MoP Issues Draft Amendment to Renewable Consumption Obligation Framework

The Ministry of Power has introduced a draft amendment to the Renewable Consumption Obligation (RCO) notification under the Energy Conservation Act, 2001, aiming to strengthen renewable energy adoption and ensure compliance among designated consumers.

Stakeholders have been invited to submit their feedback within three weeks of the letter’s issuance, by April 18, 2025. The amendment, issued in consultation with the Bureau of Energy Efficiency (BEE), revises the RCO framework originally notified on October 20, 2023.

It mandates a minimum share of electricity consumption from renewable sources for designated consumers, including electricity distribution licensees, open-access consumers, and captive users. For open-access consumers and captive users, the renewable energy obligation must be met through electricity procured from external sources rather than from distribution licensees.

To provide flexibility, the revised framework allows any shortfall in wind or hydro renewable energy consumption obligations to be offset by surplus consumption from other renewable energy sources. Additionally, surplus power from distributed renewable energy can be used to meet wind or hydro renewable energy requirements.

For captive users classified as designated consumers, the renewable energy obligation will be determined based on self-consumption, excluding auxiliary consumption. However, electricity generated through waste heat recovery using fossil-based sources will not be considered for compliance, except in cases where a Waste Heat Recovery Steam Generator (WHRSG) is used in a captive Combined Cycle Gas-Based Generating Station.

The amendments also introduce multiple compliance options. Consumers can fulfill their renewable energy obligations by directly consuming non-fossil-based electricity, either with or without an energy storage system. Alternatively, they can purchase Renewable Energy Certificates (RECs) issued under regulations set by the Central Electricity Regulatory Commission (CERC) or pay a buyout price specified by CERC. The funds collected through the buyout mechanism will be allocated to support the development of non-fossil fuel capacity, further increasing the share of renewable energy in India’s power mix.

Non-compliance with renewable energy consumption obligations will be considered a violation, with penalties imposed under Section 26 of the Energy Conservation Act, 2001. Cases of shortfalls, non-submission of required information, or submission of incorrect data may be reported by the Bureau of Energy Efficiency (BEE), State Designated Agencies, or other authorized entities to the Adjudicating Officer for penalty enforcement.

To ensure effective implementation, the BEE will monitor compliance and submit periodic reports to the Central Government. It will also issue detailed guidelines regarding compliance procedures, reporting mechanisms, and enforcement measures.

The proposed amendments reflect India’s commitment to expanding its renewable energy footprint while ensuring a structured and flexible compliance mechanism for obligated consumers.