Thermal Generators Allowed To Bundle Renewable In Existing PPA’s

In one of a promised series of moves to encourage more renewable adoption, the Power Ministry and MNRE have revised guidelines for thermal power producers to allow them to add renewable energy within existing PPA’s. The move has been backed by Power and MNRE Minister R.K. Singh.

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The new guidelines provide for thermal generation companies to set up renewable energy generation capacity either by themselves through developers by open bids and supplying it to the consumers under the existing PPAs. The ministry/s believe this will enable the replacement of fossil fuel based energy by renewable energy under the existing PPAs.

Presently, as the cost of renewable energy is less than the cost of thermal energy, the gains from the bundling of renewable energy with thermal will be shared between the generator and Distribution companies/other procurers on a 50:50 basis. As the renewable energy will be balanced with thermal energy, therefore, the DISCOMs will now not need to acquire any separate capacity for balancing of renewable energy.

The ministry believes this is a very significant step towards achieving the goal of 500 GW of non-fossil fuel capacity by 2030. The distribution companies will be able to count the renewable energy supplied under the scheme towards their renewable purchase obligation and this will be without the financial burden of separate PPA. Interestingly, this should also help discoms meet their RPO obligations within their existing demand supply matrix, as many states have been complaining of lack of fresh demand for energy beyond their committed purchases from thermal producers, that would create space for renewable energy buys.

Calling this just one of the many steps that the ministry will be taking to support the target of 500 GW by 2030 for India, the Power and MNRE ministry has promised announcement of many more such steps in the coming future. On November 5, the MNRE had also issued an order to enable dispute resolution caused by supply disruptions in PV supplies.

Details in terms of the involvement of State Level Electricity Regulators, limits based on period of PPA remaining etc will be shared in due course.

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