The Bureau of Energy Efficiency (BEE) has issued the draft operational procedure for designated consumers to comply with renewable consumption obligations (RCO).

In September 2025, the Ministry of Power prescribed an RCO for designated consumers to achieve a 43.33% target by the financial year 2030.

Compliance Modes

Designated consumers can meet the RCO targets through their own generation under captive mode, requisition from the distribution company, and consumption of power from a green hydrogen or green ammonia project.

They can also meet RCO targets by sourcing renewable energy through open access and using renewable energy stored in any energy storage system, including battery energy storage systems and pumped storage projects.

The ESS must be under net metering, and only energy consumed after deducting ESS losses will be counted toward meeting the RCO goals.

Consumers can also meet their renewable energy certificates (RECs) requirements through power exchanges or electricity traders, or by retaining previously issued RECs.

They can also meet REC compliance by entering into virtual power purchase agreements and through the RCO buyout mechanism.

RCO Mechanism for Corporations

Corporates/cooperative societies can meet RCO targets through a corporate-level compliance method.

Under the corporate-level compliance method, corporations/cooperative societies with multiple obligated designated consumers will consider RCO compliance at the holding company level.

RCO compliance will be considered in aggregate across the multiple obligated designated consumers under the holding company’s common control.

The shortfall or surplus in one of the obligated designated consumer entities can be offset against the corresponding surplus or shortfall in another obligated designated consumer entity under the holding company.

The multiple designated consumers may either be co-located or located in different geographies in India and may belong to any of the energy-intensive sectors.

Non-designated consumer entities under a holding company cannot be considered for meeting RCO compliance.

The licensed entity procuring bulk power on behalf of the distribution companies (DISCOM) can also be treated as the holding company and can meet RCO targets under the corporate compliance model.

The licensed entity procuring bulk power on behalf of the DISCOM must issue a monthly category-wise statement of power allocation to the respective DISCOM by the 15^th of the next month.

The category-wise allocation will include conventional (brown) power, nuclear power, and renewable power. The allocation of power may be based on actual consumption for the preceding month or on a directive from the respective state commission.  It will also facilitate the quarterly and annual submission of the RCO compliance reports by the respective DISCOMs.

Compliance Modes for DISCOMs

DISCOMs can meet their RCO targets by sourcing green energy from renewable energy projects and by consuming power through captive generation from eligible non-fossil sources.

They can also meet their RCO targets from a grid-connected non-fossil fuel project under captive mode by the consumers of a distribution licensee, other than obligated designated consumers, within the ‘area of supply’ of the distribution licensee.

They can also meet the RCO by purchasing power from an obligated designated consumer who is generating power from grid-connected distributed renewable energy sources under captive mode.

DISCOMs can also meet their RCO targets from off-grid renewable energy/distributed renewable energy sources owned by DISCOMs.

They can also meet the RCO targets from a DISCOM consumer that is not obligated under RCO and has a distributed renewable energy project.

DISCOMs can also meet the RCO targets from energy generated and sold to DISCOM from a designated DISCOM consumer that is also a designated consumer obligated under the RCO mechanism.

In gross metering and net metering configurations, the entire energy generated and exported to the grid will be deemed sold to the DISCOM and counted towards fulfillment of RCO compliance.

Declaration of RCO Compliance

Each quarter, the obligated designated consumers must provide the state-designated authority with information on RCO compliance, with a copy to the BEE.

The obligated designated consumers must provide the information related to RCO compliance  verified and certified by their own energy manager or plant head, in the following way:

• The source-wise energy generation comprising fossil and non-fossil-based, and purchase and sale data
• Consumption of green hydrogen or green ammonia as energy, and the renewable energy accounted towards the fulfillment of RCO, will be computed based on the quantum of green hydrogen or green ammonia consumed and on the energy equivalent of producing one metric ton of green hydrogen or green ammonia.

Green ammonia produced using the quantity of green hydrogen already reported, and green ammonia procured from a designated consumer, cannot be accounted for RCO compliance.

The difference of energy stored in any ESS and the portion of stored energy drawable from the ESS represents the sum of losses or charges and needs to be deducted from the energy consumed.

Total energy consumption and total non-fossil energy consumption will be determined using formulae.

An entity that becomes an obligated designated consumer in the current quarter must provide information on its RCO compliance starting in the next quarter.

Quarterly compliance processes will not be required to be verified by accredited energy agencies (AEAs)/state load dispatch centers (SLDCs).

The designated consumers must submit the supporting documents to the AEA, state-designated agency, and BEE for the above submissions.

Open Access/ Captive Consumers

All designated consumers, whether captive or open access, must obtain an independent annual verification of RCO compliance from a BEE-empaneled AEA firm.

All distribution licensees must obtain an annual verification of RCO compliance from the respective SLDC.

The obligated designated consumers, in consultation with an employed AEA firm/agency, need to put in place a transparent mechanism for verifying the compliance data.

The empaneled AEA firm or SLDC must submit a report to the designated consumers elaborating on the verification activities conducted to arrive at the conclusions recorded, the calculations performed, the supporting documents verified, any physical verification of metering arrangements, and behind-the-meter installations.

Every designated consumer must submit to the state-designated agency, with a copy to the BEE, the annual compliance assessment form with compliance information for the complete target year, duly certified and signed by the AEA agency or respective SLDC

They must submit the following documents:

• Copy of the unique registration number given to the obligated designated consumers
• M&V Report of the Empaneled AEA agency, along with all supporting documentation
• Quarterly compliance reports for all four quarters
• Supporting documents to substantiate the fulfilment of RCOs
• Certification by the empaneled AEA agency or SLDC

RCO compliance also applies to captive projects based on 100% waste-heat recovery or 100% waste-energy recovery

Submissions by the REC Registry

For each state/union territory, the REC registry needs to provide designated consumer-wise information on RECs to the SDA, with a copy to the BEE.

The REC Registry must submit the following details:

• Buyer code of designated consumers
• Number of RECs purchased in the target year
• Code/identifier of certificate of purchase for REC purchases
• Number of RECs purchased in the assessment year compliance window
• Code/identifier of certificate of purchase for REC purchases
• Number of RECs redeemed through self-retention in the target year
• Number of RECs redeemed through self-retention in the assessment year compliance window

The REC registry must provide the above information to the state-designated agency and BEE within 135 days of the target year or within 285 days of the target year’s conclusion.

The state-designated agencies will conduct the verification annually by cross-verifying the compliance information provided by the obligated designated consumers. The verification needs to be completed within 20 days of receipt of data from the obligated designated consumer to state state-designated agency, or within five months of completion of the target year.

The state-designated agency will finalize the obligated designated consumer-wise RCO compliance report based on the verification results, and a consolidated RCO compliance report for the state will be generated.

SDA will submit the consolidated RCO compliance report and all designated consumers’ RCO compliance reports to BEE within seven months of the completion of the target year.

RCO Shortfalls

The designated consumers can make up for any shortfall in compliance within a period of nine months of the conclusion of the target year.

The designated consumers must submit details on meeting RCO targets, including RECs or the buyout price, to the state-designated agency and BEE.

Submissions by Holding Companies

The holding company must submit the locations of the designated consumers to the BEE, with a copy to all state-designated agencies. They must also submit the compliance assessment form along with the compliance information for the complete target year, duly certified and signed by the respective empaneled AEA or SLDC.

The submissions must be made within 135 days of the end of the target year, or within 285 days of that date.

In the event of RCO compliance shortfalls at the corporate level, any subsidiary can meet them by purchasing or retaining RECs and/or paying the buyout price.

The holding company can also purchase RECs, in which case such RECs can be redeemed or self-retained against any of the subsidiary designated consumers.

The shortfalls in RCO compliance can also be addressed by redeeming or self-retaining the RECs generated by any of its non-designated consumer subsidiary entities against any designated consumer of the subsidiary.

The holding company may, by mandate, identify and assign, from among the sub-specified designated consumers, those responsible for final settlement.

In case of shortfall after the compliance window, the same will be allocated to the designated consumer responsible for final settlement.

The BEE will conduct the final round of verification based on the RCO compliance report submitted by the individual state-designated agencies.

BEE will issue a digitally signed certificate for each obligated designated consumer, indicating the compliance/shortfall for the target year, within 30 days of receipt of all reports.

It will also communicate the status of designated consumer-wise RCO compliance based on the certification to the respective state electricity regulatory commissions and the state-designated agency within ten days of certification.

Compliance Timelines

The timeline for RCO compliance will be as follows:

Penalties

Designated consumers failing to meet RCO targets will be liable for penalties under the Energy Conservation (Compliance Enforcement) Rules, 2025.

In case of non-submission of data, RCO compliance will be treated as 0%.

The BEE may also initiate action for independent review of RCO compliance reports.

Fees

Each designated consumer must pay a non-refundable one-time registration fee of ₹10,000 (~$110.8) to support compliance monitoring of RCO targets. They must also pay a yearly compliance monitoring fee of ₹5,000 (~$55).

Each empaneled AEA firm must pay a non-refundable annual empanelment fee of ₹20,000 (~$221.6).

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