India’s Minister of State with independent charge for power, coal and renewable energy, Shri Piyush Goyal, spoke to reporters on the side-lines of Indian Electrical and Electronics Manufacturers’ Association (IEEMA) event and said that the Ministry of Power is looking into finding a solution to enforce or penalize states that flout the ‘must run’ status as reported by the Press Trust of India (PTI).
Mercom has been reporting on this topic regularly with inputs from project developers and state agencies. Rajasthan and Tamil Nadu, the states with the largest solar and wind capacities respectively, have curtailed power from renewable energy sources sporadically in the past, citing low demand for power and the availability of cheaper power on the power exchange.
“India’s renewable energy target of 175 GW by 2022 is very aggressive,” said Raj Prabhu, CEO of Mercom Capital Group. “The government needs to remove hurdles like non-compliance of must run status of renewables by DISCOMs to have a chance to meet the installation goal.”
The MNRE had issued an advisory to the Central Electricity Regulatory Commission (CERC) in August for cutting back its use of power from solar projects. Since solar projects have a ‘must run’ status and do not have the benefit of a two-part tariff enjoyed by thermal projects, when these solar projects are asked to ‘back down’ they do not get paid for the loss of energy. The advisory asked the commission to enforce the ‘must run’ status and requested that projects be paid their full tariff in the rare cases they are asked to cut back.
MNRE sources told Mercom that while the advisory was issued by MNRE, it was not being enforced by the regulatory commission. The MNRE official also said that in order for the renewable energy market to grow, long-term power purchase agreements (PPAs) along with strict regulatory compliance and enforcement is crucial. He added that the Electricity Act of 2003 talks about punishing non-compliance of renewable purchase obligation (RPO), the MNRE has to set down strict guidelines for its enforcement.
Image credit: “A New India – Free Fair and Prosperous” (CC BY-NC-SA 2.0) by World Economic Forum
Raj Prabhu is a recognized thought leader in clean energy markets where his work has influenced policies worldwide. He has a deep understanding of regulatory policy and clean energy markets and his market and opinion pieces are regularly published on both MercomIndia.com and other leading publications globally. Raj is also a regular speaker and presenter on clean energy policy and finance topics at conferences worldwide. Raj attended the KLE College of Science in Bangalore, India for physics and chemistry, and holds a Bachelor of Science Degree in Hotel and Institutional Management from Johnson and Wales University, Rhode Island. More articles from Raj Prabhu.
