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Making solar plants more viable: UP units to get life-long power-banking facility

Solar plants in Uttar Pradesh will now get a life-long, power-banking facility, a process under which they will be able to deposit excess power in the grid and withdraw it when they need to sell it to customers
By Brajendra K Parashar, Lucknow
PUBLISHED ON JUN 18, 2021 10:53 PM IST

Solar plants in Uttar Pradesh will now get a life-long, power-banking facility, a process under which they will be able to deposit excess power in the grid and withdraw it when they need to sell it to customers.

Using its exceptional powers under the section 108 of the Electricity Act, 2003, the state government has directed the UP Electricity Regulatory Commission (UPERC) to make necessary changes in its current regulations to pave the way for the power-banking facility for solar plants during their entire life term.

Tamil Nadu and Chhattisgarh are said to be the only two other states in the country to have made provisions for power-banking facility for an open-ended period for renewable power-generating plants.

According to government officials, the move will save solar power-generating companies from financial losses they suffer on account of wastage of excess power, apart from helping new investors get the projects financed easily.

“In a meeting chaired by the additional chief secretary, energy and renewable energy, on January 23, 2021, it was decided that the power-banking facility will be provided to all solar energy-generating units commissioned during the Solar Policy-2017 till they complete their life or for 25 years from the date of their commissioning, whichever earlier offer a long-term clarity and certainty to investors and financiers,” Alok Sinha, additional chief secretary, energy, wrote in a letter to UPERC on June 15.

“The government, therefore, directs the UPERC, using its powers under the section 108 of the Electricity Act, 2003 to act in accordance with the decision taken by it under the Solar Policy-2017 in the larger public interest,” Sinha added in the letter.

According to New and Renewable Energy Development Agency (NEDA) director, Bhawani Singh Khagrawat, under the existing provisions known as UPERC (Captive and Renewable Energy Generating Plants) Regulations, 2019, the power-banking facility to solar plants is available only for five years and till March 31, 2024.

“This was creating a state of uncertainty about what would happen after 2024, and the investors were also finding it difficult to get their projects financed for the same reason. Now, the government directions to the UPERC will make it possible for these plants to enjoy the power-banking facility during their whole useful life,” he said.

The government is learnt to have issued the directions after the UPERC expressed its unwillingness to make changes in the existing regulations which it said were valid only up to March 31, 2024.

Welcoming the government decision, Alok Verma of Amplus Solar said, “The decision will bring much needed certainty in the policy and also make solar plants financially more viable in UP.” He said the power-banking facility for an open-ended period was a must because there were times when solar plants generated excess power and without the banking facility the excess power generated would get wasted, incurring losses to investors.

“Banking of power is a process under which a generating plant supplies power to the grid not with the intent of selling it to either a third party or to a licensee, but with the intention of exercising its eligibility to draw back this power from the grid within the time period and against the charges as specified under the rules,” Verma explained.

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