The Central Electricity Regulatory Commission (CERC) has issued a suo moto order to determine the buyout price as an alternative compliance mechanism for meeting Renewable Consumption Obligations (RCO).
Under the RCO framework, designated consumers including distribution companies (discoms), open access users, and captive consumers are required to ensure a specified portion of their total energy consumption comes from renewable sources.
The CERC’s order outlines three pathways for fulfilling this obligation: direct consumption of renewable energy (with or without storage), purchase of Renewable Energy Certificates (RECs), or payment of a buyout price. The buyout price will serve as a last-resort compliance option for entities unable to meet their RCO through other means.
According to the Commission, the buyout price should capture the value of green attributes equivalent to REC pricing, along with a reasonable premium, but will exclude the cost of electricity itself. The collected funds will be directed to state energy conservation funds and used to promote new renewable energy and energy storage capacity across the country.
CERC has also emphasized that the buyout price should be set higher than the prevailing REC rates to motivate obligated entities to prioritize direct procurement of renewable power or REC-based compliance over the buyout mechanism.
This move is expected to enhance accountability and support India’s broader renewable energy transition goals by ensuring consistent investments in clean energy development.
