Enhancing RPO Effectiveness: Key Takeaways from Prayas Review of India’s Renewable Purchase Obligation Framework

The report titled “A Comprehensive Review of State RPO Framework and Regulations: Learnings for Effective Implementation” published by Prayas (Energy Group), delves into India’s Renewable Purchase Obligation (RPO) framework. The report provides an in-depth analysis of state-level RPO regulations, their compliance, and the effectiveness of their implementation, offering insights and recommendations for improvement.

India has committed to reducing the emissions intensity of its GDP by 45% by 2030 from the 2005 level, aiming for about 50% cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030. Renewable energy (RE) is crucial for these goals, with an installed capacity of 190 GW as of March 2024. Despite the progress, compliance and monitoring of RPO at the state level remain weak and need further improvement.

The Electricity Act of 2003 mandates State Electricity Regulatory Commissions (SERCs) to specify a minimum share of total consumption from renewable sources. This target, known as the Renewable Purchase Obligation (RPO), applies to various obligated entities like DISCOMs, Open Access, and Captive consumers. Over time, states developed their RPO regulations, setting minimum RPOs for obligated entities, while the Government of India prescribed a common national RPO trajectory for states.

Until 2020, RPOs were specified in two categories: solar and non-solar. In 2019, the Ministry of Power (MoP) conceptualized a specific hydropower obligation (HPO), with category targets introduced in January 2021. In 2022, the categorization was further revised to Wind, HPO, and Other RPOs, along with a new energy storage category. However, as per the latest MoP notification in October 2023, the categories were changed to Wind, Hydro, Distributed RE, and Other RE, with a total RPO target for FY 2029-30 being 43.33%.

Despite state RPO regulations and central guidelines, monitoring and reporting of RPO compliance have been irregular, leading to a backlog of shortfalls in meeting targets in most states. The Ministry of New and Renewable Energy (MNRE) has been tracking RPO compliance and will continue to do so. Recently, there has been a renewed thrust on RPO compliance monitoring from the Government of India, with the Forum of Regulators (FoR) tasked with annually monitoring RPO compliance by obligated entities. The Bureau of Energy Efficiency (BEE) has also been mandated to maintain data related to renewable energy utilization compliance by designated consumers and submit reports to the Central Government.

The Green Open Access Rules, which lowered the Open Access threshold to 100 kW from 1 MW and paved the way for timely and easy procedures with a centralized application portal, are likely to increase RE-based Open Access and Captive Power Plant (CPP) consumption in the coming years. Improving transparency and accountability of obligated entities regarding compliance will be crucial for the broader success of RPO.

While RPO targets continue to vary across states, some states are now aligning their targets with those mandated by the Government of India as part of the Energy Conservation Act amendment. The broader RPO framework, including its applicability, compliance, data reporting, incentives, and penal structures, also varies significantly across states. Sharing regulatory practices across states can promote cross-learning and wider adoption of good practices. A minimum level of uniformity across states in the RPO framework, while maintaining space for innovation and state-specific contexts, would greatly help in comparing various parameters across states.

Based on the analysis, the report highlights good practices and provides recommendations for improving the effectiveness of the RPO framework in states. The study compiled, critically analyzed, and summarized over 250 public documents across 36 states, including RPO regulations and Ministry of Power guidelines. A detailed comparison of these regulations and visualizations based on the study can be found on Prayas’ India RE Portal.

While the RPO framework has driven significant RE deployment in India, its effectiveness depends on robust compliance and monitoring mechanisms. States need to adopt more uniform and stringent RPO regulations, enhance transparency, and ensure better accountability among obligated entities to achieve the ambitious renewable energy targets set by the country.