In a significant move towards reducing fossil fuel consumption and promoting renewable energy sources, the Central Government, empowered by the Energy Conservation Act, 2001, has issued a new notification specifying minimum renewable energy (RE) usage for designated consumers with coal and lignite-based generating stations. This decision marks a crucial step in the government’s efforts to combat climate change and transition towards cleaner energy alternatives.
The Energy Conservation Act, 2001, has been periodically amended to align with evolving energy conservation goals. This latest amendment empowers the government to set specific targets for the share of non-fossil energy consumption by designated consumers. The primary objective is to reduce reliance on fossil fuels, such as coal/lignite, and increase the utilization of non-fossil energy sources, particularly renewables.
Under this new mandate, designated consumers, including coal/lignite-based power stations, are required to supplement their conventional energy generation with a minimum supply of renewable energy. This obligation can be fulfilled by either establishing renewable energy generation capacity or procuring and supplying renewable energy.
One noteworthy aspect is that designated consumers can supply renewable energy independently, separate from their existing power purchase agreements (PPAs) related to coal/lignite-based generation. This provision allows for flexibility and encourages the growth of renewable energy markets.
Additionally, captive coal/lignite-based generating stations are exempted from the Renewable Generation Obligation (RGO) if they meet specified renewable energy consumption obligations set by the Central Government.
Furthermore, generating companies with multiple coal/lignite-based generating stations can aggregate their RGO compliance, making it more feasible for large conglomerates to meet their renewable energy targets.
The government’s recent “Scheme for Flexibility in Generation and Scheduling of Thermal/Hydro Power Stations through Bundling with Renewable Energy and Storage Power” will also contribute to RGO fulfilment, further promoting the integration of renewables into the energy mix.
The RGO is calculated annually as a percentage of renewable energy generation in both conventional and renewable sources. Any shortfall in meeting this target results in penalties under the Energy Conservation Act, 2001.
This new notification supersedes previous ones and signifies the government’s unwavering commitment to promoting renewable energy and reducing the environmental impact of coal and lignite-based power generation. It is a significant step towards achieving a sustainable and clean energy future for India, aligning with global efforts to combat climate change and reduce greenhouse gas emissions.
Please read the document below for more details.