Govt. Updates Renewable Energy Consumption Rules for Electricity Consumers

The Ministry of Power has issued updated Renewable Consumption Obligations (RCO) for designated electricity consumers, including distribution licensees, open access users, and captive consumers. This notification supersedes the previous 2023 rules and sets minimum renewable energy targets applicable from the fiscal year 2024-25.

The RCO requires consumers to source a specified percentage of their electricity from renewable energy, with targets increasing from 29.91 percent in 2024-25 to 43.33 percent by 2029-30. The obligation is divided into wind, hydro, distributed renewable, and other renewable energy components. While shortfalls in wind, hydro, and other renewable categories are interchangeable, distributed renewable energy obligations must be met independently, though surpluses can offset other components.

Wind and hydro energy obligations apply only to projects commissioned after 31 March 2024, though hydro energy from free power or approved foreign projects may also count. Distributed renewable energy includes projects of 10 MW or less, covering all solar configurations and other notified small-scale renewable sources. Energy from such projects can be calculated either directly in kilowatt-hours or, where generation data is unavailable, using a standard conversion factor. Other renewable energy covers older wind and hydro projects as well as energy from biomass, municipal solid waste, and other approved sources.

For open access consumers and captive users, the RCO applies to electricity drawn from the grid or self-generated, excluding nuclear energy, fossil-based co-generation, and waste-heat recovery processes, with partial exclusions for aluminum smelters and fossil co-generation plants. Distribution licensees must calculate RCO based on electricity supplied to consumers within their service area, excluding open access and captive user consumption. Compliance can be achieved through direct consumption, Renewable Energy Certificates, or payment of a buyout price, with 75 percent of buyout funds allocated to state renewable development.

The Bureau of Energy Efficiency will monitor compliance, with reporting required from all designated consumers. Energy accounts for FY 2024-25 must be submitted by 31 October 2025, and post-adjustment compliance reports by 31 March 2026. Any shortfall in meeting RCO will be treated as non-compliance and may attract penalties under the Act. This notification consolidates state-level Renewable Purchase Obligations into a single national framework, reinforcing India’s commitment to expanding its renewable energy share.