What Led to the Surge in REC Purchases by DISCOMs?

What Led to the Surge in REC Purchases by DISCOMs?

Union Minister of State for New and Renewable Energy Shripad Yesso Naik, in his latest statement before the Parliament, indicated that the Renewable Energy Certificates (RECs) have seen an upsurge. He attributed this surge to the changes in policy, which have made it more favorable for the power distribution companies (discoms) in the state.

He also cited data on the procurement of RECs by discoms. The data, sourced from the Grid Controller of India (GCI), showed that the removal of floor and forbearance prices for Renewable Energy Certificates (RECs) on December 5, 2022, led to a sharp rise in REC purchases by power distribution companies (DISCOMs). REC procurement jumped from around 6 million in FY23 to 10.6 million in FY24, and over 22.2 million in FY25 (as of March 26, 2025).

The Ministry said it entrusted the GCI (formerly POSOCO) with the responsibility of tracking RPO compliance from FY 2021–22. The minister, in his response, also shared data related to the RPO compliance by states. India’s Renewable Purchase Obligation (RPO) compliance stood at 79.55% in FY 2023–24, down from 96.47% in the previous year but higher than the 69.22% recorded in FY 2021–22, according to the data shared by the Union Minister of State for New and Renewable Energy & Power, Shripad Yesso Naik.

rpo-compliance

In response to a query on the steps taken to improve RPO adherence and how REC deregulation affected DISCOM behavior, the Ministry outlined a wide range of initiatives aimed at promoting renewable energy and ensuring 100% RPO compliance. These measures, the Minister said, aim to support the rapid scale-up of renewable energy capacity while ensuring regulatory compliance and financial viability for stakeholders across the power sector.

Some of the measures outlines included–

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• Issuance of a bidding trajectory to procure 50 GW of renewable energy annually between FY 2023–24 and FY 2027–28.

  

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• 100% Foreign Direct Investment (FDI) is permitted under the automatic route.

• Waiver of Inter-State Transmission System (ISTS) charges for:

  • Solar and wind projects commissioned by June 30, 2025,

  • Green hydrogen projects until December 2030,

    

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  • Offshore wind projects until December 2032.

• Notification of Renewable Consumption Obligation (RCO) trajectory through 2029–30, with penalties for non-compliance. RCO includes consumption from decentralized renewable sources.

• Establishment of a Project Development Cell to attract and facilitate investments.

• Issuance of standard bidding guidelines for grid-connected solar, wind, hybrid, and firm-dispatchable renewable energy (FDRE) projects.

• Implementation of schemes such as:

  • PM-KUSUM,

  • PM Surya Ghar Muft Bijli Yojana,

  • National Programme on High Efficiency Solar PV Modules,

  • New solar power scheme for tribal and PVTG habitations under PM JANMAN and DA JGUA,

  • National Bioenergy Programme,

  • National Green Hydrogen Mission,

  • Viability Gap Funding (VGF) scheme for offshore wind energy projects.

• Promotion of solar parks and ultra mega solar power projects to provide land and transmission access.

• Green Energy Corridor Scheme support for grid infrastructure.

• Issuance of the Electricity (Rights of Consumers) Rules, 2020, allowing net metering up to 500 kW or the sanctioned load, whichever is lower.

• Issuance of the National Repowering and Life Extension Policy for Wind Power Projects, 2023.

• Release of the Strategy for the Establishment of Offshore Wind Energy Projects, with a 37 GW bidding trajectory by 2030.

• Notification of the Offshore Wind Energy Lease Rules, 2023.

• Launch of Standard & Labelling (S&L) programs for solar PV modules and grid-connected inverters.

• Preparation of a transmission infrastructure plan up to 2030 to meet RE targets.

• Notification of the Electricity (Late Payment Surcharge and Related Matters) Rules (LPS Rules).

• Notification of Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules, 2022, enabling any consumer with 100 kW or more demand to access green power.

• Launch of the Green Term Ahead Market (GTAM) on exchanges for trading renewable power.

• Orders issued mandating advance payment or Letters of Credit (LC) for power dispatch to ensure payment to RE generators.

• Guidelines released for resource adequacy planning to help states meet growing demand and fulfill RPO.