Power Ministry clarifies RGO compliance rules for new thermal projects

The Ministry of Power has issued a clarification on the Renewable Generation Obligation (RGO) policy, outlining how thermal power plants must integrate renewable energy (RE) into their operations. The directive, dated 6 August 2025, applies to coal and lignite-based plants commissioned after 1 April 2023.

For projects with Commercial Operation Dates (COD) between 1 April 2023 and 31 March 2025, the compliance deadline for meeting RGO requirements is now set for 1 April 2025. Projects commissioned on or after 1 April 2025 must meet the RGO target of 40 per cent by the time they reach COD.

The ministry has also clarified that RE capacity procured or developed by wholly owned subsidiaries of thermal generators, or subsidiaries of joint venture partners, will be eligible for RGO compliance.

The RGO mechanism allows thermal plants to either set up renewable generation capacity or procure an equivalent amount of renewable electricity. The ministry has reiterated that participation remains voluntary, in line with the original 2023 policy resolution.

The clarification addresses industry concerns on compliance flexibility through group entities. However, other challenges remain. Stakeholders point to rising supercritical thermal tariffs, now above Rs 6 per unit, driven by capital costs of Rs 8–11 crore per MW and landed coal prices exceeding Rs 4,500 per tonne. There is also uncertainty about the adoption of these tariffs under Section 62 of the Electricity Act, especially as battery storage begins to offer competitive baseload alternatives.