PUNJAB STATE ELECTRICITY REGULATORY COMMISSION SCO NO. 220-221, SECTOR 34-A, CHANDIGARH Petition No. 52 of 2013 Date of Order: 14.11.2013 In the matter of: Petition under Section 86 (1) (b) and 86 (1) (e) and other applicable provisions of the Electricity Act, 2003 for purchase of electricity from solar energy generators in the State of Punjab. AND In the matter of: Punjab State Power Corporation Limited, The Mall, Patiala. AND In the matter of: Punjab Energy Development Agency (PEDA), Chandigarh Present: Smt.Romila Dubey, Chairperson Shri Gurinder Jit Singh, Member Order Punjab State Power Corporation Limited (PSPCL) has filed this petition seeking approval of the Commission to procure electricity including the tariff from solar energy generators to be established in the State of Punjab and also to the draft Power Purchase Agreement (PPA) to be executed with the solar energy generators. PSPCL has submitted that Government of Punjab (GoP) has recently issued New and Renewable Sources of Energy (NRSE) Policy, 2012, which is aimed at the development of renewable energy sources, in particular solar energy generation in the State of Punjab. PSPCL has further submitted that vide letter dated 26.02.2013, Punjab Energy Development Agency (PEDA) informed that the Government of Punjab has approved installation of minimum 300 MW Solar PV power projects in the State in the first phase. 2. Pursuant to above, PEDA initiated competitive bidding process for inviting generators for the establishment of 300 MW Solar PV power projects in Punjab. On the basis of the bids received, PEDA allocated a total capacity of 250 MW Solar PV power projects to various developers. The allocations have been made in two categories namely (i) 1 to 4 MW (total capacity of such projects: 50 MW) and (ii) 5 to 30 MW (total capacity of such projects: 200 MW). The tariff discovered in the competitive bidding process varies from 7.20 per kwh to 8.70 per kwh for 1 to 4 MW capacity projects and 7.67 per kwh to 8.74 per kwh for 5 to 30 MW capacity 1
projects. The details of the tariffs discovered and allocations made are attached as per Annexure-1. 3. PSPCL has submitted that solar energy generation is expected to be one of the sources for future renewable energy generation which can be procured in large quantum. It has been further submitted that the solar energy generation has been promoted in various other States and also through the policies issued by the Government of India (GoI). On the same lines GoP has taken proactive steps to ensure development of solar energy generation capacity and at the same time discovered cost through the competitive bidding process. PSPCL has further submitted that it is the distribution licensee in the State of Punjab and is required to fulfil its minimum renewable purchase obligation (RPO) specified by the Commission in its Regulations namely Punjab State Electricity Regulatory Commission (Renewable Purchase Obligation and Its compliance) Regulations, 2011 (RPO Regulations, 2011). As per these Regulations, the solar RPO for FY 2013-14 and FY 2014-15 is 0.13% and 0.19% respectively. PSPCL has submitted that the present installed capacity for Solar PV power projects in Punjab is about 10.75 MW and with the addition of aforementioned 250 MW capacity and another 65 MW solar capacity in the pipeline, PSPCL would be able to comply with the solar RPO. PSPCL has intimated that from the year 2015-16 onwards, the solar power of about 314 crore annually would be purchased from these 250 MW capacity Solar PV power projects at an average tariff of 8.37 per kwh. 4. PSPCL has submitted that the total procurement as envisaged is likely to exceed the RPO as specified presently and in the circumstances filed this petition seeking approval for procurement of 250 MW capacity of solar energy generation in the State of Punjab to be established by the generators as listed in Annexure-1. It has been submitted that in terms of section 86 (1)(b) and section 86(1)(e), the procurement of electricity including the rate is required to be approved by the Commission. PSPCL has also sought approval of the draft PPA to be signed with the solar power generators. 5. In the prayer, PSPCL has requested the Commission to approve the procurement of electricity by it from solar energy generators at the tariff discovered in the competitive bidding process conducted by PEDA as per details in Annexure-C to the petition and allow this power purchase cost as a pass through in the Annual Revenue Requirement (ARR) and further requested the Commission to approve the draft PPA, attached as Annexure-E to the petition, with or without modifications. 2
6. The petition was admitted by the Commission and PEDA was directed to file reply by 11.10.2013 with a copy to PSPCL as per Commission s Order dated 25.09.2013. 7. PEDA in its response filed on 11.10.2013, while referring to Commission s Order dated 25.06.2013 in Petition No. 37 of 2013 (Suo-Motu), has submitted that in line with the said Order, it invited competitive bids on the basis of discount to be offered by the bidders on the generic tariff determined by the Commission for Solar PV power projects. PEDA has further submitted that as per National Tariff Policy, the RPO for Solar power is targeted at 3% in the year 2022. Therefore to achieve the same, the per year rise on the base of RPO of 0.19% for FY 2013-14 specified by the Commission, will be 0.4% per year for which appropriate solar power capacity additions are required. PEDA has contended that, therefore, the addition of 250 MW through the present bidding process is in order and will help in achieving the RPO target in future. PEDA has further submitted that the tariff for the Solar PV power projects arrived at through the competitive bidding process is levellised tariff and will remain same for 25 years (term of the PPA) whereas the tariff for conventional coal based power projects will increase every year due to rise in fuel cost and therefore at some point of time in near future, this solar power will be cheaper than the conventional power from coal based thermal plants. PEDA has prayed that the prayer of PSPCL in the petition may be accepted by the Commission. 8. In the hearing on 15.10.2013, PSPCL submitted that its prayer at Sr.No. (a) be taken up by the Commission on priority and prayer at Sr. No. (b) may be deferred for the time being pending resolution on deviations and variations and that PSPCL shall file an application for this purpose. PSPCL was directed to file the said application by 29.10.2013 with a copy to PEDA. PSPCL was further directed to file additional submissions on the deviations/variations occurring in the draft PPA by 05.11.2013. The next date of hearing was fixed to be held on 12.11.2013. PSPCL vide its Memo No. 6895/TR-5/539 dated 06.11.2013 sought extension for filing the submissions by 11.11.2013. 9. PSPCL has filed the submissions on 11.11.2013 and submitted that in order to expedite the process of approval of procurement of electricity at the tariff discovered in the competitive bidding process conducted by PEDA and approval of the PPA, the present petition may be considered in two parts. Firstly for approval of procurement of electricity at the tariff discovered in the competitive bidding process conducted by PEDA with pass through of cost of this power through ARR of PSPCL 3
and thereafter the approval of PPA to be signed by PSPCL with the project developers. Accordingly, with regard to first part of the petition, PSPCL has prayed to approve the procurement of electricity from solar energy generators at the tariff discovered in the competitive bidding process conducted by PEDA as per the details already submitted and allow the power purchase cost to be incurred by PSPCL as pass through in the ARR of PSPCL. In the hearing on 12.11.2013 and as brought out in its Order of even date, the Commission considered the proposal of PSPCL and decided that Order in respect of the first part shall be issued separately. As regards second part, PEDA was directed in the Order dated 12.11.2013 to first take up the draft PPA with the bidders/project developers and obtain their consent/concurrence to the variations/deviations in the draft PPA from corresponding provisions in Request for Proposal (RfP) and Implementation Agreement (IA) and file the same within two/three days. 10. The Commission notes that PEDA initiated the competitive bidding process in a transparent manner and invited bids from solar PV power project developers for supply of electricity on the basis of discount offered by the bidders on the generic tariff determined by the Commission for Solar PV power projects in the said Order i.e. 8.75 per kwh. The Commission further notes that the rates discovered in the bidding process are in the range of 7.20 per kwh to 8.70 per kwh for 1 to 4 MW capacity projects and 7.67 per kwh to 8.74 per kwh for 5 to 30 MW capacity projects. The project wise tariff discovered is enclosed as Annexure-1 to this Order. The Commission further notes that, as brought out by PEDA, the Solar RPO is targeted as 3% by 2022 and would need to be enhanced by 0.4% per year from the current level. To meet this target, about 1330 MW solar capacity is required to be installed by 2022, considering 6% compound average growth rate of power in Punjab i.e. on an average about 145 MW annually. Presently in its RPO Regulations, 2011, the Commission has specified the RPO upto FY 2014-15 and accordingly, RPO beyond this period i.e. FY 2015-16 onwards is to be fixed by the Commission. The GoI is pressing hard to bring the solar RPO compliance in the States upto the targeted 3% as per the Tariff Policy. Recently, Joint Secretary, Government of India, Ministry of New and Renewable Energy vide letter dated 29.08.2013 has emphasized to suitably fix the RPO to match the same with the Tariff Policy. Secretary, Government of India, Ministry of New and Renewable Energy vide D.O. reference dated 04.09.2013 has also requested the Commission for ensuring the RPO compliance. The Commission notes that the approval granted by the GoP for installation of minimum 300 MW solar PV power projects is a step in the right 4
direction and would help the State to meet the solar RPO target from FY 2015-16 onwards. In this regard, the submission by PSPCL that they would be procuring more solar energy than RPO requirement beyond FY 2014-15 is not tenable. The Commission, under section 86 (1) (e) of the Electricity Act, 2003 is mandated to promote generation of electricity from renewable sources of energy. Furthermore, para 6.4 of the Tariff Policy provides for preferential tariff to be determined by the Commission for renewable energy projects while para 5.2.20 of the National Electricity Policy requires adoption of suitable promotional measures for encouraging higher generation from renewable energy sources. 11. Keeping in view the above, the Commission approves the procurement of electricity by PSPCL from the solar energy generators at the tariff discovered in the competitive bidding process conducted by PEDA as per details in the attached Annexure-1. The cost of power purchase from the projects enlisted in Annexure-1 would be considered as pass through in the ARR of PSPCL. The tariff period for the said projects would be twenty five (25) years as per Regulation 6(c) of the Central Electricity Regulatory Commission (Terms and Conditions for Tariff determination from Renewable Energy Sources) Regulations, 2012 adopted by the Commission in its Order dated 19.07.2012 in Petition No. 35 of 2012 (Suo-Motu) with State specific modifications. Further, the tariffs approved above would be applicable upto 31.03.2015 provided that (i) the PPAs are signed on or before 31.03.2014 and the entire capacity covered in each PPA is commissioned on or before 31.03.2015, in line with Regulation 8 of the said Regulations. Sd/- (Gurinder Jit Singh) Member Sd/- (Romila Dubey) Chairperson Chandigarh Dated: 14.11.2013 5
Annexure-1 Solar PV power projects with capacity 1 to 4 MW Sr. No. 1 WAA Solar Pvt. Ltd. Company Name Project Capacity (MW) Net Tariff Quoted ( /kwh) Project-1 2 7.20 Project-2 2 7.47 2 T R Energy & Agro Private Limited 2 7.75 3 International Switchgears Pvt. Ltd. 1 7.75 4 Aditya Media Sales Ltd., Mumbai 4 7.85 5 Shan Solar Pvt. Ltd. 1 7.89 6 Supreme Infrastructure India Ltd., Gurgaon 4 8.25 7 Azure Urja Pvt. Ltd., New Delhi 4 8.28 8 SAR Capital Pvt. Ltd. 4 8.29 9 Focal Energy Wind India Pvt. Ltd. 4 8.30 10 Atma Powers Private Limited, Muktsar 2 8.41 11 Allianz Group LLC, Ludhiana 2 8.45 12 Nexgen Solex Pvt. Ltd. 1 8.45 13 I K Energy Pvt. Ltd. 1 8.48 14 Asopus Infrastructure Limited 4 8.49 15 Abundant Ventures LLC, USA 2 8.55 16 Welspun Solar Punjab Pvt. Ltd., Mumbai 2 8.56 17 Mokia Green Energy Pvt. Ltd. 4 8.59 18 Earth Solar Pvt. Ltd. 4 8.70 Total 50 Contd... 6
Solar PV power projects with capacity 5 to 30 MW Sr. No Company Name 1 Azure Urja Pvt. Ltd., New Delhi Project Capacity (MW) Net Tariff Quoted ( /kwh) Project-1 15 7.67 Project-2 15 7.97 2 Solairedirect Energy India Private Limited, Pune 20 7.99 3 Welspun Solar Punjab Pvt. Ltd., Mumbai Project-1 20 8.33 Project-2 10 8.42 4 Punj Lloyd Infrastructure Limited 20 8.49 5 Moserbaer Clean Energy Limited, New Delhi(Project-1) 15 8.52 6 Asopus Infrastructure Limited (Project-1) 10 8.58 7 Moserbaer Clean Energy Limited, New Delhi(Project-2 15 8.63 8 Essel Infraprojects Ltd., Mumbai (Project-1) 10 8.65 9 Asopus Infrastructure Limited (Project-2) 20 8.66 10 Essel Infraprojects Ltd., Mumbai (Project-2) 20 8.70 11 Lanco Solar Energy Private Limited, Gurgaon 10 8.74 Total 200 7