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India’s legislative framework on Renewable Energy

Introduction

When it comes to the scale of its energy economy, as determined by the total income of energy corporations, India is ranked fifth among all nations. According to a recent report by British Business Energy, the nation also ranks third in terms of investments in and future plans for renewable energy.

A major turning point in the global effort to combat climate change has been India’s statement that it plans to achieve net zero emissions by 2070 and to fulfill 50% of its electricity requirements from renewable sources by the year 2030. India is setting the bar for a novel approach to economic growth that might steer clear of the carbon-intensive strategies many nations have previously taken and serve as a model for other emerging markets.

The term “renewable energy” describes power produced from renewable resources such as the sun, wind, and water. They aid in lowering environmental pollutants and are comparatively clean. 

Currently, India’s installed renewable energy capacity—which includes big hydro—stands at more over 159.95 Giga Watts, or nearly 40% of the nation’s total capacity, having grown 396% in the past 8.5 years (as on 31st March 2022). The potential for renewable energy in India may be increased up to several times greater than it is now. Considering the immense resources at its disposal and the rapidly expanding population, India has been reticent to publicly advocate for the use of renewable energy sources.

Acts, policies, and programs promoting Renewable Energy development in India

The first piece of legislation to address the use of renewable energy sources in the production of electricity was the Electricity Act of 2003. This law made it possible to construct captive wind farms (i.e. independent generation of power for personal uses). Additionally, it developed specialized tools for implementing policy, such as favorable tariffs, renewable purchasing requirements, and tradable renewable energy certificates. The State Power Regulatory Commissions (SERCs) are required by Section 61(h) of the Electricity Act, 2003 to promote grid connection of the electricity produced from renewable resources through tariff rules. The State Commission is required by Section 86(1)(e) of the Electricity Act of 2003 to promote cogeneration, the production of electricity from renewable energy sources, and the timely updating of the National Tariff Policy and Tariff Policy for the best possible utilization of both conventional and non-conventional sources.

The Ministry of Power oversees the application of the Electrical Act and principally exercises administrative control over the growth of the nation’s electricity industry. However, the Ministry of New and Renewable Energy, which serves as the government’s main body for all issues connected to the development of renewable energy, is in charge of overseeing the development and expansion of renewable energy in India.

Even if the Electricity Act does not define renewable energy, there are other laws and regulations that do, both at the federal and state levels. A 2017 regulation known as the Central Electricity Regulatory Commission (Terms and Conditions for Tariff Determination from Renewable Energy Sources) Regulations defines “renewable energy” as grid-quality electricity produced from renewable energy sources. The phrase “renewable energy sources” has also been defined to include small hydro, wind, and solar, including its integration with a combined cycle, biomass, cogeneration of biofuels, urban or municipal waste, and other sources that the Ministry of New and Renewable Energy may deem appropriate. Additionally, by virtue of an official letter dated 8 March 2019, the Ministry of Power has officially classed hydropower project stations as having a capacity of more than 25 MW as a renewable energy source.

The 2005 National Electrical Policy, In particular, emphasizes making the most of the nation’s hydropower potential. Its goals include developing rules for the power sector’s rapid development, ensuring that all areas had access to electricity, and utilizing technology to access these resources. In accordance with Section 3 of the Electricity Act of 2003, this policy was created in the year 2005. It permits favorable pricing for electricity generated using renewable resources. It has achieved its prior goal of generating enough power to guarantee access and raise the minimum annual per-capita availability to 1,000 kWh by 2012. To ensure returns and full recovery during the loan repayment period for the entire useful life, which is equivalent to a Levelized tariff, the Central Electricity Regulatory Commission (CERC) established yearly feed-in-tariffs under the National Tariff Policy for connectivity by grid power from various renewable energy resources. In order to promote grid connectivity, many incentive schemes for renewable energy sources were put in place during the 11th Five Year Plan, which runs from 2007 to 2012.

The proposed National Renewable Energy Act, 2015, whose draft has been made available for public review, aims to grant the Government of India broad authority to advance the renewable energy sector in India. This Act was created in 2015 with the intention of promoting renewable energy sources. This Act aims to promote the use of renewable energy, lessen reliance on fossil fuels, guarantee energy security, and cut back on local and global pollution. It sought to support efforts to combat climate change, foster an environmentally friendly environment, and develop pollution-free energy sources. The usage of renewable energy will lower CO2 and other harmful pollution emissions as well as those from greenhouse gases. The Act also helps to ensure that the goals of expanding the percentage of renewable energy sources at the national and international levels are met.

Electricity is a heavily regulated industry in India. The Central Electricity Regulatory Commission and the State Electricity Regulatory Commissions are established at the federal and state levels of government under the Electricity Act. Disputes between generators and distribution licensees or between distribution licensees and customers may be heard by the commissions, which also have the authority to enact rules and subsidiary laws. Before the Appellate Tribunal for Electricity (APTEL), a specialized body to assess electricity-related disputes, central or state commission rulings may be challenged. The Supreme Court of India will hear appeals of APTEL judgments.

The judiciary in our nation has frequently dealt with concerns involving renewable energy sources. The Supreme Court recently declared in 2015 that all sectors must adopt goals relating to renewable sources of energy or face penalties. This historic Supreme Court decision requires companies with captive power plants to derive a significant share of their energy needs from renewable sources. This decision also gave the state electrical regulators and related organizations the authority to impose sanctions on businesses that disobey the Supreme Court’s directives.

The necessity for research and development initiatives in the area of renewable energy was recognized by the government. A Commission for Additional Sources of Energy (CASE) was created by the government in 1981. The mission of CASE is to advance research and development in the area of renewable energy.

A subsequent creation was the Ministry of New and Renewable Energy. India became the first nation to have a dedicated ministry for the advancement of renewable energy sources.

To encourage farmers to employ solar energy, the Cabinet Committee on Economic Affairs (CCEA) granted financial help up to USD 6.5 billion by 2022.

The second phase of the Atal Jyoti Yojana (AJAY) initiative was launched in 2018 with the goal of providing financial assistance for the installation of more than 3 million solar street lights in certain locations.

In order to encourage large-grid-connected wind-solar PV hybrid systems for the most effective and efficient use of land and transmission infrastructure, the MNRE created the National Wind-Solar Hybrid Policy in 2018.

To encourage local solar cell manufacture, the government imposes the Safeguard Duty (SGD) on solar panels. Thus, these were a few of the most important measures that the Indian government took in an effort to advance, study, and grow the renewable energy industry.

The Electricity (Amendment) Bill, 2020 was proposed by the federal government to make revisions aimed at advancing the renewable energy industry. For example, the establishment of the Electricity Contract Enforcement Authority, which will have the sole authority to decide disputes arising from power purchase agreements, the imposition of penalties on distribution licensees for failing to comply with renewable purchase obligations, and the federal government’s authority to announce a National Renewable Energy Policy and prescribe a minimum renewable purchase obligation.

It is anticipated that this law, the draft National Electricity Policy 2021, and other policies would implement the necessary adjustment to improve energy efficiency in order to satisfy technological improvements and climate change objectives.

Issues and Challenges

In areas pertaining to renewable energy, coordination between the federal and state governments has not been strong. Due to this, there have been problems with land acquisition for central and state projects including renewable energy, as well as uncertainty, delays, and poor management of auctions and transmission links. A widespread issue in India is aggressive rate caps during auctions and retroactive re-negotiations. For international investors, sovereign risk is a source of worry.

Another major worry is late payments from state-owned distribution businesses that are heavily indebted. Financial limitations apply to smaller renewable energy producers. The financial support for renewable energy sources is being hampered by India’s stranded or non-performing assets in the thermal power industry. Transmission networks and balancing capacity are slowly growing throughout the nation.

Recommendations

To effectively exploit the nation’s undiscovered renewable resources, a comprehensive plan on renewable energy is required, including both supply and usage as well as suitable transportation. Tariff limitations have made renewable energy policies problematic. In order to assure the financial feasibility of high-quality projects, the price limitations must be adjusted. Analyzing the industries’ risk assessments and tariff expectations should be done to accomplish this. The government needs to take steps to reduce project-related risks.

The federal government needs to make efforts to make the most of the nation’s bioenergy potential. The manufacture of solar products in the nation has enormous potential. By providing amenities like greater solar tariff caps and by promoting exports, the government may play a crucial part in its expansion. The government should seek to modernize and expand the transmission network while taking into account the connecting requirements of significant hubs for renewable energy.

Solar and wind power equipment should only be subject to one uniform rate of GST. For businesses involved in renewable energy, access to money both domestically and abroad needs to be improved. Due to the current situation’s inefficiency problems, the electricity distribution industry has to be privatized.

Conclusion

The Indian government is aiming to achieve its goal of increasing the country’s proportion of renewable energy. The MNRE is continuously trying to put the policies into effect. Several problems need to be resolved. They can be readily stopped, though, if the right actions are followed. The tariff rates set by foreign investors ought to be reviewed by the government. In order to guarantee effectiveness and quality, the renewable energy sector needs to be competitive and privatized. The manufacture and use of renewable energy have grown quickly throughout the years in the energy industry. Although this sector is not specifically covered by any legislation, it is collectively governed by the current laws. However, in order to make the system effective and prevent more confrontations, it is advised and optimistic that sector-specific laws be developed and passed as soon as possible. In conclusion, India has performed admirably thus far, but there is still potential for growth. If all goes according to plan, India will take the top spot in the world for renewable energy.

References

  1. Deepak Sriram Krishnan, “India’s Supreme Court Reinforces Renewable Energy Targets for Industry”, World Resources Institute ( June 13 2020, 08:00 pm) India’s Supreme Court Reinforces Renewable Energy Targets for Industry | World Resources Institute (wri.org)
  2. Integrated Energy Policy – Policies – IEARenewable Energy | Make In India
  3. Renewable Energy in India – Indian Power Industry Investment (investindia.gov.in)
  4. List of Policies and Acts – National Portal for Renewable Purchase Obligation (rpo.gov.in)

This article is written by Devishee Arora, a 4th-year B.COM LLB (Hons.) student at Amity Law School, Noida.

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