Maharashtra Proposes Amendments to RPO Compliance Regulations

The proposed amendments will be valid from April 1, 2020, to March 31, 2030


The Maharashtra Electricity Regulatory Commission (MERC) has proposed amendments to the  Renewable Purchase Obligation (RPO), its Compliance and Implementation of Renewable Energy Certificate Framework Regulations, 2019.

The amendments introduce changes to wind renewable purchase obligation (Wind RPO), hydro purchase obligation (HPO), and energy storage obligation (ESO) compliance. It also includes changes to the Other RPO compliance rules.

Stakeholders have time until August 25, 2023, to submit their feedback.

The operating period of the proposed RPO framework will commence on April 1, 2020, and will be valid until March 31, 2030.

Wind Renewable Purchase Obligation

According to a new provision, Wind RPO can be fulfilled by energy generated from wind power projects commissioned after March 31, 2022, as well as the surplus wind energy beyond 7% derived from projects commissioned up until March 31, 2022.

Any shortfall in the achievement of ‘Wind RPO’ in a particular year can be met with excess energy consumed from hydropower projects, which is more than ‘HPO’ for that year and vice versa.

Hydro Purchase Obligation

Another new clause stipulates that the HPO must be satisfied exclusively through energy generated from all hydro projects, including pumped storage and small hydro projects, commissioned from March 8, 2019, to March 31, 2030.

If the granted free power is inadequate to fulfill the HPO target, the DISCOM must procure additional hydropower to meet the HPO target. Alternatively, it may acquire an equivalent number of renewable energy certificates (RECs) corresponding to the hydropower quantum.

Energy from all other hydropower projects, including free power from projects commissioned before March 8, 2019, will be considered under the category of ‘Other RPO.’

The HPO of the DISCOM may be met by the free power provided to the State from Large Hydro Projects (including pumped storage and small hydro projects) commissioned after March 8, 2019.

An additional provision indicates that if there is a deficit in attaining the targets for the ‘Other RPO’ category within a specific year, it can be offset either by the surplus energy used from wind projects commissioned after March 31, 2022, exceeding the allocated ‘Wind RPO’ for that year, or by the surplus energy utilized from eligible large hydro projects commissioned after March 8, 2019, surpassing the designated ‘HPO’ for that year. Alternatively, the shortfall can be addressed through a combination of both sources.

Other RPO

An obligated entity may meet its RPO target by one or more of the following methods:

  • Own generation from renewable energy sources.
  • By procuring renewable energy through open access from any developer directly, through a trading licensee, or through power markets.
  • By requisition from the DISCOM

The tariff for the green energy will be determined separately by the Commission, comprising the Average Pooled Power Purchase Cost of the renewable energy, cross-subsidy charges if any, and service charges covering the prudent cost of the DISCOM for providing the green energy.

Any requisition for green energy from a DISCOM will be for at least one year.

The amount of green hydrogen or green ammonia will be calculated based on its equivalence to producing one MWh of electricity from renewable sources. The specific standards for this computation will be communicated by the Central Commission.

Purchasing renewable power generated by any other sources as determined by the central government from a DISCOM at an approved generic tariff rate or through a transparent, competitive bidding process will be considered an eligible quantity for meeting the DISCOM’s RPO.

Energy Storage Obligation

The ESO will be quantified in energy units, representing a percentage of the overall electricity consumption. Compliance with this obligation will be recognized only when a minimum of 85% of the annual energy stored within the Energy Storage System is sourced from renewable energy sources.

The portion of the ESO that is fulfilled through energy stored from renewable sources will be accounted for as a contribution to the complete fulfillment of the overall RPO.

Incentives and Penalty

The DISCOM should aim to achieve the total RPO target notified by the Central Government. For doing so, it will receive an incentive of ₹0.25 (~$0.003)/kWh for renewable energy procured above the minimum specified percentage.

Any shortfall in meeting the minimum percentage of renewable energy may be carried forward from FY21 and FY22 to FY23, from FY24 to FY25, from FY26 and FY27 to FY28, and from FY29 to FY30 and the obligated entity should meet such shortfall on a cumulative basis by March 31, 2023, March 31, 2025, March 31, 2028, and March 31, 2030, respectively.

The DISCOM will be subjected to a reduction in Aggregate Revenue Requirement (ARR) at a rate of ₹0.10/kWh for a cumulative shortfall in the total renewable energy procurement target for each year.

The cumulative deficits in procuring renewable energy by March 31, 2023, March 31, 2025, March 31, 2028, or March 31, 2030, will not be rolled over to the following year. Instead, these shortfalls will be reconciled by reducing the ARR for DISCOMs and imposing penalties on other entities obligated to meet renewable energy targets. The penalty will be determined based on the floor price of the corresponding REC as of the relevant date.

The Andhra Pradesh Electricity Regulatory Commission recently notified the amendments to the Renewable Power Purchase Obligation Compliance by Purchase of Renewable Energy/Renewable Energy Certificates Regulations, 2022.

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