MNRE bats for strict renewable power obligation compliance

Pleads SERCs to invoke penal provisions of the regulations against defaulting entities

The ministry of new and renewable energy sources (MNRE), headed by Piyush Goyal, has pleaded the state electricity regulatory commissions (SERCs) to consider exercising their statutory authority and issue directions to state distribution companies (discoms) for ensuring renewable power obligation (RPO) compliance.

This can be done either through purchase of renewable power or renewable energy certificates (RECs) and enforce the same by invoking penal provisions of the regulations against defaulting entities.

The ministry has suggested SERCs consider directing discoms to make provision in annual revenue requirements for meeting RPO shortfall by keeping money aside to purchase RECs equivalent to the shortfall.

The validity of RECs should be extended by at least 6 months till RPOs were complied/enforced regularly in states.

MNRE in its recent meeting with the Forum of Regulators (FOR) said against RPO level of 5.45per cent for non-solar and 0.45per cent for solar the compliance was 3.74per cent and 0.08per cent respectively in 2012-13. As per 2013-14 ARRs, on all India basis, discoms had made provision only for 50per cent RPO compliance. MNRE has observed that poor RPO compliance is a major bottleneck.

Central Electricity Regulatory Commission's former chairman Pramod Deo, who also led the FOR, told Business Standard , ''Under the Electricity Act 2003, regulators are mandated to promote renewable energy (RE) and the law itself provides that the regulator shall determine the percentage of RE that will form part of consumption — which is nothing but RPO to be prescribed by the state regulators. RPO is nothing but what will be the percentage of green energy in the overall consumption by discoms and by self generators. So, while prescribing RPO, the state regulator has to consider what impact it will have on retail tariff for common consumers.''

Moreover, MNRE argued that enforcement of RPO by SERCs was critical to the success of government initiatives to augment RE capacity addition in the country. As on date, the renewable installed capacity is 31,000 MW, comprising wind (21,000 MW), solar (2,000 MW) and small hydro projects (3,000 MW).

Additionally, MNRE has made a strong case in favour of providing a ''must run'' status for generation from RE. And all the electricity generated should be absorbed by the grid, and for that, renewable energy should be a part of the transmission planning process.

A state regulator, who was present during MNRE's presentation to FOR,  said FOR has suggested that bundling of renewable energy with conventional energy should be done to reduce the cost of generation to attract discoms. SERCs also recommended that MNRE could consider purchasing the  unsold RECs by using National Clean Energy Fund. Existing coal cess could be increased, if need be.