Government Issues Notices to States for Failure to Meet Renewable Purchase Obligation Target

At least 25 states received a letter from the government where they have been asked to complete the targets set forth by the power ministry to achieve Renewable Purchase Obligation (RPO) goals.  

The states that got the letters include Andhra Pradesh, Delhi, Gujarat, Haryana, Kerala, Madhya Pradesh, Maharashtra, Rajasthan, and Tamil Nadu.  

Renewable Purchase Obligation (RPO) is a mandate for organisations to purchase a minimum amount of electricity from renewable energy sources.  

The states failed to meet the targets set for the previous two fiscal years, as reported by Economic Times citing sources with knowledge of the development.  

The power ministry asked the states to follow their renewable consumption trajectory and meet their targets after it was observed that some states fell short of their targets in FY 2023 and FY 2024.   The RPO to be purchased by the obligated entities depends on the total consumption by the Distribution companies, open access consumers, captive power producers, etc.   

Last month, ICRA reported that to achieve the RPO target of 43.3 per cent by FY 2030, the current renewable energy capacity of 200 GW needs to be doubled.  

The transition will involve the necessary capital expenditures in energy storage technology and the interconnection of systems on current and other land acquisition and transmission system problems.  For FY 2025, the designated consumers have to ensure that at least 29.9 per cent of the required supply is from sources other than fossil fuel; for FY 2030, it has to be 43.3 per cent.  

An industry official told the Economic Times that the renewable energy and power sectors have faced significant challenges due to distribution utilities' failure to comply with RPOs and the lack of stricter enforcement by state regulators. The Energy Conservation Act, 2001, which includes provisions for penalties on any entity that deviates from the path the central government has envisioned for their respective RPOs, was preview by the central government last year and includes the RPO mandate.