New Delhi: In a major development, the government has allowed thermal power generation companies to bundle renewable energy (RE) along with thermal power and supply it to power distribution companies (discoms) under existing power purchase agreements (PPAs). The Ministry of Power and the Ministry of New and Renewable Energy have said that this will enable the replacement of fossil fuel-based energy with RE under the same PPA. "This is a very significant step towards achieving the goal of 500 GW of non-fossil fuel capacity by 2030," the Ministries said in an official statement released on Tuesday.
"Under the guidance of Union Minister of Power and New and Renewable Energy, the Ministry of Power and New and Renewable Energy have issued revised guidelines providing for thermal generation companies to set up renewable energy (RE) generation capacity either by themselves through developers by open bids and supplying it to the consumers under the existing PPAs," said the ministries. The announcement comes weeks after Prime Minister Narendra Modi announced at the COP26 Summit in Glasgow that India will increase its non-fossil energy capacity to 500 GW to meet 50 percent of its energy requirements through renewable energy by 2030. Earlier, India had committed to putting in place 450 GW of renewable energy by 2030.
"As the cost of renewable energy is less than the cost of thermal energy, the gains from the bundling of renewable energy with thermal will be shared between the generator and distribution companies/other procurers on a 50:50 basis," said the Power Ministry. As the renewable energy will be balanced with thermal energy, therefore, discoms will now not need to acquire any separate capacity for balancing of renewable energy.
The distribution companies will be able to count the renewable energy supplied under the scheme towards their renewable purchase obligation (RPO) and this will be without the financial burden of a separate PPA. "This step by the Central Government will lead to a faster energy transition and will be beneficial for both the generators and the distribution companies," said the ministry.
The government had earlier proposed bundling of RE with thermal power in January 2020 for round-the-clock power supply. However, the provision to supply bundled RE under existing PPAs is new.
The ministry added that it will soon announce additional measures for achieving the target set out by the Prime Minister at the COP26 Summit. "Under the direction of the Hon'ble Minister of Power and New & Renewable Energy, the Ministry of Power and New & Renewable Energy are poised to take some additional steps for achieving 500 GW by 2030, for which orders are to be issued shortly," said the statement.
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