Businesses with their own power plants need to purchase renewable energy

The Appellate Tribunal for Electricity (ATE) has ruled that captive power consumers must purchase renewable energy at the amount set by the Odisha Electricity Regulatory Commission (OERC). This ruling is expected to have a significant impact on captive generation plants (CGPs) with co-generating units in the state.

In its ruling of February 20, 2024, the Tribunal stated that cogeneration of electricity using fossil fuels cannot be used to satisfy the renewable purchase obligation (RPO).

A two-member bench of the ATE, chaired by Justice Ramesh Ranganathan and technical member Sandesh Kumar Sharma, dismissed Tata Steel’s appeal against the February 1, 2023 order of the OERC declining to treat its power consumption from 323 MW captive generating unit (including 258 MW of co-generation plant) at Meramundali in Dhenkanal district as RPO compliance. The bench stated that electricity generated from fossil fuel-based co-generation plants is not generation from non-conventional or renewable sources of energy.

It is consequently possible to impose RPO duties on captive power users. The directive said that the amount of electricity obtained and used from renewable energy sources must not be offset or altered in relation to the amount of power obtained from fossil fuel-based cogeneration facilities.

The Tribunal went on to state that the National Tariff Policy, as issued and revised by the Center under section 3 of the Electricity Act, is compliant with the Odisha Electricity Regulatory Commission (Procurement of Energy from Renewable Sources and its Compliance) Regulations, 2021. “The validity of the RPO Regulations cannot be examined in appellate proceedings under section 111 of the Electricity Act, as the OERC has chosen to be guided by the Tariff Policy in making these regulations, which are in the nature of subordinate legislation,” the statement said.

Section 86(1)(e) of the Electricity Act grants the state commission the authority to create regulations that set a minimum percentage of renewable energy that captive power customers must purchase out of their overall electricity consumption. These regulations are intended to encourage the production of renewable energy and safeguard the environment.