Ministry Of Power Seeks Comments On Renewable Consumption Obligation Amendment

The Ministry of Power has announced a draft amendment to the Gazette Notification on Renewable Consumption Obligation (RCO), initially notified on October 20, 2023, and has opened the floor for comments and suggestions from a wide array of stakeholders.  This move signals the government’s intent to refine and possibly enhance the existing framework governing the consumption of renewable energy in the country. The notification impacts various players in the power sector, from electricity distribution licensees to large consumers of electricity.   

The draft amendment introduces several modifications to the existing RCO framework.  One key change involves the definition and scope of the minimum share of electrical energy consumption from non-fossil sources for various categories of consumers, including electricity distribution licensees, open-access consumers, and captive users.  The amendment clarifies that for open-access consumers and captive users, the RCO applies to electricity consumption from sources other than Distribution Licensees.   

The draft also includes provisions for offsetting shortfalls in renewable energy consumption.  For instance, shortfalls in wind energy consumption in a given year may be offset by surplus consumption from hydro energy, and vice-versa.  Similarly, shortfalls in wind or hydro energy consumption can be offset by surplus consumption from other renewable energy sources.  Surplus from distributed renewable energy components can also be used to meet wind, hydro, or other renewable energy consumption obligations.   

The amendment further specifies that open-access consumers and captive users notified as designated consumers must meet the total renewable energy consumption obligation from any renewable energy source.  For captive users, electricity consumption obligations include self-consumption, excluding auxiliary consumption and electricity generated and self-consumed from waste heat recovery processes using fossil-based sources, with a specific exception for electricity generated from a Waste Heat Recovery Steam Generator (WHRSG) in a captive Combined Cycle Gas-Based Generating Station.   

The draft amendment outlines several methods for fulfilling the specified renewable energy consumption obligations.  These include the consumption of non-fossil-based electricity, either directly or through an energy storage system, the purchase of Renewable Energy Certificates (RECs) issued by the CERC, and the payment of a buyout price specified by the CERC.  The sums received through the buyout mechanism will be credited to the Central Energy Conservation Fund and utilized to support the development of non-fossil fuel capacities.  The Central Government will specify the mechanism for utilizing these sums.   

The draft amendment also addresses the consequences of non-compliance with the RCO.  Any shortfall in meeting the renewable energy consumption obligation will be treated as non-compliance, and penalties may be imposed.  In cases of non-compliance, the Bureau of Energy Efficiency, the State Designated Agency, or any other person designated by the State Government may file an application before the Adjudicating Officer for imposing penalties.  The amendment also includes a provision for considering compliance for multiple designated consumers under common control on an aggregate basis at the Holding Company level.   

The Bureau of Energy Efficiency will monitor compliance with the notification and submit periodic reports to the Central Government.  For compliance monitoring, designated consumers, designated agencies, and other persons are required to furnish the necessary information as specified by the Bureau.  The Bureau will also issue detailed guidelines for the implementation of the notification.   

The Ministry of Power has invited stakeholders to submit their comments on the draft amendment within three weeks from the date of issuance of the letter, with a deadline of April 18, 2025.

 This amendment reflects the ongoing efforts to promote the use of renewable energy and ensure compliance with renewable energy consumption obligations across the country.