RGO For Coal Plants. Will It Have A Significant Impact On Renewable Capacities?

The Ministry of Power, has finally notified the Renewable Generation Obligations (RGO)for Coal and lignite based plants. These new conditions are expected to mitigate the impact of additional thermal capacities India still plans, to support demand growth for electricity across the country.

As the notice says, any plant starting operations after April 1, 2023, will be obligated to establish a renewable generating capacity on a minimum 40% of the nameplate capacity of its own generation. It can also procure the equivalent amount of renewable energy and supply that. The 40% requirement is a steep jump over the proposed 25% limit that had been proposed for plants starting operations post April 1, 2024.

However, the notification is unlikely to lead to a significant jump in renewable capacity additions, due to two reasons. First, new thermal capacity has been very limited, and to that extent overall impact is unlikely to be high.  Secondly, even where fresh plants are commissioned, generators, especially if they do not have enough experience in renewables, are likely to go for sourcing renewable energy from power exchanges, instead of establishing fresh capacities of their own. Most new thermal capacities slated to come up have been priced much higher than prevailing renewable energy market prices, and to that extent, generators will probably prefer the easy option of the exchanges.

The RGO move however does buttress India’s credentials as a responsible nation, doing its utmost to balance the energy needs of its economy with offsets as far as possible.

Since 2021, in an effort to support struggling thermal plants stuck with high priced coal sourcing deals, the government has also tendered for bundled power from them, with thermal and renewable in a 50/50 ratio. Response has been good, and procurement is on there too.

India faces a challenging summer ahead as power demand has exceeded estimates, and the country remains dependent on thermal power for close to 70% of peak power requirements.