Menu
I. Introduction
As India intensifies its commitment to renewable energy, understanding the Renewable Purchase Obligations (RPO) set forth by various regulatory bodies becomes crucial. This article delves into the alignment and diversification of RPO trajectories across different states in Indian, highlighting areas of confusion and offering recommendations for harmonization and clarity.
Central Government’s RPO Trajectory
The Central Government, via the Ministry of Power, issued a notification on 20.10.2023, outlining RPO targets from 2024 to 2030. The same is in effect from 01.04.2024. These targets are aimed at increasing the share of renewable energy in the national energy mix, emphasizing categories such as Wind Renewable Energy (RE), Hydro RE, Distributed RE, and Other RE.
| Year | Wind RE | Hydro RE | Distributed RE* | Other RE | Total RE |
| 2024-25 | 0.67% | 0.38% | 1.50% | 27.35% | 29.91% |
| 2025-26 | 1.45% | 1.22% | 2.10% | 28.24% | 33.01% |
| 2026-27 | 1.97% | 1.34% | 2.70% | 29.94% | 35.95% |
| 2027-28 | 2.45% | 1.42% | 3.30% | 31.64% | 38.81% |
| 2028-29 | 2.95% | 1.42% | 3.90% | 33.10% | 41.36% |
| 2029-30 | 3.48% | 1.33% | 4.50% | 34.02% | 43.33% |
**For hilly and North-Eastern States/Union Territories, namely Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Jammu & Kashmir, Ladakh, Himachal Pradesh and Uttarakhand, the distributed renewable energy component shall be half of that given in the Table and the remaining component for these States shall be included in the other renewable energy sources.
Distributed RE as distinct category: The aforesaid notification has created a new and distinct category wherein the renewable energy component from distributed RE is to be met only from the energy generated from renewable energy projects that are less than 10 MW in size, including solar installations under all configurations (net metering, gross metering, virtual net metering, group net metering, behind the meter installations and any other configuration) as notified by the Central Government.
The Renewable Purchase Obligation (RPO) framework in India is an essential mechanism driving the transition towards a sustainable energy future. However, this notification by the Central Government prescribing RPO targets raises not just significant legal questions, particularly in light of the Electricity Act, 2003, and the Energy Conservation Act, 2001 but also raises implementation issues in view of lack of harmony in prescribing RPO targets.
II. Legislative Overlap under Statutory Framework
The Electricity Act, 2003
The Electricity Act, 2003, serves as the cornerstone of the regulatory regime governing electricity in India. Pertinent sections of this Act delineate the roles and responsibilities of the Central and State Electricity Regulatory Commissions, particularly:
The Energy Conservation Act, 2001
The Ministry of Power’s notification invokes clauses (n) and (x) of Section 14 of the Energy Conservation Act, 2001 to prescribe RPO targets for designated consumers. Section 14 provides for power of the Central government to enforce efficient use of energy, it reads as under:
14. Power of Central Government to enforce efficient use of energy and its conservation.—The Central Government may, by notification, in consultation with the Bureau,—
It may be noted that Clause (x) was introduced under the Energy Conservation Act, 2001 by virtue of an amendment being the Energy Conservation (Amendment) Act, 2022 published in the official gazette on 20.12.2022. Though the primary objective of the Energy Conservation Act is to promote energy efficiency and conservation, the newly introduced Clause (x), while tangentially related to energy conservation by promoting renewable energy, focuses more on the generation and procurement aspect of electricity, a domain categorically reserved for the Electricity Act, 2003. Further, when the identical subject matter is already covered under a separate legislative enactment, the insertion of Clause (x) under Section 14 of the Energy Conservation Act, 2001 amounts to encroaching and usurping the mandate given to State Commissions. The aforesaid situation has created a direct conflict between two central enactments and more over it creates a confusion/ regulatory uncertainty which would be counter-productive for not only the obligated entities but also the prospective investors.
It is also pertinent to mention that in addition to the above conflict between two central enactments that exist as elucidated hereinabove, the confusion is perpetuated by yet another policy document issued by Central Government, namely, the National Tariff Policy, 2016 under Section 3 of the Electricity Act, 2003. Under the National Tariff Policy, 2016, in particular, under Clause 6.4(1), it provides that it is the Ministry of Power which will prescribe the RPO trajectory in consultation with Ministry of New and Renewable Energy. The relevant portion is extracted as under:
“6.4 Renewable sources of energy generation including Co-generation from renewable energy sources:
(1) Pursuant to provisions of section 86(1)(e) of the Act, the Appropriate Commission shall fix a minimum percentage of the total consumption of electricity in the area of a distribution licensee for purchase of energy from renewable energy sources, taking into account availability of such resources and its impact on retail tariffs. Cost of purchase of renewable energy shall be taken into account while determining tariff by SERCs. Long term growth trajectory of Renewable Purchase Obligations (RPOs) will be prescribed by the Ministry of Power in consultation with MNRE.” [Underline Supplied]
Even internally, the Ministry of Power has not been consistent in prescribing RPO trajectory, inasmuch as it has vide its earlier Notification dated 22.07.2022 prescribed following trajectory, which is at variance with the trajectory notified vide Notification dated 20.10.2023 under the Energy Conservation Act, 2001:
| Year | Wind RPO | HPO RPO | Other RPO | Total RPO |
| 2022-23 | 0.81% | 0.35% | 23.44% | 24.61% |
| 2023-24 | 1.60% | 0.66% | 24.81% | 27.08% |
| 2024-25 | 2.46% | 1.08% | 26.37% | 29.91% |
| 2025-26 | 3.36% | 1.48% | 28.17% | 33.01% |
| 2026-27 | 4.29% | 1.80% | 29.86% | 35.95% |
| 2027-28 | 5.23% | 2.15% | 31.43% | 38.81% |
| 2028-29 | 6.16% | 2.51% | 32.69% | 41.36% |
| 2029-30 | 6.94% | 2.82% | 33.57% | 43.33% |
The graph below displays the variance between the differing RPO targets as notified by Ministry of Power:
The above overlap necessitates judicial intervention, at the very least, to clarify the law and implementation on the subject.
III. Cacophony of RPO Targets
A. State Commissions alignment with Central Government Trajectory:
State Commissions which have aligned their RPO trajectories with the Central Government’s targets, ensuring consistency and ease of compliance are as follows:
B. States with Diversified RPO Trajectories:
Following State Commission have adopted distinct RPO trajectories, reflecting regional priorities and strategies:
B.1. Rajasthan Electricity Regulatory Commission (RERC): Vide Rajasthan Electricity Regulatory Commission (Renewable Power Purchase Regulations, 2023 notification dated 13.06.2023 w.e.f. 01.04.2024, the RPO trajectory prescribed is as under:
| Year | Wind RPO | HPO | Other RPO | Total RPO |
| 2024-25 | 2.46% | 1.08% | 26.37% | 29.91% |
| 2025-26 | 3.36% | 1.48% | 28.17% | 33.01% |
| 2026-27 | 4.29% | 1.80% | 29.86% | 35.95% |
| 2027-28 | 5.23% | 2.15% | 31.43% | 38.81% |
| 2028-29 | 6.16% | 2.51% | 32.69% | 41.36% |
| 2029-30 | 6.94% | 2.82% | 33.57% | 43.33% |
B.2. Tamil Nadu Electricity Regulatory Commission: Vide Tamil Nadu Electricity Regulatory Commission (Renewable Power Purchase Obligation) Regulations, 2023 dated 26.10.2023, it has notified RPO trajectory as under:
| Year | Wind RPO | HPO | Other RPO | Total RPO |
| 2023-24 | 1.60% | 0.66% | 24.81% | 27.08% |
| 2024-25 | 2.46% | 1.08% | 26.37% | 29.91% |
| 2025-26 | 3.36% | 1.48% | 28.17% | 33.01% |
| 2026-27 | 4.29% | 1.80% | 29.86% | 35.95% |
| 2027-28 | 5.23% | 2.15% | 31.43% | 38.81% |
| 2028-29 | 6.16% | 2.51% | 32.69% | 41.36% |
| 2029-30 | 6.94% | 2.82% | 33.57% | 43.33% |
B.3. Madhya Pradesh Electricity Regulatory Commission (MPERC): Vide Madhya Pradesh Electricity Regulatory Commission (Co-Generation and Generation of Electricity from Renewable Sources of Energy) (Revision-II) Regulation 2021 (First Amendment) dated 16.01.2023 provided RPO targets as under:
| Year | Wind Renewable Energy | Hydro Renewable Energy | Other Renewable Energy | Total Renewable Energy |
| 2024-25 | 2.46% | 1.08% | 25.63% | 29.17% |
| 2025-26 | 3.36% | 1.48% | 26.13% | 30.97% |
| 2026-27 | 4.29% | 1.80% | 26.63% | 32.72% |
| 2027-28 | 5.23% | 2.15% | 27.13% | 34.51% |
| 2028-29 | 6.16% | 2.51% | 27.63% | 36.30% |
| 2029-30 | 6.94% | 2.82% | 28.13% | 37.89% |
B.4 Odisha Electricity Regulatory Commission (OERC): Vide Odisha Electricity Regulatory Commission (Procurement of Energy from Renewable Sources and its Compliance) Regulations, 2021 dated 17.01.2022, it provided RPO targets as under:
| Year | Solar Renewable Energy | Other Non- Solar RPO | Hydro Renewable Energy | Total Non-Solar RPO | Total Renewable Energy |
| 2024-25 | 9.75% | 7.17% | 1.08% | 8.25% | 18% |
Though OERC has issued a Draft Amendment in its RPO Regulations, 2021 aligning itself with trajectory of Central Government’s earlier notification dated 22.07.2022.
B.5. Uttarakhand Electricity Regulatory Commission (UERC): Vide Uttarakhand Electricity Regulatory Commission (Tariff and Other Terms for Supply of Electricity from Renewable Energy Sources and non-fossil fuel based Co-generating Stations) Regulations, 2023 dated 16.08.2023, it provided RPO targets as under:
| Year | Wind RPO | Hydro Purchase Obligation (HPO) | Solar RPO | Other than Solar | Total |
| 2023-24 | 1.60% | 0.66% | 5.00% | 18.81% | 24.81% |
| 2024-25 | 2.46% | 1.08% | 5.31% | 21.06% | 26.37% |
| 2025-26 | 3.36% | 1.48% | 5.68% | 22.49% | 28.17% |
| 2026-27 | 4.29% | 1.80% | 6.02% | 23.84% | 29.86% |
| 2027-28 | 5.23% | 2.15% | 6.33% | 25.10% | 31.43% |
| 2028-29 | 6.16% | 2.51% | 6.59% | 26.10% | 32.69% |
| 2029-30 | 6.94% | 2.82% | 6.77% | 26.80% | 33.57% |
B.6. Telangana State Electricity Regulatory Commission (TSERC): Vide Telangana State Electricity Regulatory Commission Renewable Power Purchase Obligation (Compliance by Purchase of Renewable Energy/Renewable Energy Certificate) Regulation, 2022 dated 04.04.2022, it notified RPO targets as under:
| Year/RPO | 2022-23 | 2023-24 | 2024-25 | 2025-26 | 2026-27 |
| Solar | 7.50 | 8.00 | 9.00 | 10.00 | 11.00 |
| Non-Solar | 1.00 | 1.25 | 1.50 | 1.75 | 2.00 |
| Total | 8.50 | 9.25 | 10.50 | 11.75 | 13.00 |
B.7. Haryana Electricity Regulatory Commission (HERC): Vide Haryana Electricity Regulatory Commission (Terms and Conditions for determination of Tariff from Renewable Energy Sources, Renewable Purchase Obligation and Renewable Energy Certificate) Regulation, 2021 (2nd Amendment) Regulations, 2022 – Suo-motu Order, it amended Regulation 62 to provide for RPO trajectory till 2023-30 as under:
| Year | Wind RPO | HPO RPO | Other RPO | Total RPO |
| 2023-24 | 1.60% | 0.66% | 24.81% | 27.08% |
| 2024-25 | 2.46% | 1.08% | 26.37% | 29.91% |
| 2025-26 | 3.36% | 1.48% | 28.17% | 33.01% |
| 2026-27 | 4.29% | 1.80% | 29.86% | 35.95% |
| 2027-28 | 5.23% | 2.15% | 31.43% | 38.81% |
| 2028-29 | 6.16% | 2.51% | 32.69% | 41.36% |
| 2029-30 | 6.94% | 2.82% | 33.57% | 43.33% |
Analysis and Observation
The issue with the above overlap has been that there has been a cacophony of RPO targets and trajectory, both by virtue of overlap with legislative framework as well as internal in-consistencies in policy prescriptions by Ministry of Power. Inconsistent RPOs will lead to a fragmented renewable energy market, where developers and investors face uncertainty about where to invest their resources, leading to an obvious impediments in the growth of the renewable energy sector.
While State Commission for the State of Maharashtra, Jharkhand have fully aligned their RPO targets with the Central Government trajectory, providing clarity and simplifying compliance, State Commissions for the State of Rajasthan and Tamil Nadu have only aligned their overall RPO targets and while few other State Commissions for State of Madhya Pradesh, Haryana, and Odisha have diversified their targets completely, reflecting regional priorities around renewable energy strategies.
However, these differing targets and category definitions across states is likely to create confusion and necessitate clear guidelines for compliance, especially when they diverge. The divergence become a concern as the Energy Conservation Act, 2001 also stipulates separate penalty for breach in meeting the RPO targets, in addition to penalties provided under the Regulations framed by different State Commissions. Section 26(3) of the Energy Conservation Act, 2001 (introduced vide Amendment Act of 2022) is extracted for ready reference as under:
“(3) If any person fails to comply with the directions issued under clauses (n) and (x) of section 14, he shall be liable to a penalty which shall not exceed ten lakh rupees for each such failure:
Provided that he shall also be liable to an additional penalty which shall not exceed twice the price of every metric ton of oil equivalent prescribed under this Act, which is in excess of the prescribed norms.”
Therefore, it would be ideal if the Central Government refrains from prescribing RPO targets in view of legal challenge outlined above and obviate any scope of confusion.
IV. Conclusion
India’s renewable energy journey is not just a technological and economic challenge but also a legal one. Navigating this path also requires upholding the principles of rule of law, ensuring that our pursuit of sustainable energy is firmly rooted in constitutional and statutory propriety. Addressing the legal and implementation challenges outlined above is crucial to ensure that renewable energy targets are met efficiently and effectively, without market fragmentation.
Author: Mr. Matrugupta Mishra and Mr. Nipun Dave
©2021, Ritam Legal All Rights Reserved.
