With a view to encouraging the renewable energy developers, a mechanism called Renewable Purchase Obligation or RPO was designed under Section 86(1) (e) of the Electricity Act 2003 (“EA 2003”) and retained under the National Tariff Policy 2006. Under this mechanism, the obligated entities are obliged to purchase certain percentage of electricity from Renewable Energy sources, as a percentage of their total consumption of electricity.
With the amendment of Tariff Policy in January, 2016, the State Electricity Regulatory Commissions (SERCs) were required to reserve a minimum percentage for purchase of solar energy, which should be such that it reaches 8% of total consumption of energy, excluding Hydro Power, by March 2022 or as notified by the Central Government from time to time. The Government of India in July, 2018 notified the Long Term growth trajectory of RPOs for Solar as well as Non-solar, uniformly for all States or Union Territories, reaching 21% of RPO by 2022 with 10.5% for solar based electricity.
However, still something more was required, to attract, involve and incentivise the country-wide RE-generators to make them increase their stake in the Green Energy generation beyond their respective state’s aggregated purchase obligation. Now, with the launch of Green Term Ahead Market (GTAM) for electricity, the RE-generators will have much wider sales potential.
Obviously, through GTAM contracts, now the RE-generators will get access to a much wider market to sell their generated renewable energy. The obligated entities will be able to procure renewable energy at competitive prices. It will also create an effective platform for the environmentally conscious open access consumers and utilities to buy green power.
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