Introducing Renewable Consumption Obligation (RCO) under the Energy Conservation Act, as amended by the Energy Conservation (Amendment) Act, 2022. India has strengthened its clean energy transition by making RCO mandatory.
The amendment empowers the Central Government to mandate a minimum share of energy consumption from non-fossil sources for Designated Consumers.
In pursuance of this provision, the Ministry of Power, through its Gazette Notification dated 20 October 2023, S.O. 4617(E) operationalized Renewable Consumption Obligations effective 1 April 2024.
The framework, implemented by the Bureau of Energy Efficiency, applies to DISCOMs and Designated Consumers, including those operating captive power plants and procuring electricity through open access. Defined renewable sub-targets for wind, hydro, and distributed renewable energy are applicable to DISCOMs, while Designated Consumers are required to meet the overall renewable consumption targets.
RCO marks a decisive regulatory shift — embedding renewable energy consumption directly into India’s statutory compliance architecture.
What is Renewable Consumption Obligation (RCO)?
Renewable Consumption Obligation (RCO) is a mandatory requirement for obligated entities to consume a specified percentage of their total annual electricity consumption from renewable energy sources.
The legal foundation of RCO is derived from the Energy Conservation Act as amended by the Energy Conservation (Amendment) Act, 2022, which empowers the Central Government to mandate minimum consumption of energy from non-fossil sources by Designated Consumers (DCs).
Obligated Entities Under the RCO Framework
A) Designated Consumers (DCs)
The following entities must comply:
- Energy-intensive industries notified under the EC Act
- DCs operating Captive Power Plants (CPPs)
- DCs procuring electricity through Open Access (OA)
Notified Sectors & Threshold Energy Consumption (Mtoe/year)
| Serial No. | Notified Sector | Threshold Energy Consumption (mtoe/year and above) |
| 1 | Aluminum | 7,500 |
| 2(a) | Cement – Integrated Cement Unit | 30,000 |
| 2(b) | Cement – Grinding Unit | 10,000 |
| 3(a) | Commercial Buildings – Hotels | 500 |
| 3(b) | Commercial Buildings – Airports | 500 |
| 4 | Chlor-Alkali | 12,000 |
| 5 | Electricity Distribution Companies (DISCOMs) | All licensed distribution companies by SERC/JERC |
| 6 | Fertilizer | 30,000 |
| 7 | Iron and Steel | 20,000 |
| 8 | Pulp and Paper | 7,500 |
| 9 | Petroleum Refinery | 90,000 |
| 10 | Petrochemical Units (Gas crackers / Naphtha crackers / both) | 1,00,000 |
| 11(i) | Railway – All Zonal Railways (Traction) | 70,000 |
| 11(ii) | Railway – Workshops | 750 |
| 11(iii) | Railway Production Units (ICF, RCF, CLW, BLW, PLW, RWF, MCF, RWP) | By name |
| 12 | Textiles | 3,000 |
| 13(i) | Petrochemical Manufacturing – Fiber Intermediates | 50,000 |
| 13(ii) | Petrochemical Manufacturing – Polymers | 10,000 |
| 13(iii) | Petrochemical Manufacturing – Detergent Intermediates | 9,000 |
| 13(iv) | Petrochemical Manufacturing – Performance Plastics | 3,000 |
| 13(v) | Petrochemical Manufacturing – Other Petrochemical Products | 6,000 |
| 13(vi) | Petrochemical Manufacturing – Synthetic Rubbers | 15,000 |
| 13(vii) | Petrochemical Manufacturing – Aromatics | 20,000 |
| 14 | Sugar | 10,000 |
| 15(i) | Chemical – Alkali Chemicals (Soda Ash, Potassium Hydroxide) | 3,000 |
| 15(ii) | Chemical – Inorganic Chemicals | 3,000 |
| 15(iii) | Chemical – Organic Chemicals | 3,000 |
| 15(iv) | Chemical – Pesticides (Technical) | 3,000 |
| 15(v) | Chemical – Dyes and Pigments | 3,000 |
| 15(vi) | Chemical – Pharmaceuticals (Active Pharmaceutical Ingredient) | 3000 |
| 16 | Ceramic | 5,000 |
| 17 | Glass | 10,000 |
| 18 | Zinc | 20,000 |
| 19 | Copper | 10,000 |
| 20 | Port Trust | 500 |
| 21 | Dairy | 2,500 |
| 22 | Automobile Assembly Unit | 3,000 |
| 23 | Tyre Manufacturer | 7,000 |
| 24 | Forging | 1,500 |
| 25 | Foundry | 5,000 |
| 26 | Refractories | 3,000 |
B) DISCOMs
- All State and Private Electricity Distribution Licensees
- Entities supplying electricity to end consumers
RCO Targets – Designated Consumers (DCs)
| 2024–25 | 2025–26 | 2026–27 | 2027–28 | 2028–29 | 2029–30 |
| 29.91% | 33.01% | 35.95% | 38.81% | 41.36% | 43.33% |
RCO Targets – DISCOMs
DISCOMs – Year-wise RCO Target (Category-wise)
| Financial Year | Wind | Hydro | Distributed RE | Other RE | Total Renewable |
| 2024–25 | 0.67% | 0.38% | 1.50% | 27.35% | 29.91% |
| 2025–26 | 1.45% | 1.22% | 2.10% | 28.24% | 33.01% |
| 2026–27 | 1.97% | 1.34% | 2.70% | 29.94% | 35.95% |
| 2027–28 | 2.45% | 1.42% | 3.30% | 31.64% | 38.81% |
| 2028–29 | 2.95% | 1.42% | 3.90% | 33.10% | 41.36% |
| 2029–30 | 3.48% | 1.33% | 4.50% | 34.02% | 43.33% |
Annual Compliance Requirement
All DCs and DISCOMs must submit RCO compliance reports annually before 31st July every year.
Renewable Consumption Obligation (RCO) compliance shall be duly authenticated and verified by the Energy Manager / Chief Executive Officer and subsequently audited by a BEE-empaneled Accredited Energy Auditor (AEA) firm.
Penalty for Non-Compliance
Failure to meet the prescribed RCO targets shall attract penalty under Section 26(3) of the Energy Conservation Act.
Illustration of penalty for not achieving the specified renewable energy consumption norms specified under EC Act, 2001 notified by Ministry of Power on 20th October, 2023: The maximum penalty amount for shortfall in the RE consumption norms is twice the price of every metric ton of oil equivalent (MTOE) of the shortfall.
- MTOE = 11,630 kWh
- Price of one MTOE = INR 21,650.00 (As per MoP Gazette Notification dated 26.12.2023 for the year 2019-20 and it may be 20-30% higher for 2024-25)
- Penalty on each unit of shortfall in meeting RE consumption norms = (2 x 21,650)/11,630 = INR 3.72 per kWh