UP Regulatory Commission Approves 100 MW Renewable Power Procurement Agreement Between NPCL And SJVNL At ₹4.38/kWh

Noida Power Company Limited (NPCL) has submitted a petition for the approval of a power sale agreement (PSA) entered into with SJVN Limited (SJVNL) In Uttar Pradeshon March 15, 2024. The agreement concerns the procurement of 100 MW of firm and dispatchable renewable power from renewable energy projects connected to the Inter-State Transmission System (ISTS), combined with an Energy Storage System. This agreement was established through a tariff-based competitive bidding process and is planned to last for 25 years.

NPCL is seeking approval from the regulatory commission for the procurement of this 100 MW of renewable energy. It is part of NPCL’s strategy to meet its growing power demand while complying with the Renewable Purchase Obligation (RPO) targets. NPCL already has long-term agreements for power supply, including a 171 MW round-the-clock (RTC) supply from M/s DIL, which will provide about 158 MW of power at the NPCL bus. Additionally, NPCL sources 25 MW of solar power from M/s Adani Solar Energy Chitrakoot, providing about 13-14 MW during daytime hours, 25 MW from M/s Tata Power Renewable Energy Limited, also providing 13-14 MW during the day, and 10 MW of wind power from M/s PTC India Limited, offering 6-7 MW during daytime hours.

The Central Electricity Authority (CEA) conducted a long-term load forecast for NPCL through fiscal year 2033-34. Based on these projections and NPCL’s current power supply arrangements, there is an expected increase in power deficit starting from FY 2024-25. NPCL’s current power purchase agreements will not fully meet its future demand, making additional power procurement necessary. This 100 MW renewable energy procurement is seen as a step toward addressing that growing power deficit.

NPCL’s petition also seeks approval for the PSA with SJVNL, which would help fulfill NPCL’s rising power requirements. The power purchase agreement is critical for ensuring a steady supply of renewable energy over the long term. In August 2024, the Central Electricity Regulatory Commission (CERC) issued an order approving a tariff of ₹4.38 per kilowatt-hour (kWh) for Tata Power Renewable Energy Limited (TPREL) for a total capacity of 460 MW, of which 100 MW will be supplied to NPCL. This decision further supports NPCL’s request for the approval of the PSA with SJVNL.

A key point in the petition relates to the trading margin associated with this power procurement. Both NPCL and SJVNL have referenced the CERC trading licensee regulations of 2020, which allow for a trading margin of up to 7 paise per unit. However, Regulation 8(1)(d) and (f) leave the decision regarding the exact margin up to the transacting parties, as long as it falls within the 7 paise per unit ceiling. While the trading margin could potentially be reduced to lower the burden on consumers, the state commission has stated that it is unable to intervene in the interstate trading margin due to legal restrictions. The commission invoked the principle “Dura lex sed lex,” meaning “The law is hard, but it is the law.”

In its decision, the commission approved NPCL’s procurement of 100 MW of renewable energy at the tariff of ₹4.38 per kWh, along with a trading margin of ₹0.07 per kWh. However, the commission also noted that if SJVNL fails to provide a secure payment mechanism such as an escrow arrangement or an irrevocable letter of credit to the renewable energy generator, the trading margin would be reduced to ₹0.02 per kWh in accordance with CERC regulations. The commission also approved the PSA between NPCL and SJVNL dated March 15, 2024. Furthermore, the commission advised NPCL to consider these observations when entering into future power procurement agreements to safeguard consumer interests.

With this decision, the petition is disposed of according to the outlined terms.