The Central Electricity Regulatory Commission (CERC) has finalized the “Buyout Price” for Renewable Consumption Obligation (RCO) compliance at ₹347 per MWh. The decision follows detailed public consultations and a review of stakeholder feedback. The final price is significantly higher than the earlier proposed rate of ₹245 per MWh, which had drawn criticism from several sections of the renewable energy industry.
The RCO framework was introduced by the Ministry of Power in September 2025. Under this framework, designated consumers such as distribution licensees (DISCOMs), captive power users, and open access consumers are required to meet a minimum percentage of their electricity consumption from renewable energy sources. The policy is part of India’s broader push to increase the share of non-fossil fuel energy in its overall power mix.
Obligated entities have three options to meet their RCO targets. They can directly consume renewable electricity, purchase Renewable Energy Certificates (RECs) from the market, or pay a specified buyout price to the regulator. The buyout option is designed as a fallback mechanism for entities that are unable to meet their targets through renewable procurement or REC purchases.
The initial proposal of ₹245 per MWh was calculated as a 5 percent premium over the weighted average REC price for the financial year 2024–25, which stood at ₹232.84 per MWh. However, several stakeholders, including renewable energy developers and companies such as Adani Group, raised concerns that the proposed price was too low. They argued that a lower buyout rate could effectively act as a soft cap on REC prices. If paying the buyout amount was cheaper than purchasing RECs or signing long-term renewable power contracts, many obligated entities might choose to simply pay the fee instead of investing in green energy.
Industry representatives also warned that such a move could weaken the REC market and slow down investments in new renewable capacity. In response, the CERC reviewed recent market trends and noted that REC prices had been increasing in recent months. The commission said it wanted to ensure that the buyout option remains a measure of last resort and does not undercut the renewable market.
At the same time, the regulator also considered the financial health of DISCOMs and the potential impact on retail electricity tariffs. By setting the buyout price at ₹347 per MWh, the CERC aims to strike a balance between encouraging renewable procurement and avoiding excessive compliance costs for power distribution companies.
The funds collected through the buyout mechanism will be credited to the Central Energy Conservation Fund. Of this amount, 75 percent will eventually be transferred to State Energy Conservation Funds to support non-fossil fuel energy projects.
With this decision, the CERC has signaled its intent to strengthen the RCO framework and support India’s transition toward a cleaner and more sustainable power system, while still allowing flexibility in compliance options.
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