Solar RPO: Issues and Concerns

Government of India’s targets under National Action Plant for Climate Change (NAPCC) to reduce the GHG emissions of 20-25% reduced emissions by 2020, considering the baseline of 2005 has taken various initiatives to achieve this targets, and Jawahar Lal Nehru National Solar Mission (JNNSM) is one of such ambitious program to meet Indian Governments targets of NAPCC. Government has planned to install about 20000 MW of grid/rooftop solar power by 2022. Government initiated RPO (Renewable Portfolio Obligation) for Solar power projects as well apart from the non solar categories. Generally the states have taken solar RPO targets of about 0.25% by the end of first phase of JNNSM. The solar RPO compliance is to increase up to 3% by 2022 and this translates to over 50000 MU of solar electricity on annual basis by 2022. If we consider a CUF of 20% for solar projects, there is a requirement of over 30000 MW of additional solar electricity by the end of 2022. Most of the states have failed to achieve the target of 0.25% RPO for year 2011-2012 except Gujarat. This raises the concerns on the enforcement of the RPO targets to the states through the regulators. Also there is no clarity on the enforcement of Solar RPOs on the captive users of 1 MW and above capacity.

Given current experience of non compliance of RPO scheme by the different states, the targets of achieving 20000 MW solar electricity by 2022 looks to be in danger.

The states have two options to meet their RPO compliance which are as follows:

  • Through signing the PPAs under the Feed in Tariff (FIT) Route
  • Buy Solar RECs from the open market.

According to the present guideline on REC non compliance is as follows:

If an obligated entity does not fulfil the renewable purchase obligation as provided in these Regulations during any year and also does not purchase the certificates, the Commission may direct the obligated entity to deposit into a separate fund, to be created and maintained by such obligated entity, such amount as the Commission may determine on the basis of the shortfall in units of RPO and the forbearance price decided by the Central Commission.

The RECs may remain untraded in the following situations:

  1. The state utilities (Distribution Licensees) do not meet their respective Solar RPO targets.
  2. The Distribution Licensees meet their targets through preferential tariff option (Feed in Tariff) for solar and do not find any need for the Solar RPO.
  3. The obligation for RPO is also on the captive generator over 1 MW capacity. The above situation may arise that the captive generators also do not fulfill their RPO compliance.

Currently there are three Solar PV generators who are accredited from the respective state agencies for RECs. However these Solar PV generators are yet to get registration from the central agency which is NLDC. These solar PV generators under REC route are following:

S. No. State Energy Source RE Generator Capacity (MW)
1. Rajasthan Solar PV Kanoria Chemical & Ind. Ltd.


2. Tamil Nadu Solar PV Numeric Power Systems Ltd.


3. Madhya Pradesh Solar PV M&B Switchgears Ltd.


For a newly built solar plant, the technology selection is done on the basis of most economic way as REC scheme considers the solar electricity at par with the grid electricity, and some of the immature technologies will not take their space in the development cycle.






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