RERC says no to new 3,200 MW coal power citing consumer interest and cheaper alternatives

The decision by the Rajasthan Electricity Regulatory Commission (RERC) to reject Rajasthan Urja Vikas Nigam Limited's (RUVITL) proposal for procuring 3,200 MW of new coal-based power for 25 years marks a pivotal moment in India's energy transition. This move, prioritizing consumer interest and cheaper renewable energy alternatives, signifies a significant departure from traditional fossil fuel reliance and underscores the evolving dynamics of India's power sector.

**Background Context:** India, a rapidly developing economy, has historically relied heavily on coal to meet its escalating energy demands. Coal-fired power plants currently constitute approximately 50-55% of the country's total installed electricity generation capacity. This dependence has been a cornerstone of India's industrial growth since independence, providing a relatively cheap and abundant source of power. However, this reliance comes with substantial environmental costs, contributing significantly to greenhouse gas emissions and air pollution. Globally, there's an urgent push towards decarbonization, with India committing to ambitious climate goals, including achieving Net Zero emissions by 2070 and installing 500 GW of non-fossil fuel electricity capacity by 2030, as announced at COP26 in Glasgow. Concurrently, the cost of renewable energy, particularly solar and wind power, has plummeted dramatically over the past decade, making them increasingly competitive, and often cheaper, than new coal-fired power.

**What Happened and Key Stakeholders:** The RERC, a statutory body established under the Electricity Act, 2003, rejected RUVITL's proposal. RUVITL, a state utility, is responsible for power procurement and distribution in Rajasthan. The RERC's primary mandate is to regulate the electricity sector within the state, ensuring fair practices, promoting efficiency, and safeguarding consumer interests. By rejecting the coal power proposal, the RERC explicitly stated its rationale: the availability of cheaper alternatives (renewables) and the paramount interest of consumers, who would otherwise bear the cost of more expensive coal-based power over a long 25-year period. Key stakeholders in this decision include the RERC (the regulator), RUVITL (the procurer), the consumers of Rajasthan (who stand to benefit from lower tariffs), and the broader renewable energy sector (which gains impetus from such policy signals). Coal power producers, on the other hand, face increasing uncertainty regarding new projects.

**Significance for India:** This decision holds immense significance for India's energy landscape. Firstly, it reinforces India's commitment to its climate goals and accelerates the energy transition away from fossil fuels. It demonstrates that state-level regulatory bodies are actively aligning their decisions with national and international environmental objectives. Secondly, it has profound economic implications. By opting for cheaper renewable energy, states can potentially lower electricity tariffs, reducing the burden on consumers and making industrial operations more competitive. This fosters economic growth and reduces India's susceptibility to volatile international fossil fuel prices, enhancing energy security. Socially, a shift to cleaner energy sources leads to improved air quality and public health outcomes. Politically, such decisions send a strong signal to investors, encouraging greater investment in renewable energy infrastructure and associated technologies, thereby fostering a green economy and creating new job opportunities.

**Constitutional and Policy References:** The regulatory framework for India's power sector is primarily governed by the **Electricity Act, 2003**. This landmark legislation aimed at liberalizing the sector, promoting competition, protecting consumer interests, and encouraging renewable energy. State Electricity Regulatory Commissions (SERCs) like RERC are statutory bodies formed under this Act, vested with powers to regulate tariffs, license power generators and distributors, and ensure efficient power procurement. The subject of 'Electricity' falls under the **Concurrent List (List III) of the Seventh Schedule** of the Indian Constitution (Article 246), meaning both the Central and State governments can legislate on it. This allows states to play a crucial role in shaping their energy policies. Furthermore, the **National Tariff Policy, 2016 (amended)**, explicitly promotes renewable energy procurement and encourages competitive bidding. The Directive Principles of State Policy (DPSP), particularly **Article 48A**, which mandates the State to endeavor to protect and improve the environment, also provides a constitutional underpinning for such environmentally conscious decisions.

**Future Implications:** The RERC's decision could set a precedent for other State Electricity Regulatory Commissions across India. As the cost of renewables continues to decline and environmental pressures mount, more states might follow suit, making new coal power projects financially unviable or legally challenging. This accelerates the need for significant investments in grid modernization and energy storage solutions to effectively integrate the increasing share of intermittent renewable energy. While this is a positive step for climate action, it also necessitates a 'just transition' plan for coal-dependent regions and workers, ensuring alternative livelihoods and economic opportunities. This move aligns with broader themes of sustainable governance, economic resilience, and India's growing leadership in global climate action, signifying a robust commitment to a cleaner, greener future.