Revised Renewable Consumption Obligation (RCO) Guidelines, 2025

Introduction

The Ministry of Power, Government of India, recently issued revised guidelines describing the minimum share of renewable energy in total electricity consumption for specified consumers through its notification dated 27 September 2025. This notification has been issued in consultation with the Bureau of Energy Efficiency (BEE) under the provisions of the Energy Conservation Act, 2001, Section 14 (n) & (x) and supersedes the notification dated 20 October 2023. The revised framework is intended to further promote the use of renewable energy in India’s power mix to aid the country’s energy transition and sustainability.

Explanation

As per the revised guidelines, all designated consumers, which includes electricity distribution licensees, open access consumers, and captive users, will need to ensure that a proportion of their total electrical energy consumption is mandated to be sourced from renewable energy. This percentage, which is mandatory and referred to as the Renewable Consumption Obligation (RCO), will be phased in annually from FY 2024-25 to FY 2029-30

Key Provisions

1. Renewable Consumption Targets:

The total renewable energy consumption requirement has been set to progressively increase from 29.91% in FY 2024–25 to 43.33% by FY 2029–30. These targets are divided across different categories wind, hydro, distributed renewable energy (DRE), and other renewable sources.

2. Special Conditions for Certain States:

For the North-Eastern and hilly States (including Himachal Pradesh, Uttarakhand, Sikkim, and others) and certain Union Territories, the distributed renewable energy obligation will be 50% of the prescribed level, while for urban-only distribution licensees, it will be 75% of the specified level. The balance will be included under the Other Renewable Energy component.

3. Categorisation of Energy Components:

• Wind and Hydro Energy: Obligations will be met through power generated from projects commissioned after 31st March 2024.
• Distributed Renewable Energy: Applicable to projects up to 10 MW capacity, including rooftop solar, net metering, group net metering, and other notified installations.
• Other Renewable Energy: Includes power from sources such as biomass co-firing and municipal solid waste projects.

4. Compliance Mechanism:

Designated consumers may fulfil their RCO by:

• Consuming renewable electricity directly or through energy storage systems.
• Purchasing or self-generating Renewable Energy Certificates (RECs) as per regulations notified by the Central Electricity Regulatory Commission (CERC).
• Paying a buyout price determined by CERC.

Funds received through the buyout mechanism will be deposited in the Central Energy Conservation Fund, with 75% transferred to respective State Energy Conservation Funds to promote renewable energy development and energy storage capacities.

5. Monitoring and Reporting:

The Bureau of Energy Efficiency (BEE) will monitor compliance and submit periodic reports to the Central Government and respective State Electricity Regulatory Commissions (SERCs).

• Certified energy accounts for FY 2024–25 must be submitted by 31st October 2025, and for each subsequent year by 31st July.
• Compliance reports, after making good any shortfalls through RECs or buyouts, must be submitted by 31st March 2026 for FY 2024–25 and by 31st December in the following years.

6. Penalties and Noncompliance:

Noncompliance with RCO targets or failure to submit necessary information will result in penalties as per Section 26(3) of the Energy Conservation Act, 2001. Penalties may be levied by the Bureau or the State Designated Agencies.

7. RPO Framework Integration:

The notification states that no further Renewable Purchase Obligation (RPO) will be imposed per the Electricity Act, 2003 because the State-level RPO targets will be incorporated into the new RCO framework. This is to ensure consistency across different jurisdictions.

Conclusion

The Revised Renewable Consumption Obligation Guidelines, 2025 is a key policy document for India’s renewable energy framework. Consumption targets that are clear, progressive, and legally enforceable enhance legal and institutional renewable energy adoption. It also aligns the national energy policy with long-term sustainability objectives, attracting investment in green energy, and adopt a more comprehensive approach to meeting India’s renewable energy targets.