The Uttar Pradesh electricity regulator has requested state-run power utility Uttar Pradesh Power Corporation (UPPCL) to deposit Rs 7,244.7 crore in a regulatory fund by January 2022 to meet the renewable purchase obligations (RPO) for FY22 and clear the past dues. The move would give the much-needed payment assurance to solar, wind and hydel power producers providing electricity to the state.
The amount to be deposited by UPPCL comprises Rs 1,459.3 crore for not meeting its RPO marks till FY21, while the balance amount is towards meeting FY22 RPO obligations. This is for the very first time the UP utility has been asked to pay the RPO funds in advance.
Uttar Pradesh’s ‘overdues’ — pending receivables of 45 days or more — to power manufacturers stood at Rs 5,688 crore at FY21 end. In March, the regulator had directed UPPCL to route all payments to renewable power generators through the RPO regulatory fund to ensure these developers are paid on time. More than Rs 709 crore have already been paid to such developers in the initial three months of the ongoing fiscal from the RPO fund.
Keeping in mind the liquidity flow of the discoms, the regulator has permitted UPPCL to deposit the fund in the account in 10 equal instalments between July 2021 and January 2022. The obligatory amount is equivalent to about 10% of the state’s annual power purchase cost, experts pointed out.
For the cumulative shortfall of RPO marks, the deposit amount has been calculated at Rs 1/unit for the electricity not procured by the state discoms till FY21. For the FY22 consumption estimate, it is calculated at Rs 4.37/unit which is the average power acquisition cost of the UP discoms. UPPCL would also have to submit quarterly compliance reports on these deposits to the RPO fund, the regulator stated. As the RPO target shortfall till FY21 was meaningfully higher for non-solar and hydel sectors compared with solar power procurement, the regulator has directed UPPCL to “revisit their renewable power purchase strategy”.
Asserting that much lower tariffs have been revealed in recent solar auctions in other states, UP has lately cancelled the auction for 184 megawatt (MW) of solar power plants conducted in February, 2020 where the tariff of Rs 3.17/unit was discovered. Of the 40,000 MW of installed solar capacity in the country, Uttar Pradesh houses around 1,700 MW.
Solar power tariffs stretched a record low of Rs 1.99/unit in December 2020 under auctions held by Solar Energy Corporation of India (Seci) in Gujarat. In November 2020, a tariff of Rs 2/unit was exposed in Seci’s solar auctions for Rajasthan.
The Centre prescribed RPOs that mandates the discoms to buy a minimum share of renewable power to meet their supply obligations as per the long-term RPO trajectory set by the Union power ministry. “We are pressuring the states to achieve their RPO targets,” Union power minister RK Singh recently stated at a press conference, adding that “right now penalties for RPO failures are mild, in the Electricity Act amendments we are proposing to increase the penalties”. “We already have RPO targets, valid till 2022 and we will be extending the RPO targets to 2030,” Singh added.
