Economic Development: Energy (General Studies-Paper-3)
•How are we to achieve 175 GW of renewable capacity by 2022? If 175 GW of renewable capacity comes on line, do we need 1,500 MT of coal?
•03 measures to encourage renewable power: feed-in tariff (FIT), renewable portfolio obligation (RPO) and accelerated depreciation allowance.
What is FIT/RPO/ADA?
FIT-a fixed tariff is guaranteed to the power producer for a certain number of years.
RPO-An electricity distribution company (DISCOM) is required to purchase a certain percentage of its total distributed electricity from renewable sources. The price that a renewable power producer will receive is determined by the market. Thus there is also incentive to supply electricity at completive rates. However, this creates uncertainty of revenue for the power producers, and banks are reluctant to finance them.
Advantage of RPO is that it can be neutral to technology. One does not have to prescribe whether it is solar or wind or biomass. Competitive market forces will select the most economical option. Thus there is no need to prescribe separate levels of RPO for wind, solar, small hydro, and so on.
ADA-Helped boost wind power in the country, provides incentive to set up the plant but not to maintain it or generate electricity.
The new RPO guidelines:-
•Setting and enforcing a trajectory of RPO obligations ensures that the target for renewable power generation and capacity will be realised.
•The Ministry of New and Renewable Energy (MNRE) has recently announced consultation guidelines for long-term RPO trajectory. The guidelines stipulate separate RPO for solar and non-solar electricity.
•While the Central government has issued these guidelines, electricity is a State subject and some States are not happy with the guidelines. States which do not have renewable potential feel that they would have to bear a higher burden for the renewable target. If West Bengal has to import renewable electricity from Tamil Nadu or Rajasthan, it will have to bear a higher burden or transmission charges.
•The success of the RPO scheme will depend on the specification of a floor price and effective enforcement by States. The Centre needs to create some mechanism to incentivise States to enforce the RPOs. The Centre could provide money from the coal cess revenue to States depending on the extent to which they meet the RPO targets.
Source: The Hindu