The Supreme Court of India has laid down that owning a captive power plant does not absolve a

company of its obligation to purchase part of its power consumption from green sources, such as
wind and solar.
The judgment implies that the various companies, who have not been buying green power by
taking shelter under a legal ambivalence, now face enforcement of their obligations.
The case pertains to an appeal of Vedanta groups Hindustan Zinc Ltd against a 2012 verdict of
the Rajasthan High Court, which said that the State electricity regulatory commission was right
in imposing the renewable purchase obligation on the company, even though the company runs
its own captive power plants, of about 475 MW capacity.
Consequent to the judgment, HZL may have to shell out annually about 65 crore to buy green
power.
The renewable purchase obligation imposed upon captive power plants and open consumers
through the impugned regulation cannot in any manner be said to be restrictive or violative of the
fundamental rights conferred on the appellants..we do not find any reason to interfere with the
impugned judgment (of the Rajasthan High Court), the apex Courts order said.
It dismissed Hindustan Zincs appeal saying it was devoid of merit.
Impact of the order
The Supreme Courts order brings clarity to the point as to whether or not companies that have
captive power plants are covered by the law that mandates green power purchase.
Some other companies had impleaded themselves in the case, filing counter affidavit with the
Supreme Court Ultratech Cements, Mangalam Cements, Binani Cements, Trinetra Cements,
Shree Cement, Rajasthan Textile Mills Association, DCM Shriram Consolidated Ltd, JK Tyre
Industries and Lucid Coloids Ltd.
All other interlocutory applications for impalement / intervention/stay/directions are disposed
off, the order says.

SC order upholding RPO big boost for renewable energy trading

Apex court ruling to help state electricity regulators impose RPO regulations more
effectively

A Supreme Court order last week has come as a major boost for compulsory purchase of
renewable energy even though it is unlikely to increase the power costs for an industry dependent
on captive power generation.
With the apex court upholding renewable purchase obligation (RPO), power purchasers in all
states would have to follow the regulatory norms for RPOs.
This would also boost the market for renewable energy certificates (RECs), which are traded and
bought to meet the RPO.
The apex court in its order said regulations framed by electricity regulatory commissions cannot
in any manner be said to be restrictive or violative of fundamental rights.
The court ruling came in a case filed by Hindustan Zinc against the Rajasthan Electricity
Regulatory Commission on May 13.
The court also ruled out the case filed by a number of firms including DCM Shriram, Binani
Cements, JK Lakshmi Cement and Ultra Tech Cement. It instead favoured the Rajasthan
Electricity Regulatory Commissions decision that compelled these players to procure fixed
amounts of energy from renewable sources or pay money in case they failed to meet the
requirements.
In Rajasthan, captive power producers along with open access consumers, who buy power
directly from the grid, along with distribution companies, are required to buy 8.2% of their
power requirement from renewable sources besides 2% from solar. Himachal Pradesh has
even higher RPO at 11% and Mizoram at 14.75%.
The companies had argued that neither any licence nor any approval from any authority is
required to install a captive power plant and therefore the RERC has no jurisdiction to impose
any obligation upon such captive power plants for purchase of renewal energy.
They had added that the penalty of paying charges in case of shortfall is contrary to the object
and intendment sought to be achieved under the provisions of the Act of 2003 and the same is
also opposed to the National Electricity Policy, 2005 and the Tariff Policy, 2006.

According to Reconnect Energy Solutions, enforcement of RPO regulations have been lax due to
various reasons including the stay granted by various High Courts like in the case of Gujarat
(recently vacated), Madhya Pradesh and Tamil Nadu, among others.
With the Supreme Court order, however, stay by various high courts might also become
redundant.
Top States with Renewable Purchase The new order would enable stronger enforcement and
provide support to the state electricity regulators to
Obligation for 2015-16
(as percentage of total impose RPO regulations more forcefully and
effectively.
power used)
Non-solar
solar
Delhi
7.3
0.3
Gujarat
7.5
1.5
Himachal
11
0.25
Pradesh
Karnataka
10
0.25
Maharashtra
8.5
0.5
Rajasthan
8.2
2
Tamil Nadu
9
2
Uttrakhand
8
0.1
Mizoram
14.75
0.25
Nagaland
7.75
0.25