CEEW Series: Rethinking Renewable Energy Power Purchase Agreements Curtailing Renewable Energy Curtailment
1. Introduction The Central Electricity Regulatory Commission (Indian Electricity Grid Code) Regulations, 2010 (grid code) instituted the provision of priority access and the must-run principle to incentivise the development of the renewable energy industry in India. Accordingly, no solar or wind power plant, duly commissioned, should be directed to back down by load dispatch centre except in the specific case of such dispatch affecting grid security or causing danger to personnel or equipment.7 The grid code exempts RE power plants (except for biomass power plants) from the merit order dispatch principle – cheaper power must be provided to consumers first and that the more expensive power can be supplied only if the cheaper power is unavailable. In the initial years of renewable power production in India, tariffs were high, and deterred offtakers from scheduling renewable power for generation; and they were not mandated to, under law. Hence, the remedy in the form of must-run status and exemption from the merit order dispatch principles was announced for renewable power. This has been adopted by states in the state electricity grid codes. The reason for the exemption is largely because renewable power tariffs were high in the initial years of its production in India, which was a deterrent for offtakers to schedule renewable power for generation, and they were not mandated to, under law. Hence, the remedy in the form of must-run status and exemption from the merit order dispatch principles was announced for renewable power. While the must-run status did help bring investment into the fledgling sector in its early years, it is becoming untenable owing to reasons including the inability of the transmission infrastructure to accommodate large quantities of unscheduled fluctuating renewable power renewable power, RE generators’ failure to effectively forecast the quantum of generation of renewable power, etc. Further, it is pertinent to note that the must-run status was instituted, despite the concerns of discoms, transmission companies, load dispatch centres, conventional power generators,8 amongst other stakeholders in the market, as listed out in the table below.
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Clause 5.2 (u) of the Grid Code Bridge to India, ‘Urgent reform needed to achieve energy sector transformation in India’, http://www.bridgetoindia. com/urgent-reform-needed-achieve-energy-sector-transformation-india/ (March 27, 2017)
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