REC for CPP based on renewable energy in Maharashtra

Posted on March 30, 2011 by


Captive Power refers to generation from a unit set up by industry for its exclusive consumption. Industrial sector in the country is one of the largest consumers of electrical energy. Due to non-availability of adequate grid supply, a number of industries are now increasingly relying on their own generation (captive and cogeneration) rather than on grid supply. There are two types of captive power plant (CPP) – 1) Grid connected captive power plants and 2) Stand alone captive power plants.

Renewable Energy Certificates (REC) mechanism allow captive power plant based on Renewable Energy (RE) to avail the benefits of RECs and in other side CPP are also obligated to purchase certain amount of renewable energy or equal amount of REC’s from the RE generators (Find below more about the obligated entities). Therefore Renewable Purchase Obligations (RPO) is applicable to the CPP. (Know more about RPO for the state of Maharashtra)

Categorising by mode of fuel consumption, CPP can be divided in Fossil fuel based and RE based.  In Maharashtra, RE based CPP mostly includes bagasse based cogeneration units. Power generation (cogeneration) using bagasse is the common practice in the Indian sugar industry and in Maharashtra alone there are 23 and 173 cogeneration units set up by private and cooperative sectors sugar factories respectively.

Eligible CPPs under the REC

Only grid connected CPPs based on renewable energy are eligible under the REC mechanism.   A minimum 250 kW of capacity and above CPPs producing energy through the following energy resources can earn RECs.

  1. Non-fossil fuel (including bagasse) based co-generation projects
  2. Wind Energy
  3. Biomass Power
  4. Small Hydro, Mini Hydro, Micro Hydro Power
  5. Municipal Waste based Power
  6. Solar Power

Administrative requirement

  1. Captive users shall submit necessary details regarding total consumption of electricity and power purchase from renewable energy sources towards fulfilment of its RPO on monthly basis to the State Agency.
  2. If they have signed PPA at preferential tariff (Please see below) with state distribution companies, can not enter in RE mechanism. If they indeed wish to apply for REC’s, must have to wait for the validity of the PPA.  Another way is to break out the Power purchase Agreement and wait for another three consecutive years to enter in REC mechanism.
  3. As per the MERC regulations every CPP has to fulfil its RPO which is 6% in Maharashtra for the year 2010-11 and will increase each year by 1%.
  4. Both RE and Non RE based CPP have renewable purchase obligations. RE based CPP can  sell RECs and required to buy RECs to fulfil its RPO from other RE generator

Preferential tariff: State Electricity Regulatory Commissions fix minimum percentage of power purchase from non-conventional energy sources taking into account availability of such resources in the region and determine the preferential tariff for non-conventional energy sources. Distribution companies procure such energy at preferential tariff determined by the State Commission or through competitive bidding process. In simple it is a tariff fixed by the State Commission for sale of energy from a generating station based on renewable energy sources to a distribution licensee in accordance with Maharashtra Electricity Regulatory Commission.

Obligated entities

  • Grid connected captive Power plant with minimum installed capacity of 1 MW and above
  • Entity with demand of minimum 1 MVA and who  consumes electricity procured from conventional fossil fuel based  generation through open access sources

Notes:

  • These obligations shall be valid until March 31, 2016 (Financial year 2015-16).
  • If the Obligated Entity fails to comply with the RPO target- penalty amount for such conditions will be decided by the Commission on the basis of the shortfall in units of RPO, RPO Regulatory Charges and the Forbearance Price decided by the Central Commission; separately in respect of solar and non-solar RPO

Reference : MERC

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