India’s Renewable Energy Compliance Gap Widens As RPO Shortfall Reaches 7.3%—Discussion Paper

India’s rapid expansion of renewable energy capacity has not translated into consistent compliance with Renewable Purchase Obligation (RPO) targets, according to an analysis by Prayas (Energy Group) titled Fragmented Frameworks and Entangled Enforcement. The report highlights gaps in regulation, enforcement and institutional coordination that continue to affect the implementation of India’s renewable energy obligations.

India is targeting 500 GW of non-fossil electricity capacity by 2030 and Net Zero emissions by 2070. Renewable energy capacity, including captive generation, has expanded significantly, with total installed renewable energy capacity reaching about 275 GW by March 2026. However, renewable generation has remained below the levels required to meet national RPO targets.

According to the analysis, renewable energy accounted for an estimated 25.7% of total energy supplied in FY 2025-26, compared with the national RPO target of 33%. This represents a shortfall of around 7.3 percentage points and an estimated generation gap of 138 Billion Units (BU). The gap has persisted over several years. Renewable energy supply stood at 22.3% against a 24.6% target in FY 2022-23, while the shortfall increased to 6.7 percentage points in FY 2023-24 and 8 percentage points in FY 2024-25.

The report identifies legal uncertainty as one of the major barriers to effective RPO implementation. RPOs were introduced under Section 86(1)(e) of the Electricity Act, 2003, with State Electricity Regulatory Commissions responsible for implementation. However, prolonged litigation over the applicability of RPO requirements, particularly to captive power plants and fossil-fuel-based cogeneration, has resulted in differing interpretations.

The treatment of fossil-fuel cogeneration has been particularly contentious. Earlier Appellate Tribunal for Electricity rulings, including the Century Rayon case, had provided exemptions in certain circumstances. Subsequent Full Bench decisions, including Lloyds Metals and Tata Steel, took a different position. At the same time, state-level judicial decisions have continued to create differences in interpretation, contributing to uncertainty for regulators and obligated entities.

Enforcement is another major concern identified by the analysis. Although Section 142 of the Electricity Act provides powers to impose penalties for non-compliance, the study of 53 SERC orders found several instances where penalties were either nominal or compliance was allowed to be deferred. Some orders imposed fines as low as ₹25,000 or even ₹1. The report also points to cases where RPO-related financial consequences were attempted through tariff proceedings instead of statutory penalty mechanisms.

The introduction of Renewable Consumption Obligations (RCOs) under the Energy Conservation Act, following amendments in 2022, has added another layer to the regulatory structure. RPOs are administered through electricity regulators, while RCOs are monitored under the Energy Conservation framework involving the Bureau of Energy Efficiency. According to the analysis, overlapping jurisdictions have created additional legal and institutional uncertainty.

The report recommends simplifying the framework, strengthening statutory penalty provisions and placing tighter conditions on carry-forward and waiver requests. It also suggests that obligated entities seeking additional time should demonstrate genuine difficulties in procuring renewable energy or Renewable Energy Certificates.

The findings highlight that India’s renewable energy challenge is no longer limited to adding generation capacity. Effective implementation of renewable obligations, consistent legal interpretation and credible enforcement will also be important for converting capacity growth into actual clean-energy consumption.