RPO Compliance: A Necessity For India To Meet Its Solar Targets

Hon’ble Prime Minister of India, Shri Narendra Modi’s setting the solar energy target to 100 GW by 2022 has given Indian solar industry the leg up it needed, leading to current 13 GW capacity. India has, practically, doubled its solar capacity from 5 GW in 2015 to 10 GW in 2016. And, the country is estimated to add approximately 8 GW at the end of 2017. The growth trajectory is incredible indeed, and India is on its way to become the third largest solar market!

The Glitch

However, it is important to highlight that in order to meet the humongous target ahead, the country has to install more than 17 GW each year for the next 5 years. To simplify such a task, India has introduced Renewable Purchase Obligation (RPO). Through the RPO enforcement, power distribution companies are made to purchase a percentage of their electricity from Renewable sources (solar). And not just that, RPO targets are supposed to serve as guideline for states to enforce regulations and increase year wise solar installations, effectively reaching the cumulative target (100 GW) systematically. Considering this, RPO policy can be identified as the most important policy frame work for renewable energy to successfully reach 100 GW target.

However, most states have failed to enforce the RPO regulations, leading to slow solar growth as a mainstream energy source. You have to understand that making solar ‘The’ main stream energy source is the core idea behind the decisions and actions of Indian Government in favour of solar industry. And, mandating power utilities (state wise) to buy more green energy can make it happen.

Delay in fulfilling the set targets in RPO regulations is slowing down overall solar growth of the country.


A Closer Inspection

Being such an important issue it deserves a closer look. And by doing so, we will see that more than 25 Indian states have failed to reach their set RPO targets. This is not a sudden hindrance to a well-oiled machine. Indian states have been falling behind in meeting RPO target for years (5 years to be exact) now. Even states like Gujarat and Rajasthan, which have huge solar energy potential, have failed to comply with state RPO regulations.

RPO deficit in Sikkim, Meghalaya, Manipur, Goa, Jharkhand, West Bengal and Tripura is almost 100%, while other states are not doing well either.

The Bottleneck(s) Causing The Glitch

Research shows that an additional 17.7 GW of solar capacity can be installed within the current financial year, if each state can manage to fulfil its individual RPO targets. This should be encouragement enough for the Indian Government to enforce RPO mandates. But, in many states, DISCOMs are encouraged to carry the unfulfilled RPO burden to the next year. In some cases, the state regulatory commissions have allowed yearly RPO target shortfall, considering that the DISCOMs are going through initial transition process (from conventional to renewable energy).

But, financial health of DISCOMs is not the only reason behind this issue. Not having on-time payments and lack of payment guarantees, transmission and evacuation issues have also raised road-blocks in the path of RPO target fulfillment. Therefore, it is apparent that only pushing or penalizing DISCOMs will not help the states in reaching RPO targets, the underlying issues have to be addressed as well.

The Way Forward

Although there are challenges, Government is actively taking steps towards faster RPO compliance. Drafting a new tariff policy, waving off the interstate transmission charges, developing green energy transmission corridor, bringing Ujwal DISCOM Assurance Yojana (UDAY) programme, introducing better financing through World Bank are few of the many initiatives taken by the Government to help states reach RPO targets. It is fortunate that the Government of India understands that providing a conducive and low-risk market condition for solar installations can help the industry grow faster, which in turn will benefit the economic, industrial, and social components of the country.

Only a bit more focus and calculated (time-managed) efforts are needed for Indian solar industry to push past the RPO road blocks and reach, or, may be, even surpass the set (100 GW) targets.




Gyanesh Chaudhary
MD and CEO | Vikram Solar Limited