The Central Electricity Regulatory Commission (CERC) has passed a suo moto order to determine the buyout price as an alternate compliance option for fulfilling the renewable consumption obligation (RCO).
The RCO mandates a minimum share of energy consumption from renewable sources by designated consumers, including distribution companies (discoms), open access users and captive consumers. The notification outlines three fulfilment methods: direct renewable energy consumption (with or without storage), renewable energy certificate (REC) purchase and payment of a buyout price. The proposed buyout price must reflect the cost of green attributes equivalent to REC pricing, plus a premium and will not include electricity charges. The funds collected through the buyout mechanism will be transferred to state energy conservation funds to support new renewable and storage capacity development. CERC has recommended setting the buyout price above prevailing REC rates to encourage obligated entities to prefer direct procurement or REC options.