What is an RPO and why would an entity purchase REC?

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A Renewable Purchase Obligation (RPO) is defined by the Central Electricity Regulatory Commission (CERC) as such:
“Renewable Purchase Obligation means the requirement specified by the State Commissions under Clause (e) of Sub-section (1) of Section 86 of the Act for the obligated entity to purchase electricity from Renewable Energy sources.”
The RPO is defined by a State Commission in terms of the percentage of total annual electricity consumed by the Obligated Entities. Being a mandate from State Commission, the Obligated Entities would be required to either purchase electricity generated from Renewable Energy sources or purchase a Renewable Energy Certificate (REC) in lieu of the same.

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