How Obligated Entities (OE) can meet their Obligations?

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The Electricity Act (2003) has mandated the State Electricity Regulatory Commissions (SERCs) to promote renewable energy (RE) by fixing Renewable Purchase Obligations (RPOs) for “Obligated Entities.” These entities are obligated to purchase a minimum share of their electricity from renewable energy sources. State policies on RPOs vary in terms of targets and eligibility; therefore RE developers and companies with RPO targets looking to register for Renewable Energy Credits (RECs) should carefully consult their respective state policies.

“Obligated Entities” (OE) commonly include distribution licensees, captive power plant (CPP) owners, and open access consumers. They can meet their obligations in three ways:

  1. By generating RE power for self consumption
  2. Buying power from other RE generators
  3. Buying Renewable Energy Certificates (RECs)

While the first two options are explicit, it must be noted that all RE power is not qualified to meet RPO requirements. Most generally, it may be stated that if an RE generator is availing other RE incentives, such as feed-in-tariffs, concessional or preferential transmission and wheeling charges, such power would not be qualified to meet RPO requirement. Using option 3 requires buying REC from the designated Exchanges in India. However, to participate in trading, the buyer must be registered with the exchange; if not, REC can be purchased through other registered traders.

There are two types of RECs: solar and non-solar. They can only be traded within the price band set by the Central Electricity Regulatory Commission (CERC).

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