On 22nd October, 2025, the CERC via Petition No. 12 / SM/2025 (Suo-Motu), invited public comments on the proposal of specifying the Buyout Price for FY 2024-2025, with buyout price being an alternate compliance mechanism towards fulfilment of Renewable Consumption Obligation (RCO) under Energy Conservation Act 2001 as stipulated in the MoP notification of 27th September, 2025.
After laying out our broader thinking on RPO/RCO framework, our submission highlights some key challenges in this framework.

1. Payment of the buyout price is essentially akin to a penalty by a different name since this mechanism does not translate to any actual RE capacity addition in the country.
2. Linking the buy-out price to the REC mechanism is one possible option, but the REC market is just 5% of the national RE capacity. Thus, determining buyout price may be challenging, especially since REC prices are not reflective of a time when SERCs should have been strictly enforcing RPO targets and levying penalties.
3. No sun-set clause for the buyout price mechanism and floor price for the buy-out price.

Thus, given the challenges noted above, our submission suggests that,

1. Set the buy-out price as the higher of 35p/kWh or 110% of the weighted average REC price for FY 24-25.
2. The minimum value of the buy-out price should increase by 10p/kWh each year to clearly signal to the DCs that the preferred option for RPO compliance should be setting up RE capacity.
3. The value of the buy-out price should be re-considered by CERC after 2 years.

We also note some supplementary steps that could be taken by MoP to make this framework more effective and in the spirit of the core objective of RE targets, namely the nudge towards more RE
capacity and generation.

Our detailed submission on the matter can be found in attached document on the page.