An Indian high court ordered companies including units of billionaire Anil Agarwal’s Vedanta Resources Plc and Switzerland’s Holcim to pay penalties for failing to meet clean energy obligations at the power plants they operate.
Two judges of the Rajasthan High Court’s Jaipur bench on August 31 dismissed an appeal by Hindustan Zinc, Ambuja Cements, Grasim Industries and 14 other companies that challenged a government order to purchase a minimum amount of renewable energy at their plants, according to a judgment on the court website.
Hindustan Zinc, Ambuja and Grasim didn’t respond to emails and phone calls seeking comment.
India requires electricity distributors and large industrial consumers of power, such as cement factories, miners and steelmakers, to buy as much as 10 percent of their energy from wind farms, biomass plants and other renewable utilities. State regulators are responsible for enforcing the targets.
“This is important because it will act as a precedent for similar court cases in other states” like Gujarat and Tamil Nadu, said Vibhav Nuwal, director of REConnect Energy Solutions, who advises companies in the industry. Such enforcement is key to ensuring the success of India’s one-year-old renewable energy trading market, which allows companies to buy and sell certificates to meet their clean-power obligations.
Seeking exemptions
India suffers from an average 9 percent power deficit and overburdened grid that lead to chronic blackouts and surging electricity prices at peak hours of demand. Companies like Vedanta’s Hindustan Zinc and Holcim’s Ambuja build coal and diesel-fired generation units, known as captive power plants, which provide reliable electricity to their sites and extra revenue from selling excess power to the grid.
According to the judgment, the companies argued that the Rajasthan Electricity Regulatory Commission was acting beyond its powers and that its order for them to buy clean power or face fines was a violation of India’s 2003 Electricity Act and of the constitution. The companies said that as independent power plants without distribution licenses, they should be exempt from the targets.
“The submission is baseless,” judges Arun Mishra and Narendra Kumar Jain said in their ruling. The companies misconstrued legal provisions to argue their case, they said.
The renewable targets are lawful and the state regulator has the authority to enforce them, the judges said.
“The writ petitions being devoid of merits are hereby dismissed,” they said, ordering the companies to pay their fines immediately.
The case is Ambuja Cements v. Raj Electricity Regulatory Commission. 2772/2012. High Court of Judicature for Rajasthan at Jaipur Bench (Jaipur.)
