Delhi Electricity Regulatory Commission Approves Power Sale Agreement For Renewable Energy Procurement

In a significant development shaping the landscape of renewable energy procurement, the Delhi Electricity Regulatory Commission (DERC) issued a pivotal order on March 26, 2024, regarding a Petition filed by BSES Rajdhani Power Limited (BRPL) against Solar Energy Corporation of India (SECI) and other key stakeholders. The petition, aimed at securing approval for a Power Sale Agreement (PSA) dated July 20, 2021, between BRPL and SECI, sought to procure 110 MW from SECI’s expansive 1,200 MW ISTS-Connected Wind-Solar Hybrid Power projects.

BRPL, a prominent joint venture company and distribution licensee in Delhi, has strategically pursued this agreement to fulfill its Renewable Purchase Obligation (RPO), as mandated by DERC regulations. SECI, operating under the Companies Act, plays a pivotal role in advancing solar power initiatives and conducts bids for solar projects to assist distribution licensees like BRPL in meeting their RPO targets.

The petition underscored the robust regulatory framework governing renewable energy procurement, notably citing the DERC Renewable Purchase Obligation Regulations 2012 and the DERC Business Plan Regulations, which delineate RPO targets for BRPL across various fiscal years. Additionally, it highlighted the National Wind-Solar Hybrid Policy, designed to optimize transmission infrastructure utilization and enhance grid stability.

A key aspect of the petition was the meticulous detailing of SECI’s competitive bidding process, which culminated in the selection of certain generating companies to supply power from their Wind-Solar Hybrid projects. The petition elucidated the competitive bidding process, tariff discovery mechanisms, and the imperative for regulatory approval of long-term Power Purchase Agreements (PPAs) to meet RPO obligations. It stressed the advantages of procuring renewable energy through PPAs as opposed to relying solely on Renewable Energy Certificates (RECs), arguing that direct procurement of green power yields more substantial benefits for consumers.

In its comprehensive analysis, the Commission acknowledged the in-principle approval granted to BRPL for power procurement and subsequent developments, including the competitive bidding process and tariff adoption by the Central Electricity Regulatory Commission (CERC). Notably, the Commission deliberated on the back-to-back nature of the PPAs and PSAs involved examined regulatory and legal precedents concerning trading margins, and considered conditions set forth by the Supreme Court of India.

Concluding its deliberation, the Commission rendered its approval for the PSA between BRPL and SECI, facilitating the procurement of 110 MW of power at a total tariff of ₹2.48/kWh, inclusive of the trading margin. However, this approval is contingent upon the outcome of ongoing legal proceedings on the trading margin. Furthermore, the parties involved have been instructed to promptly inform the Commission about the commissioning of the projects within 30 days of operationalization of the Long-Term Access (LTA).

In essence, the DERC’s order represents a watershed moment in advancing renewable energy procurement objectives, underscoring the regulatory commitment to fostering sustainable energy practices and bolstering the transition towards a greener, more resilient energy ecosystem.

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