States to meet 25% of their energy needs from renewable energy sources

States would need to meet a quarter of their energy demand from renewable energy (RE) sources under the new ‘Renewable Purchase Obligation (RPO)’ mandate and increase it to 43 per cent by end of this decade. The new set of targets include solar, wind, hydro and also energy storage for the first time for states to mandatorily purchase.

The stringent targets come in the wake of India committing an ambitious 500 gigawatt (GW) of RE by 2030 at the Glasgow COP26 climate summit last year. Also, the draft Electricity Bill 2021, likely to be placed in the Parliament during this monsoon session, has also proposed penal provisions for states which fail to meet their RPO targets.

Under the current set of targets for 2023-2030, total RPO range is 24.61 to 43.33 per cent. In this, the wind RPO is in the range of 0.81-6.94 per cent, hydro RPO, introduced two years back, 0.35-2.82 per cent and other RPO, which will majorly comprise of solar power, the range is 23.44-33.57 per cent.

For energy storage, which has been introduced for the first time, the targets are in the range of 1-4 per cent during this decade. This would be met through solar and wind power projects with energy storage.

States would now need to design and provide a trajectory for meeting the RPO targets in the range stipulated by the Centre. The states which are deficit in RE generation can purchase RE certificates from surplus states or through power trading platforms. The price of RECs is issued by the Central Electricity Regulatory Commission (CERC) annually.

During the last three years, the RPO targets were 17 per cent, 19 per cent and 21 per cent. Barring five states which over-achieved their targets, none of the states met their RPO till 2020, according to a Lok Sabha report on the same. The states which meet their RPO targets year on year are the ones which are resource rich such as Gujarat, Karnataka, Rajasthan, Andhra Pradesh and Tamil Nadu. 

For states which need to purchase RE for meeting their targets, the achievement has been dismal. Since the RPO mechanism was launched in 2010, except for RE rich states, none have met 100 per cent of their target during any year. This has led to a growing mismatch in the RE sector with states reluctant to purchase RE while solar and wind power project capacity increases every year. The Centre is now looking to strictly enforce RE purchase. 

The proposed amendments to the Electricity Act, 2003 have for the first-time drafted penalty provision for states which miss on their RPO trajectory. For states which purchase RE less than their prescribed trajectory, the Union Ministry of Power has proposed a penalty sum in the range of 25 paisa per unit (kwh) to 30 paisa per unit for the first year of default. For the subsequent years, the penalty rate would be 35-50 paisa per unit.

India has a target of meeting 175 GW of RE by the end of this year with solar contributing 100 GW, 60 GW through wind and balance from other sources such as small hydro. Currently, India’s RE capacity stands at 114 GW with solar at 57 GW and wind at 40 GW.

Year	Wind RPO	HPO	Other RPO	Total RPO
2022-23	0.81	0.35	23.44	24.61
2023-24	1.6	0.66	24.81	27.08
2024-25	2.46	1.08	26.37	29.91
2025-26	3.36	1.48	28.17	33.01
2026-27	4.29	1.8	29.86	35.95
2027-28	5.23	2.15	31.43	38.81
2028-29	6.16	2.51	32.69	41.36
2029-30	6.94	2.82	33.57	43.33

All figures in %

HPO= Hydropower purchase obligation

Other RPO includes solar power, waste to energy, biomass etc.
Source: ministry of power