NITI Aayog’s ‘Strategy for New India @75’ emphasises on Strict Enforcement of RPOs

The government’s thinktank NITI Aayog in its latest strategy document “Strategy for New India @ 75” has recommended a slew of measures to reform the country’s energy sector. The first of which is the recommendation for renewable purchase obligations (RPOs) to be more strictly enforced, while facilitating the sale of renewable energy between states.

The new document which was launched yesterday by finance minister Arun Jaitley defines clear objectives for 2022-23. It is a detailed exposition across forty-one crucial areas, that recognizes the progress already made, identifies binding constraints, and suggests the way forward for achieving the clearly stated objectives. The forty-one chapters in the document have been disaggregated under four sections: drivers, infrastructure, inclusion, and governance, of which energy is covered under infrastructure.

The document further highlighted the three main constraints presently, which the agency considers as hindrances on the path to achieve the renewable energy targets for 2022-23,

1. High energy costs result in reneging on old power purchase agreements (PPAs) and erode their sanctity. This leads to uncertainty regarding power offtake and consequently endangers further investments.
2. Flexibility in the generation and balance requirements for the integration of renewable energy are emerging as major issues.
3. There are supply chain issues in biomass power generation.

The paper further proposed that to level the playing field, all forms of energy should have the same GST rate and that all form of subsidies should be provided as functional subsidies to end-consumers to empower them to choose the energy form most suitable and economical to them.

Besides pointing out the issues that the renewable sector is currently facing, the paper also presented several steps to tackle the issues,

1. Provide a mechanism for cost-effective power grid balancing (gas-based, hydro or storage).
2. It is necessary to have national level markets and regulations for balancing of power. Central level agencies like Central Electricity Regulatory Commission or National Load Despatch Centre should socialize the costs of balancing interstate transmission systems (ISTS) connected power plants, over the entire system, on the lines of the point of connection (PoC) or a similar mechanism.
3. Decentralized renewable energy in rural areas in conjunction with the discoms’ grid can offer reliability.
4. Hybrid renewable energy systems such as solar PV + biomass should be explored.
5. Commercial biogas needs to be promoted by providing a subsidy to consumers.

India is the world’s third largest energy consumer. In the power sector, the all-India installed power capacity is about 334 gigawatt (GW), including 62 GW of renewable energy.