Abstract
India’s transition towards renewable source of energy hasa significant impact on energy law and policy governance. Energy law is framed to response the energy demand, environment concerns and international environment commitment on climate change and other aspects. The instrument that regulatesthesetransition is Renewable Purchase Obligation (RPO). RPO is a statutory requirement imposed on certain entities such as distribution licensees, captive Power Purchaseand Open- access Consumers to purchase a minimum percentage of electricity from renewable resources. The legal authority for RPO is through the Electricity Act, 2003, which empower the regulatory authority to promote renewable energy within the electricity sector.
The paper critically reviews the role of Renewable Purchase Obligation (RPO) as a regulatory mechanism to evaluate the renewable energy development within Indian energy law framework. It also analyses the institutional structure involving Central Electricity Regulatory Commission and State Electricity Regulatory Commission. Considering challenges related to enforcement mechanisms, compliance monitoring and financial constraints faced by the electricity distributing companies. It also mentions Renewable Energy Certificates as market oriented mechanism for fulfilling RPO obligation.
The paper elaboratelegal foundation under the Electricity Act, 2003. However, it also mentions the weak enforcement mechanisms, inconsistencies in regulation across various state and the financial distress within the electricity distribution sector. It further critically analysesthe law and evaluated the relevance of RPO in helping India meetits renewable energy targets and commitments given under the Paris Agreement, emphasizing the need for stronger regulatory compliance and institutional reform.
Keywords: Renewable source, Renewable Purchase Obligation (RPO), distribution licenses, electricity sector, Regulatory Commission.
INTRODUCTION
“The world’s energy destiny lies with decisions and policies made by governments”
-Dr. Fatih Birol, Executive Director, IEA[1]
The transition from conventional fossil-fuels-based energy system to renewable energy has emerged as one of the most significant policy governance and legal challenges in 21st century. The major objective behind adopting renewable source of energy is to achieve the sustainable development principal for promoting energy security, environment protection and mitigating climate change. Rapid industrialization, growing population which leads to demand for more energy and rapid increase in the threats of climate change has made nations adopt the sustainable energy strategies to mitigate thesefactor and there should be cordial relation between economic development and environment protection. India, is one of the biggest consumer in the energy market and the growing economy in world make it quite a complex task for maximizing production of energy generation and environment protection together. The production of renewable energy resources has lead to formulate regulatory compliance mechanism and considering it as an integral component of India’s energy governance and framework. Due to which India has faced dual challenges in energy sector. One is to ensure stable energy production and supply of electricity for maximum economic growth and development. On the other hand it has to address issue such as environment damage and climate change. Take measure to reduce the dependency in conventional source or fossil fuels such as coal, petroleum and oil. As India is signatory of various international environment treaties and convention it is necessary to adopt these policies and programme in domestic laws as under Article 253 of the Indian constitution[2]. Therefore, the government has introduced several policies and legal mechanism to incorporate such clause and promote renewable energy generation. The most significant reform in energy law sector was the introduction of Electricity Act, 2003[3] which provide a codified structure and introduced such provision which encourage renewable energy development.
“The Electricity Act , 2003” provide the legal structure and developed a strong foundation for promoting renewable energy resources in India. Under its “section 86(1)(e) of the Act states the function of state commission. It mentioned that the state commission shall discharge the function “promote co-generation and generation of electricity from renewable sources of energy by providing suitable measures for connectivity with the grid and sale of electricity to any person, and also specify, for purchase of electricity from such sources, a percentage of the total consumption of electricity in the area of a distribution licensee”[4]”. This particular requirement is known as Renewable Purchase obligation. The major objective of this Renewable Purchase obligation that certain amount of electricity should be generated from renewable source of energy.
In this RPO certain entities have in the electricity sector have to procure their electricity from the renewable energy. RPO is a statutory requirement imposed on certain entities such as distribution licenses, Captive Power Purchase( usually established by a group for self-consumption) and Open access Consumers to purchase a minimum percentage of electricity from renewable resources. These entities can meet their RPO targets either through renewable power generation which is also known as “Direct Procurement option”. Which simply means to install a solar plant or purchase a renewable power directly from the generator. Due to grid constraint and cost consideration[5]. Second is through purchasing the Renewable Energy Certificates(REC’s). it shows the proof of achievable targets. These are tradable instrument that shows the energy generation from renewable sources and allow obligated entities to meet their RPO requirements even if they are not been able to purchase the electricity directly.
The implementation of these RPOinvolves institution like Central Electricity Regulatory Commission which regulates the renewable energy certificate market and formulate certain regulation related to electricity markets at national level. Simultaneously, the State Electricity Regulatory Commission has power to determine the RPO target for their respective state and monitors whether the entities are comply with the provisions and required targets or not. The MNRE Ministry of New and Renewable Energy also plays a vital role in promoting renewable energy policies. It also support the remarkable growth of India in the energy sector specially from renewable sources.
However, despite having the comprehensive legal structure and well framed institutional structure the RPO still faces certain implementation challenges. Many electricity distribution companies are unable to achieve their set target due to financial constraint, operational inefficiencies and rigid enforcement of legal provision by the regulatory authorities. Even in some cases RPO has allowed certain entities to carry forward their obligation instead of imposing penalties for their non-compliance. These actions raises question regarding the authentication and effectiveness of RPO as a regulatory mechanism for promoting renewable energy.
Indian policies on renewable energy is influenced by the international commitment under “Paris Agreement”[6]. In which it aims at to reduce green house gas emission and promote the use of clean energy. Even the sustainable development Goal- 7 is also mentioned about the use of “clean energy”. Therefore it is important for India to have a massive successive under the RPO policies not only for domestic energy policies and governance but at a international climate obligation to meet the standard commitments made under the international commitments[7].
[1]“Fatih Birol, Executive Director, International Energy Agency, Statement on Global Energy Policy, International Energy Agency, available at: https://www.iea.org”
[2]“The Constitution of India . Art. 253”
[3]“The Electricity Act, 2003”
[4]“The Electricity Act, 2003, s 86(1)(e)”
[5]“Central Electricity Regulatory Commission, Renewable Energy Certificate Regulations, 2010”
[6]“Paris Agreement, 2015, United Nations Framework Convention on Climate Change”
[7]“United Nations, Sustainable Development Goal 7: Affordable and Clean Energy, available at https://sdgs.un.org”