CERC proposes buyout price under Renewable Consumption Obligation
Author: PPD Team Date: October 23, 2025
The Central Electricity Regulatory Commission (CERC) has initiated a public consultation process to determine the buyout price that obligated entities may pay as an alternative to meeting their Renewable Consumption Obligation (RCO). The move follows the Ministry of Power’s notification introducing the RCO framework, which mandates that distribution licensees, open access consumers, and captive users maintain a minimum share of electricity consumption from renewable sources.
Under the new framework, entities can comply with the RCO through three routes: by directly consuming renewable energy, by purchasing Renewable Energy Certificates (RECs), or by paying a buyout price specified by CERC. The buyout mechanism is designed as a fallback option for entities unable to meet their obligations through direct or certificate-based procurement. Funds collected through this route will be deposited into the Central and State Energy Conservation Funds to promote renewable energy development and energy storage capacity building.
For the financial year 2024–25, CERC has proposed a buyout price of ₹245 per MWh. This rate is approximately 5 per cent higher than the weighted average REC price of ₹232.84 per MWh recorded in the previous year. The commission stated that the premium is intended to maintain the buyout mechanism as a last-resort compliance tool while encouraging direct participation in renewable procurement and REC markets.
For subsequent years until FY 2030, the buyout price will be determined annually at 105 per cent of the weighted average REC price of the preceding financial year. This approach is expected to keep the buyout rate aligned with market trends while maintaining a consistent incentive structure favouring renewable consumption.
CERC has invited comments and suggestions from stakeholders on the proposed methodology and rate. Submissions can be made to the commission by November 21, 2025.
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