- Thermal power companies in India will be able to develop their own renewable energy generation capacity and sell through PPAs
- They can either set their own capacity or outsource it to be developed by another company through competitive auctions
- Renewable energy supplied thus would form part of discoms’ RPO and they won’t need to acquire separate capacity for balancing as it will be balanced by thermal energy
- Gains from the bundling of renewable energy with thermal power will be equally shared between generator and discoms/offtakers
Revised guidelines by India’s Ministry of Power (MoP) and the Ministry of New and Renewable Energy (MNRE) now paves way for thermal power generation companies to set up their own renewable energy capacity, turn into renewable power producers, and offer the same to offtakers through power purchase agreements (PPA).
Under the guidelines, thermal power companies can set up this renewable capacity either by themselves or hire developers through competitive process to set it for them. With this, discoms will not need to acquire any separate capacity to balance renewable energy since it will be balanced with thermal energy.
Discoms will also be able to count the renewable energy supplied as part of their renewable purchase obligation (RPO), without any additional financial burden of a separate PPA.
Terming the exercise a very significant step towards achieving its 500 GW non-fossil fuel goal by 2030, India said the guidelines enable renewable energy to replace fossil fuel energy under existing PPAs. India has declared to become a net zero carbon emitter by 2070, and achieve 500 GW renewables capacity by 2030 (see India Goes For Net Zero by 2070).
“As the cost of renewable energy is less than the cost of thermal energy, the gains from the bundling of renewable energy with thermal will be shared between the generator and Distribution companies/other procurers on a 50:50 basis,” reads a joint statement from the ministries.
While it will benefit both the generators and distribution companies, the move will also lead to faster energy transition. Both the ministries said they are to announce additional steps to achieve the 500 GW target as promised at the recently concluded COP26.