Is appointing a RPO compliance cell by MNRE, a breakthrough move?

The establishment of a market based Renewable Purchase Obligation (RPO) mechanism was instrumental in driving renewable energy installations in India. However, due to absence of enforcement of RPO obligations and lack of penalties, many of the state DISCOMs did not fully comply with their respective targets. This has hurt the market sentiment. However, the Government has taken a note of the issue and the newly formed RPO cell certainly is a move in the right direction to monitor, enforce compliance, and restore confidence.

The compliance cell for RPOs set up by MNRE is a great move but this compliance cell should also account in other RPOs beyond DISCOMs. It should monitor government buildings, public infrastructure, ordinance factories, shipyards and other PSUs who also have RPOs. If the compliance cell monitors RPOs in a systematic manner for DISCOM as well for government buildings on a regular basis, there will be less delay in signing PPA’s and projects will be completed in a timely fashion. This in turn will help the rooftop solar industry to take off in a bigger way.

The Ministry of New and Renewable Energy (MNRE) has instituted a compliance cell for renewable purchase obligations (RPOs) in an attempt to ensure that all states adhere to RPO targets defined by the government till 2022. It is a welcome step as it will ensure stringent implementation of RPO targets. Furthermore, states facing roadblocks in implementation of RPO’s will receive guidance to resolve it.

It is a really a breakthrough move. It will protect the solar industry in all respect. The non – active areas will be activated. Tarun Singh one of the most energetic and young scientist has been entrusted to lead the team. This cell will coordinate with States, Central Regulatory Commission and SERCs on the matters relating to RPO compliance including for monthly reports on compliance. It is also understand from the notification of MNRE ( vide number 7/10/2017-EFM dtd. 22/05/2018), that the Cell will also coordinate for periodic reporting within Government of India and for taking up no-compliance related issues with appropriate authorities. This will brush out the entire failure particle from every corner. Industry will ultimately benefitted.

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The solar sector continues to face regulatory challenges on RPO front which includes (a) wide inconsistency in RPO norms laid down by SERCs across the states; and (b) poor compliance with RPO norms by the obligated entities especially in non-RE rich states and their weak enforcement by the SERCs. At present, the RPO norms vary widely across states with only a few having a trajectory in place till FY2022. While SERCs are gradually revising upwards their RPO obligation, which is a positive development for the solar sector, the current solar RPO norms set by the SERCs vary widely across states, being in the range 0.20 – 6.75 per cent for FY2019. The RPO levels for most states also remain lower than the current RPO trajectory as suggested under the National Tariff Policy (NTP) or as per the targets released by the Ministry of Power.

This is a welcome move from the MNRE and is expected to provide an impetus to the growth of renewable energy. Earlier, while RPO norms and targets were in place, non-compliance by DISCOMs continued to remain an issue. State Electricity Regulatory Commissions (SERC) could do little beyond assigning RPO targets and hoping for compliance, due to the absence of an authority to oversee enforcement. High tariffs for renewables was one of the deterrents, but with the falling tariffs, it is expected that compliance will improve. In 2017, 25 States and Union Territories were lagging in achieving their assigned solar RPO targets. The creation of a formal compliance cell should ensure RPO enforcement and expedite the overall processes.

Yes, According to a recent order by Ministry of New and Renewable Energy (MNRE) dated 22 May 2018 (MNRE) has created a Renewable Purchase Obligations (RPO) compliance cell to ensure all states adhere to the RPO targets defined by the government till 2022. This step of MNRE to appoint an RPO compliance cell is a welcome move. The government’s target of achieving 100 GW (only solar energy projects) target by 2022 is also associated with the fulfilment of RPO of state distribution companies (DISCOMs).
Among the various renewable energy resources, solar energy potential is the highest in the country. In most parts of India, clear sunny weather is experienced 250 to 300 days a year. The annual radiation varies from 1,600 to 2,200 kWh per sq.m, which is comparable with radiation received in the tropical and sub-tropical regions. The equivalent energy potential is about 6,000 million GWh of energy per year.

Indeed, since the inception of NSM in 2010, the nation has achieved around 20 GW of solar capacity, however another 78 GW is to be achieved till 2022, i.e. at a rate of about 19 GW per year.
RPO is the most important policy initiative that drives the installations of RE sources in order to achieve this ambitious target of GOI. However its implementation wasn’t a cakewalk so far due to lack of a proper enforcing. The performance in enforcing RPO regime has been rather dismal so far. It is pre-mature to comment, however, the RPO cell in MNRE may serve this purpose and may to be effective in coordinating with the CERC, SERCs, DISCOMS.