Proposed Changes to Renewable Consumption Obligation Regulations

The Draft Renewable Consumption Obligation Regulations (Draft RCO Regulations) have been issued in supersession of notification S.O. 4617(E) dated October 20, 2023 (Existing RCO Regulations).

1. Compliance Mechanism

Draft RCO Regulations seek to establish three recognised compliance mechanisms:

• • • Consumption of renewable energy directly or through energy storage systems;

• • • Purchase of Renewable Energy Certificates (RECs) including those under Virtual Power Purchase Agreement; and

• • • Payment of the buyout price specified by the Central Electricity Regulatory Commission (CERC).

The compliance mechanism under the Existing RCO Regulations only provides for direct consumption & purchase of RECs. Under the Draft RCO Regulations, the sums received through the buyout price mechanism shall be credited to the Central Energy Conservation Fund separately, from which fifty percent of such amount shall be then transferred to the respective State Energy Conservation Fund and be utilized for supporting the development of specified renewable energy sources and storage capacities.

2. Reporting and Monitoring

The Draft RCO Regulations also seek to introduce a new provision to allow Renewable Consumption Obligation compliance for multiple designated consumers under common control (as defined under Companies Act, 2013), to be considered on an aggregate basis at the holding company level.

The Existing RCO Obligations only provide for the Bureau of Energy Efficiency (BEE) maintaining data in respect of compliance and submission of reports to the Central Government. The Draft RCO Regulations mandate that designated consumers furnish the required information to the BEE in a specific format (annexed to the Draft RCO Regulations) and duly certified by the Energy Auditor (under the Energy Conservation Act, 2001) or the State Load Dispatch Centre. Designated consumers must submit energy accounts by September 30, 2025 (for 2024-25) and by July 31 thereafter, with compliance reports due by March 31, 2026 (for 2024-25) and October 31 thereafter. The BEE shall also monitor compliance with the same and submit periodic reports to the Central Government and is also authorized to issue guidelines as required for such implementation.

The Draft RCO Regulations will be deemed to have come into force on April 1, 2024 in supersession of the Existing RCO Regulations except with respect to things done or omitted to be done before such supersession. The proposed changes provide for the strengthening of the legal framework surrounding Renewable Consumption Obligation with expanded mechanisms for compliance, mandatory reporting obligations within specific timelines and delegated authority to the BEE for enforcing compliance.