MP provides must-run status to renewable energy but imposes extra charges

Renewable power producers asked to pay all wheeling, transmission, cross-subsidy charges

Providing relief to the renewable energy developers, Madhya Pradesh, the state regulator has exempted renewable sources from merit order despatch, thereby reinstating must-run status for power generated from renewable energy sources.

In a latest order issued by the Madhya Pradesh Electricity Regulatory Commission (MPERC), it was said: “The generation from co-generation and renewable sources of energy to be subject to scheduling. The generation from wind, solar, small hydro, and municipal waste shall not be subjected to merit order despatch principles.”

Renewable power enjoys must-run status across the country so as to ensure its integration in the grid and better returns to the developers. As thermal projects are difficult to shut and start instantly, so in case of demand falling behind schedule, renewable projects are first to be backed down. 

The order comes in wake of the resistance faced by MP after it came with a draft order taking away must run status of renewable energy in August, this year. After representations from the industry, the MPERC changed its stance.  Lately, renewable power project developers in Tamil Nadu and Rajasthan have been facing backing down and have approached the Electricity Commissions contesting it and seeking protection.

At the same time, renewable power producers would now have to pay all wheeling, transmission, cross-subsidy charges live conventional power producers. This could hurt the renewable sector in the state as the low rates received in past years was because the state was the first one to offer exemptions on additional charges borne by power producers.

“Wheeling charges, cross-subsidy charges, additional surcharge on the wheeling charges, if any, under the Section 42 of the Electricity Act, 2003 shall be applicable at the rate as decided by the Commission from time to time in its retail supply tariff order,” it said.

The MP government while issuing its first tender in 2012 had exempted the developers from all the charges. It was the first state to do that and was the reason for companies to make a beeline to invest in the state and quote low tariff, especially in the Rewa Solar park tender.

The order pertains to amendments made in the Madhya Pradesh Electricity Regulatory Commission (Cogeneration and Generation of Electricity from Renewable Sources of Energy) (Revision-I) Regulations, 2010.