This disparity, highlighted by stakeholder submissions, showed that opting for alternatives such as storage can result in Rs 2,200 crore in savings for the consumer while still meeting the requirement for firm power.
Alexander Hogeveen Rutter, manager, electricity sector lead at Third Derivative and a stakeholder participant during the public hearing, said the time when new coal and new BESS were competitive is long past. “The cost savings of RE + Storage vs new coal works out to nearly Rs 4,500 per year per connection in Rajasthan, which is a massive win for consumers. On top of this, storage can be built modularly, in as little as three months, and has much faster ramp rates. Coal is not only much more expensive, it is much less reliable than the alternatives,” he stated
Non-compatibility with green power policies
The rejection of the 3,200 MW proposal rests heavily on its failure to conform with state and national policy directives, as mandated by the .
Rajasthan’s Clean Energy Policy (CEP) 2024 draws upon the National Electricity Plan 2023. The CEP fundamentally emphasises that BESSs are essential to address RE intermittency, ensuring grid stability and reducing dependence on conventional fossil fuels. Accordingly, the state is mandated to actively promote ESS through simplified regulatory processes and financial incentives.
The RERC’s recent notification of on , is considered RE-friendly and expected to promote distributed renewable energy generation across the state. In addition, the Commission has provided rebates in applicable charges for BESS, and almost all open access-related charges have been exempted for domestic consumers. The government’s plan to maximise solar generation by shifting agricultural load to daytime hours is also in the works.
Besides, the order states that it is the obligation of RUVITL to address RE curtailment, which is high in Rajasthan, and not compound the issue in the future. Taken together, these measures will further depress thermal plant load factors, making new coal financially unviable.
A granular modelling analysis of Rajasthan’s power system in 2030 showed RE + Storage will ensure reliable power to consumers, with lower costs, and is in the best interest of already financially stressed discoms, stated Disha Agarwal, senior programme lead, Council on Energy, Environment and Water. “The RERC’s public hearing process and evaluation of this proposal is commendable; with the process running over 10 months, the Commission allowed regular representations, noting all evidence and ensuring timely responses to participants,” she said.
Prevent locking-in of fossil fuel power
Rajasthan is recognised as a , and with solar generation being ramped up year on year, the state is expected to remain power-surplus during daytime hours.
The decision serves as an indictment of traditional long-term PPAs extending up to 25 years. The RERC stated that these commitments restrict discoms from adopting newer, more efficient renewable energy technologies as they evolve. Even when a unit is under-utilised, especially during high-solar daytime operations, the discom remains liable for fixed charges based on the plant’s availability. The RERC also noted the lack of flexibility in operation of the new units as floated in the tender, limiting the scope for mitigating under-utilisation of the unit in the future.
Instead, the RERC suggested a transition to shorter-tenure PPAs — for instance, 10 to 12 years — to maintain financial and technological flexibility. Furthermore, the RAP 2025 recommended a shift towards Medium-Term Open Access and Short-Term Open Access arrangements in the range of 1,500 MW to 6,000 MW in different years to address seasonal and peak-period requirements through market purchases or bilateral contracts.
However, the overhaul of the power ecosystem is fraught with complexity. Anuja Tiwari, senior partner at AZB & Partners, noted: “The challenge for transition from long-term arrangements to shorter PPAs will be to ensure the continuity of stable, affordable power to meet energy demands. RERC and other energy regulatory commissions will have to bring discoms on board in earnest for a short-term PPA framework to take off, while avoiding disruption of existing PPAs.”
Way ahead
The RERC order arrives at a crucial juncture for India. While the country’s energy requirements are rising with its growing economy, coal power continues to dominate the generation mix, accounting for . This makes the RERC’s detailed rejection a momentous decision for India’s future energy transition.
The order offers a clear blueprint for regulators across the country. Nivit Kumar Yadav, programme director at Delhi-based think tank the Centre for Science and Environment noted: “Other state electricity regulatory commissions should take note of RERC’s detailed assessment on cancellation of the additional coal power in the state. We have been advocating for revision of PPAs and their shorter tenure consistently. New coal power must be flexible, efficient and complement RE for the country going ahead.”
The focus is clearly shifting from inflexible baseload coal to responsive, need-based solutions. The Central Electricity Regulatory Commission has already notified regulations for battery storage, and the CEA’s long-term plan recognises the expansion of BESS as the critical environmental solution. The RERC order sets a new benchmark for other state regulators facing similar pressure to expand thermal capacity. The decision serves as an early, strong signal that economic and policy realities demand a transition towards flexibility in coal operations.
