This article forms Part 2 of a three-part series on renewable energy in India and focuses on the regulatory framework governing renewable energy generation, transmission, consumption and promotion in the country.
The discussion covers key legislation, regulations, government initiatives and policy measures that support India’s transition towards sustainable and renewable sources of energy.
ARTICLE DETAILS
- Date: July 23, 2022
- Version: 1.0
- Part: Part 2 – Regulatory Framework of Renewable Energy in India
- Jurisdiction: India
- Keywords: Renewable Energy, Renewable Purchase Obligation, Renewable Energy Certificate
LEGISLATION REFERRED
- The Electricity Act, 2003
- Electricity (Promoting Renewable Energy Through Green Energy Open Access Rules), 2022
- Central Electricity Regulatory Commission (Terms and Conditions for Renewable Energy Certificates for Renewable Energy Generation) Regulations, 2022
- Draft National Renewable Energy Act, 2015
- The Energy Conservation Act, 2001
OVERVIEW
This three-part series examines the use, impact and regulation of renewable energy in India.
- Part 1: General overview of renewable energy and commercial aspects of the sector.
- Part 2: Regulatory framework and government initiatives promoting renewable energy.
- Part 3: Storage, transmission, taxation, labour, financing and related issues.
REQUIREMENTS FOR GENERATION OF RENEWABLE ENERGY IN INDIA
Under the Electricity Act, 2003, a generating company does not require a licence for establishing, operating or maintaining a generating station, provided it complies with applicable technical standards.
Key requirements include:
- Compliance with Central Electricity Authority technical standards.
- Approval from the Electrical Inspector for installations exceeding 650V.
- Submission of schemes to the Central Electricity Authority for hydro-generating stations.
- Licensing requirements for transmission, distribution and electricity trading activities.
Solar photovoltaic projects, solar thermal plants and solar parks generally do not require Environmental Impact Assessment approvals.
Solar, wind and mini-hydel projects classified as “White Industries” are generally exempt from obtaining pollution control board consents under certain environmental regulations.
LEGAL FRAMEWORK GOVERNING RENEWABLE ENERGY
1. Electricity Act, 2003
The Electricity Act, 2003 is the principal legislation governing generation, transmission, distribution and trading of electricity in India.
Section 86(1)(e) mandates State Electricity Regulatory Commissions (SERCs) to promote generation of electricity from renewable sources and specify Renewable Purchase Obligations (RPOs).
The Draft Electricity (Amendment) Bill, 2020 proposes:
- National Renewable Energy Policy.
- Minimum renewable energy purchase requirements.
- Penalties for non-compliance with Renewable Purchase Obligations.
2. Green Energy Open Access Rules, 2022
The Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules, 2022 were introduced to encourage wider adoption of green energy.
The Rules apply to entities having contracted demand or sanctioned load of 100 kW or more.
Renewable energy may be procured through:
- Own generation facilities.
- Open access procurement from renewable energy developers.
- Power exchanges and electricity markets.
- Trading licensees.
3. Renewable Energy Certificates (REC) Regulations, 2022
Renewable Energy Certificates (RECs) are market-based instruments created to encourage renewable energy generation and assist obligated entities in meeting Renewable Purchase Obligations.
The 2022 Regulations:
- Remove solar and non-solar REC categorization.
- Expand REC eligibility to distribution licensees.
- Include captive generating stations.
- Include open access consumers.
4. Draft National Renewable Energy Act, 2015
The Ministry of New and Renewable Energy proposed a dedicated legislation to promote renewable energy generation and reduce dependence on fossil fuels.
Major proposals include:
- National Renewable Energy Policy.
- National Renewable Energy Fund.
- State Renewable Energy Funds.
- Promotion of energy security and environmental sustainability.
The proposed legislation has not yet been enacted.
5. Energy Conservation Act, 2001
The Energy Conservation Act promotes efficient use and conservation of energy.
Proposed amendments seek to:
- Mandate minimum renewable energy consumption by industries.
- Introduce carbon credit mechanisms.
- Promote green hydrogen adoption.
- Encourage clean technology deployment.
GOVERNMENT INITIATIVES TO PROMOTE RENEWABLE ENERGY
Draft National Electricity Policy, 2021
The Draft National Electricity Policy focuses on strengthening grid infrastructure, enhancing renewable integration and supporting large-scale renewable energy deployment.
It also proposes renewable purchase obligations for large hydroelectric projects.
Green Day Ahead Market (GDAM)
Introduced in October 2021, GDAM enables daily trading of renewable energy through power exchanges.
Benefits include:
- Greater procurement flexibility.
- Improved renewable energy market liquidity.
- Reduced curtailment of renewable generation.
- Facilitation of Renewable Purchase Obligation compliance.
Waiver of Inter-State Transmission Charges
The Ministry of Power granted waiver of inter-state transmission charges for solar and wind projects commissioned within prescribed timelines.
The waiver was subsequently extended to projects scheduled for commissioning up to June 30, 2025.
PM-KUSUM Scheme (2019)
The PM-KUSUM Scheme aims to provide energy security to farmers and expand solar energy deployment across rural India.
Key components include:
- 10,000 MW decentralized renewable power plants.
- 17.5 lakh stand-alone solar agricultural pumps.
- Solarization of 10 lakh grid-connected agricultural pumps.
Production Linked Incentive (PLI) Scheme for Solar PV Modules
Introduced in 2021, the scheme seeks to establish large-scale manufacturing capacity for high-efficiency solar photovoltaic modules in India.
The Government allocated ₹4,500 crore for implementation of the scheme over five years.
India’s renewable energy regulatory framework combines legislation, market-based mechanisms, open access reforms and incentive schemes to accelerate the country’s transition towards sustainable energy generation and consumption.
NEXT PART
Part 3 will discuss storage and transmission infrastructure, pricing mechanisms, taxation, labour and employment considerations, and financing aspects of renewable energy projects in India.
DISCLAIMER
The content of this article is intended to provide a general guide to the subject matter.
Specialist professional advice should be sought about your specific circumstances.
The views expressed in this article are solely those of the authors.
