Govt Proposes Mandating RE for Open Access, Captive Users

The Indian government has recently amended the renewable Energy Consumption Obligation (RCO) rules to facilitate open access consumers and captive power users, ensuring a smoother regulatory framework for renewable energy obligations. The Ministry of Power (MoP) issued a notification detailing these changes, aiming to enhance compliance with renewable energy consumption mandates. The government has sought comments from stakeholders by April 18, 2025.

Key Amendments in the Notification

The MoP’s latest draft notification stated, “For open access consumers and captive users, this requirement applies to electricity consumption from sources other than Distribution Licensees. The specified minimum share of electrical energy consumption from non-fossil sources is determined as a percentage of total electrical energy consumption for each category.”

It added, "A significant change in the regulation is the replacement of the word “comprise” with “include but not limited to.” This amendment broadens the scope of renewable energy obligations, allowing for more flexibility in compliance." Additionally, the notification introduced modifications in the treatment of shortfalls in renewable energy consumption obligations:

• Shortfalls in wind renewable energy consumption in a given year may be offset by surplus consumption from the hydro-renewable energy component and vice versa.
• Shortfalls in wind or hydro renewable energy consumption obligations in a given year may be offset by surplus consumption from other renewable energy components.
• Surplus from distributed renewable energy may also be used to meet wind, hydro, or other renewable energy consumption obligations.

Renewable Energy Compliance and Penalties

The revised notification mandates that open-access consumers and captive users designated as consumers must meet their total renewable energy consumption obligations from any renewable energy source. For captive users classified as designated consumers, electricity consumption obligations shall include self-consumption, excluding auxiliary consumption.

Buyout Mechanism

The draft regulation made another major addition with the introduction of a buyout mechanism. The draft rule stated that any funds received through this mechanism will be credited to the Central Energy Conservation Fund under a separate head. It further explained that these funds will be utilized to support the development of non-fossil fuel capacities to increase the share of clean energy in India’s energy mix. The Central Government will determine the utilization framework for these funds.

The draft rule stated, "Failure to meet renewable energy consumption obligations will be considered non-compliance, leading to potential penalties under the Act. Additionally, non-compliance, non-submission of required information, or submission of incorrect information may result in penalties imposed by the Bureau, the State Designated Agency, or any other designated authority."