CERC Approves UPPCL’s 1,000 MW Solar Power Procurement Plan

The Uttar Pradesh Power Corporation Limited (UPPCL) has filed a petition seeking approval for the procurement of 1,000 MW of solar power through a tariff-based competitive bidding process. This procurement is part of a long-term power supply agreement (PSA) dated February 7, 2024, aimed at meeting the increasing power demand in the state and fulfilling the renewable purchase obligation (RPO) targets set for UPPCL.

The Central Electricity Regulatory Commission (CERC) approved this petition on June 1, 2024, adopting the individual tariffs proposed by four solar power developers (SPDs) that will supply the power to UPPCL. The approved tariffs for the solar power range from ₹2.52 per kilowatt-hour (kWh) to ₹2.53 per kWh.

According to CERC regulations, trading margins can be mutually agreed upon between the supplier and the procurer, capped at ₹0.07 per unit. This allows for flexibility in negotiations without requiring central approval for the trading margin. The arrangement includes a Payment Security Mechanism that mitigates payment risks for project developers, potentially lowering the overall cost for consumers in Uttar Pradesh.

However, the commission noted that it is unable to intervene in interstate trading margins due to existing legal constraints. As a result, it emphasized the principle that “Dura Lex Sed Lex” – meaning the law is hard, but it must be upheld.

In addition to approving the solar procurement, the commission stipulated that if the Solar Energy Corporation of India (SECI) fails to establish an escrow arrangement or provide an irrevocable and unconditional revolving letter of credit to the solar power developers, the trading margin would be limited to ₹0.02 per kWh.

To ensure consumer interests are safeguarded, the commission advised UPPCL to negotiate a trading margin below ₹0.07 per unit for any future long-term power procurement agreements with the intermediary procurer or trading licensee. This step is crucial to keep power costs manageable for consumers while ensuring the growth of renewable energy capacity in the state.