DISCOMs Now Have Hydropower Purchase Obligation in Their RPO Targets

The Ministry of Power (MoP) has issued a notification specifying renewable purchase obligation (RPO) targets, including large hydropower projects commissioned after March 08, 2019.

On March 08, 2019, the government had issued an order detailing various policy measures to promote the hydropower sector and declared that large hydropower projects, including pumped storage projects having a capacity of more than 25 MW which achieved commercial operation after March 08, 2019, are eligible to be classified as a renewable energy source.

To achieve the target of 30 GW of hydropower by 2029-30, the government has issued a revised trajectory of RPO, including a long-term trajectory for hydropower purchase obligation (HPO) for projects commissioned after March 08, 2019.

As per the notification, the RPO has been calculated in energy terms as a percentage of total electricity consumption, excluding the consumption met from hydropower sources. The solar RPO target may be met by power produced from solar power projects. Other non-solar RPO (excluding HPO) may be met from any renewable source other than solar and large hydropower projects.


RPO Hydropower

The notification says that the HPO benefits may be met from the power procured from large hydropower projects commissioned on and after March 08, 2019, and up to March 31, 2030, in respect of 70% of the total generated capacity for 12 years from the date of commissioning. Free power will be provided as per agreement with the state government. The power provided for the local area development fund (LADF) will not be included within this limit of 70% of the generating capacity.

The HPO liability of the DISCOM could be met out of the free power being provided to the state from large hydropower projects commissioned after March 08, 2019. Free power (not contributed to the LADF) only to the extent of HPO liability of the DISCOM will be eligible for the HPO benefit.

In case the free power is insufficient to meet the HPO targets, then the state would have to buy additional hydropower to meet its HPO targets or buy hydro energy certificates to meet the non-solar (hydro) RPO targets.

The Central Electricity Regulatory Commission (CERC) will develop the hydro energy certificate mechanism to facilitate HPO compliance. It would have a capping price of ₹5.50 (~$0.075)/kWh for the purchase of energy from March 08, 2019, to March 31, 2021, with a subsequent 5% annual escalation.

Hydropower imported from outside India will not be considered for meeting the HPO.

On achieving solar RPO compliance to the extent of 85% and above, the remaining shortfall can be met by excess non-solar energy consumed beyond non-solar RPO for that year. Similarly, on the achievement of non-solar RPO to the extent of 85% and above, the remaining shortfall can be met by excess solar or eligible hydro energy consumed beyond specific solar RPO or HPO for that year.

On the achievement of HPO compliance to the extent of 85% or above, the shortfall can be met by excess solar or other non-solar energy consumed beyond the specified solar RPO or other non-solar RPO for that year.

The ministry said that the state electricity regulatory commissions might consider notifying the RPO trajectory, including HPO for their respective states in line with its RPO trajectory.

The share of hydropower topped the installed capacity of renewables in India. According to Mercom India Research, as of December 30, 2020, large hydropower projects of 45.7 GW were operational in the country, accounting for 12.2% of India’s total installed power capacity.

According to the International Hydropower Association’s 2020 Hydropower Status Report, India overtook Japan as the fifth largest hydropower generator globally with an installed capacity of 50.07 GW.