RGO for New Thermal Power Plants

Siddharth Arora, December 15, 2022

The Ministry of Power (MoP), in its notification dated November 7, 2022 has sought stakeholder comments and suggestions for the implementation of Renewable Generation Obligation (RGO) on new thermal power plants. As per the draft notification, MoP has proposed the cut-off date of April 1, 2024 with minimum RGO of 25 per cent on the capacity of thermal generating stations being established after this cut-off date. This notification is in accordance with the Tariff Policy, which was notified on January 28, 2016. As per Clause 6.4.5 of the Tariff Policy 2016, the Central Government shall provide a specific date and capacity for  thermal power plants to bring them under the RGO regime. The relevant excerpts from the Tariff Policy are reproduced below:

“In order to promote renewable energy (RE)  sources, any generating company proposing to establish a coal/lignite based thermal generation station after a specified date shall be required to establish such renewable energy generating capacity or procure and supply renewable energy equivalent to such capacity, as may be prescribed by the Central Government from time to time after due consultation with stakeholders. The renewable energy produced by each generator may be bundled with its thermal generation for the purpose of sale. In case an obligated entity procures this renewable power, then the SERCs will consider the obligated entity to have met the Renewable Purchase Obligation (RPO) to extent of power bought from such renewable energy generation stations.” Read more.

As per the Draft National Electricity Plan of the Central Electricity Authority-Generation, published in September this year, apart from under construction coal-based capacity of 25 GW, additional coal-based capacity required till 2031-32 may vary from 17GW to 28GW. This implies that RGO implementation can result in 10 GW–13 GW of additional renewable capacity in the grid.

The concept of RGO was much talked about in 2014 and could navigate to Tariff Policy in 2016 but did not find the mechanism for actual implementation. Once this draft notification is finalised, post receiving comments from stakeholders, the implementation of the RGO can boost renewable energy generation capacity in India.