Buying Green Power may become mandatory under the Energy Conservation Act
The Indian government is on its way to making the national renewable purchase obligations (RPOs) enforceable under the Energy Conservation Act, which carries heavy penalties for non-compliance. RPOs necessitate obligated entities, including open-access consumers, distribution companies, and captive power producers to buy a minimum amount of renewable energy.
While the central Government announces the RPO trajectory for compliance by obligated entities, the State Regulatory Commissions, under The Electricity Act, 2003, finalize them. In addition, they are responsible for ensuring compliance with RPOs in their jurisdiction. While regulatory trajectories for State regulators could differ from those notified by the Centre, non-compliance by distribution utilities and lack of stricter enforcement by regulators for RPOs is still a significant challenge for the renewable energy and power sectors.
Bringing RPO mandates under the Energy Conservation Act’s purview will enable penalties on jailed entities deviating from the central government’s prescribed RPO trajectory, as revealed by informed sources.
Penalties will ensure entities comply with policies mandated by the central Government than State regulators. Consequently, objectives of RPO compliance deferred and carried over to the next year will be less frequent.
There will be no changes in the total Renewable Purchase Obligations made by the central Government. However, specific renewable energy trajectories may be subject to certain changes, as per another expert opinion.
The current trajectory of purchase obligations indicates that the fraction of renewable energy will be 43.3% of the total electricity consumption in 2029-30. Goldman Sachs’ report revealed that even though the government-mandated RPO is expected to cross 40% of overall consumption by FY30, overall renewable energy penetration may lag behind.
In December, the Parliament amended the Energy Conservation Act, 2001, enabling its provisions to include specific energy consumption standards for buildings, industrial units, and vehicles, among others.
The Indian government is planning to take a significant step towards promoting renewable energy by making the national renewable purchase obligations (RPOs) enforceable under the Energy Conservation Act. This move is expected to impose hefty penalties on entities that fail to comply with the RPOs.
RPOs refer to the minimum amount of renewable energy that obligated entities, including distribution companies, open-access consumers, and captive power producers, are required to purchase as a percentage of their total consumption. While the central government announces the RPO trajectory for the country, it is the state regulatory commissions that finalize the trajectory under The Electricity Act, 2003. These state regulators are also responsible for ensuring compliance within their respective jurisdictions.
However, it has been observed that there are still major challenges in achieving compliance, including a shortfall in compliance by distribution utilities and a lack of stricter enforcement by the regulators.
To address these challenges and ensure greater compliance, the government is considering bringing the RPO mandates under the purview of the Energy Conservation Act. By doing so, entities that deviate from the central government’s prescribed RPO trajectory will be subject to penalties. This approach aims to keep entities more aligned with the central government’s trajectory, reducing the chances of targets being deferred or carried over to the next year.
While there are no expected changes to the total RPO set by the central government, some modifications might be made to the specific renewable energy trajectories. The objective is to enhance the implementation and effectiveness of the RPOs.
As of the current trajectory, the total portion of renewable energy in India’s electricity consumption is projected to reach 43.3% by 2029-30. However, there are concerns that the overall penetration of renewable energy may still lag behind what is mandated by the government. A report from Goldman Sachs suggests that even though the government-mandated RPO is expected to surpass 40% of overall consumption by fiscal year 2030, the penetration of renewable energy may not reach the desired level.
In December, the Parliament amended the Energy Conservation Act, 2001, to include provisions for specific energy consumption standards in various areas such as vehicles, industrial units, and buildings. This signifies the government’s commitment to promoting energy efficiency and sustainability across different sectors of the economy.
The enforcement of mandatory RPOs under the Energy Conservation Act signifies a significant step towards achieving India’s renewable energy goals. By imposing penalties on non-compliant entities, the government aims to create a stronger incentive for organizations to prioritize renewable energy procurement and contribute to the country’s sustainable development. However, it will be crucial to ensure that the enforcement mechanism is practical, fair, and takes into account the diverse challenges faced by different entities in achieving RPO compliance.
In conclusion, the government’s plan to make RPOs enforceable under the Energy Conservation Act is a positive development for the renewable energy and power sectors in India. This move will help ensure greater compliance and progress towards the country’s renewable energy targets. By encouraging obligated entities to purchase green power and imposing penalties for non-compliance, the government is promoting sustainable and responsible practices in the energy sector.
It is essential for all stakeholders to actively participate in this journey towards a greener future and work towards overcoming the challenges in implementing and enforcing RPOs effectively.
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