The Central Electricity Regulatory Commission (CERC) has proposed that designated entities, including electricity distribution licensees, open access consumers, and captive consumers, can fulfill their renewable consumption obligation (RCO) through payment of the buyout price specified by it.

The buyout price for the financial year (FY) 2024-25 will be set at ₹245 (~$2.79)/MWh, which is about 5% above the weighted average REC price for the year computed from transactions on power exchanges and via trading licensees.

The buyout price for a financial year will be 105% of the weighted average REC price. By April 30 of every financial year up to FY 2029-30, the National Load Despatch Centre will publish the weighted average price of REC and the buyout price for the previous financial year.

Stakeholders can submit their comments and suggestions by November 21, 2025.

The buyout price is the newly proposed means by the CERC to meet RCO, along with the existing method of consuming renewable electricity directly or through an energy storage system and purchasing or self-generating renewable energy certificates (REC).

The buyout price will reflect the green attribute cost and electricity component cost separately in an unbundled form. The obligated entity seeking to adopt a buyout price would pay this price, which would represent a green attribute equivalent to the REC price. In addition, such an obligated entity will have to meet its energy requirements by purchasing the electricity separately.

The sum received through the buyout mechanism will be credited to the Central Energy Conservation Fund under a separate head, from which 75% of the amount will be transferred to the respective state energy conservation funds.

These sums will be utilized to support the development of specified renewable energy sources and storage capacities, thereby increasing the share of non-fossil fuel energy in the overall energy mix. The government will specify the mechanism for utilizing these sums to support the development of such non-fossil fuel capacities.

CERC has noted that the two existing options clearly lead to investment and, in turn, the establishment of renewable energy capacities, making them the preferred options for RCO compliance. It is only when either of these two options is exhausted that the designated consumers should lean on buyout price payment for RCO compliance.

CERC recently issued draft amendments to the REC Regulations proposing clearer eligibility criteria for captive projects. They establish a new timetable for REC applications, update the methodology for certificate multipliers, and address RECs under virtual power purchase agreements.

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