Government to Slash Renewable Generation Obligation for Coal Plants to 6-10%

Stakeholders can submit their comments to the power ministry by October 21, 2023


The Ministry of Power has proposed slashing the Renewable Generation Obligation (RGO) for coal or lignite-based power generating stations to a minimum of 6-10% from the previous 40%.

The ministry issued a draft notification on RGO to establish a minimum requirement for electricity generation from renewable sources for coal or lignite-based power generating stations.

Earlier rules mandated that coal or lignite-based generating stations beginning operation on or after April 1, 2023, must either establish or procure renewable energy equal to 40% of their thermal generation capacity.

The ministry, however, did not mention the reason for reducing the renewable generation obligation targets.

The newly set RGO will be assessed annually, with renewable energy generation as a percentage of the total annual electricity generation, encompassing both conventional and renewable energy sources at designated generating stations.

Stakeholders can submit their comments on the draft to the ministry by October 21, 2023.

The RGO requirements are structured based on the commercial operation date of the power generating stations:

Renewable Generation Obligation for Coal Lignite Based Power Projects

The power generators have flexibility in meeting their RGO, including establishing the required renewable energy generating capacity or procuring and supplying renewable energy in the necessary quantity. They can also independently sell renewable energy, regardless of existing power purchase agreements for coal- or lignite-based generating stations.

Captive coal or lignite-based power stations may be exempted from RGO compliance if they fulfill the renewable energy consumption obligation.

Generating companies with multiple coal or lignite-based generating stations are allowed to comply with the RGO on an aggregate basis.

Obligations fulfilled under the “Program for Flexibility in Generation and Scheduling of Thermal/ Hydro Power Stations through bundling with Renewable Energy and Storage Power, 2022” will be considered as part of the fulfillment of RGO.

Power generating stations must provide electronic reports detailing electricity generation, including renewable energy generated or procured, for each financial year. These reports should be submitted to the designated agency and the Bureau of Energy Efficiency by June 30 of the following financial year.

The shortfall in achieving RGO targets will be calculated in tons of oil equivalent that considers the target percentage, achieved share of renewable energy, and total electricity generation from coal or lignite-based and renewable energy generating stations.

The penalty for non-compliance will be subjected to section 26 (3) of the Energy Conservation Act 2001. According to this provision, if an entity violates the specified provisions, it can be held accountable for a maximum penalty not exceeding ₹1 million (~$12,010) for each instance of non-compliance. In situations where the violation persists over time, an extra penalty of up to ₹10,000 (~$120) for each day of continued non-compliance may also be imposed.

Earlier, the Ministry of Power had outlined a detailed mechanism allowing bundling thermal and hydropower projects with standalone renewable energy projects or renewable energy projects with battery storage systems either through setting up renewable energy generation capacities themselves or through developers by inviting bids.

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