Green Targets For Indian Power Distributors

• The Indian Ministry of Power has issued new guidelines to state power distribution companies to procure power from renewable sources as part of their Renewable Purchase Obligation (RPO)
• In 2016-17, DISCOMs have to procure at least 2.75% solar power of their total power consumption, increasing every year, up to 6.75% in 2018-19
• By 2018-19, DISCOMs would be required to procure at least 17% of their total power consumption from renewables
• State Electricity Regulatory Commission will have the final say in terms of setting the targets

Power distribution companies (DISCOMs) operating in Indian states will have to procure at least 2.75% of their total power consumption from solar power plants in 2016-17. The solar share has to be increased to 4.75% in 2017-18 and 6.75% in 2018-19.

DISCOMs received guidelines with draft targets from the Ministry of Power in India. However, the final targets will be set by the state's electricity regulatory commission (SERC), according to a report in The Economic Times, an Indian business daily.

This is going to be a good news for solar in India. India has a target of 100 GW solar power by 2022 and 175 GW of total renewable energy, which are part of the renewable purchase obligation (RPO) scheme under which states are required to increase the share of renewables in their energy supply.

At the same time, DISCOMs will have to procure non-solar renewable energy with a share of 8.75% in 2016-17, 9.50% in 2017-18 and 10.25% in 2018-19. The total, according to ET, will come to 11.50% in the current fiscal year, 14.25% in 2017-18 and 17% in 2018-19.

The financial condition of DISCOMs in India has been everything but healthy. The government has introduced a plan called UDAY or Ujwal DISCOM Assurance Yojna, which aims at a financial turnaround and revival of DISCOMs. Under the scheme, the government assures 24×7 power for all. As part of the UDAY scheme, DISCOMs at state level are expected to comply with Renewable Purchase Obligations (RPO).

In a blog post in November 2015, clean energy consultancy Bridge to India stated that the success of UDAY is important for the future of solar power in India. DISCOMs are a crucial link as they distribute power to the consumers, but with financial strains they are unable to take on the additional responsibility of managing renewables.

Bridge to India commented, "Poor DISCOM financial health has serious ramifications for continued growth of the solar sector. The economic case for solar power is becoming stronger by the day but offtake concerns can imperil the solar sector in much the same way as they have for the thermal power sector. A successful revival of the power distribution sector and tariff reforms will immensely benefit both utility scale and rooftop solar."

As UDAY makes it mandatory for states participating in the scheme to share a bulk of the DISCOM debt, the power distribution companies are supposed to be better positioned to look at renewable growth as well.

Nonetheless, ET points out, "Track record of state DISCOMs is not very encouraging though. In the last three years, solar RPOs set by different SERCs varied between 0.25% and 1%, and yet they were rarely fulfilled, with penal action rarely being taken against defaulting DISCOMs."