India Tightens Renewable Consumption Obligations: A Game-Changer for 2030 and Beyond

The Ministry of Power has issued a landmark notification revising the Renewable Consumption Obligation (RCO) framework, replacing and subsuming the earlier Renewable Purchase Obligation (RPO) regime. The notification, effective from FY 2024–25, sets out progressively rising renewable energy consumption mandates for distribution licensees, open access consumers, and captive users, marking a decisive shift in India’s clean energy trajectory.

What Has Changed Compared to the Old RPO Framework

Aspect	Old RPO (till 2023)	Revised RCO (2025 Notification)	Impact
Scope	Applied mainly to DISCOMs; state-level targets varied	Applies uniformly to DISCOMs, open access, and captive users	Expands compliance base, ensuring industry accountability
Targets	~29% by 2024–25 (varied by state)	29.91% in 2024–25, rising to 43.33% by 2029–30	Clear, escalating national trajectory
Components	Solar, non-solar split	Disaggregated into Wind, Hydro, Distributed RE, Other RE	Encourages technology diversity
Distributed RE	Limited recognition	Explicit 1.5–4.5% mandate; 75% higher for urban DISCOMs	Boosts rooftop solar, behind-the-meter, and small-scale RE
Hydro	Large hydro partly included	Hydro obligation only from projects commissioned after 31 March 2024; free power counts	Incentivises new hydro capacity
Compliance Options	RECs, direct procurement	Direct RE, storage-backed RE, RECs (including VPPA), or buyout price	More flexible, market-driven
Exemptions	State-specific carve-outs	Excludes nuclear, waste heat recovery, 50% of fossil co-gen, 50% of aluminium smelter load	Rationalises baseline consumption
Integration	State RPOs separate	State RPOs subsumed under national RCO	Harmonisation, reducing regulatory fragmentation

Trajectory of Obligations (as % of consumption)

The revised RCO notification lays out a clear, escalating pathway for renewable integration, disaggregated by source and year, ensuring both diversity and predictability. In FY 2024–25, the overall RCO begins at 29.91%, with wind at 0.81%, hydro at 0.66%, distributed RE at 1.5%, and the balance from solar and other renewables. By 2025–26, the obligation rises to 33.01%, with wind doubling to 1.6% and distributed RE climbing to 2%, signalling a strong push for rooftop and behind-the-meter systems. In 2026–27, the mandate reaches 35.95%, with hydro obligations crossing 1.5% and distributed RE at 2.5%, reflecting policy emphasis on both large hydro commissioning and decentralised generation. By 2027–28, the RCO climbs to 38.81%, with wind at 3.2% and distributed RE at 3%, creating demand certainty for hybrid and storage-backed projects. In 2028–29, the obligation touches 41.36%, with distributed RE at 4% and hydro at 2.5%, aligning with India’s push for pumped storage and flexible hydro. Finally, by 2029–30, the RCO peaks at 43.33%, with wind at 4.8%, hydro at 3%, and distributed RE at 4.5%, ensuring a diversified renewable mix. This source-wise escalation not only guarantees market depth across solar, wind, hydro, and distributed RE but also creates predictable demand signals for investors, manufacturers, and DISCOMs. Crucially, the year-wise design ensures that India’s 2030 target of 50% non-fossil electricity is within reach, while laying the institutional scaffolding for 2047 energy independence and 2070 net-zero alignment.

2024–25: 29.91% ; 2025–26: 33.01%; 2026–27: 35.95%; 2027–28: 38.81%; 2028–29: 41.36%; 2029–30: 43.33%

This represents a ~13 percentage point increase in just five years, with distributed renewables alone growing from 1.5% to 4.5%.

Alignment with National Targets

• 2030 (500 GW non-fossil, 50% electricity from non-fossil):   The RCO ensures demand-side pull for renewables, compelling industries and DISCOMs to contract green power. By mandating 43% RE share by 2029–30, it directly supports the 50% non-fossil electricity target.

• 2047 (Viksit Bharat @100):   By embedding distributed RE and storage-backed compliance, the framework builds resilience, decentralisation, and consumer participation — critical for a developed, energy-secure India.

• 2070 (Net Zero):   The RCO lays the foundation for carbon markets, green hydrogen integration, and sectoral decarbonisation. By subsuming state RPOs, it creates a uniform national compliance architecture, essential for long-term net-zero alignment.

Industry-Wise Implications

• DISCOMs:   Must scale up procurement of green power, especially rooftop and distributed RE in urban areas. Green tariff products will gain traction.

• Captive & Open Access Consumers:   Heavy industries (steel, cement, aluminium, data centres) now face binding obligations. This will accelerate corporate PPAs, green hydrogen adoption, and REC trading.

• Renewable Developers:   Clear demand visibility till 2030 boosts investor confidence. Wind and hydro carve-outs ensure diversified growth beyond solar.

• Storage & Flexibility Providers:   Recognition of storage-backed RE for compliance creates a new revenue stream for battery and pumped hydro projects.

• Hydro & Cross-Border Projects:   Inclusion of post-2024 hydro and even foreign hydro projects (with approval) opens new avenues for regional energy cooperation.

• Carbon & REC Markets:   Expanded REC eligibility (including VPPA-linked RECs) and buyout price mechanism will deepen India’s green certificate market.

Analysis

• Strengths:

  • Uniform national framework, reducing state-level inconsistencies

  • Strong push for distributed RE and consumer participation

  • Flexibility via RECs, storage, and buyouts

  • Integration with carbon markets and green hydrogen pathways

• Challenges:

  • Enforcement on captive and open access users may face resistance

  • DISCOM financial health remains a bottleneck

  • Need for robust MRV (Monitoring, Reporting, Verification) to avoid greenwashing

  • Storage costs and REC liquidity must improve for smooth compliance

Conclusion

The Revised RCO Notification of 2025 is more than a regulatory tweak — it is a structural reform that expands responsibility from utilities to industries and consumers, diversifies renewable technologies, and harmonises India’s clean energy obligations. If implemented effectively, it could be the single most important demand-pull instrument to ensure India meets its 2030 renewable targets, stays on course for 2047 energy independence, and builds the institutional scaffolding for 2070 net-zero.