Confusion reigns over new renewable purchase obligations

Non-solar states oppose mandatory solar purchase; final order under review

The Union government is likely to revisit the renewable purchase obligation (RPO) targets for state-owned power distribution companies. This is following confusion among industry players about the order and opposition from some states.

The government says the guidelines were fixed, but industry executives say no order was officially released by any government department.

When contacted, officials in the power and renewable energy ministries said the order was on the ministries’ websites. Meanwhile, some states have already started opposing provisions in the order, which was reviewed by Business Standard.

The order titled “Guidelines for long term RPO trajectory of Renewable Purchase Obligations (RPO) for non-solar as well as solar” is dated July 22, 2016 and signed by the joint secretary in the ministry of power. It was issued with the approval of the Minister of State for Coal, Power, Renewable Energy and Mines, Piyush Goyal.

The order enlists the yearly RPO trajectory for both non-solar and solar power purchase from the current year till 2018-19. For non-solar, the targets are from 8.75 per cent to 10.25 per cent and solar is 2.75 per cent to 6.75 per cent during same period. The target is to reach 17 per cent of total energy consumption.

The new guidelines make it mandatory for all states to purchase a certain per cent of their power demand from solar. This, the order said, “should reach eight per cent of total consumption of energy, excluding hydro power, by March 2022”.

RPO keeps hydro power out in calculating total energy consumption.

“The order mentions that SERCs (state electricity regulatory commissions) should calculate RPO as a per cent of total energy consumption excluding hydro. According to the Electricity Act, 2003, total energy consumption includes hydro. A government order cannot supersede the Act,” said a sector analyst.

Senior officials in the Ministry of New and Renewable Energy said northeastern states, the hydro-rich states in the north and those with low solar radiation have opposed RPO targets for solar being stringent and mandatory.

“These states want solar RPO to be removed for them and let it be resource flexible. One suggestion is also that the states be divided into categories and solar targets set accordingly,” said the official, requesting anonymity.

When contacted, Upendra Tripathy, secretary, MNRE, said the order was under wide consultation as some states have said they can’t meet the solar targets. “The RPO targets need to be looked at in the light of the global commitment that India has made to mitigate carbon emission. We are talking with these states that a slight increase in the cost will go a long way in securing a sustainable future.”

He said the order was “final but under consultation”. “We have to make sure the RPO trajectory is in line with our regulations and our commitments regarding climate change,” he said.

Power ministry officials said the RPO has been finalised and is being vetted. The official did not disclose or confirm the already available trajectory.