MoP Draft RE Consumption Obligations Set 4.5% Distributed RE Target by FY30

The Ministry of Power (MoP) has issued revised draft guidelines for Renewable Energy Consumption Obligations (RCOs) under the Energy Conservation Act, 2001, setting mandatory renewable energy targets for various categories of electricity consumers, including distribution licensees, open access consumers, and captive users.

Formulated in consultation with the Bureau of Energy Efficiency (BEE), the draft mandates that a certain minimum share of total electricity consumption must come from renewable energy sources.

These RCO targets, applicable for the period 2024–25 to 2029–30, are specified as percentages of total electricity consumption and vary by energy source and consumer category.

The obligations are divided into four components: wind energy, hydro energy, distributed renewable energy, and other renewable sources. Targets are differentiated for regular states and for hilly or North-Eastern states and union territories.

The draft aims to expand the share of distributed renewable energy from 1.50% in 2024–25 to 4.50% by 2029–30. Similarly, the wind energy obligation is projected to increase from 0.67% to 3.48% over the same period.

Revised RPO Obligation

For wind energy in hilly and North-Eastern regions—such as Arunachal Pradesh, Assam, and Himachal Pradesh—the obligation must be met using wind projects commissioned after March 31, 2024.

The “other renewable” category covers energy from projects not included under wind, hydro, or distributed renewable energy. This includes generation from wind and hydro projects commissioned before April 1, 2024, and the co-firing of biomass and municipal solid waste.

For distributed renewable energy, the draft specifies that only half the obligation will count toward this category, with the balance attributed to “other renewable.” Eligible projects include those below 10 MW across all solar formats—net metering, gross metering, group metering, virtual net metering, behind-the-meter installations, and others.

Different RPO Targets

To allow flexibility, the draft proposes that surpluses in wind, hydro, or other renewable energy components can offset shortfalls in one another. However, shortfalls in distributed renewable energy are non-fungible, though any surplus can be used to compensate for deficits in the other components.

For captive users, the draft includes self-consumed electricity (excluding auxiliary consumption), except for energy from fossil-fuel-based waste heat recovery, unless generated using Waste Heat Recovery Steam Generators in captive gas-based combined cycle plants. Electricity from industrial process-based waste energy recovery and 50% of self-consumed power from fossil-fuel cogeneration is also excluded.

For distribution licensees, RCO is calculated based on electricity supplied to consumers within their jurisdiction, excluding open access consumption and captive self-use.

RCO Shortfalls to Attract Penalties; Buyout Proceeds to Support Green Energy

Designated consumers must submit energy accounts for FY 2024–25 by September 30, 2025, and by July 31 in subsequent years. Compliance reports—including Renewable Energy Certificates (RECs) or buyout price payments for unmet obligations—must be filed by March 31, 2026, for FY 2024–25 and by October 31 thereafter.

Non-compliance, including failure to meet targets or incorrect data submission, will be subject to penalties imposed by BEE or the respective State Designated Agency.

The draft mandates the Central Electricity Regulatory Commission (CERC) to set the buyout price and oversee proceeds credited to the Central Energy Conservation Fund under a dedicated account. Half of these funds will be transferred to State Energy Conservation Funds to support renewable energy development and storage infrastructure.

The notification is deemed effective from April 1, 2024, with all actions taken under previous notifications remaining valid.