Power Ministry Unveils Rules for Standard Renewable Energy Rates

The Ministry of Power in India has introduced the Electricity (Amendment) Rules 2022. These rules are designed to establish a consistent and fair pricing system for renewable energy in various sectors, including Solar Power and Wind Power, among others, with the primary goal of promoting investment and development in the sector.

Under these rules, a designated 'Implementing Agency' will be responsible for calculating a monthly "uniform renewable energy tariff" for different central pools, such as Solar Power, Wind Power, and Hydro Power. This tariff represents the rate at which intermediary procurers sell power from these central pools to end procurers. The term 'Implementing Agency' refers to the Central Agency appointed by the Central Government to implement the uniform renewable energy tariff for the central pool. Grid-India was chosen as the Implementing Agency in March 2023.

These rules establish distinct central pools for various renewable energy sources, including Solar Power, Wind Power, Hydro Power, solar wind Hybrid, Round Clock Power, Peaking Power, and other pools specified by the Central Government. The Central Government defines these sources, and the creation of multiple central pools may depend on technology and generation mix, as determined by the Central Government.

Each central pool will have a separate start date, as announced by the Central Government, and will operate for five years. All capacities with Power Sale Agreements (PSA) signed within this timeframe will become part of the central pool, provided they meet other eligibility conditions. After five years, no new capacity will be added to the pool, and existing capacity will remain in the pool until the expiration of their respective agreements. New central pools may be formed for specific renewable energy sources after the initial five-year period, with the inclusion of new participants.

The uniform renewable energy tariff for the central pool exclusively applies to end procurers for their contracted capacity within the central pool. It does not affect the renewable energy tariff determined through competitive bidding processes and is payable to renewable energy generators by intermediary procurers under Power Purchase Agreements (PPA). Intermediary procurers must align their bidding documents, including PPAs and PSAs, with the relevant provisions of the Electricity (Amendment) Rules 2022 and adhere to Standard Bidding Guidelines (SBG) issued by the Central Government to ensure compliance. Any deviations from SBG will require approvals, including those from the Central Commission or Central Government.

Bilateral scheduling from renewable energy generators to end procurers will occur directly according to power supply agreements. Any surplus generation and early commissioning sales will be governed by the respective PPA, PSA, SBG, and existing rules and regulations. The Implementing Agency will compute the uniform renewable energy tariff monthly based on the methodology specified in the rules, and intermediary procurers will invoice end procurers in accordance with the terms of the Power Sale Agreement.

Generators of renewable energy sources that connect to the Inter-State Transmission System, have signed PSAs after the central pool’s start date, and meet specific criteria can be part of the central pool. End procurers can participate if they possess a license for distribution and retail supply of electricity granted under the Act or are designated by the State Government for power procurement. Intermediary procurers, designated by the Central Government and holding a valid trading license, can also participate in the central pool. The Implementing Agency will publish the monthly calculated uniform renewable energy tariff on their website, with no liability beyond tariff calculation.

The Ministry of Power's approval is necessary for any modifications to these procedures. These rules represent a significant stride toward creating a more organized and equitable renewable energy market in India, fostering an environment conducive to sustainable energy growth and investment. Grid Controller of India Limited will have a crucial role in ensuring the effective implementation of these rules, albeit with limited liability.