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					</table>The Bureau of Energy Efficiency (<a href="http://www.beeindia.gov.in/" target="_blank" rel="noopener">BEE</a>) has issued the draft operational procedure for designated consumers to comply with renewable consumption obligations (RCO).
In September 2025, the Ministry of Power <a href="https://www.mercomindia.com/government-issues-rco-compliance-regime-for-designated-consumers">prescribed</a> 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&#8217;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 15th 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:
<ul>
<li>The source-wise energy generation comprising fossil and non-fossil-based, and purchase and sale data</li>
<li>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.</li>
</ul>
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:
<ul>
<li>Copy of the unique registration number given to the obligated designated consumers</li>
<li>M&amp;V Report of the Empaneled AEA agency, along with all supporting documentation</li>
<li>Quarterly compliance reports for all four quarters</li>
<li>Supporting documents to substantiate the fulfilment of RCOs</li>
<li>Certification by the empaneled AEA agency or SLDC</li>
</ul>
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:
<ul>
<li>Buyer code of designated consumers</li>
<li>Number of RECs purchased in the target year</li>
<li>Code/identifier of certificate of purchase for REC purchases</li>
<li>Number of RECs purchased in the assessment year compliance window</li>
<li>Code/identifier of certificate of purchase for REC purchases</li>
<li>Number of RECs redeemed through self-retention in the target year</li>
<li>Number of RECs redeemed through self-retention in the assessment year compliance window</li>
</ul>
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&#8217;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&#8217; 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:
<a href="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/01/rco.jpg"><img loading="lazy" decoding="async" class="aligncenter wp-image-88965 size-full" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/01/rco.jpg" alt="" width="782" height="518" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/01/rco.jpg 782w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/01/rco-300x199.jpg 300w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/01/rco-768x509.jpg 768w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/01/rco-650x431.jpg 650w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/01/rco-624x413.jpg 624w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/01/rco-600x397.jpg 600w" sizes="auto, (max-width: 782px) 100vw, 782px" /></a>
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).
Subscribe to Mercom’s real-time <a href="https://www.mercomindia.com/product/mercoms-renewable-energy-regulatory-updates" target="_blank" rel="noopener">Regulatory Updates</a> to ensure you don’t miss any critical updates from the renewable industry.

BEE Issues Draft Operational Procedure for Renewable Consumption Obligations

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					</table>The Telangana Electricity Regulatory Commission (<a href="https://www.tgerc.telangana.gov.in/" target="_blank" rel="noopener">TGERC</a>) has issued a comprehensive procedure for verifying the status of captive power generating plants (CGPs) and their associated captive users within the state.
The Commission <a href="https://www.mercomindia.com/telangana-issues-power-plant-verification" target="_blank" rel="noopener">issued</a> a detailed draft procedure in September.
Key Objectives and Applicability
The primary objective of this procedure is to verify the status of CGPs and captive users located in Telangana.
This procedure applies to:
<ul>
<li>All power plants and end users seeking verification of their CGP and captive user status.</li>
<li>Distribution licensees submitting consolidated annual reports to the Commission by June 30th each year.</li>
</ul>
The procedure is grounded in several key legal provisions, including:
<ul>
<li>Section 2 of the Electricity Act, 2003, which defines critical terms such as &#8220;captive generating plant,&#8221; &#8220;generating company,&#8221; and &#8220;generating station.&#8221;</li>
<li>Section 9 of the Act, which outlines the rights and regulations governing captive generation.</li>
<li>The Electricity Rules, 2005, which set the criteria for a plant to be recognized as a captive generating plant (CGP).</li>
</ul>
Ownership Criteria
<ul>
<li>For a single captive user: Not less than 26% of the ownership with voting rights must be held by the captive user throughout the year.</li>
<li>For cooperative societies: Members must collectively satisfy not less than 26% ownership throughout the year.</li>
<li>For Association of Persons (AoP): Captive users must hold in aggregate not less than 26% of the ownership or paid-up equity share capital with voting rights throughout the year.</li>
<li>For Special Purpose Vehicles (SPV) or companies: Captive users must hold in aggregate not less than 26% of the proportionate paid-up equity share capital with voting rights of the units identified for captive use.</li>
<li>For a partnership firm, the ownership must represent at least 26% proprietary interest and control over the generating station or power plant. Additionally, the consumption of energy generated must be at least 51% on an annual basis, according to this procedure.</li>
</ul>
Consumption Criteria
<ul>
<li>For single captive users: Consumption should not be less than 51% of the net electricity generated annually.</li>
<li>For cooperative societies: Members must collectively consume not less than 51% of the net electricity generated annually.</li>
<li>For AoPs: Captive users shall consume not less than 51% of the electricity generated, in proportion to their ownership contribution, within a variation not exceeding 10%</li>
<li>For SPVs, captive users must consume at least 51% of net electricity generated annually, in proportion to their shares in identified captive units, within a 10% variation. For LLP/partnership firms, captive users must consume at least 51% of net electricity generated annually.</li>
</ul>
Verification Process
<ul>
<li>CGPs must submit an application with requisite documents to the distribution licensee in their area by May 31st each year.</li>
<li>The distribution licensee may seek clarifications from the CGP or captive user regarding the submitted information.</li>
<li>A consolidated report is to be submitted by the distribution licensee to the Commission by June 30th.</li>
<li>TGERC may seek additional clarifications if needed.</li>
<li>The verification process should be completed within two months of receiving the consolidated report</li>
</ul>
Metering and Technical Considerations
<ul>
<li>Each CGP unit must have a separate interface meter with real-time communication capabilities.</li>
<li>Technical losses in the electrical network and energy storage systems are to be included in the energy consumption calculations of captive users.</li>
<li>The aggregate energy generated from a CGP unit is calculated as gross energy generated minus auxiliary consumption</li>
</ul>
If a CGP fails to meet the required conditions in a given financial year, the generating plant will no longer qualify as a CGP, and the captive user will lose its status as a captive user.
However, this cessation is applicable only to the specific financial year in question.
Mercom earlier <a href="https://www.mercomindia.com/regulations-delays-telangana-open-access-solar" target="_blank" rel="noopener">reported</a> that at a time when solar open-access installations are gaining traction across the country, developers with small-capacity projects in Telangana say the inordinate delay in adhering to regulatory frameworks by distribution companies is creating bottlenecks.
Subscribe to Mercom’s real-time <a href="https://mercomindia.com/product/mercoms-renewable-energy-regulatory-updates/" target="_blank" rel="noopener">Regulatory Updates </a>to ensure you don’t miss any critical updates from the renewable industry.

Telangana Unveils New Procedure for Verifying Captive Generating Plants

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					</table>The Madhya Pradesh Electricity Regulatory Commission (<a href="https://mperc.in/index.htm" target="_blank" rel="noopener">MPERC</a>) has issued a detailed procedure to verify captive generating projects and user compliance per the Electricity Rules, 2005 provisions.
The procedure will be applicable for the financial year (FY) 2023-24.
The Madhya Pradesh Power Transmission Company (<a href="https://www.mptransco.in/" target="_blank" rel="noopener">MPPTCL</a>) will be the designated authority to determine the captive status of the captive generating projects and captive users.
The general provisions for verifying the compliance of captive generating projects with the regulations of the Electricity Rules, 2005, are mentioned below:
Throughout the year, the captive user must maintain ownership of the generating project or unit designated for captive use at a minimum of 26% with voting rights. Additionally, they must consume no less than 51% of the electricity generated annually.
If there are multiple captive users, they must collectively hold a minimum of 26% of the paid-up equity share capital with voting rights for the entire year. They must consume electricity generated by the captive project in proportion to their respective shares, ensuring that their consumption remains at least 51% of the total electricity generated, with a permissible variation of not more than 10%. The proportionality test will be applied to the net 51% of aggregate generation and not to any consumption exceeding this amount by a captive user.
In the scenario where the generating project is owned by a special purpose vehicle (SPV) company and consists of multiple generating units, the captive users must collectively hold a minimum of 26% of the proportionate paid-up equity share capital with voting rights. They must consume at least 51% of the electricity generated annually for their captive use throughout the year. The user is required to annually consume a minimum of a net 51% of the energy generated specifically by the identified generating unit for captive use, not considering the entire generating project&#8217;s output.
The same holds true if the generating project is owned by a company that is not an SPV.
In the case of a cooperative society, the members should collectively satisfy at least 26% of the ownership throughout the year and collectively consume not less than 51% of the energy generated on an annual basis.
If there is a change in ownership structure, the adjustment in shareholding to maintain a minimum ownership of 26% throughout the year should be carried out. However, such changes in shareholding must be communicated to both the distribution company (DISCOM) and the designated authority within 15 days of the occurrence. If the change is not communicated within the specified period, The designated authority may conduct verifications in case of failure to do so.
The guidelines for verifying captive power projects in Madhya Pradesh are in sharp contrast to the notification <a href="https://www.mercomindia.com/user-mandated-26-shareholding-group-captive-project">issued</a> by the Ministry of Power, which clarified that each captive power user, even in a group captive structure of open access, must now hold a minimum ownership of 26%.
Determination of gross net generation 
The net energy generated from the unit identified for captive use should be the gross energy generated from the unit minus the aggregate auxiliary consumption during the 15-minute time block. The net energy generation in all the time blocks of the year should be grossed up to determine the gross net generation of the captive unit.
When it comes to open access, the energy consumption by the captive user should be determined based on the lower value between two options: the net energy generated by the captive generating project or the actual or scheduled energy drawn through open access in 15-minute time blocks.
The applicant should submit the details of actual generation from the power project, auxiliary consumption, and the actual consumption made by the captive user annually.
Also, the period of year should be as defined in the MPERC (Verification of Captive Generating Projects and Captive Users) Regulations, 2023, for determining the captive status of the captive users.
However, in the first year of declaring the project under captive status, the start date for determining the project&#8217;s generation under captive status should be considered as the commencement date of open access. The period of the year should be calculated on a pro-rata basis.
If the shareholding pattern remains unchanged throughout the year, the verification of the consumption criteria, which includes consuming not less than 51% of the aggregate electricity generated and the test of proportionate consumption, should be conducted for the entire year. It is important to note that if the shareholding pattern changes during the year, the verification of the consumption criteria should be based on the energy generated and consumed during the corresponding period, taking into account the revised shareholding pattern.
Metering
Each captive generating project must install a dedicated special energy meter to accurately record the gross generation and auxiliary consumption. They must also have an automatic meter reading facility to transmit ABT meter data separately to the state load dispatch center (SLDC) and the DISCOM as per the specifications mentioned in the Madhya Pradesh Electricity Grid Code (Revision-II) 2019 and the Central Electricity Authority (CEA) (Installation and Operation of Meters) Regulations, 2006.
Each captive generating project should also establish a real-time data communication system to telemeter power system parameters such as flow, voltages, and switch statuses per the guidelines provided by the SLDC.
In the case of a co-located captive generating project that sells power through bilateral transactions to third-party consumers, it is necessary to arrange separate metering systems for both generation and self-consumption within the same premises.
Revocation of captive status
If the captive generating project or the captive user fails to meet the ownership and consumption criteria by the end of the year, as mentioned in Rule 3 of Electricity Rule 2005, their captive status for that specific year will be revoked. Consequently, they will be subject to the imposition of a cross-subsidy surcharge, additional surcharge, and any other relevant charges applicable to open access consumers and non-captive generating projects during that year.
In the event of failure to maintain captive status, the DISCOM has the authority to issue a demand for the applicable cross-subsidy surcharge, additional surcharge, and all other relevant charges for each month. Additionally, a delayed payment surcharge at a rate of 1.25% per month will be added from the due date of the demand.
If the DISCOM does not receive payment, they may discontinue open access under captive use after giving the consumer a 15-day advance notice. This action does not affect the DISCOM&#8217;s right to recover the outstanding charges in accordance with applicable laws.
Subscribe to Mercom&#8217;s real-time <a href="https://mercomindia.com/product/mercoms-renewable-energy-regulatory-updates/" target="_blank" rel="noopener">Regulatory Updates</a> to ensure you don&#8217;t miss any critical updates from the renewable industry.

Madhya Pradesh Outlines Procedure to Verify Captive Power Project Compliance

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					</table>Solar installations in the U.S. dropped 17% year-over-year (YoY) in the third quarter (Q3) of 2022, with 4.6 GW of cumulative capacity installed during the period, said a report released by <a href="https://www.woodmac.com/" target="_blank" rel="noopener">Wood Mackenzie</a> and Solar Energy Industries Association (<a href="https://www.seia.org/" target="_blank" rel="noopener">SEIA</a>).
The report attributes the dip in installations to delays in approvals for hundreds of stranded solar equipment shipments that are subject to inspection under U.S. Customs and Border Protection (CBP).
Several projects await execution and construction, while many imported solar modules and cells await compliance clearance under the Uyghur Forced Labor Protection Act (UFLPA).
While commercial solar installations in Q3 totaled 340 MW, community and utility-scale solar installations stood at 212 MW and 2.5 GW, respectively,
The U.S. Solar Market Insight Report 2022 Q4 said that trade barriers and ongoing supply chain constraints would cause a 23% decline in solar installations this year compared to 2021.
Further, the report forecasted that the utility-scale solar market would add 10.3 GW of new capacity in 2022, representing a 40% drop from 2021 volumes.
The U.S. Department of Commerce’s recent <a href="https://mercomindia.com/us-finds-chinese-module-manufacturers-evading-tariffs/" target="_blank" rel="noopener">decision</a> to apply anti-circumvention tariffs on solar products from Southeast Asia presents a downside risk to future solar deployment, the report said.
It added that the industry will remain supply-constrained through at least the second half of 2023. “Equipment importers are still contending with detainments as they seek to provide the documentation needed for compliance,” it said.
By 2024, <a href="https://mercomindia.com/ira-help-us-solar-installations-to-triple-by-2027/" target="_blank" rel="noopener">Inflation Reduction Act</a>-fueled growth will begin in earnest, with annual solar growth averaging 21% between 2023 and 2027.
“Once supply chain relief arrives, the true impacts of the Inflation Reduction Act will manifest in our outlooks. Beginning in 2024, annual installations of solar will consistently reach 30-40 GWdc,” the report said.
SEIA President and CEO Abigail Ross Hopper said, “America’s clean energy economy is being hindered by its own trade actions. The solar and storage industry is acting decisively to build an ethical supply chain, but unnecessary supply bottlenecks and trade restrictions are preventing manufacturers from getting the equipment they need to invest in U.S. facilities. In the aftermath of the Inflation Reduction Act (IRA), we cannot afford to waste time tinkering with trade laws as the climate threat looms.”
As a result of supply constraints, the utility-scale, commercial, and community solar markets all experienced quarter-over-quarter declines in Q3. The residential solar segment was less directly impacted by existing trade issues and saw 1.57 GW of new installations, marking a 43% increase over Q3 2021.
“Installations this year were significantly depressed due to supply chain constraints,” said Michelle Davis, principal analyst and lead author of the report. “It has proven more difficult and time-consuming to provide the proper evidence to comply with the UFLPA, further delaying equipment delivery to the U.S.”
The total installed capacity of solar in the U.S. stood at 135.7 GW, sufficient to power around 24 million American homes by the end of Q3.

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