India Mandates Renewable Energy Use for Key Power Consumers

Ministry of Power Notifies Renewable Consumption Obligation for Designated Consumers

The Ministry of Power has formally notified the Renewable Consumption Obligation (RCO), mandating designated consumers to ensure a minimum portion of their total electricity consumption comes from non-fossil sources. This measure applies to entities such as distribution companies (DISCOMs), captive power plants, and open access users, marking a significant step in India's energy transition strategy.[1][5]

Background and Context of the Notification

India's energy sector is undergoing rapid transformation to meet growing demand while aligning with global climate commitments. As of October 31, 2025, the country's total installed generation capacity reached 505 GW, with non-fossil sources accounting for over 259 GW, surpassing 50% of the total capacity. This achievement came five years ahead of the target set under the Paris Agreement's Nationally Determined Contributions (NDCs).[2][1]

Electricity generation has shown steady growth, increasing from 1,739.09 billion units (BU) in 2023-24 to 1,829.69 BU in 2024-25, a rise of 5.21%. Projections for 2025-26 set the target at 2,000.4 BU. Peak demand has also escalated, reaching 249,856 MW in 2024-25, met almost entirely with minimal shortages of just 0.001%.[2][3]

Shri Manohar Lal, speaking at an event, highlighted this milestone, stating that India remains committed to emission reductions. The RCO notification aligns with these efforts, building on previous mechanisms like the Renewable Purchase Obligation (RPO), with trajectories notified till 2029-30 to encourage renewable energy consumption.[1][3]

Details of the Renewable Consumption Obligation

The RCO requires designated consumers to meet specified targets for renewable energy in their consumption mix. Designated consumers include DISCOMs, captive power plants, and open access users, ensuring broad coverage across major electricity users. This obligation replaces or complements earlier frameworks, focusing on actual consumption rather than just purchase commitments.[1]

Complementing this, the government has promoted energy efficiency through initiatives like Production Linked Incentive schemes. In 2023-24, these efforts resulted in energy savings of 53.60 million tonnes of oil equivalent, alongside substantial economic benefits and CO₂ emission reductions.[5]

The trajectory for RCO, following RPO, extends to 2029-30, providing a clear roadmap for compliance. This structured approach aims to integrate renewables systematically into the national grid.[3]

Implementation Mechanism and Compliance

Implementation involves monitoring and enforcement by relevant authorities under the Ministry of Power. Designated consumers must track their non-fossil fuel consumption against obligated levels, with penalties or incentives likely tied to compliance, though specific details on enforcement are outlined in the notification.[1]

This builds on India's broader capacity expansion plans. Thermal capacity additions include 97,000 MW of coal and lignite-based projects planned by 2034-35, with 16,560 MW already commissioned since April 2023 and 40,345 MW under construction as of November 2025. Renewable capacity under construction totals 156,900 MW, including 69,180 MW solar, 29,650 MW wind, and 57,630 MW hybrid.[3]

• Hydroelectric projects: 13,223.5 MW under construction, 4,274 MW planned by 2031-32.
• Nuclear capacity: 6,600 MW under construction by 2029-30, 7,000 MW in planning.
• Renewable planning: Additional 51,420 MW targeted by 2029-30.

Transmission infrastructure supports this, with 191,474 km of lines and 1,274 GVA transformation capacity planned from 2022-23 to 2031-32.[3]

India's Broader Energy Transition Landscape

The RCO fits into a comprehensive strategy. Flagship programs like PM Surya Ghar have added 7 GW of clean energy, connecting nearly 24 lakh households by December 2025. The UJALA scheme distributed 36.87 crore LED bulbs, saving 47,883 million kWh annually, ₹19,153 crore in costs, and reducing CO₂ by 3.88 million tonnes yearly.[2]

In December 2025, energy-intensive sectors such as aluminium, cement, petrochemicals, refineries, pulp & paper, textiles, and chlor-alkali transitioned from the Perform, Achieve, and Trade (PAT) mechanism to the Carbon Credit Trading Scheme (CCTS), enhancing industrial efficiency.[2]

"Energy conservation is not just an option, but the most crucial need of today. Saving energy doesn't simply mean using less, but rather utilising energy wisely, responsibly, and efficiently."

This statement from the President of India during the National Energy Conservation Awards underscores the national emphasis on efficient resource use.[5]

Alignment with National and International Commitments

India's NDCs target 50% non-fossil capacity by 2030, already met, alongside reducing GDP emissions intensity by 45%, creating a 2.5-3 billion tonne CO₂ sink, and achieving net-zero by 2070. Programs like Pradhan Mantri Surya Ghar Muft Bijli Yojana and National Green Hydrogen Mission reduce fossil fuel dependence.[2][5]

Internationally, Union Minister of State Shri Kirti Vardhan Singh highlighted at UNEA-7 in Nairobi that India reached 50% non-fossil capacity ahead of schedule, with transitions in solar, wind, hydropower, biofuels, green hydrogen, offshore renewables, and storage. Initiatives like PM-KUSUM promote public participation.[4]

India leads global efforts through the Global Biofuels Alliance (GBA), expanded to 25 countries and 12 organizations, and co-founds the International Solar Alliance (ISA) for solar deployment in the Global South. Engagements with CDRI, Mission Innovation, and IRENA further support clean energy.[2]

Administrative Impacts on Designated Consumers

For DISCOMs, captive plants, and open access users, RCO introduces mandatory renewable integration, potentially requiring procurement adjustments, grid upgrades, or renewable certificates. This could streamline compliance through digital tracking but may necessitate investments in metering and reporting systems.

Administrative bodies like the Bureau of Energy Efficiency (BEE) will likely oversee monitoring, integrating RCO with existing frameworks. The shift enhances predictability with trajectories to 2029-30, aiding long-term planning.[3]

Industry sectors, major energy consumers, face direct implications. The recent CCTS transition for energy-intensive industries complements RCO, promoting dual focus on efficiency and renewables.[2]

Public and Economic Implications

Publicly, RCO supports reliable, cleaner power supply, reducing outages as evidenced by near-zero shortages in 2024-25. Households benefit indirectly through stable tariffs and expanded clean energy access via programs like PM Surya Ghar.[2]

Economically, it drives renewable investments, job creation in solar and wind, and cost savings from efficiency. UJALA alone yields ₹19,153 crore annual savings and avoids 9,586 MW peak demand.[2]

Peak demand growth—from 190,198 MW in 2020-21 to 249,856 MW in 2024-25—highlights the need for balanced expansion. RCO ensures renewables contribute proportionally, enhancing system resilience.[3]

Future Outlook and Capacity Roadmap

Looking ahead, RCO supports ambitious targets: 51,420 MW additional renewables by 2029-30, alongside hydro, nuclear, and thermal additions. Transmission expansions will facilitate integration.[3]

National Energy Conservation Day emphasizes collective responsibility. Government, BEE, industry, and citizens must collaborate for an efficiency-driven culture, advancing 2030 commitments and Viksit Bharat vision.[2]

The RCO notification reinforces India's leadership in sustainable energy, ensuring growth aligns with environmental goals.