Adani Electricity Mumbai has Time Until March 2020 to Comply with RPO

Government agencies in India are taking renewable purchase obligation (RPO) compliance cases seriously, and entities are being brought to task by state electricity regulatory commissions after the creation of RPO compliance cell.

The Maharashtra Electricity Regulatory Commission (MERC) has ordered Adani Electricity Mumbai Limited to comply with its solar and non-solar RPO requirement shortfall by March 2020.

MERC heard a case for verification of RPO compliance by Adani Electricity Mumbai Limited for the financial year (FY) 2017-18. Adani Electricity Mumbai Limited had requested that MERC allow the cumulative surplus up to FY 2015-16 to be offset against the RPO target of FY 2016-17 and FY 2017-18 and carry forward the shortfall in RPO from FY 2016-17 through FY 2019-20 to the next control period.

MERC was going through submissions made by Adani Electricity Mumbai Limited and Maharashtra Energy Development Agency (MEDA), the designated state agency by the MERC. The agency noted that Adani Electricity Mumbai Limited has shortfall in its standalone solar, non-solar and mini-micro hydro project RPO targets for FY 2016-17 and FY 2017-18.

MERC also noted that Adani Electricity Mumbai Limited had not purchased renewable energy certificates (RECs) in FY 2017-18 and that it had purchased solar power of 68.516 million units (MUs) in FY 2017-18 as against its target of 187 MUs. Similarly, the company has not purchased any non-solar RECs and purchased only 200.597 MUs of non-solar power as against its target of 984.30 MUs.

The MERC believes it appropriate to consider the cumulative surplus of solar at the end of FY 2015-16 to offset the standalone shortfall of FY 2017-18. The standalone solar RPO shortfall for FY 2017-18 is 118.968 MUs which is to be offset by the surplus solar of 80.92 MUs. So the standalone solar RPO shortfall for FY 2017-18 becomes 38.048 MUs.

MERC also ordered that the standalone non-solar RPO shortfall for FY 2017-18 of 783.698 MUs be offset by the surplus non-Solar RE power of 15.36 MUs. Similarly, the standalone mini-micro RPO shortfall for FY 2017-18 of 1.969 MUs to be offset by the mini-micro power of 0.010 MU. With that, the standalone non-solar RPO shortfall for FY 2017-18 becomes 768.343 MU.

According to MERC, “Adani Electricity Mumbai Limited has standalone shortfall for solar RPO of 38.048 MU for FY 2017-18 and cumulative shortfall of 61.37 MU till FY 2017-18, stand-alone shortfall for its non-solar RPO of 768.343 MU for FY 2017-18 and cumulative shortfall of 997.88 MU and standalone shortfall for its mini/micro hydro RPO of 1.959 MU for FY 2017-18, and cumulative shortfall of 3.76 MU.”

After allowing for the previous fiscal’s surplus to be deducted from shortfall for FY 2017-18, the MERC ordered that Adani Electricity Mumbai Limited must purchase RECs to fully meet its standalone and cumulative shortfall of FY 2016-17 and FY 2017-18 by the end of March 2020.

MERC in its order stated that the control period for existing RPO Regulations, 2016 is ending by FY 2019-20 and it will through public consultation set fresh RPO targets from FY 2020-21 onwards. Therefore it cannot allow entities to carry forward shortfall to the next control period.

Recently MERC ordered five entities including Gigaplex Estate Pvt. Ltd., Mindspace Business Parks Pvt. Ltd., Indian Railways, Tata Power Co. Ltd. (Distribution) and Brihan Mumbai Electric Supply and Transport Undertaking (BEST) to comply with their solar and non-solar RPO requirement for FY 2017-18 in FY 2018-19.

MERC also made an unusual ruling and ordered Maharashtra State Electricity Distribution Company Limited (MSEDCL) to comply with its solar renewable purchase obligation (RPO) requirement for FY 2017-18 by March 2020 to fulfill the solar RPO requirement of the year.

“Though compliance rulings from MERC are welcome, asking the government and private entities to comply with RPOs retroactively is occurring regularly, which is concerning. This is not how an RPO works and entities must be made to comply in the current year for India to meet its 175 GW renewable energy installation goal,” said Raj Prabhu, CEO of Mercom Capital Group. On the other hand, strict enforcement of yearly RPO targets can single-handedly propel the renewable sector in India.

Saumy Prateek Saumy is a senior staff reporter with MercomIndia.com covering business and energy news since 2016. Prior to Mercom, Saumy was a copy editor at Thomson Reuters. Saumy earned his Bachelors Degree in Journalism & Mass Communication from the Manipal Institute of Communication at Manipal University. More articles from Saumy Prateek.