Regulatory Blog
?>
CERC (Power Market) (First Amendment) Regulations, 2025
Power Markets
send
Power Market Design
15 October 2025
Keywords:
OTC, Power Market, Trading licensee, VPPA
The CERC notified draft on CERC (Power Market) (First Amendment) Regulations, 2025, issued on 17th June 2025. The main objectives of the proposed regulations are:
Objective: The CERC seeks to strengthen the evolving framework of electricity trading by expanding role of Over-the-Counter (OTC) platforms and incorporating Virtual Power Purchase Agreements (VPPAs). The amendment aims to promote innovation in market instruments, and provide flexibility for buyers and sellers through structured contracts. By enabling consumers to participate in VPPAs and empowering OTC platforms to facilitate a wide range of bilateral contracts and aligning with existing provisions with the Connectivity and General Network Access (GNA) framework, the amendment aims to promote transparency, market accessibility, and competition.
EAL Opinion:
1. Disparity in Financial and Technical Requirements & Compliance Symmetry between OTC Platforms and Trading Licensees: There is a lack of balance and uniformity in the financial, technical, and compliance requirements imposed on OTC Platform Operators as compared to Trading Licensees. While Trading Licensees must meet category-wise net worth thresholds based on volume (ranging from ₹2 crores to ₹75 crores), OTC Platforms are proposed to have a flat net worth requirement of ₹35 crores with no cap on trading volume. This may create a regulatory arbitrage. The obligations and qualification criteria should be aligned across market participants.
?>
HPERC (Deviation Settlement Mechanism and Related Matters) (Second Amendment) Regulations, 2025 [Draft]
Transmission
send
Deviation Settlement Mechanism
15 October 2025
Keywords:
Contact Rate, Reference Charge Rate, Deviation Charges, System Frequency, Declared Scheduled (DGS/DBUY)
HPERC notified for (Deviation Settlement Mechanism and Related Matters) (Second Amendment) on 26th April, 2025. The key highlights of this draft regulations are given below:
Objective: The amendment to the Principal Regulations substitutes the definitions of Contract Rate and Reference Charge Rate under Regulation 2, updates the key design parameters by aligning them with the CERC (Deviation Settlement Mechanism and Related Matters) Regulations, 2024, and revises Charges for Deviation under Regulation 7 for general seller, RoR generating station, and Buyer, incorporating slabs linked to system frequency, f band, Declared Generation Schedule (DGS), Declared Buyer Schedule (DBUY), and Volume Limits, to promote grid security, commercial discipline, and responsible scheduling.
CER Opinion:
1. Contract Rate: In the proposed clause K(ii) “in respect of a WS seller or a MSW Seller or such other entity as applicable, whose tariff is not determined or adopted or approved under Section 62 or Section 63 or Section 86(1)(b) of the Act, and selling power through power exchange(s), the price as discovered in the Power Exchange for the respective transaction;”
?>
IEX Petition (Introduction of the Peak Day Ahead Market (Peak DAM) and Peak Real Time Market (Peak RTM) at Indian Energy Exchange Limited
send
16 September 2025
Keywords:
Renewable Energy absorption, Peak Day Ahead Market, Peak Real Time Market, Battery Energy storage system, Pumped Storage Plant
The CERC, invites comments, Suggestions and Objection on petition filed by Indian Energy Exchange (IEX) (Introduction of Peak Day Ahead Market (Peak DAM) and Peak Real Time Market (Peak RTM) at Indian Energy Exchange Limited). Issued on 4th August 2025.
Objective: This petition is to obtain approval from the Central Electricity Regulatory Commission (CERC) for introducing the Peak Day Ahead Market (Peak DAM) and Peak Real Time Market (Peak RTM) on the IEX platform, with the aim of addressing peak-hour demand-supply imbalances, promoting participation of flexible resources such as Battery Energy Storage Systems and Pumped Storage Plants, facilitating market-based storage capacity addition, ensuring reliable power supply during deficit periods, and strengthening India’s electricity market design through efficient price discovery and improved liquidity.
CER Opinion-
1. Market Segmentation and Market Entry Barrier: In the proposed Clause 7(i) Eligibility: “Energy storage sellers will be allowed to sell in Peak DAM segment. To begin with, the following categories of generators shall be eligible to participate”
Lower barrier to entry is the hallmark of competition in any market. Market segmentation lowers liquidity and competition, leaving it more prone to manipulation thus ultimately impacting the market outcome. By limiting seller participation only to energy storage systems (ESS), the product design would significantly undermine competition in Peak DAM segment. Demand response, co-located storage as well as high-cost generators would be equally eligible players for participation in the proposed market segment thus keeping it technology agnostic.
Renewable Consumption Obligation (RCO) Under the Energy Conservation Act, 2001
Renewable Energy
send
RCO / RPO
28 August 2025
Keywords:
Renewable Energy, Wind, DRE, Compliance, Penalty, Designated Consumers, Consumption
The MoP notified Draft Gazette Notification on Renewable Consumption Obligation (RCO) Under the Energy Conservation Act, 2001
Objective:
The Ministry of Power has notified Renewable Consumption Obligations (RCO) under Section 14 of the Energy Conservation Act, 2001, effective 1st April 2024. Designated consumers distribution licensees, open access users, and captive plants—must meet rising renewable energy targets from 29.91% in 2024–25 to 43.33% in 2029–30. The obligation is split into wind, hydro, distributed renewable energy (DRE), and other renewables, with special relaxations for hilly and North-Eastern states. Wind and hydro apply only to projects commissioned after March 2024, while DRE covers projects below 10 MW, including rooftop solar. Obligations under wind, hydro, and other renewables are interchangeable, but DRE is non-fungible except for surplus. Adjusted consumption excludes nuclear, fossil waste heat recovery, and part of fossil co-generation. Compliance can be achieved via direct renewable use, RECs (including virtual PPAs), or buyout payments, with penalties for shortfalls under Section 26. The Bureau of Energy Efficiency will monitor compliance, with annual reporting and certification requirements.
CER Opinion:
1. Non-congruent definition of Obligated Entities vs Designated Consumers: Draft Clause 1 “In exercise of the powers conferred by section 14 of the Energy Conservation Act, 2001, (hereafter referred as 'Act') and in supersession of the notification vide No. S.O. 4617 (E) dated 20th October, 2023, except as respects things done or omitted to be done before such supersession, the Central Government in consultation with the Bureau of Energy Efficiency, hereby specifies the minimum share of electrical energy consumption from renewable energy sources for designated consumers, who are electricity distribution licensees, open access consumers and captive users. For open access consumers and captive users, this requirement applies to electricity consumption from sources other than distribution licensee.”
The draft notification introduces of Designated Consumers (DCs) that does not appear fully congruent with the earlier regulatory understanding of Obligated Entities. As per “Notice for Submission of Renewable Consumption Obligation (RCO) Compliance Report ”, DCs are restricted to a specific list of industries meeting prescribed consumption thresholds, measured in metric tons of oil equivalent, pursuant to the Energy Conservation Act, 2001. However, under the framework of the Electricity Act, 2003, Open Access consumers—irrespective of their individual consumption thresholds—were also considered obligated entities for the purpose of Renewable Purchase Obligation (RPO) compliance. By excluding Open Access consumers below the notified mtoe threshold, the present draft effectively removes a number of consumers from the coverage of RCO. Such exclusion may dilute the compliance base and run contrary to the policy objective of progressively broadening the framework for renewable energy integration. It is therefore suggested that the notification clarify the treatment of Open Access consumers who do not qualify as Designated Consumers and specify whether they remain obligated to meet RCO in respect of consumption from sources other than the distribution licensee, in line with the earlier RPO regime. This clarification will ensure that the objectives of the mechanisms are aligned and have uniformity in targets across entities.
Energy Conservation (Compliance Enforcement) Rules, 2025
Renewable Energy
send
Compliance
28 August 2025
Keywords:
Renewable Energy, Enforcement, Compliance, Conservation
The MoP notified Draft Energy Conservation (Compliance Enforcement) Rules, 2025 Issued on 4th August 2025
Objective:
The Draft rules provide a structured mechanism for monitoring, reporting, and enforcement of compliance under the Energy Conservation Act, 2001. These rules will come into force upon publication in the Official Gazette and are applicable to manufacturers, importers, designated consumers, and other obligated entities as specified in the Act.
Under Section 13A, 14, and 15 of the Energy Conservation Act, the Bureau of Energy Efficiency (BEE) has been entrusted with the responsibility to seek information, verify compliance with prescribed norms, and submit certified reports to the Central Government. The draft rules clarify that in cases of shortfall or non-compliance, the Central Government’s notified norms will take precedence over cumulative norms at the State level, thereby ensuring uniformity.
The rules also outline that all penalties payable by obligated entities for non-compliance shall be credited to the Central Energy Conservation Fund (Section 20 of the Act), from which 90% will be transferred to the State Governments and 10% retained by the Central Government for designated purposes. In terms of reporting, the rules stress the requirement of periodic submission of data by entities, with BEE responsible for verification to prevent under-reporting or misreporting.
Overall, the draft rules seek to strengthen compliance through a clear enforcement framework, defined reporting timelines, penalty mechanisms, and fund utilization provisions, thereby aligning with the larger spirit of the Energy Conservation Act, 2001, which is to promote efficient use of energy and reduce dependence on fossil fuels.
CER Opinion:
1. Jurisdictional Concerns over Central vs. State Obligations: In the proposed Clause 3(2) “In the event of any shortfall, the norms and standards provided by the Central Government under clause (x) of section 14 of said Act shall apply to the extent of such shortfall, and not cumulatively with any norms and standards provided by any State Electricity Regulatory Commission under the Electricity Act, 2003.” (emphasis added)
The draft clause provides that in the event of any shortfall, the norms and standards notified by the Central Government under Section 14(x) of the Energy Conservation Act shall apply, and not cumulatively with those framed by the SERCs. On the face of it, this provision is intended to avoid double counting of penalties, thereby ensuring that Designated Consumers (DCs) are not subjected to overlapping obligations under the Electricity Act 2003 and the Energy Conservation Act, 2001.
The RPO obligations specified under the Electricity Act 2003 are subject to regulatory compliance and penalty mechanism thereof. It is not clear if the SERCs could also penalise the obligated entities
While it acknowledges the concurrency of the obligations under two different legislations, it seems to bestow a hierarchy to such norms and standards. An explicit acknowledgement that the shortfall would be judged separately by the respective SERC under the Electricity Act 2003, would reduce scope for disputes. This would particularly be desirable in case of state-level obligation being higher than the central level. This is further explained below.
?>
CEA: “Alternative Mechanism for implementation of FPPAS under of the Electricity (Amendment) Rules, 2022.”
Electricity
send
FPPCA
06 August 2025
Keywords:
Power procurement costs, Stabilization fund, Uniform surcharge, financial sustainability, Regulatory compliance
The CEA notified draft on “Alternative Mechanism for implementation of (FPPAS) under Rule14 (Timely recovery of Power purchase cost by distribution licensee) of the Electricity (Amendment) Rules, 2022.” Issued on 30th December, 2024.
Objective: The proposed concept paper address mechanisms for managing deviations in power procurement costs faced by electricity distribution companies (DISCOMs). It highlights the (FPPAS) as a mechanism for periodic revenue recovery, standardized and proposed certain changes under Rule 14 of the Electricity (Amendment) Rules, 2022. Current approach practices, such as Gujarat base FPPPA and Maharashtra stabilization fund, aim to minimize tariff fluctuations and ensure financial stability. A proposed alternative mechanism involves a uniform surcharge collected monthly to avoid consumer tariff shocks while ensuring timely cost recovery for DISCOMs
The documents can be accessed here
1. Past FPPAS and Future Surcharge: In the proposed Clause 7(i) “Along with monthly electricity bill, Distribution Licensee shall also collect monthly Base Fuel and Power price Adjustment Surcharge (FPPAS) not exceeding X % of monthly average billing rate approved by the State Commission. X shall be decided by the State Commission based on weighted average FPPAS of last 3 years’ audited values and the proposal/approval for ensuring year as filed by the Distribution Licensee before the State Commission”.
The existing mechanism of FPPAS takes into account most recent changes in fuel and power purchase cost. The proposed mechanism would link the future FPPAS (as a factor X) based on price changes in the past three years. This would not be a correct reflection of cost changes in the near term and, in fact, increase the delink between cost changes and FPPAS to be collected from consumers (Figure 1). For example, change in fuel cost and FPPAS was significantly high in the past few years due to imported fuel, whose share has now reduced. Furthermore, a change in variation in share of coal-based generation over the years would also be a reflection of what may happen in the near term.
?>
KSERC (Renewable Energy and Related Matters) Regulations 2025
Renewable Energy
send
Tariff, RPO
06 August 2025
Keywords:
Net Metering, Gross Metering, Virtual Net Metering, Open Access, Energy Storage, Grid Stability
The KSERC notified draft on (Renewable Energy and Related Matters) Regulations 2025. Issued on 30th May, 2025
Objective: The draft documents to regulate the promotion, integration, and operation of renewable energy systems in Kerala, ensuring their safe and efficient grid connectivity. It aims to streamline processes for Net Metering, Gross Metering, Virtual Net Metering, and Open Access for various renewable energy generators. The regulations promote energy storage, grid stability, and consumer participation in renewable energy adoption through prosumer models. They also support Kerala's clean energy transition by setting guidelines for Renewable Purchase Obligations (RPO), tariff determination, and market facilitation.
CER Opinion-
1. Dynamic Peak hours: As per the proposed Clause3 (68) “Peak Hours’ means the period from 18:00 hours to 23:30 hours on the same day:
Provided that, the time period specified above shall be applicable wherever ABT meters or smart meters or ToD meters programmed for the above time zone are installed and in all other cases the ‘peak hours’ shall be zone 2 (18:00 hrs to 22:00 hrs)”.
The electricity demand as well as market dynamics vary across seasons as well as time of the day. Peak/off-peak hours are to be guided by the relative electricity demand that may itself vary across the seasons. This would necessitate that the time zones mentioned in these regulations based on price or peak hours should be dynamic, be adjusted on a seasonal basis with observed/expected demand variation and the market prices.
?>
Amendments to the Guidelines for Tariff Based Competitive Bidding Process for Procurement of Power from Grid Connected Wind Solar Hybrid Project, 2025
Renewable Energy
send
Procurements
16 July 2025
Keywords:
Renewable Energy, Scheduled Commercial Operation Date, Power Procurement
The MoP notified Draft Amendments to the Guidelines for Tariff Based Competitive Bidding Process for Procurement of Power from Grid Connected Wind Solar Hybrid Project, 2025 Issued on 25th June, 2025
Objective:
The amendments to the Guidelines for Tariff Based Competitive Bidding for Grid-Connected Renewable Energy Projects with Energy Storage Systems, notified on June 9, 2023, and amended on November 17, 2023, February 2, 2024, and February 12, 2025, streamline power procurement. They mandate Distribution Licensees to seek Power Sale Agreement approval within 30 days of signing if not pre-approved, allow extensions of the Scheduled Commercial Operation Date for delays in tariff adoption or approval beyond 60 days from submission or 120 days from signing, and reduce the Performance Bank Guarantee from 5% to 3% of the project cost. These changes enhance efficiency and ease financial burdens for developers.
CER Opinion-
1. Consistency with Reference to “Appropriate Commission”: Clause no 5.1 (a) Any deviations from these Guidelines and/or Standard Bidding Documents (SBDs) in the draft RfS, draft PSA (if applicable) need to be approved by the Government Appropriate Commission in accordance with the process described in Clause 19 of these Guidelines. (emphasis added)
While Clause 5.1 is proposed to be amended as above, clause 19 of the Guidelines currently refers to the "Appropriate Government" as the authority for approving deviations from the Guidelines and/or Standard Bidding Documents (SBDs). However, other parts of the document - such as provisions related to deviations in the RfS, PPA, and PSA—refer to the "Appropriate Commission" as the approving authority. (a), (b), and (c). This revision will help avoid misinterpretation and ensure that the categories of obligated entities are explicitly defined and consistently understood.
?>
CERC (Virtual Power Purchase Agreements (VPPAs)) Guidelines, 2025
Power Markets
send
Renewable Energy Contracts
10 July 2025
Keywords:
Renewable Energy, Strike Price, Virtual Power Purchase, RPO, Renewable Energy Certificate (REC), Generator, Consumers
The CERC notified draft on (Virtual Power Purchase Agreements (VPPAs) Guidelines, 2025 Issued on 22nd May, 2025
Objective:
The Draft Guidelines for Virtual Power Purchase Agreements (VPPAs), issued by the Central Electricity Regulatory Commission (CERC) in 2025, aim to establish a formal regulatory framework to facilitate financial contracts for renewable energy procurement without physical delivery. These guidelines recognize VPPAs as Non-Transferable Specific Delivery (NTSD) over the counter (OTC) contracts between renewable energy generators and consumers (including designated consumers), enabling large commercial and industrial buyers to meet their Renewable Consumption Obligations (RCO) through the purchase of RECs linked to these agreements. The strike price is mutually agreed upon by parties and settled financially against the market price (typically on power exchanges), with the difference paid or received by the consumer. Key highlights include clear recognition of VPPAs under CERC’s regulatory oversight (subject to SEBI's jurisdictional clarity), mandatory REC transfer (non-tradable) to buyers for RCO compliance, and a standardized contract structure with defined settlement and dispute resolution mechanisms. The guidelines also propose integration with emerging OTC platforms and mark a step toward market-based decarbonization, providing legal certainty and scalability for corporate renewable procurement in India.
CER Opinion-
1. Relevance of Virtual PPAs: Virtual Power Purchase Agreements (VPPAs) would help unlock further investment in the renewable energy development, wherein a buying entity need not take direct delivery of the electrical energy, which is separately sold in the market. This offers greater revenue certainty to the investors as the price associated with the RECs as well as the energy can be directly contracted/negotiated between the RE generator and the buyer entity. This would also help enhance RPO compliance for open access and captive consumers.
The current wording of draft clause may lead to ambiguity regarding the scope of obligated entities. Specifically, the phrase "Any other person consuming electricity" may be replaced by "Any of the following persons consuming electricity" to clearly connect it with sub-clauses (a), (b), and (c). This revision will help avoid misinterpretation and ensure that the categories of obligated entities are explicitly defined and consistently understood.
Ministry of Coal (Public Consultation on Coal Trade Exchange)
Market
send
Coal Trade Exchange
11 June 2025
Keywords:
Coal trading exchange, Coal Controller Organization, Surplus coal scenario
Ministry of Coal notified Public Consultation on (Coal Trade Exchange) Issued on 07th March, 2025.
Objective: The recent coal sector reforms have boosted production, with India expected to produce 1.5 billion tonnes by 2030, leading a potential coal surplus. Current coal sales channels are primarily for government owned companies Coal India Ltd. and Singareni Collieries Company Ltd. A CTE is proposed to provide a competitive platform for commercial and captive miners to sell surplus coal alongside public sector companies. It is also proposed to designate the Coal Controller Organization (CCO) as the regulator for the CTE. This requires amending the Mines and Minerals (Development & Regulation) Act, 1957, to define the CTE and empower the Ministry to frame rules for its operation, licensing and regulations. Prospective exchange operators can apply for authorization under the new rules. The CCO will regulate the CTE while operators will establish market rules and bye laws
CER Opinion-
1. Coal trade exchange- India's coal production is estimated to reach 1 billion tonnes by 2024-25, and exceed 1.5 billion tonnes by 2030. Major consumers of coal, primarily thermal power plants and the cement plants have historically been allocated captive mines or linkages to ensure availability of the fossil fuel. Growth of captive mining, which allows for limited sale of surplus production is rowing to contribute to the coal availability through domestic production. To ensure that the available surplus in the coal sector is price in a competitive environment, an exchange based platform can address the need for the sector. This can help address short-term shortages by major coal consumers, who otherwise resort to coal imports bleeding the precious foreign exchange reserves. Market based prices would help price the scarcity but also needs regulatory oversight to ensure that the market outcome does not vitiate the competitive spirit through market power and its misuse.
Draft amendments proposed in the MBDs for Procurement of Power for Long term from Thermal Power Stations set up on DBFOO basis -Reg.
Generation
send
Thermal Power Plant
11 June 2025
Keywords:
Model Bidding Documents, DBFOO, Bid Security, Fuel Charge, Technical capacity
The MoP notified (Draft amendments proposed in the Model Bidding Documents for Procurement of Power for Long Term from Thermal Power Stations set up on Design, Build, Finance, Own and Operate DBFOO Basis -Reg), Issued on 15th April, 2025.
Objective: The draft documents proposed amendments on “Model Bidding Documents (MBDS) 2.0" is to propose amendments to the existing model framework for the long-term procurement of electricity by distribution licensees from thermal power stations operating on a Design, Build, Finance, Own, and Operate (DBFOO) basis. These changes aim to update clauses in the bidding and power supply agreements to reflect evolving policy, regulatory needs, financial structures, and risk-sharing mechanisms. The intent is to enhance clarity, ensure fairness in bidding, and align with current legal and economic conditions in India's power sector.
CER Opinion-
1. Incentive for Higher Availability and Ramp Rate (Instead of PLF): In the proposed Clause
21.4.4 “The obligations of the Utility to pay Fixed Charges in any Accounting Year shall in no case exceed an amount equal to the Fixed Charge due and payable for and in respect of the Normative Availability of 90% (ninety per cent) computed with reference to the entitlement of the Utility in Contracted Capacity (the “Capacity Charge”). Provided, however, that in the event of Despatch of the Power Station beyond such [72% (seventy two per cent)], Incentive shall be payable in accordance with the provisions of Clause 21.6.1. For the avoidance of doubt, the Capacity Charge referred to herein shall be equal to and computed with reference to the maximum Availability of [72% (seventy two per cent)]26 of the Contracted Capacity”.
?>
TNERC (Renewable Energy Purchase Obligation) (Amendment) Regulation, 2025
Green Energy
send
Renewable Purchase Obligation & REC
11 June 2025
Keywords:
Renewable Energy, Renewable Purchase Obligation, RPO, Renewable Energy Certificate (REC), Distribute
TNERC notified draft on (Renewable Energy Purchase Obligation Amendment) Regulation, 2025. Issued on 21th May, 2025.
Objective: The draft amendment on Renewable Energy Purchase Obligation Regulations, 2023, in order to align them with the updated Renewable Consumption Obligation (RCO) framework issued by the Ministry of Power, Government of India. It aims to ensure compliance through well-defined eligibility criteria, standardized methods for estimating energy generation, and data reporting requirements. The regulation also designates the Tamil Nadu Green Energy Corporation to monitor and report on RPO fulfillment. Overall, the objective is to strengthen the regulatory framework to support the state's transition to clean and sustainable energy.
CER Opinion-
1. Achieving Credible HPO Targets Using Allocated Free Hydropower: In the proposed Annexure-I (Note 2) “The hydro renewable energy component shall be met only by energy produced from Hydro Power Projects [including Pump Storage Projects (PSPs) and Small Hydro Projects (SHPs)], commissioned after the 31st March, 2024:
Provided that the hydro renewable energy component may also be met out of the free power being provided to the State/DISCOM from the Hydro Power Projects commissioned after the 31st March,2024.”
?>
CERC: Indian Energy Exchange petition before Commission on introduction of Green Real Time Market segment on its trading platform
Power Markets
send
Power Market Design
14 May 2025
Keywords:
Renewable Purchase Obligation (RPO), Exchange Platform, Day Ahead Market, Real Time Market, Green Real Time Market
Central Electricity Regulatory Commission (CERC) on 7th April 2025, invited comments, suggestions and objection on petition filed by Indian Energy Exchange (IEX), an energy trading platform, for approval to introduce Green Real Time Market in Real Time Market segment on its platform for providing exclusive trading in Renewable Energy.
Objective: The IEX seeks to introduce the Green Real-Time Market (G-RTM) to facilitate renewable energy (RE) trading by providing a platform for real-time transactions, in order to address the variability and forecasting challenges of RE generation through shorter trading windows. The G-RTM aims to enhance market efficiency and flexibility by allowing RE generators to manage forecasting errors, reduce deviations, and ensure grid stability, with the option to transfer unselected bids to the conventional Real-Time Market (RTM). It supports the Government of India’s goal of achieving 500 GW of RE capacity by 2030 and aligns with the National Electricity Plan (NEP) 2023 by promoting market-based RE integration. It also attached procedural changes necessary for approval on G-RTM’s operational framework, including contract specifications and amendments to IEX’s Business Rules, it will enable seamless implementation. Additionally, it addresses stakeholder demands, evidenced by the unmet 72% of RE purchase bids in the Green Day-Ahead Market (G-DAM) in FY24, and seeks to create new trading avenues for RE generators, including merchant projects, while helping obligated entities meet their Renewable Purchase Obligations (RPOs).
CER Opinion-
1. G-RTM to Help Reduce Deviations under DSM: Variability and uncertainty associated with renewable energy sources is reflected in the revision of RE schedule from day-ahead till the gate closure. Given such uncertainty, opportunity to buy/sell RE energy near to the time of delivery would provide an opportunity to the generators as well as buyers to adjust their buy/sell portfolio on account of changes in the RE generation forecast.
?>
Gazette Notification on Renewable Consumption Obligation (RCO) notified on 20th Oct 2023, 2025
Green Energy
send
Renewable Purchase Obligation & REC
02 May 2025
Keywords:
Renewable Consumption Obligation (RCO), Renewable Energy, Renewable Purchase Obligation, RPO, Renewa
The MoP notified draft amendment on (Gazette Notification on Renewable Consumption Obligation (RCO) notified on 20th Oct 2023), 2025 Issued on 8th Mar, 2025
Objective:
The draft amendment to the Gazette Notification on Renewable Consumption Obligation (RCO), dated October 20, 2023, introduces several key changes aimed at strengthening compliance and promoting renewable energy integration. It specifies the minimum share of electrical energy consumption from non-fossil sources for designated consumers, including electricity distribution licensees, open access consumers, and captive users. The amendment allows for shortfalls in wind or hydro renewable energy consumption to be offset by surplus from other renewable sources, and surplus from distributed renewable energy can also be used to meet obligations related to wind, hydro, or other renewables. Open access and captive users are required to meet the total renewable energy obligation from any renewable source. For captive users, consumption obligations include self-consumption, excluding auxiliary consumption, with specific provisions for electricity generated from waste heat recovery. The amendment outlines multiple methods to fulfill RCO, including consuming non-fossil electricity, purchasing Renewable Energy Certificates (RECs), or paying a buyout price, with funds from the buyout mechanism supporting non-fossil fuel capacity development. Penalties for non-compliance, including shortfalls or submission of incorrect information, are outlined, with provisions for adjudication under the Energy Conservation Act, 2001. The Bureau of Energy Efficiency (BEE) is tasked with monitoring compliance, issuing periodic reports, and providing implementation guidelines. Additionally, compliance for multiple designated consumers under common control may be considered at the Holding Company level. Overall, the amendment aims to enhance the regulatory framework for renewable consumption obligations and support the integration of renewable energy into the national energy mix.
CER Opinion-
1. Payment of the buyout price specified by Central Electricity Regulatory Commission (CERC): Draft Clause 6 Proviso no. iii. “Payment of the buyout price specified by Central Electricity Regulatory Commission (CERC).”
“Provided that the sums received through the buyout mechanism shall be credited to the Central Energy Conservation Fund under a separate head. These sums shall be utilized to support the development of specified non-fossil fuel capacities, with the objective of increasing the share of non-
fossil fuel energy in the overall energy mix. The Central Government shall specify the mechanism for utilizing these sums to support the development of such non-fossil fuel capacities.”
Buyout mechanism, suggested initially by Singh (2010)1 as well as in multiple submissions to CERC2 and MoP3, is a compliance mechanism for the RPO obligation. This incentivises the obligated entities to ensure compliance by either buying renewable power or the REC certificates. Buyout price also acts as a ceiling price for the REC certificates.
?>
BERC (Renewable Purchase Obligation, its compliance and REC Framework Implementation) Regulations
Green Energy
send
Renewable Purchase Obligation & REC
22 April 2025
Keywords:
Renewable Energy, Renewable Purchase Obligation, RPO, Renewable Energy Certificate (REC), Distribut
The BERC notified draft on (Renewable Purchase Obligation, its compliance and REC Framework Implementation) Regulations, 2025 Issued on 8th Mar, 2025
Objective:
Draft is to consolidate and update the existing regulatory framework in line with the latest policy directives of Ministry of Power, government of India, these regulations aim to promote the adoption of Renewable Energy in Bihar by setting clear RPO targets, incorporating new categories like distributed RE and ensuring robust compliance mechanisms, the framework is designed to support Bihar’s transition to a cleaner energy mix. Ensure accountability of obligated entities, and align with national renewable energy goals under the Energy Conservation act, 2001 and Electricity Act, 2003.
CER Opinion-
1. Clarification on Scope of Obligated Entities: Draft clause no. 3 "Applicability of Renewable Purchase Obligation 3.1 These Regulations shall be applicable to all Obligated Entity such as:
I) Distribution licensee
II) Any other person consuming electricity.
(a) generated from conventional Captive Generating Plant having capacity of 1MW and above for his own use.
(b) through cogeneration from sources other than renewable sources.
(c) By procurement from conventional electricity generation through Open Access and for third party sale."
The current wording of draft clause may lead to ambiguity regarding the scope of obligated entities. Specifically, the phrase "Any other person consuming electricity" may be replaced by "Any of the following persons consuming electricity" to clearly connect it with sub-clauses (a), (b), and (c). This revision will help avoid misinterpretation and ensure that the categories of obligated entities are explicitly defined and consistently understood.
?>
HERC (Green Energy Open Access) Regulations, 2023 1st Amendment Regulations, 2025 [Draft]
Green Energy
send
Open Access
11 April 2025
Keywords:
Green energy Open Access, additional surcharge
The HERC notified draft on (Green Energy Open Access) Regulations, 2023, 1st Amendment Regulations, 2025. Issued on 9th January, 2025.
Objective: The draft documents proposes amendments to align with the Central Government's updated green energy rules. Eligibility for Green Energy Open Access is expanded to include consumers with 100 kW load via single or aggregated connections in the same electricity division. Captive users are allowed unrestricted procurement under Green Energy Open Access. Consumers on non-independent feeders may be allowed access, subject to system constraints and without compensation for power cuts. The additional surcharge exemption for offshore wind energy is extended to projects commissioned up to December 2032.
CER Opinion -
1. Ensuring the Prerequisite of Connectivity for Open Access Approval: In the Draft Clause 1(4): “Provided that a generating station, including captive generating plant, or a consumer / person shall not be eligible to apply for long term or medium term or short-term open access unless he has the connectivity or he applies for connectivity to the intra-State transmission or distribution system as the case may be.
Provided further that a person may apply for connectivity as well as long term or medium term or short-term open access simultaneously”.
?>
Alternative Mechanism for implementation of FPPAS under of the Electricity (Amendment) Rules, 2022
Electricity
send
FPPCA
11 April 2025
Keywords:
Power procurement costs, Tariff volatility, Stabilization fund, Uniform surcharge, Uniform surcharge
"Alternative Mechanism for implementation of (FPPAS) under Rule14 (Timely recovery of Power purchase cost by distribution licensee) of the Electricity (Amendment) Rules, 2022." Issued on 30th December, 2024.
Objective: The proposed concept paper address mechanisms for managing deviations in power procurement costs faced by electricity distribution companies (DISCOMs). It highlights the (FPPAS) as a mechanism for periodic revenue recovery, standardized and proposed certain changes under Rule 14 of the Electricity (Amendment) Rules, 2022. Current approach practices, such as Gujarat base FPPPA and Maharashtra stabilization fund, aim to minimize tariff fluctuations and ensure financial stability. A proposed alternative mechanism involves a uniform surcharge collected monthly to avoid consumer tariff shocks while ensuring timely cost recovery for DISCOMs
CER Opinion -
1. Past FPPAS and Future Surcharge: In the proposed Clause 7(i) "Along with monthly electricity bill, Distribution Licensee shall also collect monthly Base Fuel and Power price Adjustment Surcharge (FPPAS) not exceeding X % of monthly average billing rate approved by the State Commission. X shall be decided by the State Commission based on weighted average FPPAS of last 3 years’ audited values and the proposal/approval for ensuring year as filed by the Distribution Licensee before the State Commission".
?>
RERC (Terms and Conditions for Green Energy Open Access) Regulations, 2024 [Draft]
Renewable
send
Open Access and Captive Generation
04 March 2025
Keywords:
Green Energy Open Access, Renewable Energy
Objective: The draft regulations is to promote renewable energy adoption by enabling non-discriminatory open access to green energy for consumer with a demand of 100 kW or above. It aims to facilitate the regulations, reduce dependency on fossil fuels, ensure fair pricing, and align with India’s clean energy goals. The framework defines charges, energy banking, compliance norms, and approval processes, making green energy more accessible and efficient for businesses and consumers in Rajasthan.
CER Opinion -
1. Variable Green Energy Open Access (VGEOA): Due to seasonal nature of some of the RE resources like solar and wind, GEOA would neither be utilized uniformly across months, not across the hours of the day. A provision for variable GEOA, especially across hours of the day should be considered. For example, supply from a solar energy based plants would not use the GEOA during non-solar hours. Such time blocks should be available for allocation to other users. For example, an Energy Storage System (with or without the a RE capacity) may be able to utilize the GEOA during non-solar hours. Provision of time specific or variable GEOA (VGEOA) would help better utilization of the network capacity and would also reduce transmission cost burden for the system.
?>
UPERC “MYT for Distribution and Transmission Tariff” (Third Amendment) Regulations, 2024 [Draft]
Tariff Determination (MYT)
send
Tariff- Generation, Transmission, SLDC, Distribution
04 February 2025
Keywords:
Fuel power adjustment surcharge, Regulatory Compliance, State periphery, Energy sales, transmission charges
UPERC (MYT for Distribution and Transmission Tariff) (Third Amendment) Regulations, 2024. [Draft] issued on 2th September, 2024.
Objective: The draft document features updated methodology on “Treatment of Incremental Power Procurement Cost” under previous MYT for Distribution and Transmission Tariff Regulations, 2019. The draft document specifies that the computation of the fuel and power purchase adjustment surcharge (FPPAS) shall be automatically passed through and adjusted for monthly billing in accordance with proposed regulations. Additionally, the FPPAS shall not exceed a maximum duration of two months. In cases where the adjustment surcharge for the previous month exceeds twenty percent of the variable component of the approved tariff, the surcharge will be subject to review and adjustment as per the applicable regulations proposed.
CER Opinion -
1. FPPAS forfeited in case discom fails to compute within this time line: In the Clause No. 16.1.3“Fuel and Power Purchase Adjustment Surcharge shall be computed and charged by the distribution licensee, in (n+2)th month, on the basis of actual variation, in cost of fuel and power purchase and Inter- state Transmission Charges for the power procured during the nth month. For example, the ...
Provided that in case the distribution licensee fails to compute and charge fuel and power purchase adjustment surcharge within this time line, except in case of any force majeure condition, its right for recovery of costs on account of fuel and power purchase adjustment surcharge shall be forfeited and in such cases, the right to recovery the fuel and power purchase adjustment surcharge determined during true-up shall also be forfeited.”
Draft Procedure for Mechanism of Compensation for Degradation of Heat Rate, Auxiliary Consumption, and Secondary Fuel Oil Consumption Due to Part Load Operation and Multiple Start/Stop of Units
Part Load Operation
send
Compensation
04 February 2025
Keywords:
Compensation Mechanism, Part Load Operation ,Heat Rate Degradation , Auxiliary Consumption , Secondary Fuel Oil Consumption , Multiple Start / Stop , Calculation Period , Normative Parameter , Effective Generation And Effective Capacity.
The GRID- INDIA notified “Draft Regulation on (Mechanism of Compensation for Degradation of Heat Rate, Auxiliary Consumption, and Secondary Fuel Oil Consumption Due to Part Load Operation and Multiple Start/Stop of Units) Regulations, 2024.
Objective:
❖ Fair Compensation: Provide a structured method to compensate generators for losses in heat rate, auxiliary energy consumption, and secondary fuel oil usage.
❖ Promote Efficiency: Encourage generators to maintain operational efficiency and minimize degradation impacts.
❖ Transparent Mechanism: Establish a clear methodology for calculating, billing and reconciling compensation based on actual and normative parameters.
❖ Accountability: Allocate compensation costs fairly among beneficiaries based on energy requisition and un-requisitioned entitlements.
❖ Operational Incentives: Encourage power plants to maintain efficiency and reliability under varying grid demands.
❖ Data-Driven Decision: Mandate accurate data submission by generators to Regional Power Committees (RPCs) for validation and periodic review.
CER Opinion -
1) The Role of Mechanism of Compensation in Power Generation Operation: The mechanism of compensation for degradation in power generation is essential for enhancing efficiency and reliability. It involves continuous performance monitoring to assess the impact of part load operation and frequent cycling on key metrics like heat rate and fuel consumption.
Draft Regulation on Framework for Resource Adequacy
Resource Adequacy
send
Resource Adequacy
04 February 2025
Keywords:
Demand Forecasting, Grid Management, Peak Demand, Long Term Power Planning, Power Purchase Agreements, Load Of Loss Probability, Energy Storage, Demand Side Management
The Assam Electricity Regulatory Commission notified Draft Regulation on (Framework for Resource Adequacy) Regulations, 2024.
Objective: The objective of these Regulations is to enable the implementation of Resource Adequacy framework by outlining a mechanism for planning of generation, transmission resources for reliably meeting the projected demand in compliance with specified reliability standards for serving the load with an optimum generation mix.
a) Demand assessment and forecasting
b) Generation resource planning
c) Procurement planning
d) Monitoring and compliance
e) Optimization of Resource Utilization
CER Opinion -
1) The Role of Resource Adequacy (RA) Framework: Utilities in India are facing the challenge of reliably meeting peak demand. To tackle this, a combination of adequate power supply, a demand response framework, and the sharing of power across states and regions is crucial. The key objective of the Resource Adequacy (RA) framework is to ensure availability of adequacy capacity to meet the forecasted demand, ensuring system security and reliability. Power procurement costs are a critical factor in the RA analysis. Since power procurement plans and contracts are typically long-term, they need to be developed well in advance, relying on dependable forecasts
?>
CERC (Terms and Conditions for Purchase and Sale of Carbon Credit Certificates) Regulations, 2024 [Draft]
Indian Carbon Market (ICM)
send
Carbon Credit Certificate
08 January 2025
Keywords:
Carbon Credit Certificates (CCC), Carbon Credit Trading Scheme (CCTS), Bureau of Energy Efficiency,
Highlights:
The regulations apply to CCCs offered for transactions on Power Exchanges, including contracts in CCCs as approved by the Commission. Following are key features of the document
❖ Registry: The Grid Controller of India will function as the Registry for the exchange of CCCs and establish the necessary framework.
❖ Functions of Administrator: The Bureau of Energy Efficiency (BEE) will act as the Administrator, formulating detailed procedures, providing assistance to the Commission, disseminating market information, and ensuring transparent exchange of CCCs.
❖ Value and Validity of CCCs: The value and validity of CCCs are specified in the Carbon Credit Trading Scheme, 2023, and its detailed procedures.
❖ Category of Certificates: CCCs ar6e categorized for obligated and non-obligated entities, and the Commission may permit Power Exchanges to introduce such categories.
❖ Dealing in Certificates: CCCs are to be dealt with only through Power Exchanges, with separate market segments for obligated and non-obligated entities. The frequency of transactions is on a monthly basis.
❖ Banking and Extinguishment of CCCs: The procedures for banking and extinguishment of CCCs are specified in the detailed procedures of the Carbon Credit Trading Scheme, 2023.
❖ Pricing of Certificates: The market price of CCCs is discovered through bidding on Power Exchanges, within a floor price and forbearance price approved by the Commission.
❖ Fees and Charges: The Commission, in consultation with the BEE, determines the fees and charges payable by entities to the Registry.
❖ Market Oversight: The Commission, assisted by the BEE, exercises market oversight over CCCs on Power Exchanges.
?>
CEA Draft discussion paper on “Methodology for Capacity Credit of Generation Resources & Coincident Peak Requirement of Utilities under Resource Adequacy Framework”
Discussion Paper
send
Coincident Peak, Capacity Credit, Recourse Adequacy
07 January 2025
Keywords:
Coincident Peak, Capacity Credit Methodology, Top 5% Demand Hours Method, Top 10% Demand Hours Method, Solar vs Non-Solar Hours Method, Critical Day's Method
Highlights: According to the guidelines established by the Ministry of Power for the Resource Adequacy planning framework in June 2023, the Central Electricity Authority (CEA) is responsible for publishing capacity credits for various generating resources and outlining each State/UT’s contribution to the national peak.
Objective: CEA has produced a draft discussion paper that explores different methodologies for evaluating the capacity credit of solar, wind, and other renewable energy sources. The paper explored various methodologies for estimating the capacity credit of different resources, including the top 10% demand hours, solar vs. non-solar, and critical day’s methods. Capacity credit estimation is essential for determining the capacity requirements tied up from various resources by state and distribution utilities to meet their coincident peak demand obligations.
Furthermore, it provides utilities with guidance on how to assess their coincident peak needs during the National Peak. The paper suggests that the solar vs. non-solar methodology may be a better approach for estimating coincident peaks, especially considering factors such as agricultural load shifting and the focus on adding solar capacity.
CER Opinion:
1. Methods for Coincidental Peak Calculation: This discussion papers illustrates (Refer section 3.0 “Coincident Peak”) alternate methods to calculate the coincidental peaks. Average of top 5% peak demand presents a risk of under estimation of the expected peak. We can note from the load duration curve of all India electricity demand that top 5% of the time blocks (represent peak demand that has a significant range.
?>
Terms and Conditions for Determination of Generation Tariff Regulations, 2024 [Draft]
Tariff Determination (MYT)
send
Tariff- Generation, Transmission, SLDC, Distribution
10 December 2024
Keywords:
Capitalisation, Competitive Bidding, De-capitalisation, Gross Calorific Value, Plant Load Factor, Un
The OERC notified "Terms and Conditions for Determination of Generation Tariff Regulations, 2024". The key highlights of this draft is mentioned below:
Objective: The draft regulation, will guide the determination of generation tariffs for existing and future generating stations, excluding those with tariffs set through competitive bidding or by the CERC, and those based on renewable energy sources. The regulations cover various aspects including the determination of tariffs based on capital costs and operational efficiency, components of tariffs for thermal and hydro generating stations, norms for plant availability and efficiency, and provisions for billing, payment, and sharing of financial gains. The aim is to encourage competition, efficiency, and optimal investment in the electricity generation sector in Odisha.
❖ Suggestion on GCV Calculation Methodology:- 4th proviso to Clause 3(hh) of the draft document states that _"Provided that GCV of as Received coal shall be found out by taking GCV of coal on as "billed basis" and allowing an adjustment for total moisture as per the formula given as under: _
GCV X (1-TM)
(1-IM)
Where: GCV = Gross Calorific Value of coal on as "billed basis"
TM = Total Moisture
IM = Inherent Moisture"
According to the order in Petition No: 152/MP/2018 [1], "the Commission, in its various tariff orders, had provisionally determined energy charges based on the "as billed" GCV of coal, due to the unavailability of data on the "as received" GCV. This provisional determination was made with the application of a moisture correction formula and was subject to adjustment once the actual "as received" GCV data became available".
The adjustment for moisture based approach was to be applicable on an interim basis. The Commission should ensure that GCV "as received" should be measured by an independent third party (as prescribed under the CERC regulations), on the basis of joint sampling of coal received. Furthermore, the regulation does not clarify about the basis for total moisture and inherent moisture in the coal to be used in the above formula.
Since coal cost contributes significantly to the tariff to be paid by the discoms and hence the final consumers, adequate transparency and accountability should be ensured for this exercise. Data related to coal despatch, receipt including quantum, price, date of despatch and receipt, inventory at hand, GCV as billed and GCV as received for all generating units should archived and made available in the public domain through the Commission's or other suitable website.
?>
AERC (Demand Response) Regulations, 2024 [Draft]
Demand Response
send
Demand Response
04 December 2024
Keywords:
Demand Response Guidelines, Aggregators, Demand Response Cell, Cost Recovery, Evaluation, Verification, Monitoring and Reporting of Demand Response Program
Highlights:
The AERC Demand Response (DR) regulation aims to integrate DR into regular distribution operations to improve efficiency, manage load, reduce costs, and facilitate renewable energy integration. It promotes dynamic pricing, network reliability, congestion relief, and participation in ancillary services. Guidelines issued by the Commission ensure the design, implementation, evaluation, and monitoring of DR programs, emphasizing cost-effectiveness, data protection, and robust database systems.
Objectives of AERC Demand Response (DR) Regulation:
❖ Integration into Distribution Operations: Incorporate DR into the daily activities of Distribution Licensees to enhance efficiency and asset utilization.
❖ Load Management and Environmental Benefits: Promote load shifting, reduce seasonal peaks, address power shortages, and lower greenhouse gas emissions.
❖ Cost Efficiency: Decrease reliance on short-term power procurement and lower overall electricity costs.
❖ Dynamic Pricing: Introduce Time-of-Use tariffs and other mechanisms to encourage energy-efficient consumption.
❖ Network Security and Reliability: Improve network security while ensuring a balance between electricity supply and demand.
❖ Network Congestion Relief: Mitigate congestion in the distribution network.
❖ Participation in Ancillary Services: Enable consumers and aggregators to contribute to ancillary services through DR programs.
❖ Renewable Energy Integration: Facilitate the smooth integration of renewable energy sources and distributed generation into the grid.
Additionally, DR participants may qualify to contribute to secondary and tertiary reserve ancillary services.
Key Guidelines for Demand Response Implementation:
The Commission issue directives for Distribution Licensees to ensure effective execution of DR activities, including:
a) Design and Development: Establish DR programs tailored to system needs.
b) Implementation: Define methodologies for energy consumption measurement and demand reduction validation.
c) Cost Effectiveness: Assess the financial feasibility of DR initiatives.
d) Evaluation and Verification: Measure and verify program outcomes.
e) Monitoring and Reporting: Ensure comprehensive program oversight and transparent reporting.
f) Customer Data Protection: Safeguard consumer information.
g) Database and Systems: Develop data frameworks and systems to support DR operations.
?>
MoP (Tariff based competitive bidding guidelines for procurement of storage capacity/stored energy from Pumped Storage Plants), 2024 [Draft]
Renewable
send
Hydro Pumped Storage
11 November 2024
Keywords:
Developer, Generator, Pumped Storage Plants, Green Ammonia, Energy Storage
MoP notified Tariff based competitive bidding guidelines for procurement of storage capacity/stored energy from Pumped Storage Plants), 2024 on 22nd August, 2024. The key highlights of this draft is mentioned below:
Objective: The draft guideline provide a framework for procurement in Odisha. The National Framework for Promotion of Energy Storage Systems (ESS) 2023 aims to facilitate India's transition to renewable energy sources by addressing the challenges posed by their variability. ESS, such as Pumped Storage Plants (PSP) and Battery Energy Storage Systems (BESS), are crucial for grid stability and peak shifting. These guidelines aim to promote the development of PSPs and provide a transparent procurement framework based on open competitive bidding to ensure their efficient integration into India's energy grid and are applicable to developers, procurers (end procurers or intermediary procurers), and for the procurement of capacity or energy by the procurers from existing, under-construction, or new PSP projects.
?>
CERC (Terms and Conditions of Tariff) (First Amendment) Regulations, 2024. [Draft]
Amendment
send
Terms and Conditions of Tariff
08 November 2024
Keywords:
CERC, Regulatory, Framework, Tariff, Terms and Conditions, Coal Price, Tariff Determination, Stripping Ratio.
Objective: The objective of these Regulations is to include the provisions for determination of tariff for generating station or unit thereof (excluding the renewable generators) and transmission system or element thereof whose tariff is to be determined by the Commission u/s 62 of the COD falls within the tariff period from 01.04.2024 to 31.03.2029 and for the projects whose final tariff has not been determined till 31.03.2024.
The proposed draft Regulations lay the provisions for determination of tariff components i.e. IoL, RoE, depreciation, interest on working capital, O&M expenses (normative), energy charge rate for the thermal generating stations (coal-/ lignite-based and gas based) including that of the emission control system, hydro generating stations, transmission system or element thereof. The Regulations provide for computation of the input price of coal and lignite from integrated mine and the recovery mechanism thereof including the mine closure expenses, adjustment due to shortfall of overburden removal and non-tariff income. The draft also proposes the methodology for computation and recovery of capacity and energy charges (supplementary capacity and energy charges for emission control system) applicable for the above-mentioned entities.
CER Opinion:
❖ Recommendation for Capping Coal Price: Proposed Proviso (ii) of Clause 50 states that "Provided further that where such consents of beneficiaries are not available, the input price of coal from such integrated mine(s) shall be so fixed that the energy charge rate based on the input price of coal from integrated mine(s) does not exceed by more than 20% of the energy charge rate based on the notified price of Coal India Limited for the commen__surate grade of coal in a month".
Private participation in the coal sector was introduced with the expectation of better operational efficiency and lesser cost. Compensation at a rate more than that Coal India Limited offered by the Coal India limited would defy that philosophy at its basic core. The effective cap on the input price of coal should be limited to the price of commensurate grade coal declared by the Coal India Limited. Furthermore, this should be adjusted for any discount provided by CIL on account of timely payment, advance payment etc., if any. This will avoid undue financial strain on beneficiaries, and by extension, on end consumers of electricity. Reporting of the information related to the average input coal price across all such power plants vis-à-vis the CIL prices for the comparable grade of coal should be part of the Annual Report of the Commission.
❖ Eliminating Ambiguities in Shortfall Adjustments: Draft Clause 51 states "Factor of adjustment for the shortfall of overburden removal during the year shall be computed as under: [(Annual Stripping ratio as per mining plan) - (Actual Stripping ratio based on the actual quantity of coal and overburden removed during the year )] / (1+Annual Stripping Ratio as per Mining Plan);"
The regulatory approach to generation tariff determination is based on normative principles. In case of coal mining, the adopted approach is based on 'actuals' as the provision for 'adjustment for the shortfall of overburden removal' affectively transforms the approach to 'cost plus basis'.
A high stripping ratio not only increases the cost of coal mining but also reduces the quantum of coal mined. A high stripping ratio would thus have double impact on the coal of coal mining operation. While each coal mine may have different geological condition, and may face varying stripping ratio across the mining areas. The regulatory approach should be to fix a norm for the average stripping ratio for the tariff control period.
Additionally, advanced verification techniques such as satellite imaging and geological reports should be incorporated to objectively assess and validate the proposed stripping ratios. These measures will enhance transparency and accountability in mining operations while promoting efficiency and sustainability.
?>
OERC - Regulation on Procurement of Energy from Renewable Sources and its Compliance Regulations, 2024 [Draft]
Renewable
send
Procurement of Energy from Renewable Sources
07 October 2024
Keywords:
Inter-connection point, Mini-Grid Operator, Green Ammonia, Energy Storage
The OERC notified “Procurement of Energy from Renewable Sources and its Compliance Regulations, 2024” on 13th August, 2024. The key highlights of this draft is mentioned below:
Objective: The draft regulation provide a framework for renewable energy procurement in Odisha. These regulations apply to all "Obligated Entities," including distribution licensees and consumers with captive generating plants of 1 MW or more. Obligated Entities must meet their Renewable Purchase Obligation (RPO) through methods such as self-generation, open access procurement, and acquiring Renewable Energy Certificates (RECs). A specified percentage of total electricity consumption must come from renewable sources, increasing from 29.91% in 2024-25 to 43.33% by 2029-30. Compliance will be monitored by a designated State Nodal Agency, which will oversee reporting and publish compliance status
1. Definition of any other entity: Clause No. 3. 1. a - "Distribution licensee or any other entity procuring power on their behalf." (emphasis added)
Section 86 (1) (e) of the Electricity Act 2003 obligates that certain percentage of the consumption of electricity should be met from renewable energy sources. This includes the distribution licensees, the captive consumers and the open access consumers. An entity procuring power on behalf of a distribution licensee, e.g. a trader or a holding company or a nodal agency, cannot be obligated under the same. This would also raise an accounting issue for RPO compliance as the power supplied by a ‘trading licensee’ as well as that consumed by a distribution licensee would lead to double counting of consumption and hence the RPO.
Furthermore, in case of non-compliance of RPO by a distribution licensee or its procuring agency, who would be responsible for compliance and could be penalised for non-compliance?
?>
OERC - Regulation on Framework for Resource Adequacy [Draft]
Guidelines
send
Resource Adequacy
07 October 2024
Keywords:
Resource Adequacy, Electric Power Survey, Normalized Energy Not Served, Demand assessment and foreca
The OERC notified “Framework for Resource Adequacy” on 4th June, 2024. The key highlights of this draft is mentioned below:
Objective: The sole objective of Resource Adequacy framework is the reliable fulfilment of the peak demand with the help of adequate supply of generation and demand response.
The Resource Adequacy framework will cover the following important aspects:
a) Availability of adequate generation capacities to reliably serve demand under multiple scenarios.
b) Optimal capacity mix based on minimization of overall system cost.
c) Time horizon for the implementation of the framework should be 5 – 10 years.
d) Energy storage, other flexible resources, and short-term sale/purchase under bilateral contracts will be incorporated into the resource adequacy framework.
1. Need of Resource Adequacy Framework: Utilities in India are currently grappling with the challenge of reliably meeting peak demand. To address this, a combination of sufficient power supply, a demand response framework, and the sharing of inter-state and inter-region power is essential. The primary aim of the Resource Adequacy (RA) framework is to prevent a mismatch between demand and supply, and to ensure system security and reliability on a national scale.
Power procurement cost plays a significant role in the RA study. Given that power procurement plans and contracts generally have a long-term perspective, they must be developed well in advance based on reliable and accurate forecasts. The Centre for Energy Regulation (CER) at IIT Kanpur has conducted research on these aspects, culminating in the publication of a book titled "Regulatory Framework for Long-term Demand Forecasting and Power Procurement Planning." Additionally, IITK has provided insights on "Power Purchase and Procurement Process Regulations" and the "Terms and Conditions for Short-term Procurement/Sale of Power Regulation, 20213."
With the experience of CER and the Energy Analytics Lab (EAL) in conducting long-term demand forecasting and power procurement planning for the states of Uttar Pradesh and Chhattisgarh, we emphasize the necessity for a robust regulatory framework. Studies have shown that significant economic benefits, in terms of reduced private and social costs, can be achieved through RA
?>
MPERC "Ancillary Services" Regulations, 2024 [Draft]
Electricity
send
Ancillary Services
19 September 2024
Keywords:
SRAS, Demand Response, Area Control Error (ACE), Grid Security, SRAS-Up, SRAS-Down
Madhya Pradesh MPERC issued draft "Ancillary Services" Regulations, 2024 on 08th August, 2024, aiming to minimise deviation and helping in maintaining grid at 50 Hz .
Objective: The Ancillary Services (AS) mechanism are designed to establish procedures for the procurement, deployment, and payment to service providers at the state level. The goal is to support SLDC in maintaining grid frequency, alleviate congestion in the intra-state transmission network, and ensuring smooth operation, safety, and security of the state power grid.
Key Highlights:
❖ The regulations provide operational directions for Secondary Reserve Ancillary Services (SRAS).
❖ MP-SLDC will act as nodal agency providing Automatic Generation Control signal to call up on supply of electricity.
❖ An SRAS provider willing to participate is required to provide standing consent for a minimum period time of 7 days to the Nodal Agency.
❖ Selection of provider will be based on merit order of variable cost.
❖ No incentive shall be provided to the SRAS provider during the introductory stage of SRAS implementation.
CER Opinions
❖ Suggestion for Definition of Energy Storage: The definition of energy storage in Clause 3.1 (10) "Energy Storage" in relation to the electricity system, means a facility where electrical energy is converted into any form of energy which can be stored and subsequently reconverted into electrical energy.
It is prayed to the Commission to consider the following definition suggested for adaptation: "Energy Storage in relation to the electricity system, means a facility where electrical energy is converted into any other form of energy which can be stored, and subsequently reconverted into electrical energy which is injected back to the grid". _(emphasis added)
The updated definition brings clarity that a storage technology should convert electricity into other forms of energy and vice versa.
?>
CERC: Staff Paper on Regulatory Oversight on Bidding Behaviour in Power Exchanges
Staff Paper
send
Market Monitoring
06 September 2024
Keywords:
CERC, Regulatory, Framework, Pivotal Supply Index, Market Monitoring, Power Exchange, Power Market,
The Central Electricity Regulatory Commission (CERC) staff has prepared a Staff Paper on Regulatory Oversight on Bidding Behaviour in Power Exchanges, which discusses the regulatory framework and pricing methodology in Indian Power Exchanges. The paper, dated May 2024, is not binding on the Commission and aims to initiate discussions on regulatory oversight and solicit inputs from stakeholders.
The paper reviews the CERC Pricing Staff Paper from October 2022, which raised questions about the pricing methodology, criteria for regulatory interventions, the impact of price caps, and market design for incentivizing demand response and energy storage systems. Stakeholders' comments on the pricing paper suggested continuing with the Uniform Market Clearing Price (UMCP) mechanism and other measures like using UMCP for normal Day-ahead Market (DAM) and Pay-as-Bid (PAB) for residual bids.
The paper highlights issues with the UMCP mechanism, such as high prices during supply shortages or high demand, and the need for regulatory intervention to ensure market participants' faith. The Commission has directed its staff to propose measures for predictable market intervention.
The price discovery mechanism in collective transactions is based on a double-sided closed bid auction, with the UMCP adopting the principle of maximizing economic surplus. However, high prices in the market indicate the need for new investments, and there have been concerns about the frequency of price caps being hit, suggesting a need for measures to check infra-marginal sellers and reduce MCP volatility.
CER Opinion -
Market Monitoring Framework (MMF): The evolutionary journey of the Indian power market has so far had limited regulatory oversight in terms of market monitoring. The Market Monitoring Report (MMR), published by the Central Electricity Regulatory Commission (CERC), is a market reporting exercise that is published with a significant lag. While it is a useful compendium of the market outcome and broad market power indices, there is an urgent need to set up a robust Market Monitoring Framework (MMF) with continuous monitoring of the market outcome as well as bidding and operational behaviour of the power system constituents. This should provide for timely analysis of bids on daily, weekly as well as monthly basis with clear set rules for identifying divergent market outcome and suspicious Participant behaviour for further analysis. A summarized report of such daily, weekly and monthly analysis should become an integral part of the MMR published by the CERC. The MMF should ensure compliance with timely data disclosure by the power exchanges, trading Licensees, generators, Discoms, open access consumers as per a template /format to be developed for the same. Such data compliance report should form an integral part of the MMR.
?>
DERC (Terms and Conditions for Green Energy Open Access) Regulations, 2024. [Draft]
Renewable
send
Open Access and Captive Generation
05 September 2024
Keywords:
Green Energy Open Access, Renewable Energy
DERC notified a draft (Terms and Conditions for Green Energy Open Access) Regulations, 2024. [Draft] on 10th June, 2024
Objective: The objective of these Regulations is to provide non-discriminatory Open Access for Green Energy (Renewable Energy) for use of Intra-State Transmission System(s) (InSTS) and/or Distribution System(s) of licensee(s) in State including Intra-State Transmission or Distribution System(s), which are incidental to Inter-State Transmission of electricity, for grant of open access, methodology for the determination of Open Access Charges and Banking Charges etc. for Green Energy Open Access consumers.
CER Opinion -
❖ Green Energy Open Access (GEOA): Green Energy Open Access is aimed at enhancing share of green energy in the power sector for the obligated entities as well for the final consumers. Our comments on "MoP Draft Electricity (Promoting Renewable Energy through Green Energy Open Access) Rules, 2021"[1] provides insights to improving efficacy of the same. In the submitted comments, we emphasized on promotion of Green Energy via banking of Green energy, cross subsidy surcharges and green Certificates[2].
❖ Treatment of Shortfalls in Energy Banking: The draft Clause 9 (iii) states, "The permitted quantum of banked energy by the green energy open access consumers shall be at least 30% of total consumption of electricity from the distribution licensee by the consumers during the billing period".
GEOA consumers may encounter shortfall in banked energy (up to 30% of consumption) due to disruptions at generation side and constraint/ limit on load end by DISCOM. Some of these causes may be beyond the control of the GEOA consumers. This provision would have difficulty in implementation, and may lead to disputes thereof. Let us consider a scenario wherein a consumer may be able to 'bank' only 28% of its consumption during a billing cycle thus falling short of the eligibility criteria. What would be the treatment of 28% 'unbanked' energy fed into the intra-state grid as this is not going to qualify banking criteria? Will be considered as deviation from schedule? Since energy accounting and settlement is undertaken on a weekly basis, how would the energy accounting and settlement be reworked once the month has passed and the 'excess' energy injected is not considered as banked energy.
?>
DERC (Renewable Purchase Obligation and RE Certificate Framework Implementation) Regulations, 2024
Green Energy
send
Renewable Purchase Obligation & REC
29 August 2024
Keywords:
Renewable Energy, Renewable Purchase Obligation (RPO), RPO Compliance, Renewable Energy certificate (REC), Penalty, Obligated entities, Captive, open access
Highlights:
Objective: The Draft Regulation for implementing RPO and REC frameworks in the National Capital Territory of Delhi. It mandates that dicoms, captive & open access consumers meet specific RPO obligations, with targets varying yearly for different RE sources, including wind and hydro power. The draft define key terms, set compliance mechanisms and outline penalties for non - compliance. The framework aim to ensure that a portion of electricity consumption in Delhi is met through RE sources, promoting sustainability and energy diversification in the region
CER Opinion:
Capacity Constraints for Increased Consumer Load: Clause No. 5.2.a- "Own Generation from renewable energy sources. -There shall not be any capacity limit for installation of power plants from renewable energy sources, by entities for their own consumption and such plants may be set up at any location in India and power shall be transmitted by using open access: Provided that the generating plant may be set up by the entity itself or by a developer with which the entity enters into a power purchase agreement." (emphasis added)
The proposed clause does not account for potential capacity constraints of the supporting infrastructure. A consumer who intends to consume higher than the Sanction load, the feeder or the distribution transformer may have a capacity limitation to handle this additional energy procured. A proviso may be added to subject the same to the limit due to system constraints, particularly those at the distribution network level.
While the above clause specifies no capacity limit for installation of RE power plants for own consumption, clarity with respect to plants with shared capacity by consumers within the area of a distribution licensee or multiple distribution licensees in the state. A consumer may have multiple locations across different license areas in the state of Delhi, and thus should have flexibility of setting up a shared generation capacity or enter into a PPA for the same.
The above clause should also permit setting up of a generating unit owned by a group of consumers within or across different distribution licensees within the state
?>
TNERC: TNERC (Framework for Resource Adequacy) Regulations, 2024 [Draft]
Guidelines
send
Resource Adequacy
13 August 2024
Keywords:
Resource Adequacy (RA), Demand Assessment & Forecasting, Capacity Crediting, Planning Reserve Margin, LT-DRAP, MT-DRAP, ST-DRAP, LT-NRAP, MT-NRAP, ST-NRAP, Power Procurement Planning, Demand-Supply Mismatch, System Security and Reliability, Long-term Contracting, Flexibility in Short-term Procurement, Energy Banking, Demand Response
TNERC notified draft Tamil Nadu Electricity Regulatory Commission (Framework for Resource Adequacy) Regulations, 2024 on 13th June, 2024 for providing framework for resource adequacy. The key highlights of this draft is mentioned below:
Objectives:
The overall objective of the Resource Adequacy (RA) framework is found a cost- effective approach to meet forecasted demand at all the times with a mechanism of sharing of resources among distribution licensee (DL) and states to maximize utilization, while ensuring the system security and reliability at a national level. This involves enhancing the accuracy of long-term demand forecasting and power procurement planning. The framework emphasizes the necessity for distribution licensees to focus on adequate contracting through long-term contracts (at least 70%) to maintain system reliability and manage costs effectively. Additionally, it talks about the capacity crediting of various renewable energy sources and its capacity to meet peak load and increased system ramping and balancing needs.
CER Opinions:
1. Necessity of resource adequacy framework: The ongoing challenge of catering to the peak demand reliably is currently being faced by the utilities in India. Sufficient amount of power supply coupled with demand response framework and sharing of inter-state and inter-region power should be adopted to meet the peak demand reliably. The overall objective of Resource Adequacy (RA) framework is to avoid demand-supply mismatch, ensure system security and reliability at the national level.
?>
UERC Terms and Conditions for Determination of Multi Year Tariff Regulations, 2024 [Draft]
Tariff Determination (MYT)
send
Tariff- Generation, Transmission, SLDC, Distribution
13 August 2024
Keywords:
Aggregate Revenue Requirement, Hydro Generating Stations, Power Procurement Plan, Capital Cost, Operation & Maintenance, WPI, CPI
The Uttarakhand Electricity Regulatory Commission notified draft "Terms and Conditions for Determination of Multi Year Tariff" Regulations, 2024. The control period of this regulation is for five years i.e. FY 2025-26 to 2029-30.
Summary: The Commission circulated the Multi Year Tariff Determination process to initiate discussion and solicit feedback from stakeholders. These regulation will cover the entire state of Uttarakhand and are applicable to all new and existing generation companies, transmission licensees and distribution licensees. The calculation method for O&M expenses for entities have been updated. The insurance for the hydro power plant can be trued up based on past trends.
CER Opinion
1. Regulatory Framework to Emphasise Efficiency linked Normative Cost Recovery: The regulatory approach for tariff determination for generation and transmission can generally be classified as normative cost of service approach as tariff depends on UERC norms for most of the operational and financial parameters. In the spirit of the EA, 2003, and Tariff Policy, the regulatory approach, while approving normative costs, should emphasize on efficiency improvement by the regulated entities both in terms of operational parameters as well as financial costs. While the adopted approach allows for cost recovery based on norms, the norms themselves are based on actuals of the immediate preceding control period with an escalation rate . The regulatory framework should also provide for continuous improvement in efficiency through better norms by introducing an efficiency factor. Operational efficiency norms must provide incentive for improvement for the generation companies as well as the transmission licensees.
?>
UERC "Tariff and Others Terms for Supply of Electricity from Renewable Energy Sources and non-fossil fuel based Co-generating Stations" (First Amendment) Regulations, 2024. [Draft]
Renewable
send
Renewable Purchase Obligation
29 July 2024
Keywords:
REC, RPO, Distributed Energy Source
The UERC notified amendments on "Tariff and Others Terms for Supply of Electricity from Renewable Energy Sources and non-fossil fuel based Co-generating Stations" (First Amendment) Regulations, 2024". The key highlights of this draft is mentioned below:
Objective: The draft amendment regulation aims to issue revised targets of Renewable Purchase Obligation (RPO) to the distribution licensee, open access consumers and captive users. A new category "Distributed RPO", the distributed RPO is limited to power generated from renewable energy power plants with installed capacity less than 10 MW including solar installation (net metering, virtual metering, group net metering, behind the meter and any other configuration) the compliance will be measured in kWh/kW/day. It also addresses the time frame for Technical Feasibility Study and successful commissioning of grid interactive Rooftop and small solar PV plants installed under net metering.
CER Opinion:
1. State Specific CUF for RPO compliance: In proposed amendment to Principal Regulations Clause 10 (1) (c) proviso 2 _"Provided further that in case the obligated entity is unable to provide generation data against distributed renewable energy installations, the reported capacity shall be transformed into distributed renewable energy generation in terms of energy by a multiplier of 3.5 units per/kW/day."_
The multiplier factor of 3.5 units considered according to the MoP[1] notification must be tailored to the resources available in the state of Uttarakhand. For example the solar irradiance varies according to geography and seasons. During period of low intensity radiation, there will be no incentive for solar power producer to provide actual energy production data as 'deemed' generation calculated using the multiplication factor would result in higher amount of solar energy generated. This would result in ghost RPO met by such entities.
It is suggested to provide a monthly multiplier factor based on benchmarked capacity utilisation factor (CUF) of solar plants located in the state. This can later be revisited based on more reliable data collected from the projects located across the state. Such a benchmark can be defined for different regions across the state. Continued non-reporting of data can be further penalised by applying a factor of 0.9 - 0.8 over and above benchmarked CUF for the applicable month(s) for non-reporting of data for more than 3 months in a span of 5 years. This would incentive the generators to report actual electricity generation data.
?>
CERC (Deviation Settlement and Related Matters) Regulations, 2024 [Draft]
Transmission
send
Deviation Settlement Mechanism
29 July 2024
Keywords:
General Seller, DSM charges, RE Rich state, HP-DAM
CERC notified for Deviation Settlement Mechanism (DSM) on 30th April 2024. The key highlights of this draft regulations are given below:
Objective: The governing body have monitoring the grid events namely frequency excursions and frequency fluctuations. To ensure smooth and secure grid operation the new regulation have been designed accordingly.
New definitions added in the draft regulations:
❖ Contract rate: An alternative method of calculation have been introduced. It is weighted average ACP of the Day Ahead Market segments of all power exchanges for that time block.
❖ To allow high cost power generate to participate in the DSM, High price-Day Ahead Market (HP-DAM) have been included in I-DAM.
❖ The states with RE installed capacity of more than 1000MW less than 5000 MW will be identified as 'RE Rich State' and state with more than 5000 MW as 'RE Super Rich State'.
❖ Normal rate will be calculated based on summation of fraction I-DAM, Real Time Market, RTM and Ancillary service charges.
CER Opinion:
1. Approach to Deviation Settlement Mechanism (DSM): The rising RE penetration and associated uncertainty of generation, along with uncertainty of electricity demand remain key challenges in ensuring power system stability. Power system stability is influenced by two critical and dynamic parameters - (i) System frequency and (ii) Market prices. To ensure that DSM is able to provide an appropriate signal to minimize power system imbalance, thus ensuring power system stability, it is suggested that the above two ingredients should be an integral part of the DSM structure for all system constituents with limited exceptions.
?>
MNRE (Draft Guidelines for implementation of PM-Surya Ghar: Muft Bijli Yojana for component to "CFA to Residential Sector"), 2024
Renewable Energy
send
Rooftop Solar Generation
22 May 2024
Keywords:
Rooftop Solar Systems, Residential Sector, Net metering, RESCO Model
Objective: The objective of PM-Surya Ghar: Muft Bijli Yojana is to promote the installation of rooftop solar systems in the residential sector. The scheme aims to achieve the installation of 1 crore rooftop solar systems by the end of the fiscal year 2026-27. Its key goals include providing free or low-cost electricity to households, with a target of supplying up to 300 units of electricity per month through rooftop solar installations. Additionally, the scheme seeks to reduce carbon emissions, develop the ecosystem for rooftop solar projects, boost the local economy, and support India's green climate commitments. The implementation period for the scheme is set until 31st March, 2027, with a significant financial outlay for Central Financial Assistance (CFA) to residential consumers, among other components. The scheme also includes mechanisms for third-party audits, coordination with state regulatory commissions, and a focus on rooftop solar in the government sector. The implementation is facilitated through a National Portal, and the scheme involves various stakeholders, including MNRE, NPIA, and SIAs, with a strong emphasis on monitoring and evaluation to ensure its successful execution.
CER Opinions -
The scheme proposes to address one of the key focus area for India's energy strategy while also meeting its commitments under the climate policy. However, given the substantial outlay of funds for the scheme, greater attention should be paid to the implementation strategy to ensure efficacy and efficiency in reaching out to the beneficiaries, and long term operational performance of the solar rooftop systems (RTS).
Solar Rooftop Suitability Index (SRSI) - Shadow Free Area: The scheme should adopt a Solar Rooftop Suitability Index (SRSI) based criteria for selection of appropriate rooftops for implementation of solar rooftop system have often witnessed limited assessment of site suitability. RTSPV installations have often been found in completely or significantly shadowed areas. In some cases, growth of vegetation or nearby construction have made such installations ineffective. The suggested rating system would enable only selection of suitable roofs ensuring that the program achieves its objective to reduce electricity bill effectively as this would ensure a reasonable CUF and operational performance.
Experience has shown that in order to meet targets for similar schemes, rooftop installations are sometimes also installed on sites currently with significant shadow or are likely to have significant shadow in the near future due to growth of vegetation/trees or nearby construction.
A Solar Rooftop Suitability Index (SRSI) based rating system is proposed so as to take into account the current shadow and potential shadowing of the rooftop panels based on available free shadow area. The ratings can be defined by the duration of shadow free hours during the day:
Revised Draft on KERC (Verification of captive status of generating plants/consumers in the State of Karnataka) Regulation, 2024
Generation
send
Captive Generating Plant
20 May 2024
Keywords:
Captive Generating Plant, Captive Consumer, Group Captive Users, Cooperative Society
The KERC notified "Revised Draft on KERC (Verification of captive status of generating plants/consumers in the State of Karnataka) Regulation, 2024" on 12th March, 2024. The key highlights of this draft is mentioned below:
Objective: The document is a notification from the Karnataka Electricity Regulatory Commission (KERC) regarding the Revised Draft KERC (Verification of Captive Status of Generating Plants/Consumers in the State of Karnataka) Regulations, 2024. The revised draft regulations aim to bring regulatory control and protect the interests of stakeholders by ensuring compliance with the provisions under the Electricity Act 2003 and Electricity Rules 2005. The document outlines the criteria for determining captive status, including share-holding patterns, consumption details, and the process for verification of captive status. The categories of captive users covered include single captive users, cooperative societies, and group captive users, each with specific criteria for verification. It also addresses metering requirements, default consequences, dispute resolution, and the power to remove difficulties and amend regulations.
CER Opinion:
1. Verification of End use by Captive users: Revised draft clause no. 2(c) states that “captive user shall mean the end user of the electricity generated in a Captive Generating Plant and the term “captive use” shall be construed accordingly”
The Electricity Rules, 2005 qualifies a user as a captive user on the basis of it being the ‘end user’. A variety of cases would highlight that generation side scheduling is more appropriate than ‘end use’ measured at the consumer end.
Differentiating impact of transmission losses may lead to different proportion of captive energy consumed by members of a group captive plant, if measured at injection end or the drawl end. To address this, the calculation for ‘end use’ for a consumer should be recorded on the basis of the energy scheduled from the captive unit rather than that recorded at the end of the user, which would exclude transmission loss.
?>
APSERC (Terms and Conditions for Determination of Renewable Energy Tariff) Regulations, 2024
Renewable Energy
send
Generation
26 April 2024
Keywords:
Auxiliary Energy Consumption, Average Power Purchase Cost, Capacity Utilisation Factor, CERC RE Tariff Regulations, Project Specific Tariff, Generic Tariff
Summary:
Key Facets of the proposal are given below:
❖ The Control Period or Review Period shall be of three (3) years starting from the date of the notification of these Regulations for financial year 2024-25 to 2026-27.
❖ The procedure for levelised generic tariff for small hydro projects (SHP) up to 1 mw capacity, biogas power projects with Rankine cycle technology and project specific tariff for small hydro projects above 1 mw capacity up to 25 mw capacity, wind power projects up to 25 mw capacity, solar PV projects up to 5 mw capacity ,renewable energy hybrid projects, municipal solid waste based power projects and refuse derived fuel based power projects, renewable energy with storage project, any other renewable energy technology as approved by MNRE has been undertaken.
CER Opinion:
❖ Determination of Capital Cost on the basis of prevailing market trends: The draft regulation proposed to use market trends to arrive at a capital cost for determining the tariff for various RE technologies. It is important to mention that the data on capital cost is maybe of private nature and may be treated as commercial information by a number of RE Generators. Specifically, those, who have selling power through the process of competitive bidding. Capital cost should be ascertained on the basis of those projects which have been ascertained from competitive bid tariff. In case of RE Projects for which tariff is going to be determine under section 62 and 63, there is perverse incentive for potential over invoicing for providing a higher capital cost .
?>
APSERC (Framework for Resource Adequacy) Regulations, 2024 [Draft]
Guidelines
send
Resource Adequacy
25 April 2024
Keywords:
Resource Adequacy (RA), Demand-Supply Mismatch, System Security and Reliability, Power Procurement Planning, Demand Forecasting, Long-term Contracting, Flexibility in Short-term Procurement, Energy Banking, Demand Response, Time-of-Day (TOD) Tariff
Objectives:
The overall objective of the Resource Adequacy (RA) framework is to avoid demand-supply mismatches and ensure system security and reliability at a national level. This involves enhancing the accuracy of long-term demand forecasting and power procurement planning. The framework emphasizes the necessity for distribution licensees to focus on adequate contracting through long-term contracts (at least 75%) to maintain system reliability and manage costs effectively. Additionally, it seeks to provide flexibility for short-term procurement adjustments and recognize the roles of demand response and TOD tariffs in achieving resource adequacy.
CER Opinions:
The overall objective of the Resource Adequacy (RA) framework is to avoid demand-supply mismatches and ensure system security and reliability at a national level. This involves enhancing the accuracy of long-term demand forecasting and power procurement planning. The framework emphasizes the necessity for distribution licensees to focus on adequate contracting through long-term contracts (at least 75%) to maintain system reliability and manage costs effectively. Additionally, it seeks to provide flexibility for short-term procurement adjustments and recognize the roles of demand response and TOD tariffs in achieving resource adequacy.
❖ Necessity of resource adequacy framework: The ongoing challenge of catering to the peak demand reliably is currently being faced by the utilities in India. Sufficient amount of power supply coupled with demand response framework and sharing of inter-state and inter-region power should be adopted to meet the peak demand reliably. The overall objective of Resource Adequacy (RA) framework is to avoid demand-supply mismatch, ensure system security and reliability at the national level.
?>
CERC (Terms and Conditions for Tariff determination from Renewable Energy Sources) Regulations, 2024
Renewable
send
Tariff
25 April 2024
Keywords:
RoE, WtE prevailing market trends
Objective:
The draft notification proposes significant amendments to the existing regulations governing the connectivity and general network access to the inter-State transmission system in the electricity sector. The changes aim to address various aspects related to renewable energy, application processing timelines, minimum capacity requirements, financial closure, possession of land, and bank guarantees. These amendments are crucial for ensuring a streamlined and effective regulatory framework that caters to the evolving needs of the electricity transmission sector, particularly in the context of renewable energy integration and infrastructure development. The proposed amendments reflect the regulatory commission's proactive approach to adapting to industry requirements and ensuring a conducive environment for sustainable energy development and transmission. It is essential for stakeholders to review and provide feedback on these proposed changes to facilitate informed decision-making and contribute to the development of a robust regulatory framework for the electricity transmission sector.
CER Opinions -
1. Prevailing market trends to Efficient 'Capital Cost Benchmarks': It is suggested that Commission should provide clarification for the term prevailing market trends mentioned in clause (23), (26), (46), (48), (68), (69), (71) and (73).
Given that capital cost influences various components particularly depreciation, interest cost and RoE, a capital cost benchmarking methodology should be evolved. This may also include 'market trends' covering efficient cost benchmarks in the international context. Higher weightage should be given to capital equipment procurement on competitive tendering basis. There may be inherent data bias as 'market trends' may be reported from limited set of deals. The Commission may propose a methodology for gauging market trends. This should give higher weightage to recent deals.
2. Prevailing market trends got Interest on Loan and Interest on Working Capital: The SERCs may also follow up with a Capital Cost Benchmarking approach. The existing approach sets interest rate at certain basis points above the SBI MCLR. The Commission may develop a methodology to capture 'market trends' for interest for term loans and working capital loans. Such data may be captured through
1. Prevailing market trends to Efficient 'Capital Cost Benchmarks': It is suggested that Commission should provide clarification for the term prevailing market trends mentioned in clause (23), (26), (46), (48), (68), (69), (71) and (73).
Given that capital cost influences various components particularly depreciation, interest cost and RoE, a capital cost benchmarking methodology should be evolved. This may also include 'market trends' covering efficient cost benchmarks in the international context. Higher weightage should be given to capital equipment procurement on competitive tendering basis. There may be inherent data bias as 'market trends' may be reported from limited set of deals. The Commission may propose a methodology for gauging market trends. This should give higher weightage to recent deals.
2. Prevailing market trends got Interest on Loan and Interest on Working Capital: The SERCs may also follow up with a Capital Cost Benchmarking approach. The existing approach sets interest rate at certain basis points above the SBI MCLR. The Commission may develop a methodology to capture 'market trends' for interest for term loans and working capital loans. Such data may be captured through
?>
CERC: Commission (Terms and Conditions of Tariff) Regulations, 2024 [Draft]
Tariff Determination (MYT)
send
Tariff- Generation, Transmission, SLDC, Distribution
23 April 2024
Keywords:
CERC notified draft Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2024 for the tariff period from 01.04.2024 to 31.03.2029 on 4th January, 2024. The proposed Regulations include the provisions for determination of tariff for generating station or unit thereof (excluding the renewable generators) and transmission system or element thereof whose tariff is to be determined by the Commission u/s 62 of the COD falls within the tariff period from 01.04.2024 to 31.03.2029 and for the projects whose final tariff has not been determined till 31.03.2024.
Highlights:
CERC notified draft Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2024 for the tariff period from 01.04.2024 to 31.03.2029 on 4th January, 2024. The proposed Regulations include the provisions for determination of tariff for generating station or unit thereof (excluding the renewable generators) and transmission system or element thereof whose tariff is to be determined by the Commission u/s 62 of the COD falls within the tariff period from 01.04.2024 to 31.03.2029 and for the projects whose final tariff has not been determined till 31.03.2024.
The proposed draft Regulations lay the provisions for determination of tariff components i.e. IoL, RoE, depreciation, interest on working capital, O&M expenses (normative), energy charge rate for the thermal generating stations (coal-/ lignite-based and gas based) including that of the emission control system, hydro generating stations, transmission system or element thereof. The Regulations provide for computation of the input price of coal and lignite from integrated mine and the recovery mechanism thereof including the mine closure expenses, adjustment due to shortfall of overburden removal and non-tariff income. The draft also proposes the methodology for computation and recovery of capacity and energy charges (supplementary capacity and energy charges for emission control system) applicable for the above-mentioned entities.
CER Opinion -
1. Regulatory Impact Assessment (RIA) - Key to a Balanced Approach to Tariff Determination from the perspectives of Investors as well as the Consumers: The approach paper outlines various options for a variety of aspects related to tariff determination for generation and transmission under Section 62 of the Electricity Act 2003. Response to the specific aspects are provided herein. Various options suggested in the context of various components of tariff can be evaluated in terms of their impact on various components of tariff as well as overall tariff to be paid by the consumers and returns to be obtained by the investors. This would help bring a more balanced perspective from the point of view of the consumers as well as the investors. The CERC should thus spearhead an approach to Regulatory Impact Assessment (RIA) while approving regulations for the sector. Forum of Regulators may constitute a Working Group to take forward the discussions in a Consultative manner.
Draft CERC (Connectivity and General Network Access to the inter-State Transmission System) (Second Amendment) Regulations, 2024
Transmission
send
Inter-State Transmission
18 April 2024
Keywords:
INTER-STATE TRANSMISSION, CONNECTIVITY AND GENERAL NETWORK ACCESS (CGNA), TRANSMISSION, GRID ACCESS
The CERC notified “CERC (Connectivity and General Network Access to the inter-State Transmission System) (Second Amendment) Regulations, 2024” on 16th February, 2024 applicable for interstate entities for transmission of power. The key highlights of this draft is mentioned below:
Objective: The draft notification proposes significant amendments to the existing regulations governing the connectivity and general network access to the inter-State transmission system in the electricity sector. The changes aim to address various aspects related to renewable energy, application processing timelines, minimum capacity requirements, financial closure, possession of land, and bank guarantees. These amendments are crucial for ensuring a streamlined and effective regulatory framework that caters to the evolving needs of the electricity transmission sector, particularly in the context of renewable energy integration and infrastructure development. The proposed amendments reflect the regulatory commission's proactive approach to adapting to industry requirements and ensuring a conducive environment for sustainable energy development and transmission. It is essential for stakeholders to review and provide feedback on these proposed changes to facilitate informed decision-making and contribute to the development of a robust regulatory framework for the electricity transmission sector.
CER Opinions
1. Definition of Renewable Energy Implementing Agency: The proposed new Clause 2.1.(ag-i) states that “Renewable Energy Implementing Agency” means and includes an entity designated by the Central Government or the State Government to act as Intermediary Procurer to select and buy power from Renewable energy generating station(s) and sell the same to one or more distribution licensees or any other entity in accordance with the Guidelines issued from time to time by the Ministry of Power, Government of India or the Ministry of New and Renewable Energy, Government of India or the State Government” (emphasis added). It is suggested that it may be clarified that whether the “Renewable Energy Implementing Agency” can participate in market for selling part capacity as a merchant power plant? It may also be clarified that whether these regulations will be applicable if such entity is supplying power to more than one DISCOM within a (single) State.
?>
JSERC (Terms and Conditions for Green Energy Open-access) Regulations, 2024
Generation
send
Green Energy
05 April 2024
Keywords:
Green Energy Open-access, Renewable Energy, Energy Storage System, RPO
Highlights:
Objective: These Regulations shall be applicable for allowing Open-access towards generation, purchase and consumption of green energy as defined under clause 3.1 (h) of these Regulations, including but not limited to energy from Waste-to-Energy plant, and for use of the intra-state transmission systems (InSTS) and/or distribution systems of licensees in the State, including such intra-state transmission and/or distribution systems, which are incidental to the inter-state transmission of electricity.
CER Opinion:
1. Quantum of green energy: As per the draft Clause 4.C (iv & v), “Any requisition for green energy from a distribution licensee shall be for a minimum period of one year;” & Clause 4.C (v.) “The quantum of green energy shall be pre-specified for at least one year”.
The above provision would demotivate Green energy open access consumers to opt for the same. The option for a consumer to seek green energy from a distribution licensee should be in line with consumers’ ability to secure non-green electricity, which does not come with such limitations. To ensure greater acceptability of green energy by final consumers, such limitations should be avoided at the very outset and may be reviewed later, if required.
Given that the RE sources like solar and wind are subject to variation in generation across months, it may not be possible to pre-specify a quantum for a year. Under such circumstances, appropriate provisions to address cases of such a variation should be added. As a step towards encouraging renewables, a 10-15% variation (or as deemed fit by the Commission) in quantum and duration of green open access should be allowed. This may be reviewed later based on experience. Over and above this variation, exceptions should include force majeure conditions, and curtailment of the transmission capacity, both at the inter-state as well as intra-state level.
Furthermore, the regulation should provide for part or full surrender of load by the consumers. Such reduction in load should be translated to reduction in the quantum of power as well as duration of green Open Access.
?>
CEA: Proposed procedure for verification of captive status of such generating plants, where captive generating plant and its captive user(s) are located in more than one state [Draft]
Generation
send
Captive Generating Plant
31 January 2024
Keywords:
Captive Generating Plant (CGP), Renewable Hybrid Generating Station, Energy Storage System, ownership, Special Purpose Vehicle (SPV).
Highlights:
Objective: To rigorously assess and determine the captive status of generating plants and their captive users scattered across various states. In this context, Captive Generating Plants (CGPs) and their users must adhere to certain specific criteria to preserve their captive status as per the requirements of Rule 3 of the Electricity Rules, 2005.
The letter in in reference CEA (Proposed procedure for verification of captive status of such generating plants, where captive generating plant and its captive user(s) are located in more than one state) (Draft), 2023. These regulations provide the pathway for the installation of renewable energy system (RES) with battery energy storage system (BESS).
Captive status in subsequent years is determined by total generation between 1st April and 31st March of next year.
CER Opinion:
1. Calculation of Equity for Special Purpose Vehicle (SPV): In accordance with Clauses 6(6.7, 6.8, 6.9) and 9(9.1)(9.1.4), the following suggestions may be implemented for the specified SPV.
An SPV may have multiple units, which may have multiple with some common users across units. Under such circumstances, calculation of equity at the corporate level (SPV) or for the respective units would present different results.
In case of different units are set up across time, a captive user may have right proportion of equity holding as per the investment undertaken at that time.
A subsequent investment in another unit at a higher/lower investment cost, would alter the proportional ownership of the captive users having capacity share in the first unit. The issue would get further complicated in case a captive user has share of capacity in both the units.
Such differentiation would require unit specific data, which may have certain challenges.
The following example illustrates the above suggestion:
Consider the allocation of entities denoted as 'A,' 'B,' 'C,' and 'D,' each having captive shares in 250 MW units 1 and 2 respectively. It is assumed that the unit 2 is set up after unit 1, say after 3 years. Both units are owned by the same SPV. It is further assumed, for simplification, that both units have 100% equity investment. The arguments would remain the same in case of differential debt components.
Procedure, Terms and Conditions for grant of Transmission Licence and other related matters, Regulations, 2023
Transmission
send
Transmission licence
22 December 2023
Keywords:
Transmission Licence, Bulk Consumer, Long Term Transmission Customer, Designated ISTS Customer (DIC), Obligations of licensee
Highlights:
The CERC notified "CERC (Procedure, Terms and Conditions for grant of Transmission Licence and other related matters) Regulations, 2023" on 28th November, 2023 applicable for interstate entities for transmission of power. The key highlights of this draft is mentioned below:
Objective: To establish eligibility criteria, procedures, terms and conditions for entities involved in interstate power transmission and to formalize arrangement for regulated tariff mechanism, enabling licence acquisition by winning TBCB bidders, streamline the process for bulk consumers to construct connecting transmission lines.
Bulk Consumer: means a consumer who avails supply at voltage 33kV or above as defined in the Central Electricity Authority (Technical Standards for Connectivity to the Grid) Regulations, 2007. It has a provision to construct connecting transmission line which will connect transmission line to bulk consumer with a load 50MW or above.
Long Term Transmission Customer (LTTC): means a person, who has entered into the Transmission Service Agreement (TSA) for availing or intending to avail access to the Inter-State Transmission System under the provisions of the TSA issued under competitive bidding guidelines.
CER Opinion:
1. Timeframe for receiving suggestion/objection from public/stakeholder:
Draft Clause No. 4(7) states, "In the notice published in the digital newspapers and on the applicant’s website under this Regulation, it shall be indicated that the suggestions and objections to the application, if any, may be filed by any person within 15 days of publication of the notice to The Secretary, Central Electricity Regulatory Commission at the address where the office of the Commission is situated and at email id: registry@cercind.gov.in. Any suggestion or objection furnished shall be forwarded to the applicant and the respondents by the registry of the Commission." (Emphasis added)
"In the notice published in the digital newspapers and on the applicant’s website under this Regulation, it shall be indicated that the suggestions and objections to the application, if any, may be filed by any person at least 30 days of publication of the notice to The Secretary, Central Electricity Regulatory Commission at the address where the office of the Commission is situated and at email id: registry@cercind.gov.in. Any suggestion or objection furnished shall be forwarded to the applicant and the respondents by the registry of the Commission."
The transmission line petition may include large documentation, which needs scrutiny and analysis to understand and to prepare comments on the same. A fifteen day’s duration for submission of the comments seems inadequate. It is suggested that a time period of at least 25 days be provided for the same.
?>
Detailed Procedure for Compliance Mechanism under the Indian Carbon Market, 2023 [draft]
Indian Carbon Market (ICM)
send
Carbon Credit Trading Scheme
22 December 2023
Keywords:
Issuance of Carbon Credit Certificates (CCC), Purchased electricity emissions, Non-energy process emissions, Calculation of Carbon Credits, Biogenic emissions, Certification and Entitlement, Banking and Rollover of CCC, Resale of banked CCC, Thermal energy consumption, Classification of fuel consumption
Highlights:
Bureau of Energy Efficiency (BEE) notified draft Detailed Procedure for Compliance Mechanism under the Indian Carbon Market (ICM) on 9th November, 2023. The key highlights of the document are mentioned below: -
Objective: The purpose and vision for the development of ICM is to accelerate decarbonization and meet Nationally Determined Contributions (NDCs) targets.
Legal framework:
❖ ICM was established under the Energy Conservation Act, of 2001, and the Environment (Protection) Act, of 1986.
❖ The Energy Conservation Act, 2001 empowers the Union Government to specify the Carbon Credit Trading Scheme (CCTS) and emission standards for obligated sectors. The Government of India notified CCTS on June 28, 2023.
CER Opinion:
1. Issuing Carbon Credits: Incremental Reduction Vs Total Emission Reduction: The proposed framework provides for issuance of carbon credit for emission reduction beyond the stipulated target. Let us call it Incremental Emission Reduction. We suggest that carbon credits be issued towards all the emission reduction, wherein that achieved would be surrendered to the nodal agency, the rest (incremental) would be available for trade in the Indian Carbon Market. This would contribute to liquidity in the carbon market, wherein a designated consumer can sell carbon credits, say in one of the earlier months, and buy it from the market subsequently towards its compliance. This would have twin advantage - (i) enhancing market liquidity for carbon credits, and (ii) allowing early monetization of emission reduction earlier in a financial year thus improving their cashflow within a year rather than waiting for carbon credits to be traded next year onwards. This would improve attractiveness of participation in the emission reduction program.
?>
Gujarat Electricity Regulatory Commission (Multi-Year Tariff) Regulations, 2023 [Draft]
Tariff Determination (MYT)
send
Tariff- Generation, Transmission, SLDC, Distribution
01 December 2023
Keywords:
Fuel Utilization Plan (FUP), Fuel Procurement Plan (FPP), Renovation & Modernization (R&M), Station Heat Rate (SHR), Continuous Emission Monitoring Stations (CEMS), Flue Gas Desulfurization (FGD), PLF, O&M, Repair and Maintenance Costs of Generating Station / Generating unit for the nth year (R&Mn), Employee Cost of Generating Station / Generating unit for the nth year (EMPn), Administrative and General Costs of Generating Station / Generating unit for the nth year (A&Gn), Efficiency factor for nth Year. Value of Xn to be considered as zero till such time the same is determined through a study by the Commission (Xn), Weightage of Wholesale Price Index (WEWPI), Weightage of Consumer Price Index (WECPI).
Highlights:
The Gujarat Electricity Regulatory Commission (GERC) has circulated draft regulations for the Multi Year Tariff Determination process to initiate discussion and solicit feedback from stakeholders. These regulation will cover the entire state of Gujarat and apply to all existing generation companies, transmission licensees, distribution licensees, the State Load Dispatch Center (SLDC). The regulations will be in the effect from April 1, 2024 to March 31, 2029, unless otherwise reviewed or extended.
For the matter relating to Aggregate Revenue Requirement (ARR) and Tariff up to March 31, 2024. The provision of Gujarat Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2005, or Gujarat Electricity Regulatory Commission (Levy and Collection of Fees and Charges by SLDC) Regulations, 2005, or Gujarat Electricity Regulatory Commission (MYT Framework) Regulations, 2011, or Gujarat Electricity Regulatory Commission (Multi Year Tariff) Regulations, 2016 will apply.
CER Opinion:
1. Interest on Working Capital: Proviso to Clause 38.1.1 states that "Provided further that in the event that availability by any thermal generating station is less than the Normative availability due to less coal stock maintained by the plant, the penalty shall be determined as per Regulation 57 of these Regulations."
As per the prevailing framework, there is no independent way to assess the availability of a thermal generating station due to coal stock availability. Generating stations, specifically the high cost ones, may not maintain the normative coal stock due to lower scheduling of such high VC plants as per the merit order, especially during the off-peak seasons. Monthly opening, closing stock, purchases, and delivered and sold should be reported to the Commission. Furthermore, it is suggested that the Commission may provide for random stock verification from time to time.
Based on analysis of merit order based schedule of high cost generating stations, a seasonal coal stock requirement may be specified. This would ensure higher coal stock during peak season and lower during off-peak season, while optimizing interest on working capital.
In case of imported coal, if required/mandated, higher calorific value of the imported coal should be considered to adjust overall coal stock maintained at the generating stations.
Approach Paper On Terms and Conditions of Tariff Regulations
Regulations
send
Tariff - Generation, Distribution, Transmission
17 November 2023
Keywords:
Normative tariff, Gross Fixed Asset (GFA), Net Fixed Asset (NFA), Modified GFA, Thermal generating station, Hydro generating station, Inter-state transmission licensee, Indexation, Flexibilisation, Capital Cost, RoE, Depreciation, IOL, IOWC, O&M, ROCE, Sharing of gains, Normative Annual Plant Availability Factor (NAPAF), PLF.
Highlights:
CERC released approach paper for terms and conditions of Tariff Regulations for the tariff period 01.04.2024 to 31.03.2029. The discussion paper includes the approach for determination of different tariff components for a generating company (coal and gas based and large hydro) and a transmission licensee, taking into consideration, the target to be a net-zero country by 2070, revised Intended Nationally Determined Contributions (INDCs) submitted by India and ensure steady growth of power sector.
The focus of the proposed approach is to shift the tariff framework to normative regime by determining the components of tariff on normative basis, thus reducing the regulatory overburden on the petitioner as well as the Commission.
CER Opinion:
1. Regulatory Impact Analysis (RIA) – Key to a Balanced Approach to Tariff Determination from the perspectives of Investors as well as the Consumers: The approach paper outlines various options for a variety pf aspects related to tariff determination for generation and transmission under Section 62 of the Electricity Act 2003. Response to the specific aspects are provided herein. Various options suggested in the context of various components of tariff can be evaluated in terms of their impact on various components of tariff as well as overall tariff to be paid by the consumers and returns to be obtained by the investors. This would help bring a more balanced perspective from the point of view of the consumers as well as the investors. The CERC should thus spearhead an approach to Regulatory Impact Assessment (RIA) while approving regulations for the sector.
?>
BRPL Letter dt. 17th April, 2023
Rooftop Solar
send
Renewable Purchase Obligation
07 November 2023
Keywords:
Solar Rooftop Systems, Battery, Renewable Purchase Obligation, Capacity Utilisation Factor, Net Metering
Highlights:
Objective: To measure the Renewable Purchase Obligation (RPO) for the Solar rooftop systems having battery installed on the DC side of the system.
The letter in in reference to DERC (Net Metering for Renewable Energy) Regulations, 2014 and DERC (Group Net Metering and Virtual Net Metering for Renewable Energy) Guidelines, 2019. These regulations provide the pathway for the installation of renewable energy system (RES) with battery energy storage system (BESS).
A consumer intends to couple its solar plant with BESS on the DC side. Key components of the intended system are (i) solar meter for the measurement of total solar generation to estimate discom’s RPO and consumer’s generation based incentive (GBI), and (ii) separate backup wiring to prevent battery power to flow into the grid when the grid is not supplying electricity.
CER Opinion:
1. Introduction: The proposed configuration by BRPL provides for a bidirectional inverter wherein the battery can be charged both from the electricity generated from the PV panels or that imported from the distribution utility. The battery will thus be able to inject “non-green” electricity, which was drawn from the distribution utility, into the grid.
This will lead to following issues-
❖ This will make it difficult to estimate the proportion of green energy in the energy injected by a consumer under the prevailing net metering regulations. It will be challenging to estimate the correct RPO met by the distribution utility.
❖ Under the proposed configuration, the battery may also be charged by drawing electricity from the distribution grid during the peak hours and discharged during the off-peak hours, thus further aggravating the peak load management of the distribution utility.
❖Calculation of storage obligation
?>
CERC Staff Paper on Market Coupling
Power Markets
send
Market Coupling
30 October 2023
Keywords:
Market Coupling, Power Exchange, Collective Transaction, Continuous Transaction, Uniform Price Disco
Highlights:
CERC notified a Discussion Paper on “Market Coupling” on 21st August, 2023.
Objective: The sole objective of the discussion paper is the collection of bids from different power exchanges and discover a uniform market clearing price that could potentially lead to uniform liquidity among power exchanges and increase in economic surplus.
The key highlights of the draft are given below:
❖ IEX dominates the share in the collective transaction segment
❖ Coupling of Power Exchanges in India
❖ Discovery of Uniform Market Clearing Price across the country
❖ Increase in economic surplus and uniform liquidity among power exchanges can be added advantages.
CER Opinion:
1. Divergence of Price Discovery Mechanism among Power Exchanges: The discussion paper aims to bring the idea of coupling of existing power exchanges across the country. One of the main reasons to implement the same could be to allow the transmission of information across the power exchanges. Currently the power exchanges operate in isolation such that the bid information of one exchange is not visible to other exchanges. One of the implications of the same is the variation in the diversion among the discovered clearing prices in the power exchanges.
There are two ways to mitigate the implication which was discussed above:
1. Market Coupling: One of the way to improve the transmission of information among the exchanges is to collect and combine all the bids from the exchanges at a single platform. This will lead to the discovery of a single Market Clearing Price for all the exchanges. The same is proposed in the current discussion paper.
2. Derivatives Market: Another way of transmission of information between different exchanges can be through the derivatives market, wherein the underline of derivatives will be the MCP discovered under IEX since it is the largest and most liquid power
?>
Grid India (Detailed Procedures for Security Constrained Unit Commitment (SCUC), Unit Shut Down (USD), and Security Constrained Economic Despatch (SCED) at Regional Level), 2023 [Draft]
Power Markets
send
SCED - Power Market
26 October 2023
Keywords:
Security Constrained Unit Commitment (SCUC), Unit Shut Down (USD), Security Constrained Economic Despatch (SCED), SCUC-Up, SCUC-Down, Minimum Up Time, Minimum Down Time
Highlights:
Grid-India notified “Detailed Procedures for Security Constrained Unit Commitment (SCUC), Unit Shut Down (USD), and Security Constrained Economic Despatch (SCED) at Regional Level” on 07th September, 2023. The key highlights of the draft are mentioned below:
❖ This document aims to clarify the roles and duties of different parties involved and provide a framework for operation of Security Constraint Unit Dispatch (SCUC), Unit Shut down (USD) and Security Constraint Economic (SCED). SCUC focuses on boosting reserves for grid security, while SCED strives to optimize electricity generation to achieve National Merit Order after gate-closure for RTM.
❖ The procedure is applicable to thermal generating stations within regional entities whose tariff is determined u/s 62 of the EA, 2003 and also to the other regional thermal generating stations willing to participate in SCUC/ SCED. Thermal generating stations opting for SCUC are mandated to participate in SCED as well.
CER Opinion:
1. Economics of Security Constrained Unit Commitment (SCUC): The preliminary results of an ongoing study at Energy Analytics Lab (EAL), IIT Kanpur show that additional saving in power procurement cost may emerge with the adoption of for Security Constrained Unit Commitment (SCUC). The study used three month’s data from five states in the northern region and estimated overall costs under alternate market arrangements.
?>
UERC (Terms and Conditions for Determination of Multi Year Tariff) (2nd Amd) Regulations, 2023
Electricity
send
FPPCA
13 September 2023
Keywords:
Fuel and Power, Purchase cost Adjustment, Distribution Licensee, Base energy charge, Multi Year Tari
Highlights:
UERC notified a draft document (Terms and Conditions for Determination of Multi Year Tariff) (2nd Amd) Regulations, 2023. June, 2023
❖ According to the proposed draft Regulation 83 the term “Fuel Cost adjustment” has been rephrased as “Fuel and Power Cost Adjustment (FPPCA)”.
❖ The FPPCA charge shall be applicable on the entire sale of the Distribution Licensee without any exemption to any consumer.
❖ UERC has proposed that, timeline for computation and verification of FPPCA has been done in 60 days instead of 30 days in principal regulation.
❖ FPPCA charge to be announced before beginning of the month for which the charges to be applicable.
❖ The FPPCA charge for any category shall not exceed 20% of the Base Energy Charge for respective category, or such other ceiling as may be stipulated by the Commission from time to time.
CER Opinion -
1. Exclusion of banked energy and energy sale outside the state from calculation of FPPCA: As per the Clause (83) (1) of the proposed draft “The FPPCA charge shall be applicable on the entire sale of the Distribution Licensee without any exemption to any consumer.” It is suggested that the energy sale outside the State and the energy banked (within the state as well as outside the state) should be excluded from the calculation of the FPPCA charge for the distribution licensee. Thus the above Clause may be rephrased as “The FPPCA charge shall be applicable on the entire sale of the Distribution Licensee excluding the energy sold outside the state and the banked energy (within the state as well as outside the state) without any exemption to any consumer.”
?>
DERC (Net Metering for Renewable Energy) (First Amendment) Regulations, 2023 [Draft]
Electricity
send
Renewable Energy
13 September 2023
Keywords:
Net Metering, peer to peer transaction, renewable energy, blockchain, prosumer
Highlights:
DERC notified draft DERC (Net Metering for Renewable Energy) (First Amendment) Regulations, 2023.
In the proposed amendment, the definitions of ‘Blockchain’, ‘Peer to Peer Transaction’ and ‘Prosumer’ have been introduced. The objective of this regulations is to provide flexibility to the prosumer and consumer to use renewable energy using distribution network of distribution licensee. This peer to peer mode of transaction billing and accounting will be done by distribution licensee. Further that Delhi discoms shall file petition under this regulation for determination of transaction charge/fee, if required, for enabling peer to peer transactions.
CER Opinion -
1. Definition of peer to peer transaction: The definition of ‘Peer to Peer Transaction’ in the proposed draft Clause 2(22) states, "Peer to Peer Transaction" means a transaction, based on interconnected platform that serves as marketplace wherein Consumers and Prosumers meet to trade electricity through Blockchain or any other technology." Trading, as defined in the Electricity Act 2003, refers to the act of buying for sale thereof. The peer-to peer transactions are for consumption needs of a consumer and hence shouldn’t be called trading. The Clause may thus be rephrased as "………...Consumers and Prosumers meet to transact electricity through Blockchain or any other technology.” In Clause 4(3) of the proposed amendment, "mutually sell” may be replaced with “mutually agreed transaction".
?>
CEA: Guidelines for RA Planning Framework for India, 2023
Guidelines
send
Resource Adequacy
07 August 2023
Keywords:
Resource Adequacy, Demand Response, Planning Reserve Margin, Capacity Credit, Marginal Cost
Highlights:
Ministry of Power (MoP), in consultation with Central Electricity Authority has notified 'Guidelines for RA Planning Framework for India' on 28th June, 2023. These guidelines are to be followed by the institutions and stakeholders such as CEA, NLDC, RLDCs, SLDCs, DISCOMs, SERCs/JERCs, etc. to ensure sufficient tie up of capacities to meet RA requirements over different time horizons.
Objective: To provide discoms with sufficient generation capacity to meet the energy requirement and peak demand reliably.
Resource Adequacy (RA) has been defined as 'tying up sufficient capacity to reliably serve expected demand of the consumers in the DISCOMs license area in a cost effective manner'. Important aspect of the RA planning is to ensure the availability of adequate generation capacities, round the clock to reliably serve demand under various scenarios. The RA framework lays down the optimal capacity mix to meet the projected demand at minimum cost.
Important definitions:
(a) Planning Reserve Margin (PRM): It is represented as reserve generation capacity in excess of peak load forecast as a percentage of peak load forecast.
(b) Loss of Load Probability (LoLP): Measure of probability that a system’s load will exceed the generation and firm power contracts available to meet that load in a year.
(c) Expected Energy Not Served (EENS): Expected amount of load (MWh) that may not be served for each year within the planning period.
(d) Net Energy Not Served (NENS): Total expected load shed due to supply shortages (MWh) as a percent (%) of the total system energy.
(e) Firm Capacity: Amount of power a generator can reliably provide.
(f) Capacity Credit: Firm capacity expressed as a percentage of nameplate capacity.
CER Opinion :
1. Necessity of Resource Adequacy Framework: The overall objective of Resource Adequacy (RA) framework is to avoid demand-supply mismatch, ensure system security and reliability at the national level. Sufficient amount of power supply coupled with demand response framework and sharing of inter-state and inter-region power should be adopted to meet the peak demand reliably. Power procurement cost is a major part of the RA study. Power procurement plans and contracts typically have a long-term horizon and hence, need to be worked out well in advance, based on reliable and dependable forecast. CER, IIT Kanpur carried out a research on the importance of these aspects and published a book on "Regulatory Framework for Long-term Demand Forecasting and Power Procurement Planning" 2, highlighting the need for a regulatory framework for the same.
?>
HERC Draft Notification on "Duty to Supply Electricity on Request and Power to Recover Expenditure and Power to Require Security Regulations 2016 (3rd Amendment) Regulation, 2023".
Single Point Supply
send
Duty to supply Electricity
02 August 2023
Keywords:
Single Point Supply, System loading Charges, Land obligations of builder, internal Electrical Infrastructure, Spare capacity, Service Connection charges
Highlights:
HERC notified the regulation on Single Point Supply to Employer’s Colonies, Group Housing Societies and Residential or Commercial cum Residential Complexes of Developers on 22nd April, 2020. According to this regulation, a single point should be bounded with walls and should have restricted entry for further supply of electricity to the members/employees and other services/establishments inside their premises by the GHS/Employer/Developer. Again a draft was notified on “Duty to Supply Electricity on Request and Power to Recover Expenditure and Power to Require Security Regulations 2016 (3rd Amendment) Regulation, 2023” on May 2023.
Objective: The objective of this amendment is that, If the developers are not ready to create the obligated external electrical infrastructure in any particular area, and are also not willing to deposit the bank guarantee, the distribution licensees are not able to release connections to residents in such areas. The proposed amendment by the Commission is aiming to tackle this issue so that the residents of such areas do not suffer in future.
1. System Loading Charges: The system loading charges consist of following three components:
i) 25 MVA, 33/11kv Substation with two transformers of 12.5 MVA each
ii) Line from consumer substation to Licensee’s source of supply
iii) Bay at licensee substation for feeding consumer end substation
To calculate the system loading charges the following assumptions are made
i) 25 MVA, 33/11 KV Substation with two transformers of 12.5 MVA each
ii) Only AIS substations and overhead lines have been considered
iii) Only AIS substations and overhead lines have been considered
Rs.25 Lakhs per MVA are System loading charges for above 33kV voltage level.
CER Opinion:
1. Conversion of single-point connections to multi-point connections: It is suggested that all the single-point connections may be converted to a multi-point connections (wherein each individual resident is the consumer of the discom, as in the case of Mumbai) system and all new connection to multi-storied buildings shall be released with multi-point connection facilities.
?>
CEA: Draft Guidelines for Medium and Long Term Power Demand Forecast
Guidelines
send
Forecasting
14 July 2023
Keywords:
Medium Term, Long Term, Demand Forecast, Partial End Use Method, Load Factor, Diversity Factor
Highlights:
CEA notified a draft on “Guidelines for Medium and Long Term Power Demand Forecast” on 11th April, 2023. The key highlights of the draft are given below:
Objective: To standardize the forecasting methodology for the discoms across the country.
As per the draft, the medium term forecast should be prepared more than 1 year and up to 5 years while long term forecast should be at least for the 5 years and at least for next 10 years. The draft document suggested that the forecast should be prepared in consultation with all stakeholders, including industrial, agricultural, municipal corporations, drinking water departments, captive power plant owners and other departments involved in planning and implementing electrical schemes.
CER Opinion:
1. Harmonised Regulatory Framework for Electricity Demand Forecasting: A publication by the Centre for Energy Regulation (CER), IIT Kanpur on “Regulatory Framework for Long-Term Demand Forecasting and Power Procurement Planning”, (Singh et al., 2019) emphasised the need for introducing/updating applicable regulations for demand forecasting and power procurement planning. It was found that regulatory framework for the same differs across states with marked differences in terms of scope, horizon, methodological approach, responsible agency, periodicity etc. The proposed guidelines by CEA would help in bring about a harmonized regulatory framework to help coordinate this exercise in a bottom up manner enabling coordination and consolidation of the forecast for state, regional and national level.
?>
MPERC (Draft guidelines for Approach Paper on “Methodology for Estimation of Electricity generated from Biomass in Biomass co-fired thermal power plants”)
Generation
send
Renewable - Thermal
28 June 2023
Keywords:
Biomass, Merit Order Despatch, RPO, ECR, Biomass co-fired thermal power plants
Highlights:
MPERC notified a draft for approach paper on “Methodology for Estimation of Electricity generated from Biomass in Biomass co-fired thermal power plants”. The objective of this approach paper is to mandate the state sector coal-based thermal power plants whose tariff is determined by the Commission under Section 62, Section 63 of the Electricity Act 2003 and also the captive power plant to use biomass pellets along with coal.
The key highlights of this approach paper are:
1. All coal based thermal power plants with “bowl mill shall mandatorily use 5% blend of biomass pellets”, “with ball & race mill shall mandatorily use 5% blend of torrefied biomass pellets only” and “with ball & tube mills shall mandatorily use 5 % blend of torrefied biomass pellets with volatile content below 22%”, on annual basis primarily of agro residue along with coal.
2. The generating utilities with some units under reserve shutdown or not being despatched due to Merit Order Despatch (MOD) consideration, shall increase the percentage of co-firing up to 10% in their other operating units/ plants (5% in case of ball and tube mills).
3. The minimum contract period for procurement of biomass pellets by generating utilities shall be 7 years so as to avoid delay in awarding contracts and to build up long term supply chain.
CER Opinion:
1. Phase-wise Approach to Biomass Utilization: The Ministry of Power, Government of India, vide letter No. 11/86/2017-Th11 dated 17th November, 2017 issued the "Policy for Biomass Utilization for Power Generation through co-firing in Pulverized Coal Fired Boilers". The policy envisaged co-firing of 5-10% biomass pellets made primarily of agro residue along in fluidized bed and pulverized coal units.
A number of biomass-based electricity generating plants have emerged in the rural landscape. One of the outcome of emergence of such plants has been an increase in the biomass price due to localized nature of the agricultural waste biomass. Transportation and palletisation further increases cost of the palletized fuel.
Mandating a steep biomass-blending target, which is not commensurate with development of the supply chain for biomass and its palletization, may lead to increase in its price leading to higher cost of procurement both for the coal-based power plants as well as the biomass-based plants. This may change overall economics of the fuel and its utilization across a variety of usage affecting the whole waste biomass ecosystem comprising of users like pulp and paper industry, biomass/wood based products, animal fodder as well as biomass based electricity generation. It is suggested to adopt a phased approach for biomass utilization with gradual increase over the years. It may begin from 2% and increase by one percentage point each year up to the long-term target.
?>
RERC (Grid Interactive Distributed Renewable Energy Generating Systems) (First Amendment) Regulations, 2023 [Draft]
Electricity
send
Renewable Energy
16 June 2023
Keywords:
RPO, CDM, Net Billing Arrangement, Net Metering Arrangement, Parallel Operation Charges
Highlights:
RERC notified a draft on “RERC (Grid Interactive Distributed Renewable Energy Generating Systems) (First Amendment) Regulations, 2023 in May, 2023.
❖ According to the proposed draft, in case of net billing arrangement as well as net metering arrangement, the peak AC capacity of the RE generator should not exceed the capacity under the connection agreement.
❖ In case of net billing arrangement, if the peak AC capacity exceeds the capacity of the connection agreement, the corresponding excess generation shall lapse.
❖ In case of net metering arrangement, if the quantum of electricity exported exceeds the quantum imported, the distribution licensee shall purchase such excess energy at the weighted average tariff, discovered through competitive bidding and adopted by the commission whereas the net imported energy shall be billed as per the applicable slab.
❖ In case of net metering arrangement, there is no provision of cross-subsidy surcharge for RESCO owned RE generating systems.
CER Opinion:
1. Renewable Energy Obligation: Clause 5.4 of the principal document states that “The Discom may consider the quantum of electricity generation from Renewable Energy Generating System under Net Billing arrangements towards RPO.”
This clause proposes that the ‘total generation’ from the Renewable Energy Generating Systems (REGS) under net billing arrangement shall be counted towards RPO of the Discom. The RE generation has embedded value due to the green attributes, currently separately valued as Renewable Energy Certificates (RECs). The REC framework may allow monitisation of such attributes for sale thereof. The regulation should provide for the right of the RE generator to register and claim RECs for the whole generation, except that which is exchanged with the discom. Furthermore, the regulation does not explicitly provides for a condition wherein a generator with a contract to sell part of the RE energy generated through open access to a consumer located in another state.
A scenario as illustrated in following figure 1 may occur wherein the installed capacity of a generator (say, 10 MW) is greater than the connection agreement with the Discom (say 1 MW) and 5 MW capacity is contracted with an open access consumer located in another state. In such a case, the open access consumer outside the state should be explicitly recognised as an ‘obligated entity’. Thus the discom should not claim RPO for the RE energy sold to an open access consumer outside the state. Further, it is suggested that the RPO associated with the renewable energy should be applicable only for the capacity agreed for connectivity or the RE electricity injected into the grid, whichever is higher.
?>
MoP’s Proposal on Draft Electricity (Amendment) Rules, 2023
Electricity
send
Rules
16 June 2023
Keywords:
Financial Sustainability, 24x7 Power Supply, Fixed Asset Register, Billing Efficiency
Highlights:The
MoP issued the Draft Electricity (Amendment) Rules, 2023 on 20th April,
2023. The key highlights of the document is as below:The
notification proposes amendment in Section 15 of the Electricity Rules,
2005 which mandates the accounting and payment of subsidies payable to
discoms under section 65 of the Act to be done in accordance with
Standard Operating Procedure (SOP) issued by the Central Govt.
Respective SERCs will issue quarterly reports for each discom giving the
findings on the demands for subsidies raised by the discom in the
quarter. Moreover, the above mentioned report to be based on accurate
accounts of the energy consumed by the subsidized category and
consumer-wise per unit subsidy declared by the states. Further, the
actual payment of subsidy and the gap in subsidy due and paid by the
respective Govt. will also be reported.The
draft rules proposes framework for financial sustainability of discoms,
wherein the loss reduction trajectory to be adopted by the SERCs for
tariff determination should be as per the trajectory agreed by the
respective state Govt. and approved by the Central Govt. under any
national scheme or programme. Further, the trajectory for both
collection and billing efficiency for the discoms should be determined
by the respective SERCs.CER Opinion:
1. Regulation 20 (I) (a): The Draft Clause states that "The
loss reduction trajectory to be adopted by the State Commissions for
tariff determination shall be in accordance with the trajectory agreed
by the respective State Governments and approved by Central Government
under any national scheme or programme."
As per section 62 of
the Electricity Act 2003, determination of tariff for distribution
licensees falls within the jurisdiction of the respective State
Commissions. While the SERCs would continue to fix loss reduction
trajectory for determination of tariff, the process of 'approval' would
influence the tariff determination and may also delay the process.
?>
CERC (Sharing of Inter-State Transmission Charges and Losses) (Second Amendment) Regulations, 2023 [Draft]
Transmission
send
Tariff - Transmission
24 May 2023
Keywords:
GNA, Transmission, Connectivity, COD
Highlights:
CERC notified draft CERC (Sharing of Inter-State Transmission Charges and Losses) (Second Amendment) Regulations, 2023. The key highlights of the draft are mentioned below:
Objective: To determine the Yearly Transmission Charges (YTC) in case of an inter–State transmission system (ISTS) which has achieved deemed COD.
Deemed COD: COD of an ISTS where Date of Commercial Operation (COD) has been approved in terms of proviso (ii) of Clause (3) of Regulation 4 of CERC (Terms and Conditions of Tariff) Regulations, 2014 or Clause (2) of Regulation 5 of CERC (Terms and Conditions of Tariff) Regulations, 2019 or where deemed COD has been declared in terms of Transmission Service Agreement under Tariff Based Competitive Bidding.
The YTC for the inter-state transmission licensee which has achieved the deemed COD shall be treated in the following manner:
❖ 20% of YTC shall be paid to the inter-State transmission licensee for a period of 6 months from date of deemed COD or till commencement of actual power flow, which is earlier.
❖ 100% of YTC shall be paid to the inter-State transmission licensee from 7th month till commencement of actual power flow if actual power flow does not commence within a period of 6 months from deemed COD.
❖ The above mentioned YTC shall be disbursed from monthly transmission deviation charges under third bill. In case of shortfall, balance charges shall be recovered from charges collected under T-GNA. In case of further shortfall, balance charges shall be paid from Deviation and Ancillary Service Pool Account under DSM Regulations.
CER Opinion:
The debt component covers a major part of the capital cost. This is payable by the licensee to the banks/financial institutions in a timely manner. A payment of 20% of Yearly Transmission Charge (YTC) may be insufficient for the inter-State transmission licensee for carrying out its debt-service obligations. It is recommended to increase the percentage of YTC to be paid to the licensee for the first six months, in a manner such that the licensee shall not face the risk of debt default just after the beginning of the deemed COD.
?>
Ministry of Power (Draft guidelines to promote development of Pump Storage Projects in the country)
Renewable
send
Hydro Pumped Storage
03 May 2023
Keywords:
PSP, TBCB, Project Developer, HP-DAM, Market, Ancillary Services
Ministry of Power notified a draft for promoting the development of PSP in the country on 15th February, 2023. The comments are invited for the same up to 2nd March, 2023. The major highlights on the draft are mentioned as below:
❖ Considering large amount of VRE integration, PSPs are of importance for greater inertia and balancing power to the grid. They are well-suited to address dynamic supply and demand in the country. Peaking operation and reliability while battery storage solutions are still evolving and address only short duration storage needs in grid management.
?>
HERC Draft Notification on “Green Energy Open Access Regulation 2023"
Open Access
send
Green Open Access
02 May 2023
Keywords:
Green Open Access, Banking, Green certificate, Green Open Access Charges
The Ministry of Power, Govt. of India, notified the Electricity (Promoting Renewable Energy through Green Energy Open Access) Rules, 2022 on 6th June, 2022 applicable on generation, purchase and consumption of green energy including waste-to-energy plants. In adherence to the same, HERC proposed the HERC (Green Energy Open Access) Regulations, 2023. The key highlights of the draft are mentioned below:
Objective: To contribute for the fulfilment of the India’s target of non-fossil energy capacity of 500 GW by 2030, 5 million ton a year green hydrogen capacity by 2030 and Net Zero Carbon Emissions by 2070, HERC has proposed (Green Energy Open Access) Regulations, 2023.
Eligibility criteria for Green Energy Open Access:
a) Consumers having contract demand or sanctioned load of 100 kW and above.
b) Consumer of a distribution licensee who is connected through an independent feeder emanating from a grid sub-station.
c) Group of two or more
?>
POSOCO: Draft Detailed Procedure for Tertiary Reserve Ancillary Service (TRAS)
Procedure
send
TRAS
10 April 2023
Keywords:
NLDC, RLDC, TRAS Providers, power Exchanges, Eligibility Criteria, price discovery, trading
Highlights -
POSOCO notified a draft on “Detailed Procedure for Tertiary Reserve Ancillary Service (TRAS)” on 20th February, 2022. The key highlights of the draft are given below:
Objective - The sole objective of TRAS is to maintain frequency in integrated operation of large power systems. Frequency response of any power system is generally characterized by frequency responses like primary response, secondary response, and tertiary response.
The Procedure for Tertiary Reserve Ancillary Service will cover the following important aspects:
a) Eligibility of TRAS Provider
b) Criteria for Activation
c) Price Discovery.
d) Shortfall in Procurement
EAL Opinion -
1. Market Coupling under TRAS: The power exchanges would only collect bids for the TRAS market from the respective power exchanges and communicate the same to the Nodal Agency, which would combine those bids to determine market outcome. This is essentially market coupling and is deemed desirable as the underlying product is to be deployed for the sake of system security.
?>
MoP (Draft Proposal on Day Ahead Operation of Security Constrained Economic Dispatch) 2023, [Draft]
Power Markets
send
DA-SCED
21 March 2023
Keywords:
Day Ahead Market (DAM), Day Ahead Ancillary Service Market (AS-DAM), Unit commitment, Day Ahead SCED
Highlights -
Ministry of Power (MoP) notified a draft on Day-ahead (DA) Operation of Security Constrained Economic Despatch (SCED) on 24th January, 2023. The key highlights of the draft are mentioned below:
❖ ISGS participating in DA-SCED shall submit their declared capacity along with ramp rate and minimum turndown level for the next day (D) on D-1 by 06:00 hrs.
❖ The entitlements and the share of beneficiaries shall be declared by respective RLDC on D-1 by 07:00 hrs.
❖ The beneficiaries shall submit their requisitions/schedules from ISGS on D-1 by 08:00 hrs.
❖ The injection and drawl schedules shall be prepared by respective RLDC, based on availability and schedules submitted by 09:30 hrs.
❖ The first run of DA-SCED shall be carried out on D-1 at 09:45 hrs before the opening of the bidding window of DAM. Based on the results, the ISGS have a choice to participate in Day Ahead Market (DAM) as well as Real Time Market (RTM).
❖ The second run of DA-SCED shall be carried at 17:30 hrs. This will help in re-assessing the SCED schedules for the next day (D) and the committed reserve capacity available through DAM-AS.
EAL Opinion -
1. Purpose and Nomenclature of the Proposed Mechanism: The SCED, as the name suggest is the dispatch mechanism implemented few time blocks before the actual time block of delivery. Given this context, the terminology used to describe the three ‘day ahead’ interventions as DA- SCED may not be warranted as these are neither binding on the parties nor these result in dispatch instruction. It is suggested that a different terminology may adopted for the proposed three DA interventions. Since the proposal has used the SCED nomenclature, we continue to use it for the rest of the discussion herein. As per the proposed draft, SCED is run three times in addition to the current SCED mechanism, which is run on a two-block ahead basis. Let us call these, temporarily, as SCED-1, SCED-2 and SCED-3 respectively.
?>
JSERC (Modalities of Tariff Determination) Regulations, 2023 [Draft]
Regulations
send
Tariff - Generation, Distribution, Transmission
17 March 2023
Keywords:
Modalities, Tariff Determination, Tariff-Based Competitive Bidding, Regulated Tariff Mechanism, Existing Project, Ongoing Project
Highlights -
The Hon’ble Supreme Court of India gave its judgement on 23rd November, 2022 on Case (Civil Appeal No. 1933 of 2022) in which it rejected the plea of TATA Power Company Limited Transmission challenging the awarding of Rs. 7000 Cr. transmission infrastructure project without a tariff-based competitive bidding to Adani Power by the Maharashtra Electricity Regulatory Commission (MERC). As per TATA Power Company Limited Transmission, MERC should not have awarded such a large transmission project without following the process of tariff-based competitive bidding.
While the verdict was being announced, the Hon’ble Supreme Court had also asked all the State Electricity Regulatory Commissions to frame Regulations under Section 181 of the Act on the terms and conditions for determination of tariff within three months from the date of the judgement.
Objective: The objective of these Regulations is the determination of the modality of tariff determination for each State Electricity Regulatory Commission.
CER Opinion -
The expansion of existing intra-state generating projects under the Regulated Tariff Mechanism (RTM) framework is limited to the existing quantum of power approved as in the existing PPA with the licensees in the state.
The PPA between a generating station and the distribution licensee is signed and approved by the Commission based on the quantum of power mutually agreed on through PPA. Hence, the proviso to the Clause may be modified as shown below:
……However, such expansion under RTM framework would be restricted up to the quantum of power, for which PPA has been signed and approved by the Commission, with the distribution licensee(s) in the state’ (emphasis added).
?>
Notification of Renewable Generation Obligation as per Revised Tariff Policy 2016
Generation
send
Renewable
17 February 2023
Keywords:
Renewable, Generation, Decarbonisation, Non-fossil Fuel
Highlights -
The Ministry of Power is considering Renewable Generation Obligation in accordance with Tariff Policy to enhance the generation and utilisation of Renewable Energy (RE) in the country. For decarbonisation, India has set a target of net zero by 2070 alongside intermittent targets by 2030. India has committed to achieve 50% of cumulative electric power installed capacity from non-fossil fuel-based energy sources by 2030.
The Ministry of Power has proposed mandatory supply of renewable energy equivalent to minimum 25% of capacity by the thermal generating station for the stations commissioned after 01.04.2024.
CER Opinion -
1. Renewable Generation Obligation (RGO) as Renewable Capacity Obligation: As per the Clause 6.4.5 of the Tariff Policy, 2016, "coal/ lignite based thermal generation station after a specified date shall be required to establish such renewable energy generating capacity or procure and supply renewable energy equivalent to such capacity,"
It is suggested that the notification may be called as ‘Renewable Capacity Obligation’ instead of ‘Renewable Generation Obligation’ since obligation refers to capacity instead of generation.
?>
Central Electricity Regulatory Commission (Staff Paper on Power Market Pricing), October 2022
Power Markets
send
Power Market Design
17 February 2023
Keywords:
High Prices, Price Spikes, Inframarginal, Pay As Bid Auction, Power Market Design
Highlights -
Central Electricity Regulatory Commission (CERC) notified the “Staff Paper on Power Market Pricing” in October, 2022. The last date to submit comments on the same is 4th November, 2022. The key highlights of Staff Paper are as follows:
The global electricity market scenario is explained in brief. This includes the scenario of Australia, Europe and India. It shows that the unprecedented high prices in electricity markets coupled by increase in demand as well as unavailability of fuel or supply related issues are addressed and explained in the paper. Certain important questions are raised regarding the same that are to be addressed by the stakeholders as per their approach.
The document came up with open ended questions to address this issue of high prices in the electricity markets across the globe. The major reasons behind the price spikes country wise was explained in brief and few documents have been shared for reference to address such issues on high prices and avoid such unprecedented price spikes in future. It raised four major questions, first question was about the change in pricing methodology that is the way in which the price discovery takes place in electricity market needs any change or not. It has proposed PABA and UMCP and associated advantages and disadvantages with them. Question 2 raised was regarding introducing regulatory intervention – what should be the state that such an intervention to be initiated by the regulator. This includes exploring types of possible interventions to be introduced, tolerance level, capping, etc. Question 3 raised was regarding addressing the negatives of price cap introduced by the regulator in the power markets that includes what about the generators having high variable cost and the consumers that are willing to fulfil their demand at any cost. Question 4 raised was regarding the modification in the electricity market design to bring up demand response and energy storage systems.
CER Opinion -
?>
UPERC (Modalities of Tariff Determination) Regulations, 2022 [Draft]
Regulations
send
Tariff - Generation, Distribution, Transmission
10 February 2023
Keywords:
Modalities, Tariff Determination, Tariff-Based Competitive Bidding, Regulated Tariff Mechanism, Existing Project, Ongoing Project
Highlights -
While the verdict was being announced, the Hon’ble Supreme Court had also asked all the State Electricity Regulatory Commissions to frame Regulations under Section 181 of the Act on the terms and conditions for determination of tariff within three months from the date of the judgement.
Objective: The objective of these Regulations is the determination of the modality of tariff determination for each State Electricity Regulatory Commission.
CER Opinion -
1. Incorporating the Possibility of multiple Distribution Licensees: The retail tariff of the consumers will be determined u/s 62 of the Electricity Act, 2003. The recent Electricity (Amendment) Bill, 2022 enables multiple retailers in the area of license in order to increase the competition in the distribution sector. Hence, the possibility of multiple distribution licensees should be kept in the perspective while framing the modalities for distribution licensees.
?>
PSERC (Terms and Conditions for determination of Generation, Transmission Wheeling and Retail Supply Tariff)(1st Amendment) Regulations, 2022 [Draft]
Regulations
send
Tariff - Generation, Distribution, Transmission
10 February 2023
Keywords:
Terms and Conditions for Tariff Determination, Intra-State Transmission, Tariff-Based Competitive Bidding
Highlights -
While the verdict was being announced, the Hon’ble Supreme Court had also asked all the State Electricity Regulatory Commissions to frame Regulations under Section 181 of the Act on the terms and conditions for determination of tariff within three months from the date of the judgement.
Objective: The objective of these Regulations is the determination of the modality of tariff determination for each State Electricity Regulatory Commission.
CER Opinion -
1. Tariff Modalities for Generating Stations and Distribution Licensees: The modalities for the determination of tariff have been laid down only for the transmission licensees in the document. Similar provisions should be included for generating stations and the distribution licensees, such that any possible conflict involving tariff determination of the corresponding projects as per Regulated Tariff Mechanism (RTM) Framework u/s 62 of the Act and Tariff-Based Competitive Bidding (TBCB) Framework u/s 63 of the Act in the future may be avoided.
?>
CERC: Staff Paper on Power Market
Regulations
send
Staff Paper on Power Market
30 January 2023
Keywords:
CERC: Staff Paper on Power Market
Highlights -
Central Electricity Regulatory Commission (CERC) notified the Staff Paper on Power Market Pricing in October, 2022. The key highlights of Staff Paper are as follows:
Objective: The document gives brief introduction about the functioning of electricity market, the role of power exchanges and percentage share in volume of transactions taking place through power market, bilateral, deviation settlement mechanism (DSM), PPAs. Brief overview regarding the procedure for transaction taking place that are collective transactions and continuous are explained. The Uniform Price Auction (UPA) and Pay as Bid Auction (PABA) are explained in detail. The global electricity market scenario which includes the scenario of Australia, Europe and India. It shows that the unprecedented high prices in electricity markets coupled by increase in demand as well as unavailability of fuel or supply related issues are addressed and explained in the staff paper. Certain important questions are raised regarding the same that are to be addressed by the stakeholders as per their approach.
This document covers the following aspects of Power Market.
❖ Does Pricing Methodology Need a Change?
The idea for change in pricing methodology is proposed in the staff paper. The two pricing methodologies Unconstrained Market Clearing Price (UMCP) and PABA were compared. The idea for Pay As the bid is introduced to address the issue of supernormal profits earned by inframarginal generators. But PABA can give temporary addressal to the issue, as the generators participating in market are paid exactly the same price at which they placed the bid. The generators having low Variable Cost (VC) were bidding at comparatively lower prices in the market and additional component include their margin and also recover Fixed Cost (FC). In PABA, the low VC generators will bid higher gradually to recover their FC and margin. Also by introducing new pricing algorithm, the sellers will analyse the difference in cost between two pricing methodologies and just change their bidding behaviour.
?>
MoP: Concept Note on Pooling of Tariff of 25 years Plus Thermal/Gas Generating Stations
Guidelines
send
Pooling
30 January 2023
Keywords:
Common Pool, Flexibility, PPA, CoD, Genco(s), ECR, Capacity Charge Rate, Letter of Intent, Dedicated
Highlights -
Ministry of Power (MoP) on 15th November, 2022 notified the draft on Pooling of Tariff for Coal/Gas Generating stations which have completed 25 years. The key highlights of the draft are mentioned below:
Objective: The objective of this concept note is to create a Genco-wise common pool (CP) of the plants (excluding Hydro) which have completed or are going to complete 25 years of service, for maintaining grid stability until development of the appropriate storage capacity, to cater the need of increased RE integration.
❖ The GENCOs shall provide the information regarding CoD of all the stations to respective RLDC/SLDC.
❖ Coal/Gas plants crossed 25 years are considered for creation of CP.
❖ There is a provision as and when any Station completes 25 years of CoD, the same shall be automatically added to the CP.
EAL Opinion -
1. RA and Power Procurement Plan: While undertaking a power procurement planning exercise1, the DISCOMs would have already considered the expiration of PPAs (having completed 25 years) few years in advance.
2. Pooling as ST Measure: Available and operational thermal generating capacity can provide needed resources in the ST. This can partly address the RA concern of imminent nature as there is no gestation period.
?>
Electricity (Amendment), Bill
Electricity
send
Acts
27 January 2023
Keywords:
Electricity Act, Distribution Licensee, Retailers, competing retailer, Open Access, Cross-subsidy Balancing Fund (CSBF)
Highlights -
The Union Power Ministry on 8th August, 2022 introduced the “Electricity (Amendment) Bill, 2022” in Lok Sabha.
Key points of the proposed amendment bill are given below:
❖ Section 14 (b): Distribution of electricity by a distribution licensee in an area of supply in accordance with criteria prescribed by the Central Government
❖ Section 14 (b) (Sixth proviso): The Bill suggests to omit the words “through their own distribution system” for the distribution of electricity.
❖ Section 42: The discom owing network shall provide non - discriminatory open access to other licensees in the area of supply.
❖ Section 26: More power and functions of the NLDC for ensuring safety and security of the grid, and for the economic and efficient operation of the power system
❖ Section 28: The Bill provides for payment security mechanism to ensure timely payment of dues.
❖ Section 60:
1. The power and associated costs from existing power purchase agreements (PPAs) with existing distribution licensee will be shared among all discoms in the area of supply.
2. The State Government will set up cross subsidy balancing fund to deposit surplus of cross-subsidy of distribution licensee and to provide for any deficit with another distribution licensee in same area of supply.
❖ Section 62: The Appropriate Commission will determine maximum ceiling tariff and minimum tariff for retail sale of electricity.
❖ Section 64: The Bill provides for suo-motu determination of tariff by the Appropriate Commission, thereby reducing the time required for tariff determination and provision for interim tariff.
❖ Section 77: The Bill amends qualification of chairperson and members of Central Commission.\
❖ Section 142: The Bill proposes to impose penalty onto the obligated entities for shortfall in meeting the RPO.
CER Opinion -
'Carriage and Content separation' vs 'Distribution of electricity with or without network':
The Bill proposes to bring forth retail competition in electricity supply by redefining ‘distribution of electricity’ (which was hitherto defined to be undertaken only through the distribution network) as ‘distribution of electricity’ both with and without distribution network. While ‘distribution of electricity through the distribution network’ refers to the existing business of the distribution licensee (i.e. wire plus energy business), ‘the distribution of electricity without a distribution network’ refers to ‘retailing of electricity without a distribution network’.
?>
Policy paper for Indian Carbon Market, 2022 [Draft]
Policy
send
Carbon Market
12 December 2022
Keywords:
Carbon Market, Renewable Energy Certificates (REC), Perform Achieve and Trade (PAT)
Highlights -
The policy paper for the Indian Carbon Market (ICM), released by the Bureau of Energy Efficiency (BEE), Ministry of Power, Government of India, is an initiative to develop a domestic carbon market, where the emission credits issued to private and public entities will provide incentives for decarbonisation measures within many entities across multiple sectors. The development of such a market is expected to contribute to achieving India’s updated nationally determined contribution (NDC) of reducing emission intensity of GDP of 45% by 2030, from the 2005 level, as pointed out in the 26th UNFCCC’s Conference of Parties (COP) held at Glasgow. Following are the key highlights of the policy document:
❖ The domestic carbon market will be created by transitioning from the existing Perform Achieve and Trade (PAT) Scheme, Renewable Energy Certificates (REC), and Clean Development Mechanism (CDM) in two phases viz. phase-I in the period 2023-25 and phase-II from 2026 onwards.
❖ Market will be divided into two dimensions viz. compliance market and offset market. The compliance will be responsible for transitioning from the PAT scheme whereas the offset market will be transitioning from project-based REC/CDM to a carbon credit trading mechanism.
CER Opinion -
It is suggested that the EScerts be initially be converted on a voluntary basis and later be subsumed completely by the carbon market. Such a transition be planned in advance ensuring seamless transition from EScerts market to the carbon market in terms of target setting as well as compliance framework. The REC market has a number of additional benefits for the Indian power sector including development of the RE development and green electricity products1. The RECs should remain voluntarily convertible even in the later phase, thus ensuring that the REC market, with its institutional framework continues to play its role in development of the RE resources in the country.
?>
CEA: Draft Guidelines for Resource Adequacy Planning Framework for India
Guidelines
send
Resource Adequacy
06 December 2022
Keywords:
Resource Adequacy, Demand Response, Reliability, Planning Reserve Margin, Integrated Resource Planning, Capacity Credit, Marginal Cost
Highlights -
CEA notified a draft on “Guidelines for Resource Adequacy Planning Framework for India” on 23rd September, 2022. The key highlights of the draft are given below:
Objective - The sole objective of Resource Adequacy Framework is the reliable fulfilment of the peak demand with the help of adequate supply of generation and demand response.
The Resource Adequacy Framework will cover the following important aspects:
❖ Availability of adequate generation capacities to reliably serve demand under multiple scenarios.
❖ Optimal capacity mix based on minimization of overall system cost.
❖ Time horizon for the implementation of the framework should be 5 – 10 years.
❖ Energy storage, other flexible resources, and short-term sale/purchase under bilateral contracts will be incorporated into the resource adequacy framework.
CER Opinion -
?>
UPERC Verification of Generating Plants and Captive Consumers, 2022 [Draft]
Generation
send
Captive Generation
06 December 2022
Keywords:
Captive generating plant, Cooperative Society, Special Purpose Vehicle
Highlights -
The draft focuses on verification of the status of Captive Generating Plants (CGP) and Captive consumer, with respect to criteria of consumption and equity share as given in Electricity Rules, 2005. The verification will be done annually by the State Commission with the help of concerned SLDC, RLDC, and Distribution Licensees, after the end of the financial year on the basis of information submitted by the CGP and Captive users. The criteria of consumption and equity share as per Electricity Rules, 2005 for (CGP) and Captive consumer respectively is as follows -
❖ Not less than fifty one percent of the aggregate electricity generated in such plant, determined on an annual basis, is consumed for the captive use. Consumption shall be based on net electricity generated (i.e. gross generation minus auxiliary consumption) and net electricity generated is determined on annual basis at the end of the financial year.
❖ Not less than twenty six percent of the ownership is held by the captive user(s).
The document also specify the consequences in case of failure to maintain/achieve the captive status by CGP and captive consumer. If the CGP and captive fails to meet the criteria of consumption and ownership then they shall lose its captive status for that year and leading to impose cross subsidy surcharge and additional surcharge as applicable on open access consumer which shall be payable to concerned distribution licensee(s).
CER Opinion -
?>
MNRE National Repowering Policy for Wind Power Projects, 2022 [Draft]
Renewable
send
Wind Technology
25 November 2022
Keywords:
Wind Power, Repowering, Aggregator, Power Purchase Agreement
Highlights -
Objective -
The objectives of the Repowering Policy are optimum utilization of Wind energy resources by maximizing energy (kWh) yield/ sq. km of the project area and utilizing the latest state of the art onshore Wind turbine technologies.
Eligibility -
❖ All wind turbines identified under BIS Act.
❖ Wind turbines completed their design life.
❖ Wind turbines below 2 MW rated capacity.
❖ Turbines connected to a single Polling Sub Station (PSS).
❖ Wind power Project with adjacent land area.
❖ More than 90% of the total capacity of the project should have completed its design life.
CER Opinion -
1. Minimum limit of turbine capacity after repowering (Clause No. 6): The draft Clause states “The capacity of the repowered Wind turbines is enhanced by at least 1.5 times of its aggregate capacity of old turbines”.
Further, as per Clause 2, "The repowering of Wind turbine of below 2 MW capacity must be considered”.
If the turbine of capacity 1 MW is considered for repowering, the policy would allow selection of new turbine of 1.5 MW, which is would still fall below 2 MW threshold specified for repowering. Hence, new turbines should not be less than this limit of 2 MW. This criteria should be over and above the 1.5 times limit suggested in the policy.
?>
CERC (Terms and Conditions for Dealing in Energy Saving Certificates) (First Amendment) Regulations, 2022
Power Markets
send
ESCerts
25 November 2022
Keywords:
Energy Saving Certificates, floor price, mtoe
Highlights -
In these Regulations, the term ‘Floor Price’ have been introduced and is defined as the minimum price at which the Energy Savings Certificate shall be traded on the power exchanges and is proposed to be fixed at ten percent of the price of 1 mtoe of energy consumed as notified by the Central Government from time to time.
CER Opinion -
?>
CERC (Sharing of Inter-State Transmission Charges and Losses) (First Amendment) Regulations, 2022[Draft]
Transmission
send
Tariff - Transmission
27 September 2022
Keywords:
GNA, Transmission, Connectivity, Grantee, COD
Highlights -CERC
notified a draft Sharing of Inter-State Transmission Charges and Losses
on 11th June, 2022. The major highlights of the document is as below:The
draft document modifies the yearly transmission charges and also
rectify the formula for calculating the billing period. The transmission
charges shall be shared on monthly basis and will be incorporated
according to the Yearly Transmission Charges. Long Term Access, Medium
Term Access and Short Term Open Access is replaced as GNA and T-GNA
respectively. Transmission charges at each drawal node shall be
calculated as per Hybrid Methodology, using transmission line-wise
usage-based transmission charges. Where Connectivity is granted to a
Connectivity grantee on existing margins and COD of such Grantee is
delayed, the Connectivity grantee shall, corresponding to the capacity
that is delayed, pay transmission charges from the start date of such
Connectivity at the rate of Rs. 3000 /MW/month. The amount received in a
billing month, shall be reimbursed to the DICs in proportion to their
share in the first bill in the following billing month. For generating
stations reduce values of Marginal Participation Factors to zero.
CER Opinion -
1. Associated Transmission System: Draft Clause No. 2 (1) (b) states “Associated Transmission System’ or ‘ATS’ shall have the same meaning as defined in GNA Regulations”. It is suggested that the amendment proposed be modified to suit the current circumstances.
2. Principles of sharing transmission charges: In the draft Amendment Regulations, Clause 3(3) states “Bills for transmission charges shall be raised on the buyer in terms of this clause notwithstanding any provisions in the PPA and the settlement of the transmission charges inter se between the buyer and the generating station or the seller, wherever necessary, shall be made in terms of the PPA or as per the mutual agreement.”, and may be rephrased as “Bills for transmission charges shall be raised on the buyer in terms of this clause notwithstanding any provisions in the PPA and, the settlement of the transmission charges inter se between the buyer and the generating station or the seller, wherever applicable, shall be made in terms of the PPA or as per the mutual agreement.” The term “wherever necessary” may be replaced with “wherever applicable” to provide legal clarity.
Central Electricity Authority (Flexible operation of Thermal Power Plants) Regulations, 2022 [Draft]
Generation
send
Engineering - Generation
01 September 2022
Keywords:
Minimum Power Level, Ramping Capability, Flexible Operation, Ramp rate, must-run plant
Highlights -
CEA notified the draft Central Electricity Authority (Flexible operation of thermal power plants) Regulations, 2022. The highlights of the Regulations is as follows:
❖ These Regulations shall apply to all coal and lignite based thermal power plants and load despatch centres.
❖ All TPPs shall be capable of providing the required output as per the schedule for generation finalized by appropriate LDCs.
❖ The appropriate Load Despatch Centres shall schedule all coal based thermal power plants, up to the MPL of 55%, to support the operation of must run stations.
❖ The appropriate Load Despatch Centres may schedule all coal based thermal power plants, up to the MPL of 40%, to support the operation of must run stations, after the implementation of modifications by the TPPs as required.
❖ The minimum rate of loading or unloading for coal based thermal power plants shall be 3% per minute above the MPL.
❖ For supercritical and ultra-super-critical units, minimum rate of loading or unloading shall be 5% per minute above the MPL.
❖ The thermal power plants shall implement the necessary modifications to comply with these regulations in order to generate flexible power according to schedules finalized by appropriate LDCs.
❖ The Regulations also provide the process for implementing measures for flexible operation of TPPs.
CER Opinion -
❖ Necessity of Flexible Operation of Thermal Power Plant: The increasing share of variable RE (VRE) places stress on the thermal generators, which need to respond to variability in demand as well as VRE generation. Adequate ramping capability, lower technical minimum, reduced start up and shutdown time of thermal generating units, particularly those based on coal and lignite, are crucial parameters for ensuring system security and stability amidst growing share of VRE.
?>
MoP’s Proposal on High Price Market Segment for Day Ahead Market (HP-DAM)
Power Markets
send
DAM market
31 August 2022
Keywords:
Price spike, Price cap, I-DAM, HP-DAM, Power Exchange
Highlights -
The Ministry of Power floated a proposal on High Price Market Segment for Day Ahead Market (HP-DAM) on 1st August, 2022. The key highlights of the document is as below:
The issue of high price in spot market in Power Exchanges was addressed by CERC by introducing Price Cap of Rs 12/ unit in all market segments in April, 2022. The only drawback in it was that the generators having high variable cost are unable to participate in the market. To address this phenomenon, the proposal consists the following points -
❖ Eligibility of seller - having variable cost greater than Rs. 12/kWh .
❖ Minimum bid price: Rs. 0/kWh.
❖ Price Discovery: Double-sided closed auction
❖ Operation parallel to I-DAM
❖ This will enable the high cost power plant to be available during high demand period that was not possible previously. It targets only the buyers who are in deficit and can afford high price payment to participate in this segment. The other buyers will not get affected by operation of this additional segment
CER Opinion -
❖ Price Spike on Power Exchanges and Role of HP-DAM: Price spikes on the power exchanges over the past few months has been a cause for worry for the regulators as well as policy markets. This, along with the fact that some of the sellers would have made significant margins above their marginal cost (MC), may seem to have justified the idea of HP-DAM. However, the fundamental economic and implementation issues create an uncertainty about its long-term impact, while it may seem to result in some short-term benefits.
The fundamental reasons for the recent price behavior needs to be identified and addressed across the electricity supply chain, beginning with coal supply issues . HP-DAM may be a temporary solution that would likely alter bidding behavior as well as market outcome for DAM market segment itself. This is further explained below.
?>
The Uttar Pradesh Solar Energy Policy, 2022 [Draft]
Electricity
send
Solar Policy
31 August 2022
Keywords:
Renewable Purchase Obligation, Solar Target, Rooftop Solar, Distributed Solar Generation, Employment Generation, Solar Parks, Nodal Agency, Facilitation of Land
Highlights -
To align with India's ambitious solar PV capacity expansion program, the State envisages to accelerate the deployment of solar power by means of implementation of large-scale projects, small scale distributed systems, establishment of ultra-mega solar parks and Rooftop solar PV projects. These targets will be achieved by introducing new mechanism that will support consumers, businesses and developers in the sector.
Accordingly, State Government of Uttar Pradesh hereby declares and adopts Solar Energy Policy, 2022, with a target of 16000 MW solar power projects up to 2026-27 distributed according to the following table and, shall remain in operation for a period of 5 years.
The Policy provide the timelines and conditions for installation of Roof top Solar Systems, off-grid solar applications, utility scale grid connected solar projects, solar power projects with storage, solar parks and the details of incentives and facilities applicable for the said different types of the installation.
CER Opinion -
❖ Basic Design Feature of Solar Policy: The Draft Solar Policy is largely similar to the UP Solar Policy 2017. Given that most of the key objectives of the policy were unmet (till its target year 2022), it should be noted that something was inherently flawed in the basic design of the previous policy. Feedback from stakeholders (who have invested and who did not) is necessary to address lacunae in the previous policy, which is largely been followed in its design as well as content. Answers to the following questions should help identify areas for improvement and, hence, help design of the solar policy.
?>
MPERC (Power Purchase and Procurement Process) Regulations, Revision-II, 2022 (RG-19(2) of 2022) [Draft]
Regulations
send
Power Procurement Planning
29 August 2022
Keywords:
Power Procurement Plan, Rolling 5-year Plan, Forecast, Short-term power procurement, Medium-term power procurement, Short-term power procurement
Highlights -
These Regulations are proposed to revise the MPERC (Power Purchase and Procurement Process), Regulations, Revision I, 2006 and shall be applicable to all purchases of power from conventional and renewable energy sources of energy made or as proposed to be made by a distribution licensee. In these regulations the Commission has laid down the framework for power procurement planning to be done by the distribution licensee using IT tools from different energy sources, based on the forecasting by methods such as PEUM, econometric analysis, etc.
An emphasis has been done on archiving the information related to power procurement and making it available publicly. As per these regulations, the distribution licensees to constitute dedicated cell for all the power procurement activities including demand forecasting.
CER Opinion -
❖ Need for Long-term Demand Forecasting and Power Procurement Planning: Power procurement cost is a major part of the Aggregate Revenue Requirement of the distribution utilities. Power procurement plans and contracts typically have a long-term horizon and, hence, need to be worked out well in advance, based on reliable and dependable forecast. A reliable electricity demand projection cannot only help the distribution utilities to plan power procurement in advance, but also optimise the cost of the power purchase.
CER, IIT Kanpur carried out a research on the importance of these aspects and published a book on “Regulatory Framework for Long-term Demand Forecasting and Power Procurement Planning”, highlighting the need for a regulatory framework for the same. Given the experience of CER and EAL in carrying out Long-term Demand Forecasting and Power Procurement Planning for the states of Uttar Pradesh and Chhattisgarh, we reinforce the need for a robust regulatory framework for the same. From these studies, it was inferred that significant economic benefits in terms of reduced private and social costs is possible through Long-term Demand Forecasting and Power Procurement Planning.
?>
POSOCO (Detailed Procedure for REC Mechanism in compliance of CERC (Terms and Conditions for Renewable Energy Certificates for Renewable Energy Generation) Regulations, 2022) [Draft]
Renewable
send
REC Framework
12 August 2022
Keywords:
REC, Discoms, CGP, Accreditation, Registration, Redemption, default, revocation
Highlights-
POSOCO has notified draft on “Detailed Procedure for REC Mechanism in compliance of CERC (Terms and Conditions for Renewable Energy Certificates for Renewable Energy Generation) Regulations, 2022. It describes the following:
❖ Roles and responsibilities of different entities involved in the process
❖ Eligibility of different entities to participate in this procedure
❖ Detailed process of accreditation & registration of the eligible entities connected to inter-state as well as intra-state transmission system.
❖ Process for issue of RECs to eligible entities and redemptions of the RECs
❖ Conditions and consequences in event of default.
CER Opinion-
❖ REC as a guarantee of origin (Clause No.7.4): As per the clause, "An obligated entity being a distribution licensee or an open access consumer, which purchases electricity from renewable energy sources in excess of the renewable purchase obligation as determined by the concerned State Commission will be eligible for issuance of Certificates to the extent of purchase of such excess electricity from renewable energy sources." It is suggested that all RE generator in the country be issued REC, which can be issued as guarantee of origin and can be used as proof of compliance with the respective SERCs. To implement this, the eligibility for issue of REC should be extended to all the RE projects, which should now be registered with REC registry. This draft document, is a partial implementation of recommendation which has been given earlier. It is recommended that this philosophy be further extended as per the suggestion given herein.
?>
UERC (Standards of Performance) Regulations, 2022 [Draft]
Distribution
send
Standard of Performance
29 July 2022
Keywords:
Standard of Performance, DISCOMs, ARR, Consumer Awareness, SoP Compensation
Highlights -
❖ Case of Stay Order from Court, Tribunal or Commission - No payment until final decision from court. Also no payment in case of any arrears due to consumer.
❖ Payment of Compensation - Consumer bills adjustments or NEFT/RTGS/cheque (permanent disconnection with no outstanding dues).
Intimation to the consumer regarding guaranteed time for registration of complaints and regarding guaranteed standards of performance (Schedule I) and compensation amount (Schedule III). The guaranteed SOP (Schedule I) and Compensation details shall be displayed also on websites and offices.
CER Opinions -
❖ The given statements also do not mention sharing the information through the App of the licensee. It is suggested that SoP related information may be displayed on the discom’s website and mobile app in a separate section named ‘Standards of Performance’ for ease of viewing and consumer awareness
❖ The licensee must report the compensation amount, type of consumer, and other associated data linked to complaints made by consumers and complaint status to the Commission on a quarterly basis
?>
WBERC (Open Access) Regulations, 2022 [Draft]
Power Markets
send
Open Access
08 July 2022
Keywords:
WBERC (Open Access) Regulations, 2022 [Draft]
Highlights -
WBERC on 12th May, 2022 notified the Draft WBERC (Open Access) Regulations, 2022. The key highlights of the draft are mentioned below,
Extent of Application: These regulations shall be applicable for consumers drawing power from any non-captive generator without the use of intra-state transmission lines, or distribution network, such arrangement, including scheduling, determination of cross-subsidy surcharge, additional surcharge, distribution access charge, etc. Such customers shall ensure proper metering to record the generator’s energy supply.
Eligibility for Open Access:-
❖ Consumers intending to avail open access must have existing connectivity with the concerned transmission or distribution licensee. Applicant may submit the application for Long-Term connectivity with the application seeking Long-Term Open Access.
❖ Any customer wanting to avail Open Access must have ABT interface meters in line with CEA (Installation and Operation of Meters) Regulations 2006. Those customers who are connected with open access at 33KV or above voltage must have a 24x7 control room with dedicated communication system and real-time on line data with SLDC.
CER Opinion -
1. Clause No. 7: The draft clause states “…the Nodal Agency shall not compromise with the margin of different parameters of distribution systems…”. It is suggested that there should be a mechanism to transparently determine these margins, and such margins should be publicly displayed through the SLDC’s website in a conspicuous manner. This will ensure that there is no discrimination with a consumer during specific periods.
2. Clause No. 7.2 (a): The draft clause states “…Open access as will be determined by regulation 7.7 of these regulations”. It is observed that there is no presence of Clause No. 7.7 in the draft Regulations. This clause seems to refer to Clause No. 7.6, as such the required change may be made.
?>
POSOCO (Detailed Procedure for Estimation of the Requirement of SRAS & TRAS at Regional Level), 2022 [Draft]
Power Markets
send
Ancillary Services
07 July 2022
Keywords:
POSOCO (Detailed Procedure for Estimation of the Requirement of SRAS & TRAS at Regional Level), 2022POSOCO (Detailed Procedure for Estimation of the Requirement of SRAS & TRAS at Regional Level), 2022 [Draft]
Highlights -
POSOCO on 24th May 2022 notified the draft Detailed Procedure for Estimation of the Requirement of Secondary Reserve Ancillary Services (SRAS) & Tertiary Reserve Ancillary Services (TRAS) at Regional Level. The key highlights of the draft are mentioned below,
Methodology for assessment of the SRAS & TRAS reserves include:-
❖ 99 Percentile of the Area Control Error (ACE) of the respective control area
❖ Net demand forecast error
❖ Variability in Net demand forecast error
❖ Variability in Net demand
CER Opinion -
1. Evolution of Market for Ancillary Services: CERC’s Ancillary Services Regulations, 2021 laid down framework for rollout of ancillary services in the country . Evolution from charges for Unscheduled Interchange to market based Deviation Settlement Charges was based on the premise that there were shortages of power in general and the discoms avoided power procurement and pushed the deviations to the system.
2. Day Ahead Reserve Estimation (Clause No. 8.4.2): Draft procedure suggests that "For the day ahead reserve estimation, last seven days data shall be used". Given the demand profile and the relative contribution of variable renewable energy, reserve needs for a high demand (high VRE) day would be different from a low demand (low VRE) day.
Draft GERC (Electricity Supply Code and Related Matters) (Third Amendment) Regulations, 2022
Consumer
send
Electricity Supply Code and Related Matters
06 April 2022
Keywords:
Electricity Supply Code and Related Matters
Highlights -
GERC on 19th February, 2022 notified the Draft GERC (Electricity Supply Code and Related Matters) (3rd Amd) Regulations, 2022. The key highlights of the draft are mentioned below:
❖ Licensee shall provide application tracking mechanism based on the unique registration number through website/ mobile app/ SMS/ any other electronic mode to monitor the application status.
❖ Licensee shall provide new avenues for application or modification of existing connection for online submission of application form. Application may be made in hard copy or through any electronic means. The licensee shall establish 24/7 toll free call center which may minimize the applicant’s interface with the Licensee.
CER Opinion -
1. Specification of Format in Application Form: Clause 2.3 (5) states “‘Application Form' refers to an application form complete in all respects in the appropriate format, as specified by the Commission, before any payment of applicable charges”.
2. Adjustment of Excess Amount: Clause No. 4.35 states "The excess amount, if any, shall be refunded to the Consumer by issuing account payee cheque or by electronic mode within 30 days of energisation of connection, failing which the Licensee shall be liable to pay interest at a rate equivalent to the Late Payment Surcharge as per the prevailing Tariff Order issued by the Commission. The Applicant/ Consumer shall be given the detailed bill showing the details of item-wise estimation and actual expenditure along with item-wise figures of variance to the extent possible. Further, if Applicant/ Consumer seeks further information, the Distribution Licensee shall furnish the same or state the reasons for not furnishing the same within 10 days of receipt of such request."
Draft APERC Renewable Power Purchase Obligation (Compliance by purchase of Renewable Energy/Renewable Energy Certificates) Regulations, 2022
Renewable
send
Renewable Purchase Obligation
01 April 2022
Keywords:
Renewable Purchase Obligation, Renewable Energy Certificates
Highlights -
PERC notified a Draft on “APERC Renewable Power Purchase Obligation (Compliance by purchase of Renewable Energy/Renewable Energy Certificates) Regulations, 2022” on 17th March, 2022. The key highlights of the draft are mentioned below:
Renewable power can be purchased by Distribution Licensees, Open Access Consumers, and captive generatingplants (with an installed capacity of one MW or more and connected to the grid) to meet their Renewable Power Purchase Obligation (RPPO) from:
❖ Roof-top Solar PV System, if such consumer is an obligated entity.
❖ Distribution Licensees can purchase renewable energy from other Distribution Licensees.
❖ Renewable Energy Certificates.
1. Renewable Purchase Obligation (Section 3): states “Provided that the obligation will be on total consumption of electricity by a Distribution Licensee/Open Access User/Captive User, excluding consumption met from Renewable Energy Sources and hydro sources of power other than mini hydel sources of power”.
Section 86(1)(e) mandates the SERCs to specify a percentage of total consumption in the area of the licensee to be sourced from renewable energy sources. Redefinition of ‘total consumption’ to exclude consumption from RES suggests a departure from the provision of the Act and should be restored.
Draft GERC (Security Deposit) (Third Amendment) Regulations, 2022
Consumer
send
Security Deposit
01 April 2022
Keywords:
Security Deposit, Average Billed Value
Highlights -
GERC on 19th February, 2022 notified the Draft GERC (Security Deposit) (3rd Amd) Regulations, 2022. The key highlights of the draft are mentioned below:
Clause No. 4.11:
The licensee shall pay interest on Security Deposit of consumer other than Security Deposit received from Temporary Consumer for the electricity supplied, at the Bank Rate (as on 1st April of every year) notified by Reserve Bank of India or such higher rate as may be fixed by the Commission from time to time. The interest accrued to the credit of the consumer during the previous year shall be adjusted in electricity bills of May of every year for consumers covered under the monthly billing cycle and in electricity bill of May or June for those covered under bi-monthly billing cycles.
Clause No. 4.14:
The Licensee, on termination of the agreement by either party shall refund Security Deposit after adjustment of dues, if any within 7 days.
CER Opinion -
1. Security Deposit based on Average Billed Amount: Wherever there is a reference to Security deposit, the Regulations only refer the average consumption of number of units. Given the two-part/ multi-part tariff structure, the security deposit should cover energy as well as fixed charges
Draft GERC (Consumer Grievances Redressal Forum and Ombudsman) (First Amendment) Regulations, 2022
Consumer
send
Consumer Grievances Redressal Forum and Ombudsman
01 April 2022
Keywords:
Consumer Grievances Redressal Forum and Ombudsman, Establishment of Additional Forums
Highlights -GERC
on 19th February, 2022 notified the Draft GERC (Consumer Grievances
Redressal Forum and Ombudsman) (1st Amd) Regulations, 2022. The key
highlights of the draft are mentioned below,Discom shall establish the following Consumer Grievances Redressal Forums:-A Complainant can approach the Forum in the following events:i. If the Licensee fails to register a Complaint
ii. If the Licensee fails to resolve a Complaint in accordance with the Standards of Performance specified by the Commissioniii. The
consumer aggrieved by the decision of Circle/ Zonal level Forum will
have the option to approach the Company level forum before making an
appeal to the OmbudsmanCER Opinion -1. Enhancement
of the Consumer Grievances Redressal Forum and Ombudsman: The draft
GERC regulation aims to broadly align the prevailing framework in light
of the MoP rules in this context. This would enhance the options for the
consumers to get redressal to the consumer’s concerns. However, this
may also lead to greater burden on the higher levels of redressal. This
can be addressed by enhancing capacity of the lower- as well as
higher-level institutional mechanism, and also by including certain
provisions that may include certain criteria, which would allow a choice
to consumers for escalation of the unaddressed concerns to the highest
level i.e. Ombudsman level.
Draft GERC (Licensee’s Power to Recover Expenditure incurred in providing Supply and other Miscellaneous Charges) (Third Amendment) Regulations, 2022
Consumer
send
Licensee’s Power to Recover Expenditure incurred in providing Supply and other Miscellaneous Charges
01 April 2022
Keywords:
Licensee’s Power to Recover Expenditure incurred in providing Supply and other Miscellaneous Charges, Accounting and Adjustment, Electronic Transfer Options
Highlights -
GERC on 19th February, 2022 notified the Draft GERC (Licensees' Power to Recover Expenditure incurred in providing Supply and other Miscellaneous Charges) (3rd Amd) Regulations, 2022. The key highlights of the draft are mentioned below:
Clause No. 7 (vi) (Maner of Accounting and Adjustment):
The excess amount, if any, shall be refunded to the Consumer by issuing account payee cheque or by electronic mode within 30 days of energisation of connection, failing which the Licensee shall be liable to pay interest at a rate equivalent to the Late Payment Surcharge as per the prevailing Tariff Order issued by the Commission.
The Applicant/ Consumer shall be given the detailed bill showing the details of item-wise estimation and actual expenditure along with item-wise figures of variance to the extent possible. Further, if Applicant/ Consumer seeks further information, the Distribution Licensee shall furnish the same or state the reasons for not furnishing the same within 10 days of receipt of such request.
Clause No. 7 (vii):
Any expenditure incurred in excess of the amount deposited by the Applicant/ Consumer shall be paid by the Applicant/ Consumer within thirty days of demand, failing which such amount shall be debited to the next electricity bill of the consumer.
CER Opinion -
Adjustment of Excess Amount: Clause No. 7 (vi) states "The excess amount, if any, shall be refunded to the Consumer by issuing account payee cheque or by electronic mode within 30 days of energisation of connection, failing which the Licensee shall be liable to pay interest at a rate equivalent to the Late Payment Surcharge as per the prevailing Tariff Order issued by the Commission. The Applicant/ Consumer shall be given the detailed bill showing the details of item-wise estimation and actual expenditure along with item-wise figures of variance to the extent possible. Further, if Applicant/ Consumer seeks further information, the Distribution Licensee shall furnish the same or state the reasons for not furnishing the same within 10 days of receipt of such request."
Draft Guidelines for UERC (Deviation Settlement Mechanism and Related Matters) (First Amendment) Regulations, 2022
Transmission
send
Deviation Settlement Mechanism
23 March 2022
Keywords:
Deviation Settlement Mechanism (DSM), Area Clearing Price (ACP)
Highlights -
UERC notified a draft on “Deviation Settlement Mechanism and Related Matters (First Amendment) Regulations, 2022” on March, 2022. The key highlights of this draft Regulation are given below:
New Definition have been added:
1. Area Clearing Price (ACP) means the price of a time block electricity contract established on the Power Exchanges after considering all valid purchase and sale bids in particular area(s) after-market splitting, i.e., dividing the market across constrained transmission corridor(s).
2. Daily Base DSM Charge means the sum of charges for deviations for all time blocks in a day payable or receivable as the case may be, excluding the additional charges under Regulation 8.”
3. Day Ahead Market (DAM) means a market where physical delivery of electricity occur on the next day (T+1) of the date of transaction (T) and is governed by the Central Electricity Regulatory Commission (Power Market) Regulation, 2010 (as amended from time to time), the Rules and Bye-Laws of the Power Exchanges as approved by the Central Commission.”
CER Opinion -
The broader alignment of the UERC DSM regulations to those applicable at the inter-state level (i.e. by CERC) is necessary to ensure that there is overall harmony in treatment of deviations. However, two important points that would justify departure of intra-state DSM regulations to those applicable for the inter-state level. These are:
1. Applicability of DSM regulations in line with the impact of variable RE to the state’s power system applicability of DSM regulations in line with the impact of variable RE to the state’s power system.
2. The adoption of ‘local price’ signal rather than a national average area clearing price (ACP).
?>
CERC (Connectivity and General Network Access to the inter-State Transmission System) Regulations, 2021
Regulations
send
Tariff - Generation, Distribution, Transmission
23 March 2022
Keywords:
Connectivity, General Network Access (GNA), Temporary GNA (T-GNA)
Highlights -
CERC notified a draft on “Connectivity and General Network Access to the inter-State Transmission System Regulations, 2021” on 16th December, 2021. The key highlights of this draft Regulation are given below:
Objective: These Regulations aims to facilitate non-discriminatory open access to licensees or generating companies or consumers for use of inter-State transmission system through General Network Access and to consolidate the regulations on the subject.
Connectivity: Eligibility for Connectivity to ISTS
Following entities are eligible to apply for grant of Connectivity or for enhancement of the quantum of Connectivity:
(a) Generating station(s), including REGS(s), with or without ESS, Standalone ESS with an individual/aggregate installed capacity of 50 MW and above through a Lead Generator or a Lead ESS;
(b) Captive generating plant with capacity for injection to ISTS of 50 MW and above;
(c) Renewable Power Park Developer;
(d) REGS or standalone ESS with an installed capacity of 5 MW and above applying for grant of Connectivity to ISTS through the electrical system of a generating station already having Connectivity to ISTS.
CER Opinion -
Relinquishment of GNA (Regulation No. 25.1 (a)): The draft Regulation states “For an entity covered under Regulation (i) of Regulation 17.1 of these Regulations, STU may relinquish GNA on behalf of identified intra-State entity. The relinquishment charges shall be equal to 60 times the transmission charges paid by such intra-State entity for the last billing month under the Sharing Regulations, corresponding to the relinquished quantum.” Although this Regulation aids in the recovery of transmission charges, it makes the relinquishment charges equal to five (5) years of the transmission charges paid by the intra-State entity which is unreasonably high, since in case the entity goes bankrupt, they will not be able to pay the charges as specified in this Regulation.
?>
CERC: Draft Guidelines for Registration and Filing Application for Establishing and Operating Over the Counter (OTC) Platform
Guidelines
send
Over The Counter (OTC) Platform
16 March 2022
Keywords:
Over The Counter (OTC) Platform, Power Market Regulations (PMR)
Highlights -CERC
notified the Draft Guidelines for Registration and Filing Application
for Establishing and Operating Over the Counter (OTC) Platform on 26th
January, 2022. The key highlights of the draft are mentioned below,❖ Registration for operation of OTC Platform: Entities shall not operate OTC Platforms unless registration has been granted under the Power Market Regulations (PMR), 2021.❖ Grant of Registration: The
non-transferrable registration shall be in force for a period of five
years from the date of grant unless it is revoked or cancelled earlier.
Commission may renew the registration for five years at a time, after
making necessary inquiries.❖ Annual Registration Charge: Annual registration charge shall be payable by 30th of April every year as per the Fee Regulations.CER Opinion -❖ Public Information Disclosure by OTC Platform: Non-availability
of information makes it challenging to develop analytical tools that
can help in optimisation of available resources (the key objective of
NEP u/s 3 of the Act). The OTC Platform should share the detailed data
in public domain so as to enable efficient decision-making by the
stakeholders.In the context of capital
market, SEBI mandates reporting of OTC transactions at reporting
platforms of the stock exchanges. These guidelines must also mandate
availability of detailed information on contracts matched, including
contracts not matched but were available for trade. These should be
reported by all OTC platforms at the registered power exchanges.
?>
Ministry of Power Amendments to Guidelines for short-term Procurement of Power (i.e. for a period of more than one day to one year) by Distribution Licensees through Tariff based bidding process [Draft]
Guidelines
send
Short-term power procurement
13 January 2022
Keywords:
Short-term power procurement, Sale of Power without consent of Procurer
Highlights -
MoP has issued the Amendments to Guidelines for short-term Procurement of Power (i.e. for a period of more than one day to one year) by Distribution Licensees through Tariff based bidding process on 22nd December, 2021. The key highlights of the draft are as below:-
The following sub-clauses have been added in the existing Guidelines under Clause No. 6.4 (iv) g;
❖ In case the Seller fails to offer the contracted power as per the Agreement to the Procurer and sells this power without Procurer’s consent to any other party, the Procurer shall be entitled to claim damages from the seller for an amount equal to the higher of:-
a. Twice as per the PPA
b. The entire sale revenue accrued from Third Parties on account of sale of the contracted power.
There will not be any fixed charges liability to the procurers, for the power which was not supplied.
❖ On a complaint to this effect by the Procurer to the concerned load dispatch center, the Seller shall be debarred from participating in power exchanges and scheduling of this power in any short/ medium/ long-term contracts from that generating station for a period of 3 months from the establishment of default, in the complaint. The period of debarment shall increase to 6 months for send default and shall be 1 year for each successive default.
CER Opinion -
1. Name of the document: These Guidelines named as “Draft Amendments to Guidelines for short-term Procurement of Power (i.e. for a period of more than one day to one year) by Distribution Licensees through Tariff based bidding process”, may be renamed as “…for a period of more than one day, and up to one year…” in order to match the name of the term of agreement.
2. Clause No. 6.4 (iv) (a): The guidelines now also include a penal structure for ‘deviation’ from contracted capacity that has been granted open access (beyond 15%). It should be clarified if the Contract Performance Guarantee (CPG) would be applicable over and above the penalty for ‘deviation’ provided for in clause 6.4 (iv) (e) with respect to the seller.
3. Contract Performance Guarantee (CPG): The Contract Performance Guarantee (CPG) of Rs. 2 lac per MW per month is an insignificantly amount as compared to the value the seller can derive from non-performance. For e.g. In case the unit price of electricity is assumed to be Rs. 4.00 per kWh, the total amount at stake for, say 1 MW of supply during peak hours (say a 4-hour duration) for 20 working days would be itself be Rs. 80,000.00. The CPB seems insignificant and hence highlights the need for the penalty structure to address incentive to divert power when market prices are high for certain duration during the contract.
?>
TNERC (Grid connectivity and Intra-State Open Access) (Amendment) Regulations, 2014 [Draft]
Distribution
send
Intra-State Open-Access
04 January 2022
Keywords:
Grid connectivity, Intra-State Open-Access, Priority for adjustment of energy
Highlights - TNERC
notified a draft amendment to the Grid connectivity and Intra-State
Open Access Regulations on 2nd December, 2021. The key points of this
regulation are provided below:The following Regulation 19 (2) has been inserted in the prevailing Regulation.Priority
for adjustment of energy drawn by open access consumers are summarized
below. This shall be implemented for each slot/time block (adjustment in
time bock to be relevant for short-term inter-state open access
including Power Exchange (PX) transactions), upon adjustment of
applicable losses.CER Opinion -1. Settling Multiple Contracts through a Single Meter:
The evolving nature of the power sector across states is witnesses sing
participation of entities in multiple contracts for the same time
block. In the context of both for the buyers as well as sellers, energy
accounting and settlement thereof have significant commercial
implications including those on account of the applicable deviation
settlement mechanism. In case of a variety of contracts to be ‘settled’
through the same metering point, it becomes imperative to have a
mechanism to apportion the metered energy towards various contracts.
2. Regulation No 19 (2):
Definition of “predominant” needs to be included in these Regulations,
or may be referred to in case a definition already exists.
3. Regulation No 19 (2): To
bring about clarity differentiating the applicability of the
Regulations for the captive consumers and others, the following phrase
is suggested to be inserted in the draft amendment, “These apportionment
Regulations are differentiated across entities, seeking open access,
based on them being a captive entity or not”.
4. Regulation No 19 (2) (A): The
category mentioned under Non-captive Thermal as, “Short-term
inter-state open access including power exchange transactions”, is
suggested to be separated to “collective transactions through power
exchange” and “short-term inter-state open access”. This will set a
clear priority between the two types of transactions.
?>
HPERC (Consumer Grievances Redressal Forum and Ombudsman) (Second Amendment) Regulations, 2021
Regulations
send
Consumer Grievances Redressal Forum & Ombudsman
27 December 2021
Keywords:
Prosumer, Additional Forum, Ex-Officio, Compliance, Consumer, IEDRM
Highlights -
HPERC notified draft amendment to the (Consumer Grievances Redressal Forum and Ombudsman) Regulations, 2021 on 24th Nov, 2021. The key highlights of the same are mentioned below:
1. Prosumer (Regulation 3 ((1) (ia))): Definition of ‘Prosumer’ to be added in the prevailing Regulation.
2. Additional Forum (Regulation 5 (2), (3)): Provision for establishment of at least one additional forum for each of distribution licensee’ operation circles, by the distribution licensee is to be added. The jurisdiction thereof in relation to the consumers under the respective operation circles, will be as follows:
a) For the consumers covered under single-part retail tariff - all types of complaints, whether monetary or non-monetary.
b) For the consumers covered under two-part retail tariff - all types of complaints whether monetary or non-monetary, where the following conditions are met:
❖ the amount of dispute / claim ≤ ₹ 2 Lakh
❖ the standard supply voltage ≤ 22kV
CER Opinion -
1.Definition of Prosumer [Draft Regulation 3 (1) (ia)]: The draft Regulation provides the definition of ‘Prosumer’. However, the term ‘Prosumer’ is not used further in this Regulation. So, it is suggested to append the proposed definition of Prosumer by including a statement just after its definition such that wherever there is a reference to consumer in this Regulation, it should also deem to include prosumers.
The reference to ‘Prosumer’ may increasingly appear in a variety of other Regulations and orders (for example in the case of tariffs, open access, SOPs etc.). Hence, it is suggested that this definition for Prosumer should be a part of the State’s Grid Code. The prosumer may also refer to mobile storage such as electric vehicles (EVs) especially when EVs inject power in vehicle to grid mode (V2G).
?>
APERC (Terms and Conditions for short-term procurement/sale of power) Regulation, 2021
Regulations
send
Short - Term Power Procurement
24 December 2021
Keywords:
Short-term, Unit commitment, Demand estimation, Day-ahead, Real-time, DEEP portal, TAM
Highlights -
APERC issued draft on 23rd Nov, 2021 regarding (Terms and Conditions for short-term procurement/sale of power) Regulation, 2021. The key attributes of this Regulation are given below:
Demand Estimation:
SLDC to carry out monthly demand estimation for each block of 15 minutes duration, based on (historical data, demand forecasts by the licensees and AI tools - deep/machine learning etc). In addition to these, weekly & day-ahead demand estimations should also be considered by SLDC.
This Regulation has separate provisions for monthly, weekly and day-ahead power procurement plan as mentioned below:
1. Monthly Power Procurement Plan:
❖ Each licensee to provide its demand estimation for each block of 15 minutes duration to SLDC by the end of 10th of every month.
❖ After reviewing its own demand estimation for the State, estimate provided by all the licensees, availability of power from all the approved sources, SLDC to communicate with the licensees regarding the power required to be procured by each licensee on a short-term basis for the following month within three working days from the date of receipt of demand estimations from the licensees.
CER Opinion -
1. Short-term Demand Estimation and Procurement Plan (Regulation 3, 4, 5, 6): The draft Regulation provide provisions for the demand estimation and power procurement plan for short-term at three levels i.e. monthly, weekly and daily. It is suggested that the demand estimation as well as the power procurement plan proposed in this Regulation should be carried out at four levels instead of three levels namely:
❖ Monthly demand estimation and power procurement plan
❖ Weekly demand estimation and power procurement plan
❖ Day ahead estimation and power procurement plan
❖ Demand estimation and power procurement plan for Real-time market (RTM), at least 8 to 10 blocks ahead before the RTM (to make final preparation for buy and sell in the RTM)
?>
OERC (Procurement of Energy from Renewable Sources and its Compliance) Regulations, 2021 [Draft]
Renewable
send
Renewable Purchase Obligation
17 December 2021
Keywords:
Renewable Purchase Obligation, Solar RPO, Non-Solar RPO, HPO, LHP
Highlights -
Regulation (No. 4.7): In case of Hybrid Sources, the power procured from the hybrid project may be used for fulfillment of solar RPO and non-solar RPO in the proportion of rated capacity of solar and wind power in the hybrid plant respectively.
Further, renewable power stored in any form of storage (Battery, Mechanical or Gravitational) and subsequently discharged to the grid from such storage shall be treated as renewable energy.
CER Opinion -
1. Accounting of Renewable Energy from Storages (Clause 4.7): Clarification on accounting of renewable energy from storages as stated in Clause 4.7 “Further, renewable power stored in any form of storage (Battery, Mechanical or Gravitational) and subsequently discharged to the grid from such storage shall be treated as renewable energy” may be required.
It is suggested that in case of storages connected to solar sources, the discharge of energy from such storages should be accounted as solar energy and energy procured from such storages may be used for fulfillment of solar RPO.
Similarly in case of storages connected to non-solar sources, the discharge of energy from such storages should be accounted as non-solar energy and energy procured from such storages may be used for fulfillment of non-solar RPO.
For storages connected to hybrid sources, the discharge of energy from such storages should be accounted towards solar and non-solar energy in the proportion of generation of solar and wind power respectively in the previous month from the hybrid plant, and energy procured from such storages may be used for fulfillment of solar RPO and non-solar RPO in the same proportion.
?>
CEA Draft (Deletion and modifications of Formats for furnishing of the Statistics, Returns or Information, its time schedule and periodicity), 2021
Regulations
send
Data Format
15 December 2021
Keywords:
Statistics, Returns and Information, Formats, Deletion, Modification, Metering status, Fuel-Oil Data etc.
Highlights -
The Central Electricity Authority notified the (Furnishing of Statistics, Returns and Information) Regulations, 2007 on 19th April, 2007 which consisted of 65 formats for furnishing of the statistics, returns or information by the licensees, generating companies, person(s) generating electricity for its own use and person(s) engaged in generation, transmission, distribution, trading and utilization of electricity to the CEA.
CEA by utilizing the power granted under sub-regulation (2) of regulation 9 of the said regulations, decides for the deletion of thirteen formats among them (namely Format no.30, Format no.39, Format no.40, Format no.45, Format no.46, Format no.47, Format no.50, Format no.52, Format no.55, Format no.57, Format no.61, Format no.62 and Format no.63) and the modification of five formats (namely Format no.21, Format no.49, Format no.51, Format no.53 and Format no.54).
CER Opinion -
Need for Data - Tool for effective policy and regulatory design:
It is important to highlight that availability of information is very crucial to design effective policy and regulatory framework and also enable various stakeholders including researchers to evaluate the impact of various measures and suggest improvement thereof. It is suggested to retain most of the formats proposed to be deleted. Given change in the sector, additional formats are identified for inclusion as well.
Absence of data would create significant information asymmetry. While the cost of providing such data is not significant to the sector participants, its value to the sector is extremely high. CEA should reconsider the proposal to drop various data formats and take necessary steps to make data being collected through various formats to be made available through its website.
Draft Central Electricity Regulatory Commission (Deviation Settlement Mechanism and Related Matters)
Transmission
send
Deviation Settlement Mechanism
25 October 2021
Keywords:
DSM, General Seller, WS Seller, Ancillary Service Pool Account, Normal Rate of Charges
Highlights:
CERC
notified the draft for Deviation Settlement Mechanism (DSM) on 7th
September, 2021. The Key highlights of this draft Regulation are given
below:
Objective: These Regulations aims to ensure grid stability and security
Scope:
Its applicability extends to all grid connected regional & other
entities engaged in inter-state purchase and sale of electricity.
New definitions added in the draft Regulation:
❖ General Seller: Seller who provide non-solar and non-wind resource based power
❖ WS Seller: Seller who provide solar and wind resource based power
❖ Run-of-River (RoR) Generating Station: Hydro generating station which does not have upstream pondage
EAL Opinion:
❖ Standardised
Definitions: For ease of understanding and implementation, choice of
new terms to define existing ones should be avoided. New definitions
should be logical extension of the ones in practice as far as possible.
Few cases are identified herein.
The draft Regulation defines General Seller as “a seller in case of a power project based on other than wind or solar resources” and WS Seller as “a seller in case of a power project based on wind or solar energy”. It is suggested to modify the above definitions of General Seller and WS Seller. The General Seller may be renamed as ‘Despatchable seller’ in case of a power project based on the conventional power like thermal power and a ‘constrained Despatchable seller’ like Run-of-River (RoR) generating stations. The WS Seller may be renamed as ‘Non-Despatchable seller’ in case of a power project based on wind or solar energy.
❖ Definition of RE Rich State: A RE rich state is defined as a state with 1000 MW or above installed capacity of variable renewable energy (VRE) (i.e. Solar and Wind) within the control area of the state. The variability and uncertainty associated with the schedule of a state depends on the ‘contracts that it handles for consumption within the state. The RE rich state should thus be defined with reference to the contracted capacity of VRE by all entities connected to the ‘control area of the state’ (i.e. including long-term open access for VRE by consumers).
?>
Ministry of Power Electricity (Rights of Consumers) Amendment Rules, 2021
Electricity
send
Rules
22 October 2021
Keywords:
Consumer Rights, 24x7 Uninterrupted Power Supply, Removal of DG Sets, Pollution Control, Supply Reliability, SAIFI and SAIDI
Highlights -Ministry
of Power has issued the Draft Electricity (Rights of Consumers)
Amendment Rules, 2021 on 30th September, 2021. The key highlights of the
draft are given below,New Clauses under Rule No.10 (Reliability of Supply) is inserted: ❖ DISCOMs
shall ensure 24x7 uninterrupted power supply to control pollution
levels by avoiding usage of DG sets particularly in metros and large
cities. SERC shall provide SAIFI and SAIDI trajectories for the cities. SERC
may consider Reliability Charge for DISCOMs in case infrastructure
upgradation is required for ensuring power supply reliability.SERC shall make provisions for penalty in case standards are not met by DISCOMs.❖
Consumers for whom DG sets are essential for back-up power, shall
endeavour to shift to clean sources i.e., RE with battery storage etc.,
within 5 years from date of publication of the amendment, or as per
timelines set by SERC for such replacement based on supply reliability
of the DISCOMs.CER Opinion -1.
The supply code and standards of performance have been specified by the
SERCs and these differ across states due to the existing state of the
distribution network, consumer mix, terrain, vintage of the distribution
system etc. whereas proposed amendment to the Rules in general seem to
apply to all states under all conditions. Rules should provide for
flexibility - for e.g. provision of 48 hour limit for temporary supply.
2.
Classification of Metros and Large Cities: In Rule (10(3)), “In view of
the increasing pollution level particularly in the metros and the large
cities …”, An existing definition for urban conglomerations (metro/city
etc) as applicable may be used for the purpose for implementation of
the provision regarding shift from DG backup.
?>
RERC (Renewable Energy Obligation) (Seventh Amendment) Regulations, 2021 [Draft]
Renewable
send
Renewable Purchase Obligation
24 September 2021
Keywords:
RPO, REC, HPO, Renewable Market Design
Highlights -
RERC has issued the Draft RERC (Renewable Energy Obligation) (Seventh Amendment) Regulations, 2021 on August 2021. Some of the key highlights of the draft amendments are:
• Hydro Power Obligation (HPO) is met with power from Large Hydro Power (LHP) projects including Pump Storage Projects with capacity greater than 25 MW, commissioned between 8th March 2019 and 31st March 2030, w.r.t 70% of total generated capacity for 12 years from the date of commissioning. (Regulation (3) (a))
• Free power from LHPs will be provided as per agreement with the State. Power for Local Area Development Fund (LADF) is not included in the 70% of total generated capacity limit. (Regulation (3) (a))
CER Opinion -
1. Technology Neutral RPO: The whole idea of differentiating Solar and Non solar RPO are economically unjustified, it leads to economically inefficient decisions for investment. The cost of procurement from solar power plants has been on a decline, and is now even less than other RES. It would be appropriate to dispense with technology-wise RPO differentiation as solar and non-solar RPO. This would reduce the overall cost of compliance for the obligated entities
2. Definition of RPO obligation: Section 86 (e) of Electricity Act 2003 states, “promote co-generation and generation of electricity from renewable sources of energy by providing suitable measures for connectivity with the grid and sale of electricity to any person, and also specify, for purchase of electricity from such sources, a percentage of total consumption of electricity in the area of a distribution licensee”. This section empowers the SERCs to specify purchase of electricity from renewable energy sources. It is noted that the RPO in the draft regulations, defines the same w.r.t the consumption of electricity excluding those from HPO, as such it does not seem to be in line with the above provisions of the Act.
Draft Electricity (Promoting Renewable Energy through Green Energy Open Access) Rules, 2021
Renewable
send
Green Energy Open Access
21 September 2021
Keywords:
RPO, REC, Green Hydrogen, Green Energy Open Access
Highlights -
Ministry
of Power issued the Draft Electricity (Promoting Renewable Energy
through Green Energy Open Access) Rules, 2021 on 16th August, 2021. Some
of the key points are:
❖ Applicability - This rule will be pertinent to green energy purchase and consumption including energy generated via Waste-to-Energy plant.
❖ Renewable Purchase Obligation (RPO) -
There will be uniform RPO for all obligated entities (i.e. the
distribution licensees, open access and captive power consumers).
Non-obligated entity may also select to purchase and consume Renewable
Energy as per their requirements.
❖ Purchase of Green Hydrogen -
The obligated entity including the Industries can also purchase Green
hydrogen (hydrogen produced using electricity from RE sources).
❖ Green Energy Open Access - To
provide green energy open access to consumers who wants to use it, the
Appropriate Commission shall prepare regulations in line with this Rule.
The consumers, except captive consumers, having contracted
demand/sanctioned load of 100 kW and above shall be eligible to take
power through green energy open access.
CER Opinion -
1. Renewable Purchase Obligation (RPO) (Rule 4): As
per the draft Rule (4.1), “There shall be uniform Renewable Purchase
Obligation, on all obligated entities that is – the distribution
licensees, open access consumers and captive power consumers”. However,
it needs to be clarified whether the uniformity of RPO on obligated
entities is across the country or across these three set of obligated
entities within a state.
2. Defining ‘Behind the meter’ Generation Sources (Rule 4):
Rule (4.2 (A)) provides the definition of ‘Behind the meter’ as “the
electricity generated for their own use and not for injection of such
power into the electricity grid”. Although, in the case of captive
(group) and specifically plant not located on the premises of the
consumer, such power generated for their own use would have to be
‘injected’ into the electricity grid for wheeling the same to the
premises of the consumers. Hence, the above definition need to be
modified appropriately.
?>
Chhattisgarh State Electricity Regulatory Commission (Terms and Conditions for determination of tariff according to Multi-Year Tariff principles and Methodology and Procedure for determination of Expected revenue from Tariff and Charges) Regulations, 2021 [Draft]
Regulations
send
Tariff - Generation, Distribution, Transmission
07 September 2021
Keywords:
Integrated Mines, Interest on Working Capital, O&M Expenses, Return on Equity, Efficiency Factor
Highlights -
Chhattisgarh State Electricity Regulatory Commission released draft CSERC (Terms and Conditions for determination of tariff according to Multi-Year Tariff principles and Methodology and Procedure for determination of Expected revenue from Tariff and Charges) Regulations, 2021 based on the objections/suggestions/comments received on the Draft MYT Regulations, 2020. The important highlights of this draft regulation are given below:
Financial Principles:
❖ Return on Equity (Regulation 23):
o 14% for Generation, Transmission & SLDC.
o 16% for Distribution
o Grossed up by MAT rate
o Rate of pre-tax RoE = Base Rate / (1- MAT Rate)
❖ Depreciation (Regulation 25):
o Value Base = Capital Cost of the asset
o Straight Line Method
o Depreciation on new assets will be charged on day-wise pro-rata basis during the first year of the COD of the asset.
CER Opinion-
We are pleased to note that several inputs given on the previous draft of the regulations have been incorporated in this revised draft. Some important ones are highlighted here along with additional ones for consideration.
❖ Return on Equity (Regulation 23.3):
As Capital Asset Pricing Model (CAPM), often used for calculating return on equity, provides an estimate of post-tax RoE that should not be grossed up by the rate of effective tax. Adoption of such approach across the sector is erroneous, and provides excess return. This places additional burden on tariff paid by the consumers.
A recent study at CER, IITK using CAPM and multi-factor models, using a comprehensive data for over 125 infrastructure companies between 1998-2018, estimates the cost of equity for conventional generation sector to range between 12.86-16.52%, on a post-tax basis, refer Figure 1: Cost of Equity – CAPM and Three-Factor Model.
?>
Review of the Benchmark Capital Cost for Solar PV, Solar Thermal and Grid Interactive Rooftop & Small Solar PV Plants to be applicable for FY 2021-22 and onwards till reviewed/revised by the UERC
Renewable
send
Benchmark Capital Cost
01 September 2021
Keywords:
Benchmark Capital Cost, Accelerated Depreciation Benefit
Highlights -
Uttarakhand Electricity Regulatory Commission (UERC) reviewed the "Benchmark Capital Cost for Solar PV, Solar Thermal and Grid Interactive Rooftop & Small Solar PV Plants to be applicable for FY 2021-22 and onwards till reviewed/revised by the UERC" on 30th July, 2021.
Some of the key points are given below:
❖ The normative capital cost for Solar PV, Solar Thermal and Grid Interactive Rooftop & Small Solar PV Plants is inclusive of all capital works including plant and machinery, civil works, erection and commissioning, financing and interest during construction etc., and evacuation infrastructure upto the interconnection point.
❖ The proposed generic tariffs for Solar PV, Solar Thermal and Grid connected Rooftop & Small Solar PV Plants shall be applicable on the projects commissioned on or after 01.04.2021 and shall continue to be applicable till further reviewed by the Commission. Also, the tariffs determined shall be the ceiling tariffs and procurement of power shall be done through competitive bidding route by distribution licensee.
CER Opinion -
❖ High Capital Cost for Improved Operational Parameters: The draft document identified upgradation of technology as one of the reasons for the revised capital cost. If so, the same should be reflected in efficient operational parameters to be considered for determination of tariff as well. The commission should thus consider uprating the efficiency and other parameters (example: CUF, degradation factor etc.) for different Solar PV applications.
❖ Competitive Bid-based Project’s Tariff: Levelised tariff for competitively bid projects show significant decline in the electricity procurement from Solar PV technology. A similar decline is generally not reflected in the benchmark capital cost. A comparative assessment of decline in bid based tariff and that of the benchmark capital cost should enable vetting of the benchmarked capital cost and other cost components.
?>
Tamil Nadu Electricity Supply Code on stipulating harmonic limits, Methodology of measurements, meter standards, penalties etc., to ensure quality of supply to consumers [Draft Amendment]
Electricity
send
Harmonics
02 August 2021
Keywords:
Harmonics, Current Harmonics, Total Harmonic Distortion, Total Demand Distortion, Harmonic Filters, Harmonic Measurement, Harmonic Limits
Highlights -
TNERC has issued a draft notification with amendments to electricity supply code on stipulating harmonic limits, methodology of measurements, meter standards, penalties etc., to ensure quality of supply to consumers on 29th June, 2021.
Some of the key points of the proposed amendments are given below:
❖ Sinusoidal nature of ac power is changed by non-linear loads, which result in harmonic current being introduced in power system that can cause ill effects, thus these harmonic current needs to be regulated.
❖ CEA (Amendment) Regulations 2019 in respect of Current Harmonics:-
• "the limits of injection of current harmonics at the point of common coupling by the user, method of harmonic measurement and other such matters, shall be in accordance with the IEEE Std. 519-2014, as amended, from time to time”.
❖ Current distortion/ harmonics are measured at point of common coupling (PCC) in:-
• Bulk consumers at 33KV and above
• Consumers, prosumers, charging stations below 33KV
CER Opinion -
1. Scope of Applicability of the Regulation (Regulation 1 (c)): Applicability of the draft regulation seems to be ambiguous as "Measurement of current distortion / harmonic currents shall be made at the point of common coupling (PCC) of the Installation of bulk consumers at 33kV and above and consumers, prosumers, charging stations below 33kV", also refers to consumers connected below 33kV. This may seem to suggest it’s applicability to all the consumers of DISCOMs. Also, the point of common coupling (PCC) needs to be defined in the draft regulation.
2. Computation of TDD (Regulation 1 (f)): It may be clarified in the draft regulation that which of the following value(s) should be considered while computing the TDD values at 99th Percentile or 95th percentile at the interval of 3 s/ 10 min:-
• Average Value
• Highest Value
• Value at the beginning/end of the observed time period
2. Computation of TDD (Regulation 1 (f)): It may be clarified in the draft regulation that which of the following value(s) should be considered while computing the TDD values at 99th Percentile or 95th percentile at the interval of 3 s/ 10 min:-
• Average Value
• Highest Value
• Value at the beginning/end of the observed time period
?>
Discussion Paper on Market Based Economic Dispatch (MBED)
RCP - PMEO 01 | Power Market Economics and Operation (2021)
send
Market Based Economic Dispatch (MBED)
30 July 2021
Keywords:
SCED, Merit-order Dispatch, VRE integration, DAM Redesign
Highlights -
Ministry of Power (MoP) issued a discussion paper on Market based Economic Dispatch (MBED) on 1st June, 2021. The discussion paper proposes the redesigning of Day-ahead market (DAM) with the following key objectives:
❖ Meeting the system load with least-cost and efficient generation plants
❖ Encouraging efficient generation capacity addition in the future through Uniform pricing framework
❖ Facilitating increase in VRE integration through larger balancing area and reserve sharing
EAL Opinion-
❖ MBED, if implemented only for the eligible NTPC generators (as proposed), the gains (in terms of operational cost) to may be of similar order as in the case of SCED. Without participation of intra-state generators, true gains of MBED would not be realised.
❖ In the proposed MBED framework, the loss of flexibility (associated with ‘right to recall’) to the distribution utilities is of value on account of the uncertainty associated with demand as well as RE generation forecast. Also, depending on the market conditions and the need to buy/sell, the DISCOMs would have to bear the additional burden due to rebalancing of their portfolio.
❖ MBED should be supplemented with a capacity market to ensure that adequate investment is undertaken to maintain resource adequacy.
❖ In the absence of any demand, commercial or payment risk, the suggested ceiling of 7p/kWh on the sale of URS power is significantly high.
❖ The ‘margin’ for sale of URS by generators (under MBED) cannot at all be compared with the ‘trading margin’ limit of 7 paise/kWh for the licensed traders, who are exposed to comparatively much higher risk.
❖ An interim analysis of the MBED considering the overall incident of all charges (including effect of transmission losses) should be undertaken to identify the scale of impact of clearing mechanism followed in MBED framework.
Draft CERC (Ancillary Services) Regulations, 2021
Electricity
send
Ancillary Services
27 July 2021
Keywords:
CERC, SRAS, TRAS, Demand response, Battery storage, RTM, DAM, Area Control Error, Ramping, Market based mechanism, Grid security
Highlights -
Central Electricity Regulatory Commission (CERC) prepared and notified on 29th May, 2021 the draft Ancillary Service Regulations, 2021. The aim of the regulations are as follows:
❖ To provide mechanisms for procuring, deploying, and paying for ancillary services, through administered and market-based mechanisms
❖ To maintain grid safety and security while ensuring smooth power system operation
EAL Opinion-
❖ Demand response aggregator should be introduced as one of the eligible participants in the AS.
❖ URS should be computed as the difference between the declared capacity of the generating station and its total schedule by the respective beneficiaries. This should, thus, be calculated ‘prior to scheduling and despatch of the respective ancillary services’.
❖ To ensure effective participation of demand response, there is need to design and implement a demand response program with participation of aggregators, with adequate safeguards to ensure that the underlying rules encourage genuine demand response participation.
❖ The scale of proposed incentive in draft regulation seems to be disproportionately high and will impose undue burden, particularly on distribution utilities.
❖ From point of view of total cost burden on ultimate consumers, incentive scheme should also be supplemented with penalty mechanism wherein performance below 45-70 % should be subjected to a penalty.
❖ It is suggested that a phased implementation strategy be adopted wherein RTM-TRAS is implemented along with SRAS in the first phase.
❖ It is suggested that pay-as-bid framework would be economically more efficient and fair mechanism for price discovery of TRAS-Up service.
❖ The timeline proposed in the draft regulation needs to be fine-tuned to ensure that it is consistent with the deployment process mentioned elsewhere in the regulation.
❖ A modification is suggested to include ramping rate (in %) rather than in absolute term (MW/min) to provide correct incentive for the same.
?>
Discussion paper on redesigning the Renewable Energy Certificate (REC) Mechanism
Renewable
send
REC Framework
01 July 2021
Keywords:
REC Mechanism, Multiplier, Sunset clause, Guarantee of Origin, Floor and Forbearance price
Highlights-Ministry of Power issued a discussion paper on redesigning the Renewable Energy Certificate (REC) Mechanism on 07th June, 2021.
Key objectives:
❖ To increase the share of non-fossil fuel based electricity energy to meet the international target of 175 GW by 2022.❖
To maintain the future energy security by promoting the new RE
technologies such as Offshore wind, Hydrogen, Pumped storage hydro plant
etc.Some of the proposals for the REC Mechanism are:❖ The REC validity period may be removed i.e. perpetual validity till it is sold
❖
The floor and forbearance prices are not required to be specified as
RECs holders would have the complete freedom to decide the timings to
sell
❖ CERC may intervene in cases of malpractices observed in the REC trading
❖
The concept of multiplier, negative list and sunset clause can be
introduced for various technologies depending upon their maturity levelCER Opinion-1. Floor and Forbearance prices (Section 5.1):
In its earlier comments to CERC, relevance (or rather irrelevance) of
the floor and the forbearance price was highlighted. Given an efficient
market, artificial and rather arbitrary fixation of floor price
introduces avoidable (Singh (2010) highlighted the anomaly in fixation
of floor price and how it would give windfall gain to existing payers
under the regulated tariff contacts, i.e. Feed in Tariff (FiT)
contracts, to exit and sign another one under the REC framework.
With
the RECs having a perpetual validity, the relevance of floor price is
further diminished. Furthermore, compliance penalty for RPO shortfall
(as applicable in respective states, if any) indirectly translates into a
forbearance price (See Singh (2010) for further discussion on the
same).
2. REC as Unified framework for “Guarantee of Origin”:
The REC framework should be expanded as a unified framework for
“Guarantee of Origin”. Non-REC projects do not have a guarantee of
origin certification at present. This currently serves the purpose as
the system operator and the distribution utility can identify the energy
injected through the metering infrastructure. However, there is such
certification to allow this ‘green energy’ to be identified and traded
further in the market. By issuing RECs to all RE projects (including
those under FiT framework, captive as well as merchant RE capacity) in
the country would have following advantages
❖ Ensure full visibility of RE energy footprint across the country.
❖ Unified ‘Guarantee of Origin’ certification across all RE technologies
❖ Enable the obligated entities (Discoms+) to offload, in the form of RECs, excess RE procurement beyond their RPO, particularly that on account of contracts signed under the FiT framework.
❖ Develop a retail market for ‘green electricity’, wherein distribution utilities can sell a ‘green electricity product’ to willing consumers.
?>
HPERC (Security Deposit) (Fourth Amendment) Regulations, 2021
Electricity
send
Security deposit
11 June 2021
Keywords:
Security deposit
Highlights -
HPERC issued draft fourth amendment of ‘HPERC (Security Deposit) Regulations, 2021’ on 22nd April 2021.
Some of the amended clauses are given below:
❖ Security deposit amount - The amount equivalent to the average monthly bill (net of arrears and subsidy, if any) for (n+1) months based on the bills raised in relation to the period of 12 billing months immediately preceding the date of such demand.
❖ Base for calculating security deposit rates - Average monthly bill of previous year
❖ Increment in initial security deposit rates - 5% (every 3 years)
CER Opinion -
1. Security deposit for the supply of electricity (Regulation 4.3): In relation to the security deposit amount & base for calculating security deposit rates mentioned in the draft Regulation, following measures are suggested:
❖ Apart from average bill, calculation of security deposit should also consider any arrears to reflect higher commercial risk associated with such customers. A good credit history over the next 6 months should lead to recalculation of the security deposit and the excess amount be adjusted against bill of the preceding billing cycle. Inclusion of arrears in the calculation of average billing amount should disincentivize delay in bill payment.
❖ The average billing amount, apart from the adjustment for arrears suggested above, is the amount due to the utility on account of the bills raised by it, and hence should not require any adjustment on account of subsidy either accounted for in the ARR or directly paid to the consumers under a direct benefit scheme.
?>
Proposed Amendments in JERC for the State of Goa & UTs (Electricity Supply Code) Regulations, 2018
Electricity
send
Supply Code
08 June 2021
Keywords:
Standby meter, Load factor, Power factor
Highlights -
JERC (Goa & UTs) proposed amendments in ‘JERC (Electricity Supply Code) Regulations, 2018’ on 12th May 2021. These are called JERC (Electricity Supply Code) (Second Amendment) Regulations, 2021.
Some of the amended clauses are given below:
❖ "Disconnection" means the physical separation or remote disconnection of user or consumer from the Licensee’s system.
❖ "Load Factor" is the ratio of the total number of units consumed during a given period to the total number of units which would have been consumed had the load been maintained throughout the same period.
❖ "Occupier" the owner, tenant or person in occupation of the premises where energy is used or proposed to be used.
❖ "Standby Meter" means a meter connected to CT and VT, other than those used for main meter and check meter and shall be used for accounting and billing of electricity in case of failure of main meter for all new connections at voltage level of 11kV and above to be issued after notification of these Regulations.
CER Opinion -
1. Load Factor: The definition of Load factor may be modified as: “Load Factor” is the ratio of the total number of units consumed during a given period to the total number of units that would have been consumed had the load been maintained at the sanctioned load or contracted maximum demand level throughout the same period. (Clause 2.3 (47))
2. Occupier Vs User of Electricity: The legal repercussions of use of the term “occupier” should be vetted. This may be of concern in case a property is under dispute. The notion of ‘occupier’ should not have a reflection on property right. The term may be replaced with “user of electricity”. (Clause 2.3 (52))
Proposed OERC (Procurement of Energy from Renewable Sources and its Compliance) Regulations, 2021
Renewable
send
Renewable Purchase Obligation
01 June 2021
Keywords:
Renewable Purchase Obligation, Solar RPO, Non-Solar RPO, HPO, LHP
Highlights -
OERC proposed draft regulation for ‘Procurement of Energy from Renewable Sources and its Compliance’ on 27th April, 2021.
Key points of this regulation are given below:
❖ Co-firing of biomass in coal based thermal power station – Non-Solar RPO
❖ Roof-top Solar PV system under net metering agreements – Solar RPO
❖ Large hydropower projects (>25 MW and that started commercial operation after March 8, 2019) including pumped storage projects - HPO
❖ If generation from qualified LHPs is inadequate to meet HPO, small hydro commissioned on or after 8.3.2019 will be eligible for HPO fulfilment. If small hydro generation exceeds the optimal HPO trajectory, the surplus would be classified as "Other Non-Solar RPO".
CER Opinion -
1. Technology Neutral RPO: Cost of procurement from solar power plants has been on a decline, and is now even less than other RES. It would be appropriate to dispense with technology-wise RPO differentiation as solar and non-solar RPO. This would reduce the overall cost of compliance for the obligated entities.
?>
National Electricity Policy, 2021 (Draft)
Electricity
send
Policy
21 May 2021
Keywords:
National Electricity Policy, Generation, Transmission, Distribution
Highlights:
The Ministry of Power prepared and notified on 27th April, 2021 the draft National Electricity Policy, 2021.
Aims of the policy are:
1. Promote clean and sustainable generation of electricity
2. Development of adequate and efficient transmission system
3. Revitalization of Discoms
4. Development of Efficient Markets for electricity
5. Supply of reliable and quality power of specified standards in an efficient manner
6. Move towards light touch regulation
CER Opinion:
1. “Section 3. (National Electricity Policy and Plan): The Central Government shall, from time to time, prepare the National Electricity Policy and tariff policy, in consultation with the State Governments and the Authority for development of the power system based on optimal utilisation of resources such as coal, natural gas, nuclear substances or materials, hydro and renewable sources of energy.”
2. Financial Turnaround of DISCOMs and DISCOM Level Governance Reform: A ‘single-design-fit-all’ approach needs to be replaced with a menu of alternate set of reform linked programs that allow the target entities to pick the one most suitable (and hence automatically revealing their preferences, thus providing further inputs for policy design).
3. Clean Energy Transition: Increasing share of RE, adoption of cleaner fuels, improvement in the efficiency of existing generation assets, and the retirement of old, inefficient and polluting plants beyond their existing PPA should be an integrate part of the clean energy transition to be included in NEP. (Clause 5.6)
?>
Electricity (Rights of Consumers) (Amendment) Rules, 2021.
Electricity
send
Rules
07 May 2021
Keywords:
Gross-metering, Net-metering, Net-billing or Net feed-in, RPO
Highlights:
The Ministry of Power prepared and notified on 9th April, 2021 a draft amendment to the Electricity (Rights of Consumers) Rules, 2021. These rules may be called the Electricity (Rights of Consumers) (Amendment) Rules, 2021.
Key points of the amendment rules are:
- Definitions of “Gross-metering”, “Net-metering” and “Net-billing or net feed-in” may be added in sub-rule to the Rule 2 of the Electricity (Rights of Consumers) Rules, 2020.
- The Commission may allow net metering to the prosumer for loads up to 500 kW or up to the sanctioned load, whichever is lower and net-billing or net feed-in for other loads.
- Prosumers are incentivized to install energy storage so that stored solar energy can be utilized by them or fed into the grid during peak hours
CER Opinion:
- In the definition of “Gross-metering” the phrase ‘appropriate metering arrangements’ needs to be clarified. Gross metering requires more than one metering arrangement and the above phrase conflicts with the definition of prosumer ‘using same point of supply’.
- Rule (3) of the Amendment rules may be reconstructed as “….. for loads up to 500 kW or up to the sanctioned load or contract demand (as the case may be), whichever is lower…..”
- Commissions should be replaced with ‘Appropriate Commission’.
?>
Implementation of Budget Initiatives for the Power and Renewable Energy Sector
Power and RE Sector
send
Union Budget - 2021
27 April 2021
Keywords:
Union Budget, Hydrogen Energy, Non-conventional Energy, SECI, IREDA, PLI, DISCOMs
Highlights -
Finance Ministry has recently discussed about a detail roadmap for effective implementation of the provisions related to the Power and Renewable Energy Sector in the Union Budget 2021- 22. The key points are as follows:
1. A framework will be planned to promote competition among DISCOMs and give consumers options to choose from more than one Distribution Company.
2. A reform-based result-linked power distribution sector scheme will be launched that will assist to improve the financial stability of DISCOMs.
3. The government has announced the PLI scheme for 13 key sectors to possess core competence and cutting-edge technology. For this initiative, the government has committed more than 1.9 Lakh Crore over five years.
4. It is proposed to promote the comprehensive National Hydrogen Energy Mission in 2021-22 for generating hydrogen from green power sources.
5. An additional capital infusion will be provided to SECI (₹ 1000 Cr.) and IREDA (₹ 1500 Cr.) to upsurge the non-conventional energy sector.
CER Opinion -
The most important concern at hand is the financial viability primarily on account of operational inefficiency and higher cost as compared to the tariffs. The budgetary provisions should aim to address that through reform linked multi-year schemes so that the benefits are transferred to the consumers in the sector. This would also enable the distribution utilities to be prepared for the impending retail supply competition by offering choice to consumers. A focussed discussion involving key stakeholders particularly the State Electricity Regulatory Commissions (SERCs), distribution utilities academic institutions, civil society as well as consumer bodies would help identify the critical reform needs that may be differentiated across states.
?>
Electricity (Change in Law, Must-run status, and other Matters) Rules, 2020
Electricity
send
Rules
27 April 2021
Keywords:
Change in Law, Must Run, PPA/PSA, RE Curtailment
Highlights -
Ministry of Power (MoP) issued a draft on 1st Oct, 2020 on Electricity (Change in Law, Must-run status, and other Matters) Rules, 2020. Key points of the rules are given below:
❖ Adjustment in Tariff on Change in Law -
i. The appropriate Government may prescribe a formula by notification as per formula declared in the Electricity (Change in Law, Must-run status, and other Matters) Rules, 2020 by MoP, if the formula for compensation has not included in PPA/PSA agreement or bidding document.
ii. 'Pass through' will come into effect automatically after 30 days of the Change in Law event. Within 30 days of the pass through coming into effect, the Generator/Intermediary Procurer will submit the pertinent documents/calculation to the Appropriate Commission for truing up the rate of pass through per unit.
iii. The Appropriate Commission will verify the calculation and do the truing up within 60 days of the pass through coming into effect after which the rates of pass through will be
adjusted, if necessary, according to the truing up.
CER Opinion -
❖ Change in Law:
Conditions for change in law should exclude (Rule – 2 (1) (b)):
i) Change in DSM regulations itself.
ii) Change in DSM charges.
iii) Change in applicable frequency band.
iv) Any other change in the grid code.
?>
Draft Joint Electricity Regulatory Commission for the state of Goa and Union Territories (Generation, Transmission and Distribution Multi-year tariff) Regulations, 2021
Distribution
send
Tariff - Distribution
19 March 2021
Keywords:
Discount Factor, Return on Equity, Interest on Loan, Interest on Working Capital, Subsidy or Incentive
Highlights -
JERC (Goa & UTs) issued a draft Generation, Transmission and Distribution Multi-year Tariff Regulation, 2021, and will be applicable to the state of Goa and Union Territories. The key highlights of the regulation are given below:
1. Capital Cost:Any gain or loss resulting from a shift in foreign exchange rates for the loan amount up to the date of commercial operation would be offset only against the foreign debt portion of the capital cost.If actual capital cost is less than approved capital cost then actual capital cost shall be considered.
CER Opinion -
Foreign Debt Component (Regulation 24.1): The first proviso of the Regulation 24.1 (e) may be reworded as ‘Provided that any gain or loss on account of foreign exchange rate variation pertaining to the loan amount availed up to the Date of Commercial Operation shall be adjusted only against the foreign debt component of the capital cost’.
?>
Determination of levellised generic tariff for FY 2021-22 under Regulation 8 of the CERC (Terms and Conditions for Tariff determination from Renewable Energy Sources) Regulations, 2020 [Proposal]
Renewable
send
Tariff
15 March 2021
Keywords:
Discount Factor, Return on Equity, Interest on Loan, Interest on Working Capital, Subsidy or Incentive
Highlights -
CERC has notified a proposal for determination of levellised generic tariff for FY 2021-22 on 18th February, 2021.
These regulations specify the tariff determination for the RE projects (small hydro projects, biomass power projects with Rankine cycle technology, non-fossil fuel-based co-generation projects, biomass gasifier-based power projects and biogas-based power projects) which shall be applicable during the period from 1st April, 2021 till 31st March, 2022.
CER Opinion -
Swiss Challenge for all Cases Involving Project-Specific Tariff: As per current scenario the energy market is mature enough. The solar as well as wind technologies have witnessed a significant competition. The relative success of competitive technologies further encourages the competitiveness in the sector, CERC should leave it to the market forces.
?>
Tripura Electricity Regulatory Commission (Consumer Prepaid Metering) Regulations, 2021
Distribution
send
Consumer Prepaid Metering
09 March 2021
Keywords:
Consumer Metering, Prepaid Meter
Highlights -
TERC issued a draft for Consumer Prepaid Metering Regulation, 2021, and will apply to the Distribution and Retail Supply Licensees, including deemed licensees and franchisee. The key highlights of the Regulation are given below:
❖ The Regulation will cover new single-phase and three-phase LY Industrial, NDS, mobile towers and temporary connections up to a connected load of 50KW.
❖ The existing or new consumers may also opt for prepaid metering supply arrangement.
CER Opinion -
The words "prescribed" and "specified", without being defined, as used at Regulations 3(2) and 5.1 of the Draft Regulations are defined differently under Section 2 of the Electricity Act, 2003 as follows:
(52) “prescribed” means prescribed by rules made by the Appropriate Government under this Act;(62) "specified" means specified by regulations made by the Appropriate Commission or the Authority, as the case may be, under this Act.
?>
Telangana State Electricity Regulatory Commission (Deviation Settlement Mechanism and related matters) Regulation, 2020
Transmission
send
State Grid Code Regulation
06 March 2021
Keywords:
Grid Code Regulations, Annual Fixed Charges, Ramp-up, Ramp-down, Spinning Reserve, Grid Coordination Committee, STU, capacity factors, Solar Rooftop Systems, Intra-state Transmission, Ancillary Services, Merit Order Despatch
Highlights -
TSERC notified draft for Deviation Settlement Mechanism (DSM) on 28th December, 2020. This Regulation will come into picture from 1st March, 2021.
Applicability - It includes Buyers & Sellers engaged in conveyance related transactions of electricity via open access utilising intra-state transmission system (In-STS) and/or distribution system of electricity (including inter-state wheeling of power).
CER Opinion -
❖ Need for an objective definition of ‘gaming’ (Regulation 2.1(p)): The objective definition of ‘gaming’ should clearly identify the basis for assessing ‘intentional mis-declaration’ of the schedule. As an alternative, tightening of the deviation limit during the peak hours (when DSM prices are expected to be higher) can also reduce the incentive for gaming through over injection by the generators/under-drawl by the buyers.
?>
RERC (Terms and Conditions for Tariff determination from Renewable Energy Sources) Regulations, 2020
Renewable
send
Tariff
19 February 2021
Keywords:
RoE, CAPM & Three factor IoWC, RE Storage
Highlights -
RERC notified Draft for Terms and Conditions for Tariff determination from Renewable Energy Sources) Regulations, 2020 which will be applicable from 1st April, 2020 – 31st March, 2023. Highlights of the proposed regulations are as follows:
❖ Different norms and eligibility criteria to be specified for Non-fossil fuel based Co-generation project, MSW, RDF based power project and Small Hydro project.
❖ Parameters for new RE technologies such as Floating Solar Project, Renewable Hybrid Energy Project and RE Project with Storage to be specified in line with the CERC RE Tariff Regulations, 2020.
CER Opinion -
Despatch principle for Treatment of Biomass, Biogas and Biomass Gasifier based power plant (Clause - 14.4):
❖ Removal of Biomass, Biogas and Biomass Gasifier based power plants from ‘MUST RUN’ status and subjecting these to Merit Order Despatch principle would reduce their PLF in comparison to the one used for the calculation of tariff. Further, as tariff for such plants is of a single-part nature, these plants would face viability issue. Such plants would have to compete with conventional plants, particularly coal-based power plants, which have two-part tariff, and thus comparatively lower variable part of tariff.
Unless Biomass, Biogas and Biomass Gasifier based power plant also have a two-part tariff structure, these plants should continue to have must-run status. Regulatory approach should be to tighten some of the efficiency benchmarks especially those related to heat rate, auxiliary consumption and O & M costs.
?>
CERC Terms and Conditions for Tariff determination from Renewable Energy Sources (RES) Regulation, 2020
Renewable
send
Tariff
27 November 2020
Keywords:
RoE, CAPM & Three factor IoWC, RE Storage
Highlights -
CERC issued draft for Terms and Conditions for Tariff determination from Renewable Energy Sources (RES) Regulation, 2020 for the control period 2020-21 to 2022-23. Highlights of the proposed regulations are given below:
❖ 'Floating solar project', 'Grid Code', 'Pumped storage hydro project', 'State Nodal Agency', and 'Storage' have now been defined. Further, the regulations also provides for the 'treatment for over generation'.
❖ Loan tenure is proposed to be increased from 13 years to 15 years.
The CERC Document can be accessed here.
CER Opinion:
❖ RoE: Pre-tax vs Post-tax (Section 19): - Clause 2 of Section 16 should be modified as –“The normative Return on Equity shall be 14%, to be grossed up st by prevailing rate of Minimum Alternate Tax (MAT), as on 1st April preceding the CoD, for the entire Tariff Period”. (underlined text to be included)
- The cost on equity estimated by the CAPM approach is a post-tax estimate. A recent study at CER, IITK using CAPM and multi-factor models using a comprehensive data for over 125 infrastructure companies between 1998-2018, estimates the cost on equity for RE sector to range between 12.87-16.58%, on a post-tax basis. The estimate referred to in the Statement of Reasons (SoR) is also a post-tax estimate. Against the estimated post-tax cost of equity of 12.87% (using CAPM), the proposed RoE works out to 16.96% (after grossing up with 15% MAT plus 12% surcharge, and 4% ecss).
?>
Electricity Act, 2003 Amendment 2020 [Draft]
Electricity
send
Acts
27 November 2020
Keywords:
ECEA, DSL, DBT, APTEL, Payment Security Mechanism
Highlights -
The Ministry of Power on 17th Apr, 2020 issued draft for amendment to the Electricity Act, 2003. A brief summary of the proposed Amendments are given below:
❖ National Renewable Energy Policy (NREP) (Section 3A): Central Government, in consultation with State Governments, will prepare NREP to promote RE generation, and prescribe RPO for renewable and hydro energy.
❖ Cross Border Trade of Electricity (CBTE) (Section 49A): Central Government to frame rules and guidelines, and CERC will formulate regulations to facilitate CBTE.
The MoP Document can be accessed here.
CER Opinion:
1) Standard Guidelines for Distribution sub-licensee (DSL) and franchisee
❖ The set of standard guidelines for award of DSL and franchisee should be formulated by the Central Government in consultation with State Government and the SERCs. These guidelines should define the mode of award for DSL (outright sale, lease, etc.), role of competitive bidding, duration, commercial arrangements, sharing of risk and regulatory provisions thereof.
❖ Visibility of operations and regulatory purview for franchisee also needs to be enhanced.
❖ SERCs would need to amend distribution license and the relevant regulations to segregate the provisions applicable to the distribution licensee and the distribution sub-licensee. For example, the provisions related to the sub-licensed areas would now need to be excluded from the original licensed areas to avoid multiplicity of accountability.
❖ Will the respective SERC be able to cancel DSL in case of its failure to meet the provisions of the Act and regulations of the respective SERC?
2) PPA allocation to DSL
❖ Commercial arrangement for award of DSL should also specify if the sub-licensee would be allocated the existing PPAs, or provided electricity at pooled price by the existing holding/bulk supply company of the state or would be allowed to make own arrangement for power purchase.
❖ As the DSL would not require a license for power trading, would it be allowed to make its own power procurement? If so, the existing distribution licensee will be saddled with expensive PPAs unless the same is allocated to the DSL.
?>
MNRE: Draft Guidelines for Implementation od Off-Grid Solar Power Plants in RESCO model under MNRE Programme
Fundamentals of Renewable Energy: Economics, Policy and Regulation
send
Renewable Energy Development
27 November 2020
Keywords:
RESCO model, upfront, SNA/IA, CFA
Highlights -
The Ministry of New and Renewable Energy (MNRE) on 18th May, 2020 released draft guidelines for implementation of off-grid solar power plants under RESCO model. Key highlights are given below:
❖ The scheme is applicable only for North-eastern States and extended till 31 Mar, 2021.
❖ Off-grid solar power plants up to 25 kWp can be installed in areas without or unreliable electricity access.
The MNRE Document can be accessed here.
CER Opinion:
❖ The guidelines should provide a framework to identify the size/number of such projects from a list of pre-identified districts having under electrified/unreliable supply.
❖ A transparent and fair process for the 'Swiss Challenge' approach, which allows for identification for prospective sites by a developer, may be adopted for procurement under this scheme.
?>
WBERC’s Draft for Amendment to Cogeneration and Generation of Electricity from Renewable Sources of Energy Regulations
Fundamentals of Renewable Energy: Economics, Policy and Regulation
send
RE Policy and Regulation
06 July 2020
Keywords:
Renewable Energy, Cogeneration, Net-metering, Solar Rooftop, RPO Regulations, RPO Targets, West Bengal, Solar REC, Non-solar REC
Highlights -
The WBERC notified draft for the amendment to Cogeneration and Generation of Electricity from Renewable Sources of Energy Regulations, 2013. Highlights are below:
1. Consumer can install rooftop system of 1 kW or above capacity (up to total sanctioned load or contract demand) can claim net-metering/net-billing benefits.
2. DISCOMs are proposed to procure 100% of energy from waste to energy plants in their respective areas.
3. Unmet solar RPO obligation above the 85% of total RPO can be met by non-solar energy, and vice-versa.
CER Opinion -
1. RPO trajectory for the state should be specified in advance so as to provide opportunity to obligated entities to make appropriate investments or plan to procure RE/REC.
2. In case the tariff for RE has been discovered under section 63 of EA, 2003 and has been adopted by the commission, the same should not be subjected to the price cap under regulation 6.0.
3. An RPO compliance framework, supported with penalty in proportion to the shortfall, would help ensure that obligated entities take adequate steps to meet their RPO target including through purchase of RECs.
?>
CSERC Standard of Performance (SoP) in Distribution of Electricity Regulation, 2020
Distribution
send
Standard of Performance
08 June 2020
Keywords:
Standard of Performance, DISCOMs, ARR, Consumer Awareness, SoP Compensation.
Highlights -
The Standard of Performance (SoP) regulation issued by CSERC on 15th May 2020 allows variation across geographical areas of DISCOM, and across DISCOMs. A summary is below:
1. If the licensee fails to maintain SoP, it is liable to compensate consumer at rates specified in the regulation, which cannot be claimed in ARR.
2. To spread awareness regarding SoP among consumers and staff, the licensee to make manuals available at offices and on the website, display guaranteed standards of performance at local offices.
3. The licensee is to submit quarterly report on the level of performance achieved, and on the number of cases in which compensation was payable and the amount paid/payable in each case to the commission.
CER Opinion -
1. A SoP index can be developed based on key performance parameters for each feeder and consumers connected to it, which should be used for implementing a penalty/incentive framework for the associated employees.
2. Given that DISCOM would manage a system of complaint registration and follow thereof, such a system should have a mandatory audit trail with due communication (SMS/email) to the consumers.
3. The commission may periodically review the current level of performance and setup multi-year benchmarks for SoP.
?>
MERC’s Draft for State Grid Code Regulations, 2020
Transmission
send
State Grid Code Regulation
25 May 2020
Keywords:
Grid Code Regulations, Annual Fixed Charges, Ramp-up, Ramp-down, Spinning Reserve, Grid Coordination Committee, STU, capacity factors, Solar Rooftop Systems, Intra-state Transmission, Ancillary Services, Merit Order Despatch
Highlights -
MERC released draft State Grid Code Regulations (MEGC, 2020) on 1st Mar 2020. MEGC, 2020 is applicable to all generators in the state connected to intra-state transmission system (InSTS), transmission licensee in the state including STU, Maharashtra SLDC, distribution licensees including deemed distribution licensees, Indian Railways, OA consumers and EHV consumers connected to InSTS. Major highlights of the proposed regulations are below:
1. STU is to explore and evaluate alternate options if capital expenditure for any new transmission system exceeds threshold limit of ₹100 crore or as declared by the Commission from time to time.
2. SLDC need to maintain the spinning reserve margin equivalent to 3% of the system peak demand and 3% of installed capacity for the generators to manage ramp up.
3. The generating company can de-rate the capacity or can go for repeat trial run. The demonstrated capacity, in case of derating, will be equal to or greater than 105% of de-rated capacity for thermal InSGS and 110% for hydro generating station.
CER Opinion:
1. The investment approval framework should include a cost-benefit analysis considering economic efficacy of the investment and the system security over medium to long-term. Excess investment towards reliable of power supply needs to be controlled to avoid burden on consumers.
2. Clause 30.6 requires 'instantaneous' picking up of the generation to 105/110% in case of ‘sudden fall in system frequency’, which should be specified.
3. Framework for procurement and payment for spinning reserve capacity margin and its recovery from system participation (specially load serving entities) should be specified.
?>
CERC's Proposal for Determination of Forbearance Price and Floor Price for the REC Framework
Renewable
send
REC Framework
25 May 2020
Keywords:
REC Framework, Floor price, Forbearance Price, Solar REC, Non-solar REC, RPO
Central Electricity Regulatory Commission (CERC), via notification dated 31st Mar 2020, proposed to adopt forbearance price and floor price of Renewable Energy Certificates (REC) as given in the table:
Details |
Solar REC (₹/MWh) |
Non-Solar REC (₹/MWh) |
Forbearance Price |
1,000 |
1,000 |
Floor Price |
0 |
0 |
CER Opinion:
1. As the proposed REC floor price for solar/non-solar RECs is zero, reference to floor price as a part of REC framework under the principle REC Regulations can be deleted.
2. Given that SERCs are allowing excess solar (non-solar) RPO quantum to be adjusted against non-solar (solar) RPO, fungibility between solar and non-solar RECs is clearly visible and should be institutionalized.
?>
HERC: Guidelines for certifying or refusing to certify non-availability to Transmission/Distribution system or Unscheduled Load Shedding
Distribution
send
Open Access
25 May 2020
Keywords:
Open Access, Captive plants, Independent Power Producers, Contract Demand, Inter-state sale, Intra-state sale.
Highlights -
HERC drafted guidelines for certifying or refusing to certify non-availability to transmission or distribution system for OA consumers. Major highlights of the proposed regulations are below:
1. Surplus capacity to be offered to LTOA, MTOA, and STOA in respective order. In case of system enhancement, the applicant will pay the Distribution Capacity cost for grant of LTOA.
2. Consumers capacities of 10 MW and above will be eligible for connectivity at 33 kV or above, rest at below 33 kV.
3. In case of unnotified outage on account of transmission/distribution system, the licensee will compensate the OA consumer the charges payable by consumer to the generating company or the lowest tariff applicable to the consumer category, whichever will be lower.
CER Opinion:
1. To discourage withholding and to bring competitiveness in allocation of unused transmission/distribution capacity, the unused transmission capacity should automatically be released to the SLDC.
2. In case of refusal of OA application, SLDC should provide alternate slots/lower capacity or a timeline for available capacity in future.
3. In case of failure of power evacuation and compensation for wheeling and transmission charges, a mechanism to pass on the benefit to the buyer should be introduced.
?>
CEA proposes amendment to Furnishing of Statistics, Returns and Information Regulations, 2007
System Operation & Forecasting
send
Data Collection
25 May 2020
Keywords:
Captive Projects, Independent Power Producers, industrial Consumers, Power Purchase Agreement, The Electricity Act 2003, National Electricity Policy, 2005, National Tariff Policy, 2016, REC, Wind Projects, Solar Projects, Hybrid Projects, Electricity Demand.
Highlights -
The Central Electricity Authority (CEA) has proposed amendment to Furnishing of Statistics, Returns and Information Regulations, 2007. The CEA proposes to add four new formats (Format 21A, Format 21B, Format 66 and Format 67) for furnishing of the information in the Regulations.
CER Opinion:
1. Scope for format 21A and 21B should be defined in such a manner that the two tables are mutually exclusive. As per given definition, there would be common CPPs whose data would be reported in both tables.
2. In the format 21A, unit of Electricity Demand should be MVA instead of MW as industrial contract demand is considered in MVA
3. ‘Variable charges’ may be used in place of ‘fuel charges’ in column 16 of the format 66.
?>
POSOCO's "Draft Procedure for Collective Transactions through Real Time Market (RTM)"
Power Markets
send
Real Time Market (RTM)
12 April 2020
Keywords:
NLDC, RLDC, SLDC, Energy Trading, IEX, PXIL, Load Curtailment, Congestion Management
POSOCO released draft procedure for scheduling collective transactions in RTM. The draft addresses issues related to processing of application, treatment of losses, congestion management, and revision of schedule, etc. Major highlights are below:
1. Proposal for allocation of transmission corridor to exchanges based on ratio of their shares in the cleared volume in DAM, subject to minimum 10% for exchange having smaller share.
2. It is proposed that the exchange should submit scheduling request to the NLDC 3 time blocks ahead for delivery of the power.
3. Proposal for the SLDCs to schedule transactions for state utilities/intra-state entities, given the exchange should send detailed breakup of each point of injection and drawl to respective SLDCs two time blocks ahead of delivery time.
4. In case of transmission constraints or threat to grid security, short term transaction to be curtailed first, followed by medium and long-term.
CER Opinion:
1. POSOCO should evaluate the impact of the allocation scheme and identify the pattern of underutilization of allocated transmission capacity and seek suggestions to address the same.
2. More clarification is required for cases where a beneficiary/generator can trade in RTM for the ‘same’ capacity, a single standing clearance, if required, would suffice.
3. If
the respective ERC order for intrastate transmission charges or the SLDC system
operating charges is not available, the procedure specifies such charges to be
applicable. Legal aspects of such a ‘determination’ should be reviewed to avoid
any issues later.
?>
GERC's "Tariff Framework for Procurement of Power by Distribution Licensees and Others from Solar Energy Projects and Other Commercial Issues for the State of Gujarat"
Renewable
send
Solar Power Procurement
07 April 2020
Keywords:
Open access regulation, Captive power plant, Cross-subsidy Surcharge, Transmission Charge, Wheeling charges, Third Party Sale, Solar power, Power procurement, REC, Competitive bidding, Energy Banking, Banking charges, RE Forecasting
Summary -
The GERC notified discussion
paper for tariff framework concerning procurement of solar power by DISCOMs and
other stakeholders. The discussion paper proposes competitive bidding for all
solar projects, including small projects of 5 MW or less capacity. A brief
summary is below:
1. For projects below 5 MW
capacity, proposal to determine tariff through competitive bidding in different
time period of 6 months of the year.
2. Proposes a maximum allowed capacity at 50% of
contracted load for captive use, third party sale, and projects under national
solar mission.
3. Wheeling and cross subsidy
charges between 50% to 100% as applicable to normal OA consumers, are proposed for different
category of projects.
CER
Opinion
1. Linking tariff determination
of small project (below 5 MW) with larger projects is a positive step, but the
commission should also consider the significant diseconomies of scale for
smaller projects while finalizing tariff.
2. We suggest that the basis for
linking of tariff for small project can be pegged at a rate bit higher than the
prevailing mark-up.
3. A large number of small scale
projects can be bundled together to form a competitive market for smaller PV
projects and offering them for bidding. This can address issues related to
economies of scale.
?>
TNERC's "Consultative Paper for Procurement of Solar and Wind Power by Distribution Licensee and Related Issues"
Renewable
send
Renewable Power Procurement
26 March 2020
Keywords:
Open access regulation, Captive power plant, Cross-subsidy Surcharge, Transmission Charge, Wheeling charges, Third Party Sale, Solar power, Power procurement, REC, Competitive bidding, Wind power, Energy Banking, Banking charges, RE Forecasting
Summary:
The TNERC notified consultative paper for procurement of solar and wind power by DISCOM, which proposes competitive bidding for solar power procurement, and to levy 100% transmission and wheeling charges, line losses, and cross-subsidy surcharge. Further, it proposes to impose stand by charges, grid availability charges, charges for higher harmonics, reactive power charges, power factor disincentives, and capping of contracted capacities for open access consumers including captive users. Additionally, multiple energy banking options are proposed for wind projects according to their commissioning dates.
CER Opinion:
1. Removal of exemptions for wheeling and intrastate transmission charges would only reduce the cost advantage for Captive and OA consumers but would not eliminate it.
2. Withdrawing exemptions is not likely to contribute to the financial gap and may not enhance the 'financial performance' of the utilities.
3. Additionally, the intermittency issues of RE can be addressed by tightening the state's grid code and regulations for forecasting and deviation settlement.
4. Capping excess generation for OA consumers including captive users can be addressed by allocating equivalent RECs or by paying equivalent REC price.
?>
APERC's "2nd Draft Amendment to Open Access Regulation"
Renewable
send
Open Access and Captive Generation
23 March 2020
Keywords:
Open access regulation, Captive power plant, Cross-subsidy Surcharge, Transmission Charge, Wheeling charges, Third Party Sale, RE Forecasting
(Open Access and Captive Generation) Summary:
The APERC notified draft for 2nd amendment to its open access regulation 2005, which proposes to impose 100% transmission and wheeling charges, distribution losses, and cross-subsidy surcharge for captive use or third-party sale.
CER Opinion:
1. Concern regarding RE intermittency issues could be addressed by tightening forecasting regulations along with the application of deviation settlement mechanism (DSM) can help ameliorate this impact to some extent.
2. Removing exemptions may only reduce benefits for captive and open access consumers,
3. The small revenue generated by relaxing exemption may not have much effect on DISCOMs financial performance.
Recent Discussions
Related Blogs
-
CERC (Power Market) (First Amendment) Regulations, 2025
15 October 2025
Total Posts: 2 Post By: CER TEAM -
HPERC (Deviation Settlement Mechanism and Related Matters) (Second Amendment) Regulations, 2025 [Draft]
15 October 2025
Total Posts: 1 Post By: CER TEAM -
Renewable Consumption Obligation (RCO) Under the Energy Conservation Act, 2001
28 August 2025
Total Posts: 1 Post By: CER TEAM -
Energy Conservation (Compliance Enforcement) Rules, 2025
28 August 2025
Total Posts: 1 Post By: CER TEAM -
CEA: “Alternative Mechanism for implementation of FPPAS under of the Electricity (Amendment) Rules, 2022.”
06 August 2025
Total Posts: 1 Post By: CER TEAM -
KSERC (Renewable Energy and Related Matters) Regulations 2025
06 August 2025
Total Posts: 1 Post By: CER TEAM -
Amendments to the Guidelines for Tariff Based Competitive Bidding Process for Procurement of Power from Grid Connected Wind Solar Hybrid Project, 2025
16 July 2025
Total Posts: 1 Post By: CER TEAM -
CERC (Virtual Power Purchase Agreements (VPPAs)) Guidelines, 2025
10 July 2025
Total Posts: 1 Post By: CER TEAM -
ARR and Tariff Determination for DISCOMs - A case study
12 June 2025
Total Posts: 1 Post By: VIKRANT VISHAL -
Grid-India (Suggestions on Increasing the Frequency of REC Auction Sessions at Power Exchanges)
11 June 2025
Total Posts: 1 Post By: CER TEAM -
Ministry of Coal (Public Consultation on Coal Trade Exchange)
11 June 2025
Total Posts: 1 Post By: CER TEAM -
Draft amendments proposed in the MBDs for Procurement of Power for Long term from Thermal Power Stations set up on DBFOO basis -Reg.
11 June 2025
Total Posts: 1 Post By: CER TEAM -
TNERC (Renewable Energy Purchase Obligation) (Amendment) Regulation, 2025
11 June 2025
Total Posts: 1 Post By: CER TEAM -
Tariff Determinaton for Generators
10 June 2025
Total Posts: 4 Post By: Anuj Kumar -
Introduction to CER
07 June 2025
Total Posts: 2 Post By: VVSK CHAKRAVARTHI
