TNERC amends renewable energy purchase obligation regulations

The Tamil Nadu Electricity Regulatory Commission has amended the regulations relating to ‘renewable energy purchase obligation', lowering the quantum of the obligation, but bringing in more ‘obligated entities'.

“It is extremely good for renewable energy producers,” commented Mr T. Shivaraman, Vice-Chairman, Orient Green Power Ltd, which produces electricity from windmills and biomass plants.

The ‘amendment regulations' announced on Monday lowers the purchase obligation (to be fulfilled by the ‘obligated entities') to 9 per cent from 14 per cent earlier of consumption where the obligated entity is a consumer or of sales, where the entity is a distribution company.

The obligation can be met either by buying ‘green power' or by buying ‘renewable energy certificates'. Of the 9 per cent obligation, 0.05 per cent should be solar power.

While the quantum of obligated purchase is lower, TNERC has put the obligation on more entities. Under the head ‘obligated entities', the Commission has brought in a) open access consumers (consumers, say a steel or a cement company, who buy power in the open market through power exchanges), and b) grid connected captive generating plants.

The RPO is to be implemented in a phased manner. In the first phase, till March 2012, all open access and captive consumers with sanctioned demand of 2 MVA and above are obligated. In the second, 2012-13, the sanctioned demand is lowered to 1 MVA and in the third (from April 2014) all open access and captive consumers are obligated irrespective of sanctioned demand.

Many renewable energy plants in Tamil Nadu have been waiting for clarity on these very issues to register themselves for the REC scheme. A renewable energy company (say, a wind farm or a biomass plant) would first get itself approved by the respective state electricity regulatory commission, then get registered with the National Load Despatch Centre (NLDC). After this, the State load despatch centre will issue the renewable energy certificates – demat form – held in a depository run by the NLDC.

Then, the company would sell the RECs in the market – through one of the two exchanges – Indian Energy Exchange Ltd or Power Exchange India Ltd.

The ‘REC market' is practically four months old in India. Though the first trade technically happened in February, that was before any REC had been issued. The first meaningful trade happened in April.

Trading happens on the two exchanges on the last Wednesday of each month, between 1 p.m. and 3 p.m. The Central Electricity Regulatory Commission has fixed floor and ceiling prices for RECs – at Rs 1,500 and Rs 3,900 a certificate – and to this extent the prices are not market determined.

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