, the Solar PV generation has moved
ahead but status of Solar Thermal is still uncertain and yet to gather
momentum. In addition to this, the technology is fast changing for Solar
and Wind Plants.
Further the Solar PV prices have also shown
considerable dip and fluctuations in past few years. Therefore a three
year period is considered as a reasonable period for the next RPO
trajectory. The Commission therefore considers it appropriate to specify
the trajectory for ensuing three years only, as given in draft.
General Issues
Comments/Suggestions of the stakeholders
32. Sh. G.L. Sharma stated that for such heavy quantum of Wind power a
large investment in transmission system has been made and certain
burden is being borne by the Consumers of the State. More over the
Wind power is an infirm power for which no proper/correct prediction
can be made. Commission has to take judicious view to lessen the
same.
33. M/s Indian Wind Turbine Manufacturers Association has submitted that
the Commission in its Background paper (vide para 6) has provided the
achievement of RPO targets by the Distribution licensee but has not
provided the achievement by the Captive Consumer and third party
sale. The Commission vide clause 2 of (Renewable Energy Certificate
and
Renewable
Purchase
Obligation
Compliance
Framework)
Regulations, 2010 has defined the Obligated Entities which also includes
Captive and OA Consumers. The Hon’ble High Court of Rajasthan in its
judgment dated 13 August, 2012 has rejected the writ petitions filled by
the various CPP and OA Consumers and upheld the validity of the
above said Regulations and also directed them to fulfill the liability
forthwith under the impugned Regulations. Further, HZL has filed special
leave petition before Hon’ble Supreme Court challenging the said
judgment but no stay has been given.
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34. M/s Renew Power Ventures Pvt. Ltd. has submitted that the RPO targets
as proposed should also be made applicable on other obligated
entities i.e. captive consumers and open access consumers.
35. M/s Samta Power (Shri BalMukund Sanadhya) requested for the
cooperation of the Commission regarding understanding of the subject
so that all stakeholders shall be able to submit suggestions/objections. It
suggested that workshop/orientation/foundation/refresher course for
interested stakeholders may be arranged so that objectives specified in
Paragraphs 5.11, 5.13 and 6.0 of the National Electricity Policy can be
achieved.
Commission’s view/ Decision:
36. As regard suggestion of Sh. G.L. Sharma regarding heavy investment in
transmission system for evacuation of RE power and its likely burden on
State Consumers. This issue has also been agitated by some
stakeholders at the time of finalization of Investment Plan petitions of
RVPN for the year 2012-13 and 20 13-14 and the same has been dealt
with in the orders dated 25-10-2012 and dated 11-12-2013. As regards
comments of Shri Sharma about infirm nature of Wind Energy,
Commission has given considerations to the same while specifying RPO
targets for Wind Energy.
37. As regards the suggestion of M/s Indian Wind Turbine Manufacturers
Association and Renew Power Ventures Pvt. Ltd. for specifying for RPO
targets for other entities i.e. captive consumer and open access
consumers, the commission wish to state that there is a separate
regulation for these entities, therefore the suggestion is not related to
the present exercise.
38. As regards the suggestion of Samta power, the commission
wish to
state that, it has tried to explain the subject matter in the Background
paper, which was placed on the Commission’s web site also and public
notices were issued in the newspapers. However, the Commission
recognizes
that
Regulations
have
their
own
complexities.
The
suggestion of the stakeholders has been taken note of.
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39. In the light of the foregoing discussion, the finalized Regulations duly
authenticated, placed below, may be got published in the official
Gazette.
40. Copy of this memo, along with the finalized Regulations, may be sent
electronically and/or by post to the State Government, CEA,
concerned Utilities and other stakeholders.
(S. Dhawan)
Member
(D.C. Samant)
Chairman
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Annexure-1
The list of Stakeholders who offered the comments/suggestion
1. Samta Power (Shri Bal Mukund Sanadhya)
2. Rudraksh Energy
3. National Engineering Industries Ltd.
4. Moser Baer
5. Inox Renewables
6. M/s Wind World (India) Ltd.
7. Solar Power Association
8. InWEA
9. Renewable Energy Generation Pvt. Ltd.
10. ReNew Power
11. Sh. G.L. Sharma
12. Indian Wind Turbine Manufacturers Association (IWTMA)s
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Annexure-2
Rajasthan Electricity Regulatory Commission
List of Stakeholders who participated in the hearing held on 30.1.2014.
u
1.
2.
3.
4.
5.
6.
7.
8.
9.
Shri Navdeep Gupta, Associate, ICF International.
Shri Aneesh Jain, Analyst, ICF International.
Shri Rajseh Mathur, SE, Discoms.
Shri D. S. Agrawal, Consultant, Rudraksh Energy.
Shri S. T. Hussain, AEN, JVVNL
Shri D. D. Agrawal, Member, Samta Power.
Shri B.M. Sanadhya, Director, Samta Power.
Shri Manisha Chauhan, Consultant to Raj. Discoms, PWC.
Shri S. khanna, Chief Manager, NEI.
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RAJASTHAN ELECTRICITY REGULATORY COMMISSION
NOTIFICATION
Jaipur
February 2014
No. RERC/Secy/Regulation1. In exercise of the powers conferred under section 181 of the Electricity
Act, 2003 read with section 86 (1) (b) of that act and all powers
enabling it in that behalf, the Rajasthan Electricity Regulatory
Commission, after previous publication hereby makes the following
Regulations, to amend Rajasthan Electricity Regulatory Commission
(Power Purchase & Procurement Process of Distribution Licensee)
Regulations, 2004, namely:
2. Short title, Extent and commencement
(1) These Regulations shall be called the “Rajasthan Electricity
Regulatory Commission (Power Purchase & Procurement Process of
Distribution Licensee) (3rd Amendment) Regulations, 2014”.
(2) These Regulations shall come into force from date of publication in
the State Gazette.
3. Amendment in Regulation 4:
In the table existing in Regulation No. 4 (1A) following is added.
Year
Obligation expressed as percentage of energy
consumption (%)
2014-15
2015-16
2016-17
Wind
6.80
7.30
7.80
Biomass
0.70
0.90
1.10
Solar
1.50
2.00
2.50
Total
9.00
10.20
11.40
By order of the Commission
(G. K. Sharma)
Secretary
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