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Prioritizing Rajasthan’s Energy Sufficiency Sustainably: The Need For Policy Reforms To Support State Energy Generation Companies

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R.K. Sharma, Chairman & MD, Rajasthan Vidyut Utpadan Nigam Ltd

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Opinion piece by Mr. R.K. Sharma, Chairman & MD, Rajasthan Vidyut Utpadan Nigam Ltd.

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Solar energy is the most readily available source of non-polluting renewable energy resource. The uniqueness of solar technologies is that it offers a wide range of applications in solar PV as well as solar thermal technology in which case, the generated heat could be used for domestic as well as industrial applications and power generation.  

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India being a tropical country is blessed with good sunshine over most parts, and the number of clear sunny days in a year is also quite high. As per the Ministry of New and Renewable Energy (MNRE), Government of India (GoI), India has a vast solar potential of 749 GW for power generation. GOI has fixed an ambitious national target of 175 GW of Renewable Energy which includes 100 GW of Solar Energy by 2022.

When it comes to the status and achievements in Renewable Energy (RE) field, Rajasthan presents a rosy picture having largest Solar Park in the world at Bhadla and sitting at the top in the country in terms of RE installed capacity.

Registration of more than 1,00,000 MW (100 GW) RE projects has been done with RRECL by different entities and approx. 25 GW RE projects are under construction. We are committed to achieving 37.5 GW RE power by 2025 and 90 GW by 2030 through our concentrated efforts and carefully formed policies to encourage RE Power, stack holders. The Board of Investment in Rajasthan has approved 48,400 MW RE projects so far and proposals for several Ultra Mega Renewable Energy Power Projects (UMREPP), are under consideration and expected to be approved soon.

The Western desert region of the State of Rajasthan has a sparse population, dry climate, very low average rainfall, maximum sunshine hours, and vast unirrigated and non-agricultural land which is most appropriate for solar power generation. The assessed Solar Potential of Rajasthan stands at 142 GW. The state Govt. has set a target of 30 GW of Solar Power by 2025 and 75 GW by 2030 (Raj Solar Energy Policy 2019).

GOR has formed Joint Venture Companies (JVCs)with the following private players under clause 10.3 of Rajasthan Energy Policy 2014 with 50-50 equity participation in which GOR has contributed equity in form of Land:

  1. Adani Renewable Energy Park Ltd.
  2. IL & FS Energy Development Co. Ltd.
  3. Essel Infra Projects Ltd.

A staggering 7,98,801 Cr MOUs / LOIs were signed during Rajasthan Invest Summit 2022. Apart from the private entities, CPSUs such as THDC, NTPC, SJVN, SECI, etc. have also shown interest in setting up RE projects in Rajasthan.

Amidst the shining scenario, the only gloomy thing for the state of Rajasthan is that in the current policies the stake of the state’s only generation company RVUN is negligible.RVUN has a strong workforce having vast experience in construction as well as operation of Thermal, Hydro and Gas based power plants and has, for a long, been fulfilling the energy requirements of the state at cheaper rates with its outstanding performance. Being a state-owned company, the people of the state have been direct beneficiaries of its achievements in the field of power generation. It is quite strange that during policymaking for RE, RVUN was not consulted by the decision-making working group. While red carpets were rolled out for private entities and CPSUs, RVUN was not encouraged to enter into the field of RE, especially Solar Power.

Initially, looking to the indifferent stance of the decision makers, RVUN has also kept itself away from foraying into the field of Solar Power Generation. But in the recent past RVUN has strongly made its claim and as a result of constant urge and pursuance, GoR has recently allowed RVUN to develop a 2000 MW Solar Park at Pugal, Bikaner, and establish its own Solar Plant. Given the opportunity, the RVUN engineers & technicians would efficiently adapt to the Solar technologies which would lead to better execution of the state’s RE policies.

The state of Rajasthan by its investor-friendly RE policies has rolled out the red carpet for the stakeholders, but in spite of having such a vast Solar Energy potential and facilitating Solar Power Installers, the state has so far been deprived of the benefits of cheap Solar Energy produced within its boundaries. PPAs of only 3288.1 MW out of the installed 13234 MW Solar capacity have been signed with RUVN by the companies operating in Rajasthan and the rest of the PPAs are with entities operating beyond the state’s premises thus the people of the state are deprived of the benefits of their biggest natural energy resource.

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It would, therefore, be prudent to facilitate RVUN to accelerate its efforts in the RE field by providing administrative and financial support. Being the state GENCO, RVUN should be kept on an equal platform with RREC/ RSDCL and given favorable policy support by making it a Nodal agency for RE through necessary amendments in the state’s RE policies. Being the Generation Company, including RVUN in the working group for formulating policies would be a logical step having far-reaching impacts. RVUN’s rightful and effective presence in the field of Solar Power Generation would be extremely fruitful for the state and its people for the following reasons: –

RVUN has all its existing PPAs with state Discoms. Since the generating companies are allowed to utilize RE for supplying power against their existing commitments / PPAs (Scheme for flexibility Dt. 12.04.22), this would help in achieving RPO targets of Discoms.

In light of ‘Notification of Renewable Obligation’ vide MOP’s proposal Dt. 07.11.2022, the GENCOs, w.e.f. 01.04.2024, may have to establish a minimum of 25% of the RE of the capacity of new Coal / Lignite based Thermal Stations.  Allowing RVUN to establish Solar Power Plants would not only help in achieving its RGO as per the above notification but help in a considerable reduction in GHG / CO2 emissions.

Bundling of RVUN’s Thermal power with Solar Power would substantially reduce the cost of fuel for an equal amount of power generation. Against 810 MW at Pugal considering CUF of 21%, the normalized MW is equal to 170.1 MW of coal unit. If we consider replacing Coal based power of STPS with this Solar Power, the coal consumption would be reduced by 10,43,053 Tonnes per year resulting in approx. saving of Rs. 557.09 Cr in fuel cost annually.

Effective presence of RVUN in the field of RE would help in providing cheap power to the people of the state besides providing long-term stability and cutting into the cost of subsidies by GoR which is increasing year by year (it has risen from Rs. 8640.21Cr in 2015-16 to Rs. 17027.94 Cr in 2021-22). (The biggest hurdle in RVUN’s progress in the Solar field is its financial crunch, so if a part of the agriculture subsidy is transferred to RVUN for setting up new Solar Power Projects and GoR compels State Discoms to do PPA with RVUN, the cheap electricity would be available for agriculture sector thereby substantially reducing subsidy burden on the State besides providing substantial help to Discoms in achieving their RPO obligations).

The experienced technocrats of RVUN could help in the better execution of the RE policies.

As the entire generation of Solar Power by RVUN would be available for state Discoms @ 2.70 per unit (approx.), the people of Rajasthan would get the full benefit of cheaper energy produced by the state’s GENCO. 

In view of post Covid power & coal crises, if state GENCOs had Solar power plants, the replacement RE power could have lessened the burden on the state exchequer by supplying cheap power to the state. If RVUN is promoted to venture into Solar Parks in a big way, such occurrences can be mitigated.

Additional Capacity Requirement: –

Based on the energy assessment by EAC, the Year wise ‘Others’#RPO Capacity addition required up to FY 2029-30 is as under

#: – others = Solar, Bio Energy

From the above data it may be inferred that in order to achieve RPO by 2030, the estimated additional Solar capacity required is 9818 MW.

RVUN is in the process of establishing 2245 MW of Thermal Generating units and, in light of ‘Notification of Renewable Obligation’ vide MOP’s proposal Dt. 07.11.2022, RVUN, will have to establish a minimum of 561.25 MW of RE.

The total additional RE capacity requirement, therefore, stands at 9869.25 MW up to 2029-30.

In view of the above, the following amendments/insertions of new clauses in the Rajasthan Solar energy Policy,2019 and Rajasthan Wind and Hybrid Energy Policy,2019are proposed:

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Rajasthan Solar Energy Policy, 2019

(Date of commencement – 19.12.2019)

Proposed Amendment for RVUN’s Solar Park/Solar Project.

SynodExisting ClauseProposed by RVUN
1Main Clause 4: “Definitions” Currently no definition of UMREPP is added in Policy.Main Clause 4: “Definitions” Insertion of the definition of UMREPPi.e., Ultra Mega Renewable Energy Power Park be inserted/added in the Policy at no. 64
2Main Clause 10 “Utility Grid Power Projects”
Existing sub-clauses
10.1: “Solar Power Projects in Rajasthan for sale of power to DISCOMs of Rajasthan”10.2: “Solar Power Projects sanctioned under guidelines/schemes of MNRE”10.3: “Solar Power Projects for captive use10.4: “Grid connected Solar Power Projects for Third Party Sale10.5: “The Projects set up under clause 10.3 & 10.4 will also be eligible for RE (Solar) Certificate as per Orders/Regulations issued in this regard by the appropriate Commission10.6: “The State will also promote setting up of floating/reservoir top/canal top Solar Power Projects for sale of power to DISCOMs through competitive bidding or for captive use/third party sale

Main Clause 10 “Utility Grid Power Projects”Insertion of New Sub – Clause 
10.7: “Solar Projects by/of RVUNL (under bundling scheme/captive use)” for sale of Power to Discoms.
The State will promote the setting up of solar power projects for the sale of power to DISCOMs of Rajasthan on the tariff discovered through a competitive bidding process or through EPC mode on tariff approved by RERC to fulfill Renewable Purchase Obligation (RPO) target fixed by RERC or for Captive Use of RVUNL. 
3Main Clause 12 “Solar Park”Existing sub-clause 12.3.4: The State Government on its own or through any other agency designated by it will promote setting up of Ultra Mega Renewable Energy Power Park (UMREPP) in joint venture with Central Public Sector Undertakings.Main Clause 12 “Solar Park”Amendment proposed in sub-clause 12.3.4:“The State Government on its own or through any other agency designated by it will promote setting up of Ultra Mega Renewable Energy Power Park (UMREPP) as per the guidelines issued by MNRE and amended time to time” 
Insertion of new Clause 12.4 “Solar Parks by RVUNL”
“RVUN will develop Solar Parks in Rajasthan with/without CFA support from State/Central Government on its own or through any other SPV which may be created as required as per the mandate given by State Government”.
4Main Clause 14 “Registration of Solar Power Projects”Currently, no clause regarding registration charges has been mentioned specifically for Utility Scale Solar Power Projects approved by State Government mentioned. Clause 14 “Registration of Solar Power Projects”Insertion of new Clause 14.14: “Registration Charges for Solar Projects approved by State Government (for RVUNL)”
No Registration Charges shall be applicable for Solar Power Projects approved by State Government to be installed by RVUNL under EPC mode. 
5Main Clause 15 “Allotment/Procurement of Land”Existing sub-clauses
15.1: “Allotment of Government Land to Solar Park /Solar Power Projects”.15.1.1: Clause regarding land security deposit @ Rs 5 Lakhs/MW”.15.1.2: “Clause regarding allotment of maximum land area as per SPV technologies”
Currently, no clause regarding allotment/procurement of land specifically for Solar Park by RVUNL approved by the State Government or under the MNRE scheme mentioned.
Main Clause 15 “Allotment/Procurement of Land”Insertion of New Sub-Clause
15.1.3 “Solar Park by RVUNL approved by State Government or under MNRE scheme”.
For Solar Parks under Clause 12.4 (proposed new clause above under main clause 12), RREC will recommend, on case-to-case basis to Concerned District Collector for allotment of Government Land without any Security Deposit”.
6Main Clause 18 “In-Principle Clearance of Solar Power Projects”
Under sub-clause 18.1, 18.2& 18.3Procedure for in-principle clearances of Solar Projects other than projects approved by State Government like the case of RVUN are mentioned.
Main Clause 18 “In-Principle Clearance of Solar Power Projects”
Insertion of New Sub-Clause 
18.4: “In-Principal Clearance of Solar Power Projects approved by State Government (projects of RVUNL)”.
Solar Projects under clause 10.7 requires(proposed new sub-clause above under main clause 10)No In-Principal Clearance by SLSC/SLEC.
7Main Clause 19 “Security Deposits”After in-principle clearance of the projects by the State Level Screening Committee (SLSC), the Developer/Power Producer will be required to deposit security amount of Rs. 10 lac/MW in the form of bank guarantee or Rs. 5 lac/MW in cash within one month without interest and within 3 months with interest @ 9% per annum is required. Applicable for Solar Power Projects for for captive use, Grid connected Solar Power Projects for Third Party Sale, Solar Power Projects with Storage Systems for captive use/third party sale and under clause 13(iv) “for charging station service providers.Main Clause 19 “Security Deposits”Insertion of New Clause 
19.7: “For Projects under clause 10.7”.
No Security deposit will be required for the Solar Projects to be set up by RVUNL under clause 10.7(proposed new sub-clause above under main clause 10)

Proposed Amendment in Rajasthan Land Revenue (Allotment of land for Setting up of Power Plant based on Renewable Energy Sources) Rules, 2007

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Existing Clause 12A: Allotment of Land to the R.R.E.C or Rajasthan Solar Park Development Company Limited: Land may be allotted to RREC or Rajasthan Solar Park Development Company Limited on the following terms and Conditions, namely: –

  1. The land shall be allotted on leasehold basis for a period of 99 years. 
  2. The premium to be charged for the allotment of government land for setting up and developing Solar Park shall be equivalent to the market value of land assessed on the basis of rates recommended by the DLC of the same class of agricultural land in the vicinity and shall be determined accordingly.
  3. Lease rent shall be payable at the rate of Rs. 1/- per acre per annum.
  4. The R.R.E.C. or Rajasthan Solar Park Development Company Limited, may sub-lease the leased land or part thereof for setting up and developing Solar Park for solar plant/ solar power plant/ solar PV power plant/solar thermal power plant/ solar farm purposes.
  5. The R.R.E.C. or Rajasthan Solar Park Development Company Limited, may levy and recover such lease rent and other charges as may determine by it, in respect of the lands sub-leased by it.
  6. The periods of the sub-leases shall be determined by the R.R.E.C. or Rajasthan Solar Park Development Company Limited, but such period shall not exceed 30 years, in all, in any case.
  7. They shall revert to the Government free of all encumbrances and without payment of any compensation in case the R.R.E.C. or Rajasthan Solar Park Development Company Limited or any of its sub-lessees use it for any purpose other than solar plant/ solar power plant/ solar PV power plant/solar thermal power plant, including essential welfare and supporting services or commit a breach of any other condition of the lease or sub-lease; and 
  8.  The sub-lessee of the R.R.E.C. or Rajasthan Solar Park Development Company Limited shall continue to be governed by all other terms conditions prescribed in these rules and any other analogous rules that may be promulgated or orders that may be issued, in this behalf by the State Government.]

Addition of new phrase in Rule 12A Rajasthan Land Revenue (Allotment of land for Setting up of Power Plant based on Renewable Energy Sources) Rules, 2007 as below-

“Allotment of Land to the R.R.E.C or Rajasthan Solar Park Development Company Limited or RVUNL (or any of its subsidiary/JVC): Land may be allotted to RREC or Rajasthan Solar Park Development Company Limited or any RVUNL (or any of its subsidiary/JVC) on the following terms and Conditions, namely: –

  1. The land shall be allotted on leasehold basis for a period of 99 years. 
  2. The premium to be charged for the allotment of government land for setting up and developing Solar Park shall be equivalent to the market value of land assessed on the basis of rates recommended by the DLC of the same class of agricultural land in the vicinity and shall be determined accordingly.
  3. Lease rent shall be payable at the rate of Rs. 1/- per acre per annum.
  4. The R.R.E.C. or Rajasthan Solar Park Development Company Limited or RVUNL (or any of its subsidiary/JVC), may sub-lease the leased land or part thereof for setting up and developing Solar Park for solar plant/ solar power plant/ solar PV power plant/solar thermal power plant/ solar farm purposes.
  5. The R.R.E.C. or Rajasthan Solar Park Development Company Limited or RVUNL (or any of its subsidiary/JVC), may levy and recover such lease rent and other charges as may determine by it, in respect of the lands sub-leased by it.
  6. The periods of the sub-leases shall be determined by the R.R.E.C. or Rajasthan Solar Park Development Company Limited orRVUNL (or any of its subsidiary/JVC) but such period shall not exceed 30 years, in all, in any case.
  7. They shall revert to the Government free of all encumbrances and without payment of any compensation in case the R.R.E.C. or Rajasthan Solar Park Development Company Limited or RVUNL (or any of its subsidiary/JVC) or any of its sub-lessees use it for any purpose other than solar plant/ solar power plant/ solar PV power plant/solar thermal power plant, including essential welfare and supporting services or commit a breach of any other condition of the lease or sub-lease; and 
  8.  The sub-lessee of the R.R.E.C. or Rajasthan Solar Park Development Company Limited or RVUNL (or any of its subsidiary/JVC) shall continue to be governed by all other terms conditions prescribed in these rules and any other analogous rules that may be promulgated or orders that may be issued, in this behalf by the State Government.]

CONCLUSION:

CEA in its generation mix report for 2029-2030 indicates that thermal power generation of about 34% will remain as a prime source of feeding power into the grid with penetration of renewable energy to provide safe, secure, and trouble-free operation of the grid. The old inefficient thermal units are to be replaced with more efficient and eco-friendly ultra-supercritical units. 

In Rajasthan there is ample potential for solar generation, at present we are in the first position in India but to extract maximum from the available infrastructure resources and to benefit the state there is a need for the amendment to current solar policies so that we can get min 10% of the power generated by private developers free of cost to Rajasthan. 

State GENCOs should be provided full financial support to develop solar power parks and solar projects so that complete solar generation is available to Rajasthan.

Last year, power consumption by the agricultural load is 2,88,021 lakh units, and expenses in lieu of the same were 18432 crores on power purchase @6.4 Rs per unit. Subsidy released by GoR for the same- 16218 Cr. If state GENCOs can be provided with a fraction of agricultural subsidies, then in due course of time Rajasthan state GENCOs will be able to provide electricity at cheaper rates to the state on a permanent basis powering agriculture through renewable energy. If Utpadan Nigam can generate solar power, then the maximum rate of a generation shall be approx. Rs. 2.70 per unit which is quite cheaper as compared to the thermal generation cost. 

Looking into the rising power demand of the nation, MOEF and the Forest department of GOI should ease out policies to facilitate early clearances to develop pump storage facilities to meet the peaking power demands. In Rajasthan, we have the capability to develop pump storage facilities at JawaharSagarHydel Power station and RanaPratapSagar Hydro Power Station.

GoR should make policies in such a way that whatever solar energy is generated by state GENCO is procured by RUVN/Discoms. Through this step, we will be able to reduce carbon emissions immensely and generation costs will be reduced. 

RVUNL power plants have the infrastructural capacity to install solar power plants, but the only roadblock is a financial capability that has been worsened due to long outstanding dues with Discoms. If financial support can be given the installation of these plants can be paced up very quickly.

While issuing fresh consent for the installation of new solar projects, it is also to be kept in consideration that Rajasthan has an estimated Solar potential of 142 GW, out of which registration for 80 GW has already been done in favor of Private entities & PSUs. Going by the present scenario, a major part of the energy produced by these players using the state’s resources would be exported out of the state. Therefore, a major part of the remaining solar potential should be kept reserved for the state’s agency so that the power generated by the state’s resources could be used by the state’s people.

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