Telangana CM in harsh words has criticized the Prime Minister over Renewable Purchase Obligations (RPO).

Why such a gesture by Telangana CM?

• Telangana has been particularly vocal about the “increasing burden” forced upon states by the Centre on account of the clean energy cess imposed on coal and the RPOs (Renewable Purchase Obligation).

What are RPOs?

• Renewable Energy Certificates (REC) is a policy instrument to catalyze the development of renewable energy.
• It is a market-based mechanism that will help the states meet their regulatory requirements (such as RPOs) by overcoming the geographical constraints on existing renewable potential in different states.
• Under RPO, power distribution companies purchase a certain percentage of their requirements from renewable energy sources.

REC Mechanism

• REC mechanism is a market-based instrument to promote renewable energy and facilitate compliance of renewable purchase obligations (RPO).
• It is aimed at addressing the mismatch between availability of RE resources in state and the requirement of the obligated entities to meet the RPO.
• 1 REC is treated as equivalent to 1 MWh.

How many types of RECs are there?

There are two categories of RECs, viz., solar RECs and non-solar RECs.

1. Solar RECs are issued to eligible entities for the generation of electricity based on solar as a renewable energy source.
2. Non-solar RECs are issued to eligible entities for the generation of electricity based on renewable energy sources other than solar.

Issues highlighted by Telangana

• Mandatory purchase: The CM has raised the issue of mandatory purchase of renewables reducing the Plant Load Factor (PLF) for existing thermal power projects.
• Only solar RPO: The CM questioned the mandate to procure a certain percentage of power from solar energy noting that Telangana had hydropower projects producing over 2,500 MW of power from rivers.
• Not all states have ample renewables: States have thus far not been able to meet RPO targets, with over a dozen states and UTs achieving less than 60% of RPOs.
• Penalty for non-compliance: There is a (small) penalty for not meeting RPO obligations. The Centre has proposed to increase penalties on states for non-compliance with RPOs in the draft electricity amendment bill.

Clarification from the centre

• States were free to hold their own bids and buy green energy from any developer instead of procuring power based on bids by the SECI.
• They can choose to have their own bids.

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