Ministry of Power Issues Revised Renewable Consumption Obligation Framework to Boost Renewable Energy Compliance

Introduction

India is increasingly focused on building a cleaner and greener future in energy. In this recent action, the Ministry of Power (“MoP”) has released a new framework[1] for a revised Renewable Consumption Obligation (“RCO”). This framework has been introduced in the Electricity (Amendment) Rules, 2025 and seeks to replace scattered state Renewable Purchase Obligations with a centralized national framework. The objectives are uniform compliance across India, promote the increased use of cleaner energy sources, and keep India on track to meet its ambitious 2030 targets.

Explanation

The revised RCO framework marks a shift in the way renewable energy consumption is regulated in India. Instead of leaving obligations entirely in the hands of state-level regulators, the new mechanism seeks to create a central, uniform rulebook. The entities that fall under its scope remain largely the same distribution companies, open access consumers, and captive power producers. What changes is the clarity, enforceability, and national-level oversight that the new framework introduces.

One of the central features of the framework is the clear trajectory for renewable energy consumption between April 2024 and March 2030. By the end of this period, more than 43 percent of electricity consumed by obligated entities will need to come from renewable sources. This trajectory is carefully divided into categories such as wind, hydro, distributed renewable energy, and other renewable options like biomass.

An especially captivating new addition is the sole element for distributed renewable energy. This element would include any small-scale projects up to a maximum of 10 megawatts, with dedicated rooftop solar projects, behind-the-meter projects, and other small distributed renewable projects. The framework notes clearly that this element is non-fungible which means it cannot be displaced with energy from another renewable energy supply. This policy underlines the direction of government policy to generate higher uptake of more distributed energy solutions to improve individual household, small enterprise and small group energy collection. To accommodate for geographic and infrastructure constraints, the targets for difficult areas like the North East and Himalayan states have been reduced, and any shortfall has been included in the wider “other renewables” category.

With regards to compliance, the system offers various avenues. Obliged entities are able to satisfy their obligations by directly utilizing renewable energy, through long-term purchase agreements, or by purchasing renewable energy certificates. For those who are still not able to cover, a buyout mechanism has been established, whereby a price determined must be paid to cover the shortfall. The money raised through this channel will be channeled into national and state energy conservation funds so that even money penalties go back into the clean energy system.

The framework also recognizes flexibility. Group entities or holding entities of common ownership may consolidate obligations and comply at a group level. This step is anticipated to simplify it for large conglomerates with wide-ranging operations to streamline their compliance.

Monitoring and accountability constitute another imperative aspect of the framework. The Bureau of Energy Efficiency has been entrusted with monitoring compliance, abetted by a formal timeline for data submission. For the inaugural year of enforcement, parties are required to report energy accounting in October 2025, with final compliance by March 2026. From the subsequent year and onwards, a routine annual cycle will be imposed, eliminating uncertainty and making monitoring more predictable. Non-compliance will trigger penalties under the Energy Conservation Act, giving teeth to the plan and ensuring that renewable obligations can no longer be viewed as optional.

The updated regulations also clarify the procedure for how consumption shall be calculated. Certain types of electricity including nuclear and waste heat recovery equipment will not be considered when calculating the base for consumption. This will allow consumption to only be calculated for sources that apply to compliance calculations. Distributed renewable schemes will also follow a new standard of 4 kilowatt-hour per kilowatt per day to assist in more standardized accounting.

Overall, the whole framework is one of ambition and practicality. It addresses ongoing, long-standing concerns regarding uneven enforcement, while possibly aiding newer areas, like distributed energy. At the same time, it recognizes regions may be different and allows for flexibility, in compliance mechanisms.

Conclusion

The new Renewable Consumption Obligation model is a big stride towards India’s transition to clean energy. By consolidating state-level requirements into a single, enforceable regime, it deepens the use of renewable energy and underscores the value of distributed renewables in promoting access and resilience. Its success, though, will be contingent upon its implementation. Parties have to adhere in spirit, as regulators craft equitable buyout and certificate arrangements. With proper infrastructure, monitoring, and capacity building, the framework has the potential to be a game-changer, providing transparency, accountability, and incremental movement toward India’s sustainable energy future.

[1] https://powermin.gov.in/sites/default/files/webform/notices/Revised_RCO_Gazzette_Notification_dated_27th_September_2025.pdf