CERC Order Paves Way For Bundling RE With Thermal For DVC

In an important order dated March 5 that paves the way for the signing of PPAs between Damodar Valley Corporation (DVC) on one side and ReNew Power and Avaada Energy for 500 MW of solar procurement, the Central Electricity Regulatory Commission (CERC) adopted the discovered tariffs proposed by DVC.

The tariffs are notable for being part of the Scheme for Flexibility in the Generation and Scheduling of Thermal/Hydro Power Stations through Bundling with Renewable Energy and Storage Power (Flexibility Scheme). Under rules notified by the Ministry of Power in April 2022, for which detailed guidelines were issued in August 2022.

Subsequently, the Ministry of Power, through a letter dated 15.9.2022, released a list in respect of the Central, State and Private sector generating stations for the implementation of trajectory for replacement of the thermal energy with RE, wherein DVC was assigned for the replacement of 6353 MUs (equivalent solar capacity of 3296 MW) progressively during the period from the financial year 2023- 24 to the financial year 2025-26.

DVC, through its bid process consultant REC Power Development and Consultancy Limited (RECPDCL), went on to issue an RFS on Dec1 2022, along with a draft PPA for developers to bid for the supply of 500 MW of ISTS-connected solar power.

Nine bids were received, and eight out of nine bidders were found qualified in terms of the qualification requirement of the RfS. Thereafter, the techno-commercial bid was opened on 3.4.2023 and as per the eligibility criteria mentioned in the RfS, six bidders were shortlisted for participating in the e-reverse auction. The e-reverse auction was conducted on 6.4.2023 and pursuant thereto,
two bidders, namely ReNew Solar Power Private Limited for 200 MW capacity and Avaada Energy Private Limited for 300 MW capacity were selected and RECPDCL  issued Letters of Award on 19.6.2023 after obtaining the approval from DVC.

Perhaps anticipating potential delays, the Ministry of Power has removed key paragraphs of the Flexibility Scheme that required consent from beneficiaries (discoms) as long as the generator is able to supply electricity to the procurer/beneficiary at a price equal to or less than that laid down in the PPA.

it was this, along with its own reading of the other issues raised by discoms from Punjab (PSPCL) and West Bengal (WBSEDCL) that enabled CERC to finally adopt the tariffs as discovered and moved the process ahead.

The bidders will now have 18 months to set up projects for supply of power to DVC, as per the PPA that should be signed shortly.

The CERC order picked apart objections raised by the discoms, on issues ranging from their permission (not required), to profit sharing (not relevant) to the cost being higher than market rates (not backed by data).

Despite that, that it will take probably almost 3 years for the process to lead to the actual injection of renewable energy into the grid, is a good indicator of the work that still needs to be done to speed up India’s energy transition. With over 34 GW of solar, and 18 GW of wind projects in the pipeline after award of tenders, it’s an area that still needs a lot of work to ensure faster execution from Bid to injection.

The full order can be accessed here.