HERC announces a combined order for multiple matters

Haryana Electricity regulatory commission recently announced an order on multiple matters including Suo Motu for amendment and/or modification of HERC (Terms and Conditions of Determination of Tariff from Renewable Energy Sources, Renewable Purchase Obligation and Renewable Energy Certificate) Regulations, 2010 and its subsequent amendments (hereinafter referred to as RE Regulations, 2010). The Commission invited views and comments from the stakeholders and answered to them individually. The order also talks about the following:

Suo-Moto proceedings on RPO compliance

If an Obligated entity fails to comply with the obligation to purchase the required percentage of power from renewable energy sources or the renewable energy certificates, it shall also be liable for penalty as may be decided by the Commission under section 142 of the Act. Provided that in case of genuine difficulty in complying with the renewable purchase obligation because of the limited availability of renewable energy or non-availability of certificates, the obligated entity can approach the Commission for relaxation or carry forward of compliance requirement to the next year. However, in normal circumstances, the renewable purchase obligation shall not be waived off. Provided further that where the Commission has consented in writing on an application made by the obligated entity to carry forward of compliance requirement, the provision of regulation 58 (1) of these regulations or the provision of section 142 of the Act shall not be invoked.

The petition filed by Amplus seeking implementation of exemption or waiver of  wheeling charges, cross-subsidy charges, transmission and distribution charges and surcharge for ground-mounted and rooftop solar power projects

Waivers/concessions shall be applicable till the aggregate installed capacity of 500MW of Solar PV Plants in the State is achieved, where after the Commission shall review the provision of waivers/concessions taking into account the financial impact on the Distribution Licensees. Further, provided that waivers/ concessions once provided to any project shall be applicable for a period of 10 years,

The petition filed by Haryana Power Purchase Centre (HPPC) on behalf of the Haryana Distribution Licensees seeking a relaxation of Renewable Purchase Obligation

The Commission has considered the above submissions and is of the considered view that, after considerable deliberation, the RPO targets have been fixed. Further, even the Discoms have raised the issue of these targets being on the higher side. Further, it has been submitted by the Discoms / HPPC procurement of RE power in the peak hours will not only add to the demand-supply gap but also add to the surplus and backing down of cheaper conventional power putting an avoidable financial burden on the electricity consumers of Haryana. Hence, the Commission finds no reason to change the RPO targets as appearing in the draft Regulations as the same in the considered view of the Commission attempts to balance the interest of all the stakeholders.

Read the complete order here.


The Andhra Pradesh Electricity Regulatory Commission (APERC) has release RPO percentages for the years 2017-22. The RPO percentages have increased significantly since last year. In the year 2016-17, the RPO percentages were 2% for non-solar and 1% for solar. For the year 2017-18, the percentage has been increased to 6% and 3% for non-solar and solar respectively.

This percentage is applicable on total consumption of electricity including hydro and mini-hydel. The RPO percentages given in the regulation are as follows:


A comparison between the MoP trajectory and the percentages for this FY is given as follows:


The regulation can be accessed here.



  • The Honorable CERC published the final order on revised price bands for RECs which will be valid from April 1, 2017 onwards.

  • The new floor and forbearance prices are given below


  • This represents a drastic reduction of 71% for Solar RECs, and 33% for non-solar RECs

  • Existing inventory of RECs will not be given vintage multiplier

  • RECs that were at the verge of expiry have been given an extension
Impact on the market:

Immediate impact:

  • Overall, existing RECs projects will take a loss of Rs 1,866 crore due to reduction in the value of existing REC inventory. This represents roughly 50% of the total value of RECs. With such a significant loss, it is likely that several projects will become NPAs.

  • Reduced trading in March 31 trade session – generally, the March trading session sees high trading volumes as it is the last trading session of the compliance period. However, with the prospect of significant saving by trading in April, many obligated entities are likely to postpone trading to the next month.

Infact, this has been acknowledged and even allowed by a state regulator. See relevant order for allowing postponing of trading to an obligated entity here – http://www.mercindia.org.in/pdf/Order%2058%2042/DO-35%20of%202017-16032017.pdf


Long-term impact:

  • Potential (marginal) higher demand going forward – RECs prices have come down to such an extent that most captive and open access based consumers are likely to find buying RECs cheaper way of meeting RPO than buying green power. This may also apply in the case of several Discom’s, particularly in states that are power surplus. These low prices may therefore result in increase in demand of RECs.

However, it must be kept in mind that REC price reduction is always beneficial to the Obligated entities which are non-compliant as they will have an option to purchase RECs and fulfill their RPO compliance at lower prices whereas Obligated Entities who have been regularly meeting their RPO compliance will have incurred significantly higher cost. Therefore, a regularly reducing floor price actually incentivises postponing purchase of RECs, rather than meeting RPO.

Without strict enforcement and any risk of penalty, Obligated entities still have no incentive to comply. We believe that RECs demand will increase, but only to a very limited extent, as most obligated entities still don’t face any reason to comply with RPO at all.

The previous order can be accessed here and our analysis of the same can be found here.


In an article in the Economic Times, the importance of RPOs has been highlighted by saying that RPOs are the most important instruments towards achieving the lofty goal of installing 175 GW of renewable energy by 2022. Last year, the Ministry of Power had declared the National RPO Trajectory but not much was complied with. As per the CEO of Mercam Capital Group, a number of issues need to be addressed in order to make sure that RPOs are complied with such as evacuation issues, DISCOM financials, etc. The government needs to provide a conducive environment for renewable installations to thrive. In some cases, it has so happened that the state electricity regulatory commissions have allowed a carry forward of the shortfall of DISCOMS which one of the reasons for non-compliance.

On the other hand, it can also be said that a number of changes are being made from the government’s side as well to make sure that RPOs are complied with. A new policy has been introduced in which it is estimated that solar RPO will be 8% by 2022. Also, it also mandates the DISCOMS to procure 100% power from waste to energy projects. The World Bank as well as some other banks are providing financial support so as to increase the number of renewable energy installation in India.

In the last trading session, a huge gap was seen in the number of solar and non-solar RECs traded. Now, with the reduction in floor and forbearance prices of RECs by Central Electricity Regulatory Commission, compliance towards RPOs may get further delayed.

MNRE Issues Notice on RPO compliance

The Ministry of New and Renewable Energy in collaboration with Government of India has made a great initiative by spreading the message about RPO and the need for its compliance through Times of India.  The Government highlights that all the obligated entities must comply with their RPO by March 15-16 since this trading session will be the last trading session of the compliance year, whose result calls for stricter enforcement by states. The Times of India’s article can be viewwd below

CAG highlights gaps in RPO compliance of states; Penalties of Rs 4,234 crore not levied

In a recent audit report covering the functioning of MNRE, the Comptroller and Auditor General (CAG) has highlighted various issues on RPO compliance by states.

The main issues highlighted by the CAG are:

  • Setting RPO well below the NAPPC target

  • States have been lax in discharging their obligations under RPO regulations in every aspect. Many states have not prescribed any penalties (Rajasthan, Karnataka, UP are mentioned in the report), most do not collect data on compliance

  • Further, no states (except Uttarakhand, which has imposed a ‘token’ penalty) have imposed penalties. The CAG has estimated that a penalty of Rs 4,234.8 crore was leviable by states, but has not been done

  • CAG further mentions that “RPO was further diluted by frequent deferring of RPO targets as seen in the cases of Gujarat, Madhya Pradesh, Maharashtra and Uttarakhand”


REConnect Analysis:

It is good to see the CAG stepping into an area which has seen very little enforcement of rules by state regulators, despite the Supreme Court and ApTel giving clear judgements for enforcement.

It is also good to see the extent of penalties not collected being quantified for the first time. By any account, Rs 4,234 crore is a huge number. However, we believe that is is a significant understatement as the assessment by CAG covered Discom’s only – not CPPs and open access consumers who constitute a significant portion of obligated entities in the country.


News coverage of the CAG report can be accessed here.

JERC (Goa & UTs) imposes penalty for non-compliance of RPO

Joint Electricity Regulatory Commission (JERC) for UTs and Goa has become the second electricity regulator to impose penalty for non-compliance of RPO targets. JERC (Goa & UTs) had previously through a suo-motu order (dated 27th Dec 2013) directed all obligated entities to comply with RPO targets of FY11 to FY14 by 31st March 2014 and submit a detailed report by 17th April 2014. JERC notes that some of the obligated entities have failed to fulfil the targets.

Goa – In case of Goa, JERC after scrutiny of the report (submitted by former) was of the view that Goa has failed to fulfil Solar RPO targets from FY11 to FY14 and has consequently been directed to submit a detailed report by 21 July 2014. JERC has asked Goa to meet its RPO targets (along with all backlogs) positively.

Andaman & Nicobar Islands – JERC found that respondent has met with all targets up-to FY14. JERC emphasized that quarterly submission of RPO compliance reports to state agency should continue without fail.

Chandigarh – Chandigarh has also fulfilled RPO targets from FY11 to FY14. JERC mentioned that Chandigarh has also submitted the planning report for compliance of RPO targets of FY15.

Dadra & Nagar HaveliJERC has taken serious steps for non-compliance of RPO targets. The utility of Dadra & Nagar Haveli has therefore been asked to deposit INR 110 crore (Provisional) with the state designated agency positively by 30th September 2014 if it fails to comply with targets by 21st July.

The utility has also been directed to submit proposed plan to meet RPO targets of Fy15.

Daman & Diu – As per JERC, Daman & Diu has also not complied with RPO targets of FY11- FY14. The regulator also emphasized that OA consumers in the area of licensee are also required to meet the targets. The utility in Daman & Diu was asked to submit detailed report by 21st July 2014.

Lakshadweep – Lakshadweep has failed to meet non-solar RPO targets for FY11 to FY14. However, no penalty was imposed with respect to such non-compliance.

Puducherry – Puducherry has failed to comply with solar RPO targets for FY11-FY14, noted JERC. In this case also, there was no penalty imposed and the utility of Puducherry was asked to submit detailed report by 21st July 2014.

The additional information w.r.t amendment to principal RPO regulations is that the same has been forwarded to Controller of Publication, Govt. of India for publication. Our blog-post on the issue can be read by clicking here.

For more details refer the order here.

Punjab pushes PSPCL for RPO compliance by December’13

Punjab state power corporation limited (PSPCL) has been asked to comply with its stipulated RPO target for FY12, FY13 and FY14 cumulatively. In an order dated 12 August 2013, Punjab regulator allowed PSPCL to carry forward 114.80 non solar MUs and 25.8 solar MUs to FY14, which is the cumulative shortfall for FY12 and FY13.

For the current fiscal (FY14), the Punjab Discom has to purchase around 400,000 RECs and the shortfall of 114800 will eventually entail over 500,000 RECs to be purchased by end of December 2013.

in MUs Shortfall (+/-) in MWh RECs required
Non Solar Obligation 114.8 114800 114800
Solar Obligation 25.8 25800 25800
  140.6 140600 140600

With Maharashtra and Delhi also pushing for RPO on similar lines, it is expected that the buy side participation  will improve in the  poorly performing REC market.

For the copy of the order – Click Here

GERC waives RPO shortfall; second year of non-compliance

In a very disappointing order, the Gujarat State Electricity Commission (GERC) decided to waive off the shortfall in RPO for the year 2012-13. In a petition filed by the Discoms, they had asked for a waiver on the grounds that not enough RE capacity was commissioned in the state and even from those commissioned, several developers opted for the REC mechanism. GERC interpreted CERC’s REC regulations to apply mainly to non-RE resource states.

Its order states:

“From the above [reading of the CERC regulations], it transpires that the REC was introduced for the fulfillment of RPO for the States who are not having geographical conditions which is suited for RE generations and due to which they are unable to comply with the RPO envisaged in NAPPCCC and the Electricity Act, 2003. However, the State of Gujarat has very high potential of wind and solar generation. But the distribution licensees in the State could not fulfill their non-solar RPO due to lower capacity addition and unwillingness of the Wind Generators to supply electricity at the preferential tariff determined by the Commission. Under such a condition, procurement of RECs, would unjustifiably burden the consumers of the State.”

It is interesting to note that in the assessment of RPO compliance for the year 2011-12, GERC had allowed a roll-forward of RPO on the grounds that sufficient RECs were not available.

From the order of 2011-12:

“Non-compliance was primarily due to non-availability of RE power. Though the REC mechanism has been introduced to meet such contingency, availability of RECs was also not adequate. Further, no solar REC was available during the F.Y 2011-12. We, therefore, decide to carry forward the shortfall in procurement of renewable energy during FY 2011-13 by the aforesaid entities to FY 2012-2013.”

Further, GERC’s regulations clearly provide that purchase of RECs is a valid way to meet RPO. This year, GERC even decided to do away with the formality of a roll-forward and instead waived the entire shortfall:

“As pointed out above, both GUVNL and Torrent Power have made sincere efforts to fulfill their obligation under the RPO Regulations. They have been able to establish the fact of non-availability of renewable energy power in the market and also the lack of interest on the part of renewable energy power generators in concluding Power Purchase Agreements with the utilities despite the revision of the wind tariff by the Commission.”

“Any carry forward of the same would add to the burden on the licensees and the consumers. In view of the above, we decide to revise the RPO for the year 2012-13 at actual for the year as a special case in view of the prevailing market conditions at that time.” In our opinion, the order will certainly set a bad precedent for RPO compliance. It is second year in a row that GERC has shied away from enforcing RPO. It provides a strong incentive to Discoms in Gujarat to do even less in the coming year towards fulfilling its obligations.

The order can be read here

Relevant media article – Business Week

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