In a bid to enable the replacement of fossil fuel-based energy by renewable energy under the existing power purchase agreements (PPAs), the Centre has issued revised guidelines providing for thermal generation companies to set up renewable energy generation capacity either by themselves through developers by open bids and supplying it to the consumers under the existing PPAs.

The development comes in the light of India’s goal of achieving 500 GW of non-fossil fuel capacity by 2030.

“As the cost of renewable energy is less than the cost of thermal energy, the gains from the bundling of renewable energy with thermal will be shared between the generator and distribution companies/other procurers on a 50:50 basis,” the Power Ministry said in a release.

“As the renewable energy will be balanced with thermal energy, therefore, the DISCOMs will now not need to acquire any separate capacity for balancing of renewable energy. The distribution companies will be able to count the renewable energy supplied under the scheme towards their renewable purchase obligation and this will be without the financial burden of separate PPA,” the release stated.

Faster energy transition

It further added that this step by the Central government will lead to a faster energy transition and will be beneficial for both the generators and the distribution companies. Meanwhile, the Power and New & Renewable Energy Ministry are poised to take some additional steps for achieving 500 GW by 2030, for which orders are to be issued shortly.