RERC Amends RPO Regulations, Adopting Central Renewable Consumption Obligation Framework

The Rajasthan Electricity Regulatory Commission (RERC) has notified the First Amendment to the RERC (Renewable Purchase Obligation) Regulations, 2023, officially adopting the Central Government’s Renewable Consumption Obligation (RCO) framework effective April 1, 2026. This regulatory shift harmonizes Rajasthan’s green energy market with Ministry of Power (MoP) standards, providing a unified trajectory aimed at achieving the national target of 500 GW of non-fossil fuel capacity by 2030. By aligning state-level obligations with national benchmarks, the Commission seeks to streamline compliance and potentially reduce procurement costs for state utilities.

Renewable Purchase Obligation (RPO) Targets

The Commission has prescribed a minimum RPO trajectory for Distribution Licensees, calculated in energy terms as a percentage of total electricity consumption. While the immediate focus remains on the upcoming years, the regulatory framework establishes a progressive path leading to a total RPO of 43.33% by FY 2029-30.

Technical Eligibility and Regulatory Relief

The regulations define “Distributed Renewable Energy” as energy produced from renewable projects under 10 MW. To ensure the development of new capacity, the Commission has prescribed specific eligibility criteria for different energy sources:

• Wind RPO Requirements: Must be fulfilled through Wind Power Projects (WPPs) commissioned after March 31, 2022. Consumption from older projects is eligible only if it exceeds 7% of total consumption.
• HPO Eligibility: Eligible sources include Hydro Power Projects, Pumped Storage Projects (PSPs), and Small Hydro Projects (SHPs) commissioned after March 8, 2019.
• Exclusion of Imports: Hydro power imported from sources outside of India is explicitly excluded from meeting HPO targets.
• Deletion of the 9th Proviso: In a significant move toward regulatory easing, the Commission has deleted the originally proposed “9th proviso,” which would have restricted HPO eligibility to 70% of total generated capacity for certain projects. This removal aligns Rajasthan with MoP notifications and provides relief to hydro developers.

Methods for Obligation Fulfillment

Obligated entities may satisfy their RPO and RCO targets through several approved mechanisms. Notably, the Commission has clarified that newer obligations act as sub-categories of the total mandate rather than additional burdens.

1. Direct Consumption: Using energy produced from eligible RE or green energy-based projects.
2. Energy Storage Obligation (ESO): The Commission has set storage targets of 1.5% for FY 2024-25 and 2.0% for FY 2025-26. To qualify, at least 85% of the energy stored in an Energy Storage System (ESS) must be from renewable sources. Critically, ESO is treated as a sub-category that contributes toward the fulfillment of the Total RPO.
3. Renewable Energy Certificates (RECs): Targets may be met via the REC mechanism as specified by the Central Electricity Regulatory Commission (CERC).
4. Green Attributes and Markets: Procurement through the Green Term Ahead Market (GTAM) and Green Day Ahead Market (GDAM) is permitted, allowing for more flexible procurement.

Fungibility and the “Other RPO” Rationale

To prevent compliance bottlenecks, the Commission has established robust fungibility rules. Shortfalls in Wind RPO can be covered by excess HPO and vice-versa. Furthermore, any shortfall in the “Other RPO” category can be mitigated using excess Wind (post-2022) or Hydro (post-2019) energy.

The “Other RPO” category serves as a catch-all for any RE source not specifically categorized under Wind or HPO, including Solar, Biomass, and Municipal Solid Waste. Despite stakeholder requests for a separate Biomass RPO, the Commission maintained the “Other” categorization to allow Discoms the flexibility to procure the most cost-effective power available in the market.

Applicability to Obligated Entities

The regulations apply to a broad range of entities, with specific provisions for captive generators:

• Distribution Licensees: Including all deemed licensees.
• Open Access (OA) Consumers: Entities with a load of 1 MW and above.
• Captive Power Plants (CPP): Plants with an installed capacity of 1 MW and above. For CPPs commissioned before April 1, 2016, RPO is pegged at the 2015-16 mandated level. For those commissioned after this date, the RPO level corresponds to the year of the plant’s commissioning.

Compliance and Future Enforcement

Compliance and penalties remain governed by the Electricity Act, 2003, and the RERC (REC and RPO Compliance Framework) Regulations, 2010. For the era beginning in FY 2026-27, targets will be determined by Central Government and MoP guidelines.

For specialized fuels, the State Agency will play a critical role in verification. Entities utilizing Green Hydrogen or Green Ammonia must furnish comprehensive RE consumption details to the State Agency to have that consumption considered toward their RPO fulfillment.