Date:Oct 18, 2013
[dte]
Most state discoms are not meeting RPO targets because
electricity regulatory commissions do not penalise them, says renewable
energy ministry
Most states in India are not
meeting their targets for purchase of renewable energy. To set matters
right, the Union Ministry of New and Renewable Energy (MRNE) has asked
the Union power ministry to amend the Electricity Act. It wants
provisions in Act to ensure strict implementation of renewable energy
targets by state governments. These targets are called renewable
purchase obligation (RPO).
As the name suggests RPO is an obligation on state power distribution
companies (discoms) to purchase a certain amount of renewable power.
This amount or percentage is decided by state electricity regulatory
commissions every year. As per the National Action Plan on Climate
Change, India is supposed to gradually increase the share of renewable
energy upto 15 per cent in the total energy mix by 2020.
“We have been noticing that most states discoms are not meeting RPOs.
It is because state electricity regulatory commissions do not penalise
discoms for not meeting targets. Though there is a provision of penalty
of Rs 1 lakh, but either it is rarely enforced or even if it is imposed
the amount is very less,” said Tarun Kapoor, joint secretary MNRE. Also,
some state power regulatory commissions declare very less RPO targets
or in some cases even keep them constant while there should be an
increase in target percentage each year. That is why a need was felt to
make clear provisions in The Electricity Act of 2003 so that renewable
energy targets can be strictly and legally enforced, Kapoor added.
Some states like Andhra Pradesh have kept the RPO constant at 5 per
cent from financial year 2011-12 till 2015-16. Only Rajasthan and
Gujarat have been achieving their renewable purchase obligations because
of high installation of renewable energy in these states.
The states are supposed to meet their RPO either through purchase of
renewable power or by buying renewable energy certificates (REC). These
certificates promote the sale of electricity from renewable sources to
discoms at the prevailing conventional energy tariffs. While the price
is lesser than high feed-in tariff, the remaining balance is recovered
by selling the environmental attribute of generating this clean
electricity in the form of RECs. One REC is equal to one unit of
electricity which has a floor price and ceiling price. This price is
determined in the energy exchange markets.
Energy exchange market needs boost
Currently, the demand for RECs is very poor as discoms are not
buying them. In September this year, as many as 3.7 million RECs were
lying unsold. Experts say that the market can pick up only when meeting
RPO targets are strictly enforced.
MNRE’s letter is prompted by an order issued by the Maharashtra
Electricity Regulatory Commission (MERC) in July this year, asking
discoms to meet RPOs or face heavy penalties. It has ordered over 90
entities, including state distribution companies and private captive
power consumers, to meet their renewable purchase obligation of past
four years cumulatively, beginning from 2010-11 by March 2014. The
amount of penalty would be determined by MERC. The commission has set up
a committee for timely collection and review of data with regard to
compliance of RPO. “MERC’s order is welcome move and is going to set a
precedent,” said Kapoor.
State utilities find renewables expensive
However, most state governments in their defence say that it is
because of the poor financial health of the discoms that they are not
able to buy the relatively expensive renewable power. “Every time we try
to press for RPO implementation, we are told by discoms that they don’t
have money,” said an official of Uttar Pradesh Non Conventional Energy
Development Agency. “Discoms do not even calculate and declare how much
percentage of renewable have they procured. They are just not
interested. We have no data of how much renewable power has been
purchased in the state,” he said. Uttar Pradesh had to purchase six per
cent of renewable energy in its total energy mix in 2012-2013.
