UPERC Decides To Wait For Project Commencement on Amplus Plea

The Uttar Pradesh Electricity Regulatory Commission, in an order on January 7, has dismissed a petition by Amplus Green to consider its 50 Mw Mirzapur solar project installation as a captive project, asking the firm to file its plea after project completion instead. The order came even as Amplus Greens Private Limited has reached an advanced stage in the construction of the project for installing a 50 MW plant at Mirzapur, a district known for its leather industries in the state. Amplus Green was set up after the MOU between parent firm Amplus Energy Solutions and the UP government for establishing 500 MW of solar capacity in the state. The petition was possibly an effort to set the template for the full investment roadmap, now that work on the second project at Deoria is also on.

For the Mirzapur site, which was the first of the projects earmarked, the firm had committed an investment of Rs 250 crores, with project completion expected by September 2019. How this order impacts the project is not completely clear at this stage, though it doesn’t look all bad. In fact, the move by Amplus, which was also in effect dismissed for being ‘immature’

The  petition had been filed to seek clarifications on three key points:

• Withdrawal of banked energy from the Mirzapur project by captive renewable energy projects for own use. This is apparently important for the project to stay out of the ‘supply of power’ definition that would kick in from the Electricity Act. Especially as the project meets the condition of a 26 % shareholding by the ‘operator’, (Amplus), and consumption of over 51 power of the power produced by the other shareholders.  According to the commission order, the rules state that classification as a captive generating station is an ex-post event, and not an ex-ante (Advance) event, hence removing the case for a decision at this stage.
• The permissible term to avail banking facility by a renewable project under CRE regulations, 2019. Amplus contended they needed the facility for all 25 years, the life of the project.  Here, the commission has put the ball back with the UP government, which is yet to issue any order specifying any period beyond the current 5 years.
• The requirement to obtain a license for establishing, operating and maintaining a dedicated transmission line. This was based on a Ministry of Power order, which states no such requirement anymore. Here, the commission agreed with Amplus, stating the order from the Ministry of Power would supercede any other order, including from the CRE.

Thus, the decision, while not actually a rejection of Amplus’s premise, does put the firm in slightly uncertain zone, where it will apparently have to start the project, perform and meet the conditions of the electricity act, go through checks and certifications by UP power officials, and then get its status confirmed as a captive plant with rights to use banked energy for own use. How that impacts the effort to rope in corporate partners, remains to be seen.

It’s a very interesting case worth tracking to its logical conclusion, not only for the size of the investments and precedents it will create for UP, but also more broadly, as Amplus signs up more customers for its operating model of users(shareholders)  buying most of the banked energy for captive use.

The group captive market has high hopes riding on it, and not just from Amplus Energy. It is widely seen as one of the bright spots in the push to achieve critical solar energy targets, besides driving corporations and industries to become more sustainable in their energy use.

Interestingly, the UPERC order comes less than a month after another order where it had expressed displeasure at the failure of the state discom UPPCL and others to meet their Renewable Purchase Obligations (RPO). The commission had then mandated the creation of a separate account to use the proceeds to remedy the shortfall if possible. That account, with a total sum of Rs 737 crores, of which Rs 293 crores is on account of the solar shortfall, was to be st up and sums deposited in tranches by March 2020. Watch this space to know just what happened to this order.