By: Pavan Burugula
The concept of Renewable Power Obligation (RPO), or the legally-mandated obligation on states to include green power in their overall energy mix is floundering, with as many as 16 states reporting a compliance level of less than 70 per cent.
According to a study conducted by Indian Energy Exchange(IEX), of these 16, a total of nine states including Uttar Pradesh, Bihar, Madhya Pradesh and Delhi have not met even half of their RPO targets in the past two years. In FY14, Delhi managed to meet only 3 per cent of its obligation while Madhya Pradesh met about 5 per cent of its RPO compliance. UP and Bihar managed to meet about 45 per cent of their total obligation, but scored zero on solar RPO compliance.
As per the amendments made to Electricity Act, 2003, every state is obligated to produce a fixed percentage of power through renewable resources. Further, a state that fails to meet this obligation will be penalised by the regulator.
“Bihar didn’t meet all the specified targets in the last couple of years. However, we are working towards meeting the target this fiscal year. PPA agreement for 100 MW of solar power has already been signed by the government. We will also soon invite bids for non-solar power as well,” said D Balamurugan, MD, North Bihar Power Distribution Company Ltd & Director, Bihar Renewable Energy Development Agency.
Officials of Uttar Pradesh Power Corporation Limited declined to comment on the issue. “We don’t have exact numbers as of now, hence, we cannot comment. However, we will meet all the obligations specified under the law,” said Shalini Yadav, spokesperson, Madhyanchal Vidyut Vitran Nigam.
The concept of Renewable Energy Certificates (REC), as an instrument to enable states to substitute for renewable power production is not working as planned, with over 62 lakh RECs remaining unsold in Indian Energy Exchange(IEX) last fiscal. In 2014-15, the number of RECs issued increased by 46.79 per cent even as the buyer side saw a marginal rise of 11 per cent.
“The whole concept of RECs has fallen flat on its feet due to lack of demand on buyer side. In the recent session that happened on March 26, there were 65 lakh RECs on the selling side but there were only 32,000 on the buyer side,” said Shruti Bhatia, VP, policy and communications, IEX.
Introduced in 2010, each Renewable Energy Certificate is equivalent to 1 MWH of renewable power.
Officials claim REC would be last resort to meet RPO. “Discoms are already running in losses and have to depend on state commissions for funding. We don’t get compensated for the REC purchase easily. Hence we always look for options like PPA agreements which can be funded more easily,” said a Madhya Pradesh Power Transmission Company official.
“We don’t expect any great changes in the market in the coming days if regulators don’t take the initiative to oblige the states to meet their RPO targets. Power industry should understand that RPO is not a financial obligation but a social duty to promote greener power and better environment” said Rajesh K Mediratta, director business development, IEX.