25 Indian States Fall Behind Solar RPO Targets

Twenty-five states in India have fallen behind their renewable purchase obligation (RPO) targets. The state-wise installation targets set by the Ministry of New and Renewable Energy (MNRE) have not been met; only 2,250 MW of solar was installed through December 31, 2016, compared to the targeted 12,000 MW for financial year (FY) 2016-17. States are now being requested by MNRE to ensure RPO compliance including through purchase of renewable energy certificates (RECs).

An MNRE state-by-state progress report on renewable energy for FY 2015-16 shows that Meghalaya, Karnataka, Nagaland, Himachal Pradesh, Andhra Pradesh, Tamil Nadu, Maharashtra, Rajasthan, Gujarat, Haryana, Madhya Pradesh, Chhattisgarh, Punjab, and the Union Territory (UT) of Andaman and Nicobar achieved above 60 percent RPO compliance. The remaining states and union territories achieved less than 60 percent RPO compliance.

Considering the actual RPO level specified by the State electricity regulatory commissions (SERCs) for the year 2016-17, it is estimated that for FY 2016-17 over 2,034 MW of solar is needed by the remaining 25 states and union territories to fulfill the solar RPO, stated an MNRE report.

Since the RPO targets are yet to be met, all states should align their policies with MNRE targets and in accordance with regulations issued by regulatory commissions like the Central Electricity Authority (CEA) and Central Electricity Regulatory Commission (CERC), stated an MNRE official. The delay in solar parks is one of the reasons, and MNRE is trying its best to fast-track development of solar parks and related infrastructure, added the MNRE official.

To achieve respective RPOs, the MNRE has asked the states to:

  • Ensure RPO compliance by increasing the share of renewable energy
  • Comply with RPO either through the purchase of renewable power or through the purchase of renewable energy certificates.
  • Align RPO levels as suggested in the revised Tariff Policy and long-term RPO trajectory as declared by the Ministry of Power.

Renewable Purchase Obligation targets will become easily achievable once the Green Energy Corridor is complete, as it will provide for easy trade in renewable power, stated the MNRE official. The new rooftop policy from MNRE is also expected to increase installation activity in the sector [helping with RPO obligations]. The MNRE will have to step up and respond to issues early; we have learned from the past and know how to fast-track processes to remove bottlenecks, added the MNRE official.

“Mostly the reason for non-compliance is financial,” commented Raj Prabhu, CEO of Mercom Capital Group. “The financial health of DISCOMs have been a primary hurdle for India in scaling its power generation and especially more expensive renewable sources like solar. Most of the states have joined UDAY (Ujwal DISCOM Assurance Yojana, a financial turnaround program that targets DISCOM debt reduction) to fix these issues. Financial health of DISCOMs need to turn around sooner rather than later for more robust renewable installations which would in turn increase the RPO compliance” said Raj Prabhu.

To find a copy of Mercom’s most recent market update on the Indian solar sector, visit: http://bit.ly/MercomIndiaDec2016Form

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