MERC tightens RPO compliance & prevents interchangeability

In a landmark decision by Maharashtra state electricity regulatory commission, it was brought forward that the obligated entities of the state (i.e. DISCOMs, Captive and OA consumers) will no longer have the cushion of RPO waiver or interchangeability of solar and non-solar RPO. Hon’ble commission has strongly asserted that all obligated entities in the state will have to meet their RPO targets (cumulatively) before March FY14, which means that all RPO targets from FY11- FY14 will have to met after clearing all previous backlogs.

Such a decision is a good sign for the overall good of REC market, which has already shown signs of increased demand in the last trading session. (For details on volumes follow REC Trading Report – July 2013). The market is expected to conduct trading in August 2013 with an inventory of around 30 lakh plus RECs. If more such decisions from other state regulators are put in place, it eventually will pick RECs from its hitherto floor price. Relevant article in the Economic Times can be read here.

In another decision, the commission proscribed the interchangeability of solar & non-solar RPO. The commission while taking a decision on the petition submitted by Reliance Infrastructure Ltd. (D) referred to discussion of 33rd FOR meeting in which the later deemed such a move as undesirable. The meeting had concluded that interchangeability will put a lot of burden on obligated entities and will in-turn affect consumers with undue cost burden.  RIL had petitioned that since it was unable to comply with non-solar RPO targets, it must be allowed to procure the surplus solar power available to offset the same. The commission responded that such a case is possible only when solar power reaches grid parity. It also highlighted that such a move will also adversely affect the growth and penetration of other renewable energy sources.

The order copy can be found here.

Regardless of varied stakeholder sentiments, both these decisions can be rightly called as a step forward towards promoting more renewable energy in India.

Article in The Guardian