The Uttar Pradesh Electricity Regulatory Commission (UPERC) is the policymaking, supervisory, and regulatory body for the state’s power sector. The commission body has issued the new Captive and Renewable Energy (CRE) Regulations, 2024. It upgrades the power system, meets industrial power demand, and shifts towards environmentally friendly energy.
The key objectives include the extensive use of renewable energy, simplify the process of determining tariffs or electricity prices, ensure grid stability, and support India’s national renewable energy targets.
These regulations have come into force from the date of publication and will remain applicable until March 31, 2029. However, the tariff provisions were effective from April 1, 2024, helping to make the power sector more transparent, stable, and investment friendly.
What are the UPERC CRE Regulations, 2024?
UPERC CRE Regulations, 2024 have been issued in exercise of the powers of the Commission under Section 181 read with Sections 9, 61, 86(1)(a), 86(1)(b), and 86(1)(e) of the Electricity Act, 2003.
These rules will be applicable from the date of notification to March 31, 2029 (unless extended by commission). These regulations shall apply to all Captive Generating Plants of 1 MW or more for non-RE, and 100kW and above for RE. It generates electricity from any renewable or nonrenewable source. This includes biogas, biomass, solar, wind power, cogeneration units, waste to energy plant, and conventional energy-based captive plants. It brings power generation, tariff determination, grid management, and power supply to the state under an integrated framework.
Coordination between power suppliers, consumers, investors, and distribution companies will be easier. Also, setting up captive and renewable power projects in the state will be easier and more regulated.
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What are the Key Provisions of CRE Regulations, 2024?
The key provisions of the CRE Regulations, 2024 are:
Applicability and Scope of UPERC CRE Regulations, 2024
UPERC CRE Regulations, 2024 apply to every generating plant with an installed capacity of 1 MW or more. It does not matter if the plant operates on renewable or non-renewable resources. The rules cover renewable energy projects and cogeneration units designed to improve energy efficiency. The regulations apply across the entire state, and cover the entity (company) producing, selling or using electricity under captive or renewable energy setups.
Clean Development Mechanism (CDM) & Carbon Credit Distribution
If renewable and captive power generation companies begin the Clean Development Mechanism (CDM) project on or after 1 April 2009, they will be able to keep 100% of the revenue earned for those carbon credits in the first year.
This revenue will be distributed in stages from the second year onwards. First, 10% will be given to the buyer or the electricity distribution company, and this share can slowly increase to 50% in future.
The UPERC will decide on a new way to share the revenue, if the CDM scheme is closed or changed for any reason. This policy aims to encourage companies to invest in clean energy and also give some benefit to electricity buyers.
Compliance and Technical Requirements of UPERC CRE Regulations, 2024
As per UPERC CRE Regulations, 2024, every captive and renewable power project must adhere with the following technical and safety standards:
Technical Standards and Safety
- Generating units must follow the technical standards prescribed by the Central Electricity Authority (CEA) for design, construction, operation, and connectivity.
- Each project shall comply with the regulatory framework of the Uttar Pradesh Electricity Regulatory Commission (UPERC) Connectivity Regulations, 2010, along with other applicable codes and orders.
Metering and Data Monitoring
- Proper metering systems must be installed and maintained as per the guidelines issued by the CEA and the State Transmission Utility (STU) to ensure accurate measurement of energy generation and supply.
- The project authority shall coordinate with the SLDC (State Load Despatch Centre) for scheduling, load dispatch, and real-time data monitoring.
Environmental Standards
- Environmental Clearance shall be obtained.
- National and state-level emission norms should be strictly followed.
- Environmental EPR compliance reports should be submitted at regular intervals.
Deviation Management
- If there is any deviation in the supply or demand of electricity, it will be regulated as per the CERC Deviation Settlement Mechanism (DSM), 2024.
- Violation of the rules prescribed to maintain grid stability may also attract financial penalties.
Additional Responsibilities of Captive Generating Plants
According to UPERC CRE Regulations, some additional obligations have been prescribed for captive generating plants (CGPs):
Ownership and usage policy
- As per Section 9 and Rule 3 of the Electricity Rules, 2005, a minimum of 26% equity and 51% power consumption should be held by the original owners.
- It is compulsory to verify the captive status and related operational criteria compliance with the UPERC Verification Regulations, 2022.
Audit and verification
- As per the Energy Conservation Act, 2001, a biennial (after every two years) energy audit is mandatory.
- Electricity consumption data must be checked and verified as per the UPERC Verification Regulations, 2022.
Renewable Energy Obligation (RPO)
- The CGP must meet the required Renewable Purchase Obligation (RPO) target.
- A penalty or additional surcharge may be imposed if the prescribed RPO is not met.
Tariff Structure of Electricity to Distribution Licensee
UPERC has issued some clear guidelines on tariff determination and PPA approval for renewable power projects.
- Existing Plants: The tariff determined for existing plants based on Bagasse, Biomass (Rice Husk), Municipal Solid Waste, and Small Hydro plants is fixed in Schedule-I and is valid from 1 April 2024 to 31 March 2029.
- New Plants: Must follow the tariff rules under the UPERC Modalities of Tariff Determination Regulations, 2023.
- Rooftop Solar PV: Must adhere to the UPERC Rooftop Solar PV Regulations, 2019.
- Multiple Units: If any project is designed in multiple phases, the weighted average tariff will be applicable.
- Capacity Charges: Capacity charges will be based on Plant Load Factor (PLF). Let’s say, 80% for biomass and 50% for bagasse-based plants.
- New RE Technologies: For the new renewable technologies, pilot projects up to 5 MW to get tariffs based on the lower value between the APPC or PPA rate.
Approval of Power Purchase Agreements (PPAs)
All Power Purchase Agreements (PPAs) approved by generating plants must obtain UPERC authorisation. The approval process aligns with the UPERC Conduct of Business Regulations, 2019. The licensee must apply for approval within one month of signing the PPA and submit yearly energy data by 30 June for the previous financial year. The PPA will not be considered legally valid, and financial transactions may be affected without approval.
Power Procurement, Open Access and Exemption
Power Purchase Method
Generating plants can supply power through distribution licensees or using open access. If power is purchased from a distribution licensee under the HV-2 tariff category, it is applicable.
Demand charges
- 50% for usage up to 15 days.
- 100% for more than 15 days.
- Nil if no power is drawn.
Open Access and Exemption of Charges for UPERC CRE Regulations, 2024
In Uttar Pradesh, Captive Generating Plants (CGPs) must pay (transmission, wheeling, prescribed) charges for state or interstate networks. However, special exemptions are provided in some cases:
- CGS are not required to pay cross-subsidy surcharge when the electricity is used for their own captive use.
- If the power is supplied to others (non-captive use), then a Cross-Subsidy Surcharge must be paid.
- Solar projects above 5 MW capacity under the Uttar Pradesh Solar Energy Policy 2022, get special benefits such as:
100% wheeling and transmission charges are waived off, when sold to a distribution licensee.
50% exemption charges when selling for captive use or to third parties.
Banking of Energy Facility
Banking allows renewable energy producers to store extra electricity in the grid and use it later. This benefit mainly applies to renewable energy projects.
Bagasse-based plants:
- Up to 100% of the electricity generated per quarter can be banked.
- Unused units can be carried forward for up to two quarters.
RE CGPs (excluding Bagasse): Up to 25% of the monthly injected energy or 30% of the total consumption. It is higher and can be banked.
Non-RE plants: Paid ₹1/unit or PPA rate, whichever is lower.
MSW plants: Banking is not allowed.
Banking Charges:
- 8% banking charges – solar, wind, and hybrid projects
- 12% banking charges – all other projects
Usage Method
- The stored electricity must be withdrawn on a FIFO (First-in, First-out) basis.
- MSW (Municipal Solid Waste)-based plants do not get banking facilities.
Maintenance Responsibility
- All projects other than MSW will have to carry out regular maintenance of their transmission lines and terminal equipment.
- If necessary, the distribution licensee or STU (State Transmission Utility) can undertake this maintenance work through mutual agreement.
- The licensee or STU will bear the entire maintenance cost of MSW plants.
- This cost is easy to recover later through tariffs.
COD Declaration Process
COD or Commercial Operation Date, is the date from which power supply from a renewable power project officially starts.
1. For RE Plants Selling to Distribution Licensees
- COD or Partial COD (Part-COD) is declared as per the terms and conditions stipulated in the PPA.
- The electricity supplied to the grid during the trial run is considered a deemed purchase.
- The DISCOM pays 50% of the PPA tariff for that electricity.
2. For Solar PV Plants Selling to Other Entities:
- The Solar Power Developer (SPD) has to first register with UPSLDC and inform them of the date of the 7-day trial run.
- It is mandatory to test at least 10% of the plant capacity during the trial.
- A maximum of four trials is allowed.
- The maximum power generation has to be maintained for 15 consecutive minutes for three days within two weeks for a successful trial.
- If the SLDC is successful in its verification, COD can be declared within one year.
- If full capacity is not achieved within one year, the plant capacity has to be derated and registered.
- The electricity generated during the trial is valued at 50% of the weighted average tariff of approved solar projects.
Importance of UPERC CRE Regulations, 2024
UPERC CRE Regulations, 2024 ensure transparency, due process, and environmentally friendly power generation in the power sector.
- Creates certainty and stability: With a fixed regulatory period from 2024 to 2029, investors, discoms, and captive users know in advance how the tariffs and rules will work.
- Encourages renewable energy and captive generation: Banking, open access facilities, and a clear tariff structure to encourage new investments.
- Clarifies costs and responsibilities: The UPERC CRE Regulations, 2024 reduces confusion and conflicts by specifying who builds and maintains transmission/equipment, how costs are recovered, and who pays what (wheeling/banking charges).
- Supports the state’s clean energy goals: Exemptions, banking facilities, and captive use incentives for solar projects larger than 5 MW to increase renewable energy.
- Creates a simple and practical framework: COD declaration, tariff approval, and reporting, everything is outlined step-by-step, reducing the complexity of project management.
Conclusion
UPERC CRE Regulations, 2024, are a significant reform in the power sector of Uttar Pradesh. They streamline tariff management, power procurement, banking, environmental compliance, and grid stability. These regulations promote renewable energy and help create an industry-friendly environment.
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Common Questions About UPERC CRE Regulations 2024
What types of plants are covered under the UPERC CRE Regulations, 2024?
UPERC CRE Regulations, 2024 apply to renewable energy plants (such as solar, wind, and biomass) and cogeneration and captive generation of plants. All types of generation units supplying electricity through the grid have to follow these rules. Even small and large power projects come under this. So, issues related to power supply, metering, and charging are clarified.
How long is the validity of these rules?
The validity of UPERC CRE Regulations 2024 is from 2024 to 2029, i.e. for 5 years. This specific period is called the “Control Period”. All processes related to power generation, tariff, charge, and approval will be conducted according to a specific framework. This gives certainty to investors, power generators, and distribution companies.
How is the revenue share determined in CDM or carbon credit projects?
The additional income generated in a carbon credit or CDM project is first used to recover the project's costs and investment. After that, the remaining income is usually shared in the ratio of 50:50 between the project owner and the electricity buyer or end consumer. However, if there are different conditions in the PPA or contract, it can be applied.
What standards or compliance standards do generating plants have to comply with?
All generation units must comply with safety, metering, grid connection, and environmental rules as per CEA (Central Electricity Authority), UPERC, and Grid Code. It is mandatory to install correct meters, report data, and declare COD as per the process. Failure to comply with the standards may result in fines or cancellation of the grid connection.
Do captive plants have to pay for the Cross-Subsidy Surcharge?
If captive plants use electricity for their own consumption, they do not have to pay for the Cross-Subsidy Surcharge. But if that electricity is sold to other consumers or commercial customers, then this surcharge will be applicable. If it is “self-consumption,” it is exempt; if it is “sold to others,” then there is a charge.
How are tariffs determined for old and new plants?
Plants that have already signed PPAs will sell electricity as per the previous tariff. In the case of new projects, the tariff will be fixed through the Generic Tariff or Competitive Bidding determined by UPERC. This tariff considers investment cost, operation cost, and return on investment.
What is meant by energy banking, and how does it work?
Energy banking is a system where power generators can store excess power resources in the grid and withdraw them later if required. This power must be adjusted, usually within 6 to 12 months. In some cases, banking charges are imposed on the balance of energy. This is for the benefit of solar or RE plants.
What is the process of declaring COD of solar or renewable plants?
Before declaring COD (Commercial Operation Date), a trial run of 7 days is required. It is important to test at least 10% capacity in the trial. Successful testing requires maintaining peak generation for 15 minutes over three days. After that, the SLDC verifies and approves COD. If full capacity is not achieved within one year, the project capacity is considered under capacity.
How can Corpbiz help you with compliance or licensing?
Corpbiz provides you with complete support in project registration, COD approval, PPA preparation, open access, banking application, SLDC approval, and tariff-related documentation. It provides regulatory documentation preparation, government applications, and consultancy services so that your plant is commissioned on time, and all legal obligations are met.
