Maharashtra Takes a Tough Stance on Solar and Non-Solar RPO Enforcement
Maharashtra State Electricity Distribution Co has asked to meet RPO shortfall by March 2019
August 8, 2018
Recently, the Maharashtra Electricity Regulatory Commission (MERC) reviewed compliance of Renewable Purchase Obligation (RPO) targets by Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL) for FY 2016-17. MERC noted that MSEDCL has fallen short of its stand-alone solar RPO target by 689.86 million units (MU) for FY 2016-17, bringing its cumulative shortfall to 2,049.614 MUs.
MSEDCL requested MERC to allow it to carry forward the solar shortfall and to meet all solar shortfall by March 2020. The reason for its unfulfillment was the Supreme Court which had halted trading of solar Renewable Energy Certificates (RECs).
MSEDCL also stated that it has executed long-term Power Purchase Agreements (PPAs) for a total capacity of 1,327 MW and floated tenders of about 300 MW capacity for short-term power procurements through competitive bidding. It has also given “in principle” consent for procurement of long-term power from some generators and floated a tender for 1,000 MW through competitive bidding for long-term procurement.
In response, MERC asked MSEDCL to fully meet its stand-alone and cumulative shortfall of solar RPO targets in FY 2016-17 by the end of March 2019 instead of March 2020. The solar RPO targets are to be met either by purchase of solar power or through solar RECs.
In May 2018, Mercom reported that a lowest (L1) tariff of ₹2.71 (~$0.0401)/kWh was quoted in the 1,000 MW solar auction held by MSEDCL. In April 2018, MSEDCL retendered 1,000 MW of grid-connected solar projects in order to meet its RPO. The tender was initially floated in December 2017, but the bid-submission deadline was postponed due to poor response from project developers.
Recently, MERC approved the tariff proposed by MSEDCL for long-term procurement of 500 MW of wind power under a non-solar RPO.
MERC also passed orders on the RPO compliance of Brihanmumbai Electric Supply & Transport Undertaking (BEST), Tata Power Co. Ltd. (Distribution) (TPC-D), and Reliance Infrastructure Ltd. (Distribution) (RInfra-D).
Regarding BEST, MERC has taken a lenient view as it has fulfilled standalone solar RPO targets of FY 2016-17 with a surplus of 0.627 MUs. Therefore, the commission decided to give BEST the chance to fulfill the remaining cumulative non-solar RPO shortfall until FY 2015-16 and standalone non-solar RPO shortfall for FY 2016-17 by the end of FY 2018-19.
MERC has also agreed to TPC-D’s request to allow it to obtain the certificate for tradable RECs against surplus solar and non-solar energy procurements in FY 2016-17. TPC-D has fulfilled its standalone solar and non-solar RPO targets for FY 2016-17 with a surplus of 4.471 MUs and 4.226 MUs, respectively.
In addition, MERC noted that RInfra-D also fulfilled its solar and non-solar RPO until FY 2015-16, but had a shortfall in the RPO targets for FY 2016-17. RInfra-D has argued that since MERC has allowed all distribution licensees to purchase RECs in FY 2017-18 in case of any shortfall in RPO compliance, it should consider such purchase toward compliance of their RPO targets up to FY 2016-17.
RInfra-D further reasoned that as the trading in solar RECs is currently stayed by the Supreme Court, the company could not purchase solar RECs. The company also ensured MERC that it would purchase the same in FY 2017-18 now that trading in solar RECs is allowed.
The commission observed that RInfra-D did not purchase solar RECs in the first trading session of 2017. However, it did purchase some non-solar RECs to fulfill its non-solar RPO targets, but they were not enough to fulfill its standalone non-solar RPO target.
Taking note of this, MERC has agreed to give RInfra-D another chance to comply with its standalone solar and non-solar RPO shortfall for FY 2016-17, by procuring RECs by the end of FY 2018-19.
MERC will review the RPO compliance status of RInfra-D in the next RPO compliance verification for FY 2017-18. It will also undertake the review of compliance of RPO targets by distribution licensees such as BEST for FY 2017-18 so that there is enough time for them to purchase RECs, in case there is a shortfall to meet the RPO targets by FY 2018-19.
The MNRE has created a compliance cell for RPOs. The cell will coordinate with states, the central electricity regulatory commission (CERC) and state electricity regulatory commissions (SERCs) to ensure RPO compliance. The cell will work with these institutions to create monthly reports on RPO compliance. It will also take up non-compliance issues with the appropriate authorities.
RPO is the single most important policy driving renewable energy installations in India toward achieving the aggressive goal of installing 175 GW by 2022, with solar comprising 100 GW of this portfolio.
Although India has made remarkable progress over the last eight years (since the inception of the National Solar Mission in 2010), the country still needs to install 78 GW of solar over the next four years – a rate of over 19 GW per year.
Despite the ambitious targets, RPO compliance has not been up to the mark.
Most states have specified RPO targets. Due to lack of enforcement of RPO regulations and the absence of penalties when obligations are not met, many of the state DISCOMs are not fully complying with their RPO targets.
Mercom previously reported that 16 states and union territories achieved less than 60 percent of their respective RPOs in 2016-17.
The Ministry for Power, Government of India, recently set the RPO for FY 2019-2020 at 7.25 percent. The non-solar RPO for FY 2019-2020 has been set at 10.25 percent. There has also been an increase in the percentage of solar RPOs for the next financial year, compared to the current financial year. The solar RPO for current FY is 6.75 percent, and this will go up by 0.50 percent next year. But, the non-solar RPO has remained constant at 10.25 percent.
The RPO targets have been increased to build momentum for renewable energy installations, especially solar, across all states in the country.
Nitin is a staff reporter at Mercomindia.com and writes on renewable energy and related sectors. Prior to Mercom, Nitin has worked for CNN IBN, India News, Agricultural Spectrum and Bureaucracy Today. He received his bachelor’s degree in Journalism & Communication from Manipal Institute of Communication at Manipal University and Master’s degree in International Relations from Jindal School of International Affairs. More articles from Nitin Kabeer