Wind power capacity to increase by 2,800 MW in FY16 - Study
Economic Times reported that this would be driven by both independent power producers (IPP) and non-IPP segments. While IPPs are encouraged by satisfactory feed-in tariff-based power purchase agreements in key wind energy-rich states, as well as cost competitiveness with conventional power, non-IPP producers are likely to derive benefits from accelerated depreciation norms.
ICRA said that the demand drivers for the wind energy sector remain favourable in the long run, aided mainly by strong policy support from the Centre and state governments, favourable regulatory framework in the form of mandatory supply regulations as well as cost competitiveness of wind-based energy vis-a-vis conventional energy sources.
The agency, however, said the sector continues to face regulatory challenges arising out of wide variance in renewable purchase obligation (RPO) norms, weak compliance by obligated entities and absence of enforcement of penalty framework by State Electricity Regulatory Commission for any shortfall in compliance in most of the states.
RPO norms vary across states in terms of both quantum of power to be purchased—which varied from 1.50% to 11.25% in FY2016 across states—and also the trajectory, with only nine states stipulating RPO norms till FY20.
According to ICRA, a study of RPO compliance by utilities in FY14 in 14 states, which account for 65% of the country's energy demand, showed that utilities in only five states met the RPO targets. The utilities in the remaining states clocked an average RPO compliance of 60%.
In most cases, state electricity regulatory commissions (SERCs) have, however, allowed carry forward of the shortfall in RPO compliance to the next fiscal, while enforcement of RPO compliance has been seen only in a few instances.
ICRA in a statement said that "Nonetheless, the regulatory direction by Appellate Tribunal for Electricity (ATE) in April 2015 to SERCs for ensuring RPO compliance as well as the Supreme Court's directive in May 2015 to uphold SERC's authority to enforce the RPO compliance for open access and captive consumers are positive regulatory developments for the renewable energy sector. The extent of improvement in RPO compliance and its sustainability, however, remains to be seen."
Source : Economic Times