40% capacity of upcoming coal-based power plants must be sourced from renewables: Govt

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In what it has termed 'Renewable Generation Obligation (RGO)', India has mandated all upcoming coal-based power plants to source 40 percent of their capacity from renewable energy, a notification issued by the government on March 6 stated. A draft of the RGO mandate was first released by the government in 2016, and it is after seven years that the rule has finally been notified.

“It has been decided that any generating company establishing a coal/lignite-based thermal generating station and having the Commercial Operation Date (COD) of the project on or after April 1, 2023 shall be required to establish renewable energy generating capacity i.e. Renewable Generation Obligation (RGO) of a minimum of 40 percent of the capacity (in MW) of coal/lignite-based thermal generating station or procure and supply renewable energy equivalent to such capacity,” read the gazette notification.

The decision is expected to fast-track India’s ambition of having 500 gigawatt (GW) of renewable energy capacity by 2030 and going net zero by 2070. In fact, India has stepped up from its own 2016 proposal for the RGO rule, in which, earlier, the plan was to mandate coal or lignite-based power plants which start commercial operations in April 2024. In the final notification, however, the government decided to advance this by a year. Similarly, the mandate was initially planned at 25 percent of the total capacity of such plants, which in the final notification was enhanced to 40 percent.

The government has also set timelines to meet the RGO. These stations will be required to achieve 40 percent RGO by April 1, 2025. Besides, all stations commissioned after April 1, 2025, will be required to comply with 40 percent RGO from the first day of operation itself.

“A coal/lignite based thermal generating station with Commercial Operation Date (COD) of the project between April 1, 2023 and March 31, 2025 shall be required to comply with RGO of 40 percent by April 1, 2025, and any other coal/lignite based thermal generating station with Commercial Operation Date (COD) of the project after April 1, 2025 shall be required to comply with RGO of 40 percent by the COD,” the notification stated.

However, the government said that a captive plant shall be exempt from the requirement of RGO if it fulfils the Renewable Purchase Obligations (RPO) as notified by the central government.

“The move shall not only accelerate India’s energy transition, but also ensure that the crucial balancing power from thermal sources is available to facilitate RE integration in the grid,” said a senior official of the power ministry, requesting anonymity.

Prateek Bhandari, counsel - energy, infrastructure and resources, Khaitan & Co. said by way of RGO, India has introduced “supply side” push to promote RE as it imposes obligation on generators of electricity. “On the other hand, India has had 'demand side' obligations from nearly two decades in the form of Renewable Purchase Obligation (RPO) which require specific consumers or distributors of electricity to purchase certain percentage of their power requirements from RE projects. It is noteworthy that RGO was introduced in 2016 as an enabling provision in National Tariff Policy and has seen the light of day after 7 years,” he said.