From RPOs to PDOs

• To incentivise renewable energy, the Indian Electricity Act 2003, gave legal teeth to RPOs that mandate all electricity distribution licensees must purchase or produce a minimum specified quantity of their electricity requirements from renewable energy sources.
• State Electricity Regulatory Commissions fix the minimum RPO for the State.

From Renewable Power Obligations (RPOS) To Power Decarbonisation Obligations (PDO)

• The Paris agreement aims to keep the increase in global average temperature to well below 2oC above pre- industrial levels, and further limit the increase to 1.5oC, to reduce risks and impact of climate change (Article 2 of Paris Agreement).
• The new IEA-prescribed scenario to phase out fossil fuels to achieve the 1.5oC target suggesting that the power sector achieves net zero by 2040 globally, pressure on countries to develop long term deep decarbonisation plans, with the ultimate goal of net zero emissions by the earliest possible year, is also growing.
• So the government step to incentivise renewable energy, RPO mandates, further empowered state electricity regulators to determine the quantum of such RPO based on the renewable potential of the states.

• The rationale was to give a level playing field for renewable energy that was more expensive in the first decade of the 21st Century.
• However, with changing dynamics, cost of renewable power is now far below that of conventional coal thermal power.
• The number of discoms have also increased their share of purchase of renewable electricity (as high as 33%) and states have also exceeded their RPOS (Andhra Pradesh, Karnataka, Rajasthan, Maharashtra and Gujarat).

PDO's

• In order to further incentivise decarbonisation of the power sector there is a demand for PDO.
• The system would set a progressive threshold for decrease in purchase of coal-based power and a corresponding increase in purchase and absorption of renewable power by discoms.

• The Power Decarbonisation Standards, if adopted, would also ensure that a comprehensive plan is put in place to limit the setting up of new coal plants, while also retiring vintage coal-fired power plants.

• To conclude, the concept of Power Decarbonisation Obligations could work only with a finely-tuned coordination and implementation mechanism that involves policy, regulations and enforcement, with state governments on board.

• If the solution lies in reducing coal-based power in the system, it is high time the government looked at innovative options rather than tinkering with the existing structure alone.