The Ministry of Power (MoP) and the Ministry of New and Renewable Energy (MNRE) has issued revised guidelines allowing thermal generation companies to set up renewable energy generation capacity either on their own or through developers through open bids, and supply it to consumers under existing power purchase agreements (PPAs). The MoP and the MNRE are prepared to take some additional steps toward achieving 500 GW of renewable energy capacity by 2030, for which directives will be issued soon.
This is expected to assist the replacement of fossil fuel-based electricity with renewable energy. Because renewable energy is less expensive than thermal energy, the benefits of bundling renewable and thermal energy will be split 50:50 between the generator and distribution companies/other procurers. Since renewable energy will be balanced with thermal energy, discoms will no longer need to purchase separate renewable energy balancing capacity. This is a big step toward the target of 500 GW of non-fossil energy capacity by 2030. The distribution companies will be able to use the renewable energy supplied under the plan to satisfy their renewable purchasing mandate without incurring the cost of a separate PPA. This move by the government is expected to hasten the energy transition, benefiting both generators and distribution companies.