The Ministry of New and Renewable Energy is working towards bringing in a National Renewable Purchase Obligation (RPO) to replace the current state-wise RPOs, which have not been effective.
This has become necessary in the context of the plan to auction 50 GW of wind, solar and hybrid capacities annually, and a change in the method of auction from ‘reverse bidding’ to ‘closed bidding’. The change means that the bidders won’t have to start out-bidding each other after their initial bids are opened, which effectively means that the tariffs at which they sell their power would rise.
It is broadly expected that wind and solar tariffs would rise from the current levels of around Rs 2.90 a kWhr, to around Rs 3.30. The fear is that the electricity distribution companies (discoms), which have become used to buying power at low tariffs, would resist the rise.
Renewable energy insiders say that the government company, SECI, which has functioned as the auctioneer and the first purchaser of power, has been struggling to sign back-to-back power sales agreements with state governments. (SECI buys power from wind and solar companies and sells it to discoms of states that have no wind or solar resources, so that they may fulfil their renewable purchase obligations.)
So, the question is, if tariffs rise further, will the discoms play along? The answer is, ‘national RPO’ with penalties for non-fulfilment.
This differs from the existing state RPOs in that there would henceforth be one single percentage for all states — a fixed percentage of their total power purchase/ generation should come from renewable energy. Currently, the percentage is fixed by the respective electricity regulatory commission of each state.
The national RPO, according to the current thinking, would rise gradually to 10.5 per cent each for wind and solar by 2030 – by that year, a fifth of the power that the discoms sell to their customers would come from renewable sources. The national RPO is proposed to be brought through the Energy Conservation Act.
D V Giri, Secretary-General, Indian Wind Turbine Manufacturers’ Association, has welcomed the government’s “positive thinking”, calling it the “need of the hour and a step in the right direction”. He said the national RPO would play a big role in the country’s energy transition away from fossil fuels.
At present, 12 per cent of the energy consumed in India (roughly, 1.6 trillion kWhr) comes from renewable sources — mostly wind and solar, but also from small hydro and biomass, but not counting large hydro electric plants.
Also read: Govt releases month-wise bidding calendar for renewable energy
According to the Report on Optimal Generation Mix for 2029-30, released by the government on Wednesday, the country would have a total installed capacity of 777 GW and battery storage of 41 GW. Electricity generation would be 2.4 trillion units, 1.3 trillion from thermal, 1 trillion from non-fossil fuels (212 billion hydro, 208 billion wind, 553 billion solar, 92 billion nuclear and 10 billion from other RE sources).
The share of generation from non-fossil sources (including large hydro), would rise from 25 per cent in 2022-23 to 44 per cent in 2029-30. The national RPO is an essential step towards making this happen, industry sources said.