Power Purchase Agreements (PPAs) and Renewable Purchase Obligations (RPOs)? (Important) (Download PDF)


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Government while conducting third wind power auction of 2000 MW capacity announced the path for achieving 2022 targets of commissioning: 175 GW of Renewable Energy (RE). 100 GW of solar generating capacity. 60 GW of wind power of which 32 GW have already been commissioned.

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Created with Highcharts 6.0. 3Years Rs. /UnitSolar energy tariff trends between 2011 - 201717.9117.9112.5412.5410.9410.949.289.287.497.497.947.947.97.95.515.517.677.678.018.016.496.496.476.476.446.446.666.666.426.425.545.548.98.9666.716.716.456.456.856.856.886.887. Rs. /Unit20112011201220122012201320132013201420142014201520152015201520172017051015202012 Rs. /Unit: 7.49

Details of RE Roadmap

  • Long pending demand form the Industry to declare the RE roadmap of the Government.

  • Government now has to clearly put plan for speeding of RE installation and strengthening the RE manufacturing base in India.

  • Plans to encourage the Make in India through an Expression of Interest (EoI) to the Industry, for establishing domestic manufacturing facilities to the tune of 20GW

  • MNRE is exploring innovative ways for additional installed RE of over 10GW additional capacity:

  • Floating Solar Power Plants over dams, for example in Bhakra Nangal dam

  • Offshore Wind Energy Systems for example in offshore Gujarat and Tamil Nadu

  • Hybrid Solar-Wind power systems

What Are Power Purchase Agreements (PPAs)?

  • Power purchase agreement (PPA) or electricity power agreement provides contract between party which generates electricity (the seller) and the buyer which in India are the state electricity boards.

  • PPA defines commercial terms for the sale of electricity, including project dates, commercial operation, schedule for delivery of electricity, penalties for under delivery, payment terms, and termination.

  • PPA also defines the revenue and credit quality of a generating project for project financing.

What is Renewable Purchase Obligation (RPO)?

  • A mechanism by which the State Electricity Regulatory Commissions are obliged to purchase a certain percentage of power from renewable energy sources.

  • RPO being implemented throughout the country creates demand for renewable energy.

  • RPO is of two categories

    • Non Solar

    • Solar: Under the solar obligation, every State in the country has announced a solar specific percentage as part of overall RPO

  • RPOs are enforced on three categories of consumers:

    • Distribution Licensees

    • Open Access Consumers

    • Captive Consumers.

Sanctity of the PPAs and RPOs will be ensured and would be mandatorily honoured.

Strengthening of State Infrastructure

  • Funds under Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and Integrated Power Development Scheme (IPDS), to the States to ensure 24x7

  • Strengthening of intra-State transmission networks

  • Ensuring mandatory presence of metered connections through smart and pre-paid meters

Meeting Solar Targets

For achieving 100 GW solar power target by 2022 MNRE and States plan to set up bids for ground mounted solar parks for

  • 20 GW in 2017 - 18, out of which 3.6 GW have already been bid out

  • 3 GW will be bid out in December 2017

  • 3 GW will be bid out in January 2018

  • 5 GW in February 2018

  • 6 GW in March 2018.

  • 30 GW will be bid out in 2018 - 19

  • 30 GW in 2019 - 20.

Lowering of RE Power Tariffs in PPA

  • Wind power tariffs becoming competitive encouraging State DISCOMs to buy more Renewable Energy

  • Government doubled the auction capacity for the third national level wind auction from 4GW to around 9GW in the current year.

  • Power Sale Agreements (PSA) for purchase of wind power under second wind auction resulted in very competitive tariff of Rs. 2.64/2.65 per unit.

  • Earlier in May 2017, solar power tariffs in India plunged to a new low of Rs. 2.44 per unit.

- Published/Last Modified on: December 10, 2017


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