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Central Electricity Regulatory Commission Sets RCO Buyout Rate at INR 347/MWh with 5% Yearly Increase Till FY30

The Central Electricity Regulatory Commission (CERC) has determined the Renewable Consumption Obligation (RCO) buyout price at INR 347/MWh for FY 2024–25 and FY 2025–26. The rate is based on a weighted average Renewable Energy Certificate (REC) price of INR 346.74/MWh and provides an alternative compliance pathway for entities that are unable to meet their renewable energy consumption targets.

The decision was issued through a suo motu order in Petition No. 12/SM/2025, following the September 2025 notification by the Ministry of Power introducing buyout payments as a recognised compliance mechanism. Under the RCO framework, obligated entities—including distribution companies, open access consumers, and captive power users—can meet their targets through direct renewable power procurement, purchase of RECs, or payment of the notified buyout amount. CERC clarified that these options carry equal status and that the buyout route is not subordinate to other mechanisms.

In arriving at the price, the Commission examined REC trading data between December 2024 and November 2025 from leading exchanges and bilateral transactions. This included trades on the Indian Energy Exchange, Power Exchange India, and Hindustan Power Exchange, as well as volumes routed through licensed power traders. The resulting weighted average price of INR 346.74/MWh was rounded to INR 347/MWh for the initial two-year period.

For FY 2026–27 to FY 2029–30, CERC has approved a 5 percent annual escalation in the buyout rate to provide predictability for market participants. Accordingly, the price will rise to INR 364/MWh in FY27, INR 382/MWh in FY28, INR 401/MWh in FY29, and INR 421/MWh in FY30. The Commission noted that this structured approach is intended to support compliance planning while reflecting evolving market dynamics. The mechanism will remain effective through FY30 unless reviewed earlier.

The order follows consultations with 53 stakeholders and a public hearing held in December 2025. Industry participants expressed mixed views, with renewable developers and exchanges warning that a modest premium over REC prices could dampen long-term green power procurement, while discoms and energy-intensive industries cautioned against higher compliance costs being passed on to consumers. CERC stated that the final framework seeks to balance these concerns.

The regulator also clarified that detailed operational procedures and fund governance fall outside its present mandate. Under existing rules, proceeds from buyout payments are credited to the Central Energy Conservation Fund, with 75 percent allocated to State Energy Conservation Funds to support renewable and energy storage initiatives.

With this decision, CERC has established a market-linked pricing roadmap for RCO buyouts through 2030, positioning the mechanism as a structured compliance option while reaffirming that direct renewable procurement and REC trading remain central to India’s clean energy transition.