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August

4

Maharashtra and Punjab – Strict Enforcement of RPO compliance

by Harini

Over the past few months of Renewable Energy Certificate (REC) trading, it has been noticed that only a very small percentage of RECs are actually being traded in the market thereby making the current inventory balance 2.72 Million RECs. Last month’s trading figures show that less than 10% of RECs were traded and one of the reasons for this is the weak enforcement of Renewable Purchase Obligation (RPO) compliance by the State authorities. Our blogpost on last month’s trading can be accessed here and more insights on the REC market with our recommendations on how to revive it are available in our Whitepaper which can be downloaded here.

Considering this poor state of the REC market, the decision taken by Maharashtra Electricity Regulatory Commission (MERC) and Punjab State Electricity Regulatory Commission (PSERC) respectively to strictly enforce RPO compliance is expected to lift up the spirits of the REC project developers.

Maharashtra has directed all the obligated entities to fulfill their RPO targets – Solar and Non Solar for all four years i.e. FY 2010-11, FY 2011-12, FY 2012-13 and FY 2013-14 cumulatively before 31st March, 2014. This decision shall be enforced in a letter and in spirit as per the order released by MERC.  It also states that, if the obligated entity fails to fulfill it’s target during any year and fails to purchase the required number of RECs, then the entity has to deposit into a separate fund an amount determined on the basis of the shortfall in units of RPO, RPO Regulatory Charges and the Forbearance Price decided by the Central Commission; separately in respect of Solar and Non-Solar RPO. The RPO targets for Maharashtra are as follows:

Maharashtra_RPO_Target

For more details, the original order released by MERC can be accessed here.

Punjab in it’s order has allowed Punjab State Power Corporation Limited (PSPCL) to carry forward it’s shortfall in RPO compliance for FY 2012-13 along with the remaining shortfall from FY 2011-12, to FY 2013-14 to be complied by 31st December, 2013. This is in addition to its existing RPO compliance for FY 2013-14. If they fail to fulfill the said target then further action as per Regulations will be initiated. As per the order, in case of PSPCL meeting the shortfall in RPO through the purchase of RECs, then it is likely to purchase 114.8 MU (Non-Solar) and 25.8 MU (Solar) RECs. Following are the RPO targets for Punjab:

Punjab_RPO_Target

The original order released by PSERC can be accessed here.

Such measures taken by the state authorities are quite likely to result in a much needed improvement in REC trading figures. It can only be hoped that Maharashtra and Punjab have set an example with their action for other state authorities to follow suit.

4 thoughts on “Maharashtra and Punjab – Strict Enforcement of RPO compliance

  1. Pingback: MNRE - Strict Enforcement of RPO for States | EfficientCarbon

  2. Pradeep

    Dear Mr.Prasant/Mr.Ajay,

    I totally agree with your comments. We will have to wait and see whether the DISCOMs of the respective states actually comply with the RPO. Enforcement of RPO can give a major push to the REC market which is currently in a very bad state.

    Reply
  3. AjayPrakash Shrivastava

    This is a welcome development. I hope other states will follow this trend soon. This will give a big boost to Solar Energy Development.

    Reply

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