MERC Enforces RPO Compliance For Captive Power Plants In Maharashtra

The Maharashtra Electricity Regulatory Commission (MERC) has issued an order in Case No. 1/SM/2024 regarding the verification and compliance of Renewable Purchase Obligation (RPO) targets for captive power plant (CPP) users in Maharashtra for the financial years 2014-15 to 2019-20. The order, dated February 18, 2025, was issued after reviewing submissions from various stakeholders, including the Maharashtra Energy Development Agency (MEDA) and CPP users.

Under the RPO Regulations of 2010 and 2016, the Commission set minimum renewable energy purchase targets for distribution licensees, open access consumers, and captive power users in Maharashtra. These targets increased over the years, reaching 15% in 2019-20, with separate percentages for solar and non-solar energy sources. Several previous rulings had allowed extensions and modifications to these obligations, including a provision allowing fossil fuel-based cogeneration plants to meet their cumulative RPO targets by March 2020.

As part of the verification process, the Commission reviewed data submitted by MEDA, which is the State Nodal Agency responsible for monitoring RPO compliance. Notices were sent to CPP users on January 1, 2024, requesting a reconciliation of power consumption and renewable energy procurement data. A public notice was issued on October 19, 2024, inviting suggestions and objections from stakeholders, followed by public hearings on December 3, 2024, where six CPP users presented their submissions.

Several legal proceedings have challenged the applicability of RPO regulations to fossil fuel-based cogeneration units. The Bombay High Court has adjourned its decision on these matters, pending a Supreme Court ruling. However, the APTEL judgment in Tata Steel Ltd. vs. Odisha Electricity Regulatory Commission (OERC) has upheld the validity of RPO regulations, stating that RPO obligations can be imposed on captive power consumers and that fossil fuel-based cogeneration cannot be exempted from compliance.

The Commission’s order analyzed submissions from multiple companies, including UltraTech Cement Ltd., Topworth Urja & Metals Ltd., and JSW Steel Coated Products Ltd., among others. Each entity’s compliance was assessed based on energy consumption data, procurement of renewable energy, and purchase of renewable energy certificates (RECs). Companies that failed to meet their RPO targets were directed to fulfill their shortfalls within a specified period.

The Commission reiterated that captive power plants commissioned before April 1, 2016, would be subject to a composite RPO target of 9%. For plants commissioned later, the RPO target would be based on the year of commissioning. The order also clarified that companies could not offset RPO obligations across different subsidiary units unless specifically permitted under regulations.

The order emphasized the need for strict enforcement of RPO targets to promote renewable energy adoption in Maharashtra. The Commission directed defaulting entities to comply with their RPO shortfalls by the end of FY 2025-26. It also maintained that its regulations align with national policies promoting renewable energy and that the framework would remain in effect unless modified by higher judicial authorities.