The Maharashtra Electricity Regulatory Commission (MERC) has made it mandatory for distribution licensees in the state to purchase 6 per cent of their total power procurement through renewable energy sources — both solar and non-solar.
MERC has, in its notification related to regulations on renewable power obligation (RPO), said the renewable power component would have to be procured either physically at a preferential rate or through the purchase of renewable energy certificates (REC). According to its regulations, RPO, which has been fixed at 6 per cent for 2010-11, would increase by one per cent every year. The obligation would also include captive power plans in the state.
In the case of failure to comply with the regulation, the licensees would have to pay penalties to MERC. These would have to borne by the licensees in their balance sheets as they would not be allowed to pass on the penalties to consumers.
With notification of the RPO and REC regulations, Maharashtra has become another state after Gujarat to take regulatory initiatives for the promotion of renewable power.
An MERC official told Business Standard: “REC is an instrument of trading, which is tradable at power exchanges, and it is also a tool for fulfilment of RPO by the obligated entity.” The official said the state power regulation was empowered to frame the regulations for procurement of power from renewable energy sources as a promotional measure.
RECs would have to be procured by distribution licensees at a price ranging between Rs 1.50 and Rs 3.90 per unit. While Rs 1.50 is the floor price, Rs 3.90 will be the forbearance price.
Power analyst D Radhakrishna said there were five utilities in addition to captive consumers of 2,000 Mw in Maharastra. “The total renewable power under a preferential tariff mechanism, which exempts respective utilities to buy Renewable Power, is around 200 Mw. However, the utilities will have to buy solar-based renewable electricity certificates because the state does not have more then 5 Mw of solar-based power.”
A MahaVitaran source said: “If a licensee is procuring 10,000 Mw of power now, it will have to mandatorily procure 600 Mw of renewable power, according to MERC regulations.” However, the official added that it was required to be seen how the entire mechanism worked, especially due to the time taken in developing solar-based energy projects.
