The Ministry of Power (MoP) has issued a draft amendment to RCO notification, issued on 20th Oct, 2023 and has invited comments by 18th April 2025. The amendment brings in some clarifications and proposes two new innovative approaches.
- Payment of the buyout price specified by CERC as a means of complying with the RCO target. This is certain to lead to a lot of legal, jurisdictional and operational complications. Instead, we propose an alternative approach, a relaxation in penalty for RCO non-compliance subject to some stringent conditionalities including adequate RE capacity tied up in the form of signed PPAs and if all RECs have been exhausted from the system among other things.
- Aggregate RCO compliance at the Holding Company level. This is an innovative proposal with the possibility of significantly reducing transaction costs for large Holding Companies. However, we should proceed with caution and not unless the practical details for operationalization of such a scheme are worked out and agreed by all States.
Finally, the amendment also clarifies the definition of consumption for CPP. In our view, the definition of consumption, esp. for CPP should be as simple as possible with no exemptions like the one proposed for Waste Heat Recovery. For DISCOMs, we suggest that the total electricity consumption be considered at state periphery, i.e., only after excluding ISTS losses from the total procurement. A standardised definition of consumption across SERCs is certainly needed to avoid confusion and legal challenges in the future.
Our suggestions and comments on the proposed draft are detailed in the submission.