UPERC Unveils Draft CRE Regulations for Captive and RE Generating Plants

The Uttar Pradesh Electricity Regulatory Commission (UPERC) has unveiled the draft UPERC (Captive and Renewable Energy Generating Plants) Regulations, 2024, replacing its 2019 framework to accelerate renewable energy adoption and streamline captive power generation in the state.

These regulations will be effective from the date of notification until March 31, 2029. The draft applies to all non-renewable captive generating plants with an installed capacity of 1 MW or above, and to renewable captive and renewable energy generating plants with a capacity of 100 kW or more. This 100 kW threshold is in line with the minimum capacity requirement for open access eligibility under the UPERC (Terms and Conditions for Open Access) Regulations, 2019, as amended from time to time.

The regulations bring a comprehensive overhaul of tariff structures and procurement processes for captive and renewable energy plants. Existing non-renewable captive plants, such as coal-based units, and renewable energy sources including bagasse, biomass, municipal solid waste (MSW), and small hydropower will follow fixed and variable tariffs detailed in Schedule-I. For example, tariffs for bagasse-based plants are set to gradually increase from INR 4.30 to INR 4.83 per unit over a period of five years. For new non-renewable and renewable energy projects, excluding MSW, power purchase agreements must now be secured through competitive bidding conducted under Section 63 of the Electricity Act, 2003. MSW projects, however, will have tariffs determined on a project-specific basis.

Significant changes have been introduced in the banking of energy provisions to balance renewable integration with grid stability. Solar, wind, and hybrid projects are permitted to bank up to 25 percent of the monthly energy they inject into the grid or 30 percent of their monthly grid consumption, whichever is higher. Bagasse-based plants, due to their seasonal operation during the sugarcane crushing period, face a quarterly banking cap of 49 percent. Banking facilities for existing non-renewable captive plants will be phased out after a one-year transition period, while new non-renewable plants will not be allowed banking access at all. Banking charges have been fixed at eight percent for solar, wind, and hybrid projects, and 12 percent for other types of plants. Any unused banked energy will lapse but remain eligible for Renewable Energy Certificates (RECs), which provides partial financial compensation to the generators.

To maintain grid discipline and reliability, the regulations mandate that all generating plants adhere to technical standards, emission norms, and the state grid code. The State Load Despatch Centre (SLDC) will enforce Deviation Settlement Mechanisms (DSM) for all plants except small hydro and MSW projects. Solar and wind plants must comply with forecasting requirements set by UPERC, while biomass and bagasse plants will follow the Central Electricity Regulatory Commission’s DSM framework.

The regulations also aim to encourage innovation by allowing pilot renewable energy projects of up to 5 MW, utilising new technologies, to sell power at the Average Power Purchase Cost (APPC) or at mutually agreed rates. Developers who find tariffs unsatisfactory may seek revisions through regulatory prudence checks. Additionally, plants that exceed their target Plant Load Factor (PLF) or Capacity Utilisation Factor (CUF) will receive an incentive of INR 0.50 per unit. For instance, biomass plants that surpass an 80 percent PLF target will qualify for this additional financial benefit.

The 2019 regulations have been repealed, but ongoing contracts and actions under those remain valid. However, any legacy banked energy must be utilised by September 2025, after which unclaimed energy will expire.

UPERC emphasised that these reforms align with the Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules, 2022. The new provisions are designed to address seasonal generation challenges, such as those posed by bagasse plants, while protecting distribution companies (discoms) from risks related to grid instability. The focus on competitive bidding is expected to reduce procurement costs and increase transparency in the sector.

The explanatory memorandum highlights that the provisions provide banking flexibility while safeguarding discom interests. It further states that Uttar Pradesh’s emphasis on competitive tariffs and adoption of cutting-edge technologies underscores the state’s commitment to a sustainable energy future.

The draft regulations are currently open for stakeholder feedback until May 30, 2025.