‘Must run’ status for renewable energy plants; formula set for timely recovery of gencos’ costs

The Power Ministry also notified rules allowing timely pass through of increase in costs for gencos due to changes in law, such as changes in state or central taxes and in government regulations.

“The investors and other stakeholders in the power sector had been concerned about the timely recovery of the cost due to change in law, curtailment of renewable power and other related matters,” the ministry said in a release on Saturday.

The notification of the Electricity (Promotion of generation from renewable sources of energy by addressing Must Run and other matters) Rules, 2021 classify solar, wind and hydro plants (in case of excess water leading to spillage) as “must-run” plants. The rules provide that electricity supply from must-run plants can only be curtailed in the event of technical constraints in the electricity grid or for reasons of security of the grid. Procurers will be required to pay must run plants as per PPAs in case supply is curtailed.

“These rules will help in achieving the targets of RE generation. This will ensure that the consumers get green and clean power and secure a healthy environment for the future generation,” the ministry said.

The Electricity (Timely recovery of costs due to Change in Law) Rules, 2021 are aimed at ensuring timely recovery of the costs for generators due to change in law to promote investment in the power sector. “Timely recovery of the costs due to change in law is very important as the investment in the power sector largely depends upon timely payments,” said a government release, noting that currently, the pass through of cost due to change in laws takes time and this can lead to developers becoming financially stressed.

The rules provide a formula for the adjustment in the monthly tariff due to changes in law.