Objectives of the Guidelines
Promotion of competition in the electricity industry in India is one of the key objectives of the Electricity Act, 2003. Power purchase costs constitute the largest cost element for distribution licensees.
Competitive procurement of electricity by the distribution licensees is expected to reduce the overall cost of procurement of power and facilitate development of power markets. Internationally, competition in wholesale electricity markets has led to reduction in prices of electricity and in significant benefits for consumers. Section 61 & 62 of the Act provide for tariff regulation and determination of tariff of generation, transmission, wheeling and retail sale of electricity by the Appropriate Commission.
As per proviso of Section 61 read with Section 178(2) of the Electricity Act, 2003, the Terms and Conditions for Tariff determination from Renewable Energy Sources Regulations, 2012 were framed by the Central Electricity Regulatory Commission (CERC) in February, 2012. Further, section 63 of the Act states that – “Notwithstanding anything contained in section 62, the Appropriate Commission shall adopt the tariff if such tariff has been determined through transparent process of bidding in accordance with the guidelines issued by the Central Government.” These guidelines have been framed to cover grid connected Solar PV Power Projects under the above provisions of section 63 of the Act. 5
The specific objectives of these guidelines are as follows:
1. To facilitate the scale up of solar capacity addition and achieve economies of scale
2. Promote competitive procurement of electricity from Renewable Energy Sources (Solar) by distribution licensees;
3. Facilitate transparency and fairness in procurement processes;
4. Facilitate fulfillment of Renewable Purchase Obligation (RPO) requirement of the obligated entities;
5. Facilitate reduction of information asymmetries for various Bidders;
6. Protect consumer interests by facilitating competitive conditions in procurement of electricity;
7. Enhance standardization and reduce ambiguity and hence time for materialization of projects;
8. Provide flexibility to sellers on internal operations while ensuring certainty on availability of power and tariffs for buyers.
9. Bring uniformity in tendering by various agencies including State utilities which will facilitate investment 10. Ensure bankability