The proposed National Renewable Energy Act, 2015—the draft
of which has been put up for public comments—seeks to give sweeping powers to
Government of India to develop the renewable energy industry in India.
Under the first chapter—on ‘Institutional Structure’—the Act
says that the Central government “shall have the power to take all such
measures as it deems necessary or expedient” for the purpose of development of
renewable energy in the country.
The government will also “issue guidelines” to the state
governments on how to formulate ‘state level renewable energy policies’ and
‘state level renewable energy plans’ and provide “necessary support” to the
state governments.
The state government “shall” from time to time formulate,
monitor and implement state level renewable energy policy and ‘state level
renewable energy plan’, in doing which it “shall” take into consideration the
National Renewable Energy Policy and the National Renewable Energy Plan as well
as the “appropriate guidelines issued by the Central government”.
The Act makes a distinction between what a state government
“shall” do and what might do, because elsewhere in the Act it uses the word
“may”, indicating grant of option to the state government.
For instance, it says that the state government “may”
establish a State Green Fund and “may” develop policies for the promotion of
renewable energy.
Industry’s wishes granted
The proposed legislation grants two major wishes of the
renewable energy industry—the ‘deemed generation’ benefit, which says the
generator of renewable energy will be paid even if the grid is not available to
evacuate the power, and the enforcement of the legislation that forces certain
specified classes of consumers to buy specified quantities of renewable power.
On ‘deemed generation’, the Act says that (even) if the grid
is not available for power evacuation, the power produced by a renewable energy
plant that is already operational will be “considered to be generated and
sold”. The charges will be paid to the energy generator.
“It is a wonderful thing,” says S Venkatachalam, Managing
Director and CEO, Orient Green Power, a Chennai-based renewable energy
producer. However, Venkatachalam would like to see what rate the policy
prescribes as payment for such deemed generation.
Loss of revenue due to the grid not being available is an
issue seen the most in Tamil Nadu, where wind power producers have been losing
heavily because the grid operator is unable to evacuate the power.
At the peak wind periods, the grid is unable to handle the
rich but unpredictable flow of wind power and the electricity distribution
company prefers not to buy electricity from the wind power companies. The
generators are put to a loss. Deemed generation will compensate them for such a
loss.
The President of the Indian Wind Power Association, K
Kasturirangaiyan, points out that the conventional power projects already enjoy
the deemed generation benefits—they are paid ‘capacity charges’ whether or not
the power they produced is bought. The Act brings the renewable energy sector
on par with the conventional power industry, he says.
RPO compliance
The Act grants the industry the other long standing
demand—that the renewable purchase obligation should be enforced. ‘Obligated
entities’ (mostly, large consumers and electricity distribution companies) are
required by law to buy a certain portion of their energy needs from renewable
sources. The respective electricity regulatory commissions of states are
expected to enforce this obligation.
However, most of the obligated entities have not been
meeting their statutory obligations. The proposed Act prescribes stiff
penalties for non compliance and says that the state electricity regulatory
commissions “shall ensure” that the tariff for renewable energy shall be paid
by the obligated entities in a timely manner.
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