New mandate requires India thermal plants to use renewable sources to generate part of their energy

The Ministry of Power (MoP) issued a resolution introducing a new concept of ‘Renewable Generation Obligation (RGO)’ for power producers. Any new coal or lignite-based commercial thermal power station will now be required to generate a part of its total energy from renewable sources.

On March 3, the Ministry of Power issued a resolution requiring all new thermal power plants that begin commercial operations after April 1, 2023, to source 40 percent of their total power production from renewable energy.

According to the new RGO mandate, forthcoming thermal power plants must generate at least 40% of total power generated at their power plant from renewable sources. They will, however, be free to generate renewable energy on their own or to supplement their supply from other sources.

Power plants that begin commercial operations between April 1, 2023, and March 31, 2025, must assure compliance with the new RGO standards by the end of April 1, 2025. New thermal power plants that come online after April 1, 2025, must comply with the RGO from the start. However, captive thermal power plants have been exempted from the RGO. Captive power plants are non-commercial plants that are maintained to meet the needs of their users.

The MoP’s decision comes about four months after the government issued a draught notice in November 2022 introducing the RGO for thermal plants. However, in comparison to the draught guidelines, the most recent resolution has made minor adjustments. While the draught order of 2022 proposed imposing RGO on new thermal power plants that begin operations on April 1, 2024, the newly issued resolution pushed the timeframe forward to April 1, 2023, a year earlier. In addition, whereas the draught paper called for a minimum of 25% RGO compliance, the revised directive required 40% RGO for new thermal power plants.

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