MNRE Continues Supportive Moves. Clarifies on LOC Issue

Close on the heels of its missive to all state secretary’s, reminding them to treat power generated from wind and solar as ‘must use’, and not subject to curtailment, the Ministry of New and Renewable Energy ( MNRE) has released a fresh clarification on the issue of LC’s (Letter of Credit) needed to be opened by discoms when purchasing power. The LC move had been widely seen as a fresh attempt by the Power Minister Shri RK Singh to improve sentiment and solve a pressing issue for the sector.

The clarification makes it clear that in case the  DISCOM doesn’t open the LC in time, they will still have to pay full tariff as a deemed generation. The move is yet again, a huge positive, although the on-ground implementation is yet to be seen.

Readers will recall that even on the curtailment issue, the MNRE has had to step in to REMIND SLDC’s about something that already exists on the contracts and law, that renewable energy should not be curtailed unless it risks causing instability or there is a technical issue. It is an open secret that select discoms have been curtailing it simply because it is a higher cost source than other options.

What these letters from MNRE, sent in quick succession point to is also a clear resistance being attempted in specific states, to follow the letter of the law and new instructions. Moves that were meant to add an element of stability and predictability to renewable energy producers, all being resisted.

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