Ministry proposes cut in Renewable Generation Obligation for coal plant

11 Oct 2023 CW Team

In a notable departure from the norm, the Ministry of Power has unveiled a draft notification outlining its intention to significantly reduce the renewable generation obligation (RGO) for upcoming coal and lignite-based power plants.

According to the latest draft notification issued on October 6, the proposed mandate aims to decrease the current obligation of 40% to a range of 6-10%, contingent upon the commissioning date of the respective plants.

This amendment, in harmony with the Energy Conservation Act of 2001, seeks to curb fossil fuel consumption in the nation. According to the draft, power plants commencing operations by March 31, 2023, must adhere to a 6% RGO. Those commissioned between April 1, 2023, and March 31, 2025, will be subject to a 10% mandate. Obligations for plants operational after April 1, 2025, will be determined based on their commercial operation dates.

The document underscores the pivotal role of coal and lignite stations in diminishing reliance on fossil fuels by integrating electricity from renewable sources. The revised RGO percentages are positioned as a strategic move to encourage a higher proportion of electricity derived from non-fossil fuel sources.

Emphasising flexibility, the draft stipulates that designated power producers can opt to establish renewable energy generation facilities or procure the necessary renewable energy. Moreover, companies with multiple coal or lignite plants can consolidate their RGO requirements.

The Ministry has also cautioned about penalties for non-compliance, although the specific penalty structures are still under discussion. This draft notification is anticipated to supersede the previous one dated February 27, 2023, concerning renewable generation obligation.

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