Renewable power purchase hits a wall in Gujarat

Gujarat has been defaulting on its renewable purchase obligation (RPO) for four years now

Once the flag-bearer of renewable energy in India, Gujarat has been defaulting on its renewable purchase obligation (RPO) for five years now. Adding to the woes of the renewable power producers, the Gujarat Electricity Regulatory Commission (GERC) has cut the RPO by 22 per cent.

Both the central and state governments have been emphasising on adding renewable generation capacity. GERC, however, instead of increasing RPO for the state’s two utilities — Gujarat Urja Vikas Nigam and Torrent Power, calculated the weighted average of RPO achieved by all distribution licencees and waived off the past default in purchases.

This translates to 4.15 per cent for wind power, down from the original 5.5 per cent and one per cent for solar, which has not been increased further. The new norm mandates distribution companies to buy a certain percentage of power from green-energy sources. The relaxed norms following the waiver have been fixed from 2014-15 onwards.

It also granted extension to the utilities for procuring renewable power. Wind power producers have challenged this order in the Appellate Tribunal of Electricity (Aptel). “We decide to revise the RPO of the distribution licensees of the state by adopting the weighted average formula in which the renewable energy available in the state and the energy procured by the distribution licensee is considered and based on it the weighted average renewable energy determine is considered as the RPO for FY 2012-13,” said a GERC order of August 2015.

RPO is divided into two parts — solar RPO and non-solar RPO — which includes wind power and is expected to gradually increase every year. “The state is doing power purchase according to the rules of RPO. There is no less procurement amount of RPO by the state utilities,” Govind Patel, Gujarat’s minister for energy and petrochemicals, told Business Standard. “However, as Gujarat is a power-surplus state, purchase under RPO is limited. As of now, there is no plan to increase procurements as it is not needed.”

The installed capacity in Gujarat is 25,000 Mw, while the peak demand is 14,000 Mw. State energy officials rue the fact that oversupply is hurting power procurement. Lack of open access policy and robust transmission also restricts the power units in the state to sell power outside, especially renewable energy.

While shortfall in solar power procurement was reduced after 2013, wind power continues to face tough times. Gujarat had faced a similar issue in 2007-08 when the discoms stopped purchasing wind power after their target was met.

Wind power producers are aggrieved that the state is not purchasing power from their units and they are likely to face payment issues. Gujarat has close to 3876 Mw of installed win power generation capacity. Around 230 Mw of new wind power capacity was added in the state during 2015-16. Gujarat had signed close to 28 MoUs in 2010 totalling 5,071 6 Mw and entailing investment of $6.7 billion, as per industry estimates then.