The Ministry of New and Renewable Energy (MNRE), India has issued a draft policy for supply of round-the-clock (RTC) power from renewable energy projects complemented with thermal power projects. The policy has been introduced to address some of the issues related to renewable energy such as intermittency and low capacity utilization of transmission infrastructure. Here, ‘reverse bundling’ would be done wherein high-cost thermal power is bundled with low-cost renewable energy in order to provide round-the-clock power to discoms.

The reverse bundling would help in bringing down the overall cost of power purchase and meet the RTC requirements for discoms. It would also increase the penetration of renewable energy and overcome the intermittency issues related to it. Further, it will help discoms to fulfil their renewable purchase obligation (RPO) requirements. The discoms can purchase firm power at competitive rates to meet their deficits and replace expensive power procured from thermal power projects.

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Under the draft policy, discoms would not be responsible to undertake the operations to integrate renewable energy into the grid and the responsibility to complement renewable energy with thermal power solely lies with the generator. The generator has to supply power to the grid in such a manner that out of the total energy supplied in a year at least 51% should come from renewable energy and the balance from thermal related sources. The generator can combine energy storage to ensure that it achieves the minimum requirement of annual availability of 80%. In case of shortfall below the 80% annual availability, a penalty may be charged corresponding to the shortfall at 25% of PPA tariff. The penalty would be also charged in case there is a shortfall in supply of renewable energy below the mandatory 51% of the total power supplied in a contract year. The penalty again will be 25% of PPA tariff.

On the other hand, in case the power is not scheduled, the procurer shall be liable to pay the generator. Under the present regulations, the compensation provided for curtailment of renewable energy power is at 100% of PPA tariff and for thermal power, capacity charges are paid. The compensation for curtailment shall be paid at composite fixed charges.

Under the policy, the capacity will be awarded through tariff-based competitive auctions carried out by Solar Energy Corporation of India (SECI) or NTPC Limited or any other intermediary procurer authorized by the government. A composite single tariff for renewable energy complemented with thermal power shall be quoted by the bidders. The bidder shall specify the break-up of composite tariff into Composite Fixed Charges and Composite Variable Charges. The fixed charges would include renewable energy charges, capacity charges of thermal power and the non-variable component of energy charges for thermal power. The variable charges shall be payable in accordance with the fuel price indexing. The PPA term will be 25 years. The tariff shall be quoted at the delivery point which will be the Central Transmission Utility (CTU) interconnection point. All transmission-related charges and losses from the delivery point onwards will be borne by the discoms. The generator shall obtain open access for supply of power up to CTU-state transmission utility (STU) interconnection point and the entire cost is to be borne by the generator.

The implementation of reverse bundling will meet multiple objectives. One, it will ensure the offtake of conventional fossil fuel-based power, which has become uncompetitive due to the decline in tariffs of renewables, especially solar. Two, it will ensure RTC supply of power to the discoms at competitive tariffs, which is expected to reduce the financial woes of the discoms to some extent. Finally, it will increase the utilization of the grid by bundling thermal power with the intermittent renewable energy.