Taking Delhi’s climate change agenda forward, the power regulator has mandated that in the next five years, 9% of Delhi’s power supply will come through renewable sources.
The renewable purchase obligation (RPO), under which discoms will have to source a specific amount of power through renewable sources, was declared by Delhi Electricity Regulatory Commission on October 1. For the current financial year, the minimum power to be sourced through renewable energy is 3.40% with a 0.15% solar component. “The RPO was declared six months into the current financial year so at most, we will be required to meet only half of this quantum,” said discom sources.
While the environment lobby is thrilled with the order, discoms say that not only is the RPO overly ambitious but the decision will also lead to a tariff hike which the commission should be prepared to defend.
Tata Power Delhi Distribution Ltd (TPDDL) CEO Praveer Sinha said it would take them at least six months to arrange for power since local generation within Delhi was next to impossible. “It will be tough to implement this immediately. We will have to tie up with other states and for this system, we will have to look at long term power purchase agreements. It is still too early to say but in case we are unable to source power through other states, we will have to consider investing in renewable energy certificates (REC). That, however, will be our last option,” he said.
RECs work like carbon credits. They are generated by those states that produce renewable power more than their respective RPOs. States that are unable to meet their RPOs, can purchase RECs from these states. However, since RECs are very expensive due to high cost of generating renewable power, the trade is low.
Delhi is among the last few states in the country to announce an RPO. Since renewable energy is highly expensive to produce, RPO in some states is only an advisory.
Delhi, meanwhile, will have to implement the order and discoms can be penalized for falling short of the mandated quantum for each year. TPDDL has set up solar plants in Delhi but it produces only two million units against the 12 million units required for the current year.
Industry insiders say that apart from arranging for power, the government will face problem in determining the tariff. Solar power costs Rs 10-12 per unit while the other renewable sources cost Rs 4-5. It would require another change in the tariff structure and that is not likely to happen immediately. If discoms purchase RECs, they would be footing the bills and it will be accounted only next year in the revised tariff. “Either way, Delhi should be prepared for rising power bills in the next few years,” said a source.