The Ministry of Power has released a revised draft notification on the Renewable Consumption Obligation (RCO), outlining an ambitious roadmap for designated consumers to increase their share of renewable energy over the next five years. This draft, which supersedes a previous notification from October 20, 2023, specifies mandatory RCO targets for electricity distribution licensees, open access consumers, and captive users, and is now open for stakeholder comments until August 19, 2025.
The RCO, which is a specified minimum share of electrical energy consumption from renewable sources, has been structured with a phased increase from fiscal year (FY) 2024-25 to 2029-30. The total RCO target is set to rise from 29.91% in 2024-25 to 43.33% by 2029-30.
The notification breaks down the RCO into four distinct components:
- Wind energy: Must be met by energy from Wind Power Projects (WPPs) commissioned after March 31, 2024.
- Hydro energy: Must be met by energy from Hydro Power Projects commissioned after March 31, 2024, and may include free power provided to states.
- Distributed renewable energy: Must be met by energy from projects less than 10 MW in size.
- Other renewable energy: A flexible category that includes energy from WPPs and hydro projects commissioned before April 1, 2024, as well as co-firing of biomass and Municipal Solid Waste (MSW).
Key Provisions and Compliance Mechanisms
The Wind, Hydro, and Other renewable energy components are fungible, meaning shortfalls in one can be met by a surplus in another. However, the Distributed renewable energy component is non-fungible for its shortfall, though its surplus can be used to meet other obligations.
Designated consumers can fulfill their RCO through a variety of methods, including direct consumption of renewable electricity, purchasing Renewable Energy Certificates (RECs) (including those from Virtual Power Purchase Agreements), or paying a buyout price specified by the CERC.
Funds received from the buyout mechanism will be credited to the Central Energy Conservation Fund, with half of the amount being transferred to the respective State Energy Conservation Fund to support the development of renewable energy sources and storage capacities.
For all designated consumers, the RCO calculation will exclude electricity consumed from nuclear power sources. The notification also provides detailed examples for calculating RCO for distribution licensees and for captive/open access consumers, outlining specific exemptions for waste heat recovery and co-generation.
Compliance for multiple designated consumers under common control (as per the Companies Act, 2013) may be considered on an aggregate basis at the Holding Company level.
Timelines and Penalties
The new draft notification specifies clear deadlines for compliance:
Energy Accounts
Designated consumers must submit their energy accounts for FY 2024-25 by September 30, 2025, and by July 31 for subsequent years.
Compliance Reports
Reports on meeting RCO shortfalls must be submitted by March 31, 2026, for FY 2024-25, and by October 31 for each subsequent year.
Any shortfall in meeting the RCO will be considered non-compliance, and penalties may be imposed under Section 26 of the Energy Conservation Act, 2001.
Stakeholders are requested to submit their comments on the revised draft in a word file via email to rcmdivision-mop@gov.in by the deadline of August 19, 2025.