Open Access Research Article
LAWS GOVERNING RENEWABLE ENERGY IN INDIA
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Article Details
LAWS GOVERNING RENEWABLE
ENERGY IN INDIA
AUTHORED BY - PRITEE DEOTALE
Abstract
The laws governing renewable energy sector in India
are not aligned in nature.It involves many agencies in the regulatory and legal
framework. The role of these agencies altogether has created an overlapping
character which clearly depicts the inadequacy in the existing legal framework
of renewable energy in India. The article lays down the existing gaps in the
governance of renewable energy sector. At the end of the article the author
proposes measures in order to fill the gaps and bring reform in this sector.
Keywords: Renewable
Energy, Legal Framework, Reforms.
Introduction
With the
industrial revolutionand increasing population of India, the energy
sectorof India took a drastic leap in
past few decades giving impetus on not only the energy consumption but alsoon
the energy creation. Energy has thus become one the most dynamic featurefor the
development and elevation of the country’s economy since the 19th
Century.About 70% of India’s electricity is generated from Fossil fuels thus
India is largely dependent on fossil fuels to meet its energy demands.[1]
These fossil fuels such as oil, gas and coal are limited in nature and will be
exhausted in coming few decades.[2]
This has coupled the urgent need of alternate sources of energy and
environmental protection; hence the planners were forced to reform the policies
governing renewable energy.
The 2015
United Nations Climate Conference in Paris was the first ever universal,
legally binding global climate deal. 195 countries across the globe adopted the
climate deal. It has reaffirmed the need of renewable energy technologies to
attain the goal of sustainabledevelopment. Many countries have adopted the
renewable energy technologies to meet its electricity demands and reduce carbon
emission.[3]
The
emergence of Renewable Energy Regulations in Indiacan be traced back to the
late 1970’s when the world was facing a serious problem of energy crises. The
year 1976 turned out to be a game changer due to the Forty second amendment to
the Constitution of India which added Article 48A[4]which
put forward a new regime regarding the protection and improvement of
environment and safeguarding forest and wildlife.These energy crises then lead
to the creation of Commission for Additional Sources of Energy (CASE) in the
year 1981. Then in 1982 Department of Non-Conventional Energy Sources was
created, both these commissions gave impetus on creating an exclusive Ministry
for Renewable Energyin India in the year 1992 which was known as Ministry of
Non-Conventional Energy Sources (MNES) till 2006. This is the Nodal Ministry of
the Government of India under the Ministry of Power. It is the existing
regulatory body for the renewable energy in India. It broadly aims at
developing and deploying new and renewable energy for supplementing the energy
requirements of the nation. Further the Ministry was renamed in the year 2006
as Ministry for New and Renewable Energy (MNRE).
Laws Governing Renewable Energy in India
The
Electricity Act 2003 is the key legislation governing the renewable energy in
India. It mandates the SERC’s to take steps to promote renewable and
non-renewable sources of energy within their area of jurisdiction.[5]
It calls to promote co-generation and generation of electricity from renewable
sources of energy by providing suitable measures for connectivity with grid and
sale of electricity to any person, also specify for purchase of electricity
from such sources, a percentage of total consumption of electricity in the area
of distribution license.[6]Legislation
prior to Electricity Act 2003 had no specific provisions that would promote
renewable or non-conventional sources of energy. Despite this shortcoming, the
Ministry of MNRE has worked towards supporting the sector by way of a policy
guideline since 1994-1995, with mixed results. However the Electricity Act 2003
changed the legal and regulatory framework for the renewable energy sector in
India. The Electricity Act 2003 mandates policy formulation to promote
renewable sources of energy of the federal government, the state governments
and the respective agencies with their jurisdictions.
As mandated
by the Electricity Act 2003, the SERC’s determines the tariff for all Renewable
projects across the respective states, and the state owned power Distribution
Companies (DISCOM’s) ensures grid connectivity to the renewable energy project
sites, which generally are suited in remote locations, away from major load
centers. States have come out with technology specific Renewable Purchase
Specifications (RPS’s) which they continue to split between solar and non-solar
activities.[7]All
these activities take place under the purview of Electricity Act 2003. But the
renewable energy sector involves too many agencies in regulating the renewable
energy sector. At the central level, the Ministry of New and Renewable Energy
(MNRE) is the nodal ministry of the Government of India for all matters
relating to new and renewable energy. MNRE also conducts resource assessments
for renewable energy and supports R&D in renewable energy technologies.
There are specialized technical institutions set up under MNRE such as the
Solar Energy Centre, C-WET, and Sardar Swaran Singh National Institute of
Renewable Energy (SSS-NIRE), which serve as technical focal institutes for
solar, wind, and bio-energy, respectively.[8]
At the
state level, there are nodal agencies and departments which operate under the
purview of the respective state governments for the effective implementation of
all renewable energy and cogeneration schemes. These agencies promote renewable
energy deployment at the local level by channeling central-level subsidies,
implementing demonstration projects, and providing assistance to interested
parties. Many of the state agencies are
also designated agencies for the implementation of the Energy Conservation Act,
2001. The MNRE provides grants to these agencies for their recurring and
non-recurring expenditure. Financial assistance to renewable energy projects is
provided through the Indian Renewable Energy Development Agency (IREDA)the
financial arm of the MNRE which provides loans and also channels funds and
other initiatives to promote renewable energy. IREDA is registered as a
non-banking financial company and arranges its resources through market
borrowing and lines of credit from bilateral and multilateral lending agencies.[9]
This is the legal framework for power generation through renewables in India.
Role of Central Government and State Government
The Central
Government and State Government both plays an important role in the policy
development, regulation and promotion of renewable energy as their mandate
encompasses the renewable energy sector.
·
Central
Government
The
Ministry of Power (MoP) deals with the development of national electricity
policy and national tariff policy, which also cover renewable energy.[10]
They play a key role in promoting procurement of renewable energy-based
power.The Ministry of Finance (MoF) provides the fiscal incentives for
promoting renewable energy. The Ministry of Environment and Forests (MoEF) is
responsible for providing environmental clearances for renewable energy
projects.[11]
The Ministry for New and Renewable Energy (MNRE) develops national energy laws.
It sets technical standards for renewable energy. It conducts resource
assessments for renewable energy; supports R&D in renewable energy
technologies. Promotes effective use of information technology for renewable
energy, manages database. Reviews renewable energy programmes to understand
their effectiveness and efficiency.[12]
The Central Electricity Regulatory Commission (CERC) sets guidelines for feed
in tariff design for different renewable energy technologies. It regulates the
regional electricity corporation mechanism and regulates interstate open
access, and third party sales.[13]
·
State
Government
The state
government develops state-level renewable energy policy and provides fiscal
incentives for promoting renewable energy sources. Every state has its own
state nodal agency which is known as State Energy Development Agency which
conducts resource assessments for various renewable energy sources. Its main
function is to allocates renewable
energy projects and monitor its progress; Provides facilitation services to
project developers; Facilitates clearances and land acquisition; Creates awareness
and educates the masses about adoption of renewable energy; Maintains database
on renewable energy sources. Like the state nodal agencies every state has a
State Electricity Regulatory Commission (SERC) and its function is to develop
feed-in tariff methodologies for different renewable energy technologies. It
also determines RPOs and enforcement mechanism. It sets regulations on
intrastate wheeling, open access, and third party sale.[14]
Policies Governing Renewable Energy
The
policies regarding renewable energy have been enacted by Government of India
which is implemented with a motive of the expansion of the renewable energy.
The National Electricity Policy of 2005 permits the SERC’s to establish a
tariff which will make the electricity generated from renewable energy cost
effective and creates competition in the market.[15]
The Tariff Policy of 2006 was enacted with an aim to fix minimum percentage of
RPO’s by the SERC’s from renewable sources keeping in mind the availability of
those resources in the respective region and its impact on the electricity
tariff.[16]
It also aims at sustainable use of renewable power by procuring it for future
needs through the process of competitive bidding. The guidelines for
competitive procurement have been framed under Section 63 of the Electricity
Act, 2003.[17]
The first
attempt made by India of pulling together all the energies under one umbrella
when the planning commission released the ‘Integrated Energy Policy’: Report of
the Expert Committee (IEP) in October 2006, which provide a broad overarching
framework for all policies governing the generation, distribution and
consumption etc. of different energy sources. Although the report of the expert
committee has been available since 2006, political commitment to it has been
limited. While the IEP report emphasized on the need to move away from capital
subsidies towards performance incentives, to promote renewable energy sources.
It assigned a limited role to power generation from Renewable energy sources
even as late as 2032, with only 5.2% of renewable based electricity in the
grid.[18]
The
Indian Energy Policy, adopted by the Indian government in 2006, is India’s
comprehensive energy road map. Prepared by the Planning Commission of India,
the IEP identifies multiple energy challenges, including meeting energy demands,
securing supply, mitigating climate change, and promoting renewable and
alternative energy. The IEP sets forth several policy choices to address these
challenges. These choices comprise four strategies: energy diversification and
efficiency; catalyzing investment in energy diversification by competitiveness,
regulatory intervention, energy pricing changes, and effective subsidies;
strengthening diplomacy; and accountability for environmental externalities.[19]
India
has been running a renewable energy program, excluding large hydro (as hydro
energy falls under the Ministry of Power), for more than two decades, and has
policies that support renewable energy at the central and state level. These
domestic policies have been combined with participation in the Clean
Development Mechanism (CDM) by renewable project developers with reasonable
success. However, given the overall size of the energy system, the contribution
of renewables is still small.[20]
The
benefits of electricity efficiency have been recognized in the 10th and 11th
Five-Year Plans that outline measures for its implementation. Schemes for
promoting energy efficiency during the 11th Plan include the Bachat Lamp Yojana
(promoting the uptake of CFLs), the Standards and Labeling Scheme (covering all
basic household appliances, as well as motors, variable speed drives and
agricultural pump sets), Energy Conservation Building Codes (for new commercial
construction), Agricultural and Municipal Demand-Side Management (DSM) Schemes.
The 11th Plan recognizes that restructuring incentives and support by shifting
from supply driven programs to demand driven programs and technologies would be
beneficial. The India Planning Commission has recognized the strengthening of
the Bureau of Energy Efficiency (BEE) as a priority, and regulatory commissions
in many states are considering demand-side options. Hence, aggressive steps for
the promotion of EE measures are expected in the 12th Plan as well.[21]
India
is a sun rich country and the leading policy initiative for solar energy is the
Jawaharlal Nehru National Solar Mission (JNSSM) launched in 2010, it
aims on generation capacity additions from solar technology which includes both
solar thermal and solar photovoltaicin terms of both grid-connected and offgrid
applications.The Mission has adopted a three-phase approach, spanning the
period of the Eleventh Plan and the first year of the Twelfth Plan (up to
2012–13) as Phase I. The remaining four years of the Twelfth Plan (2013–17) has
been marked as Phase II and the Thirteenth Plan (2017–22) will be Phase III of
the project.[22]
The
National Tariff Policy was amended in January 2011 prescribing solar-specific
RPOs to be increased from a minimum of 0.25% in 2012 to 3% by 2022. The Central
Electricity Regulatory Commission (CERC) and State Electricity Regulatory
Commissions (SERCs) have issued various regulations including solar RPOs,
Renewable Energy Certificates (REC) framework, tariff, grid connectivity,
forecasting, etc., for promoting solar energy.[23]
Under the
National Offshore Wind Energy Policy 2015, the Ministry of New & Renewable
Energy (MNRE) has been authorized as the Nodal Ministry for use of offshore
area within the Exclusive Economic Zone (EEZ) of the country and the National
Institute of Wind Energy (NIWE) has been authorized as the Nodal agency for
development of offshore wind energy in the country and to carry out allocation
of offshore wind energy blocks, coordination and allied functions with related
ministries and agencies.[24]
It would pave the way for offshore wind energy development including, setting
up of offshore wind power projects and research and development activities, in
waters, in or adjacent to the country, up to the seaward distance of 200
Nautical Miles (EEZ of the country) from the base line. Preliminary assessments
along the 7600 km long Indian coastline have indicated prospects of development
of offshore wind power. With the introduction of the National Offshore Wind
Energy Policy, the Government is attempting to replicate the success of the
onshore wind power development in the offshore wind power development. The scheme would be applicable throughout the
country depending upon offshore wind potential availability.[25]
The Central
Government has notified the revised Tariff Policy 2016 in exercises of powers
conferred under section 3(3) of Electricity Act, 2003. The tariff policy has
been evolved in consultation with the State Governments, the Central
Electricity Authority (CEA), the Central Electricity Regulatory Commission and
various stakeholders.[26]
The objectives of this tariff policy are to; Ensure availability of electricity
to consumers at reasonable and competitive rates; Ensure financial viability of
the sector and attract investments; Promote transparency, consistency and
predictability in regulatory approaches across jurisdictions and minimize
perceptions of regulatory risks; Promote competition, efficiency in operations
and improvement in quality of supply; Promote generation of electricity from
Renewable sources; Promote Hydroelectric Power generation including Pumped
Storage Projects (PSP) to provide adequate peaking reserves, reliable grid
operation and integration of variable renewable energy sources; Evolve a
dynamic and robust electricity infrastructure for better consumer
services; Facilitate supply of adequate
and uninterrupted power to all categories of consumers; Ensure creation of
adequate capacity including reserves in generation, transmission and
distribution in advance.
Regulatory framework
The regulatory framework of renewable
energy in India is governed by the CERC and the SERC’s. These commissions are
the regulating authorities for the energy based systems in India at the central
and state level respectively. The renewable energy based systems can be classified
in two categories i.e. grid connected systems and the off grid systems but the
regulatory authority covers only the grid-connected systems and at present the
off-grid systems do not fall under the purview of regulatory authority.[27]For
the grid-interactive systems, the CERC sets guidelines for feed-in tariffs for
different renewable energy technologies and issues regulations for interstate
open access.[28]
Every state has its own regulatory
body known as SERC. The SERC is bestowed with certain roles and they are to
determine the feed-in tariffs for different renewable energy technologies; to
set RPO’s for states; to issue regulations on open-access; the third party
sales etc. The SERC’s have direct impact on them except the third party sales.
The SERC’s are loosely bound by the directives and guidelines given by the
CERC. Most of the states have announced regulations for the intra-state open
access. The final decision regarding the renewable energy projects development
stays with the SERC’s and the progress of those projects depends mainly on the
state policies and the facilitation from the state nodal agencies.[29]
The regulatory framework for the
renewable energy in India is evolving with time as these sources are
progressively sharing a higher amount of power. The Government of India
hasbrought the Renewable Regulatory Fund (RRF) regulations in 2010 as per the
provisions of the Indian Electricity Grid Code Regulations, 2010. It aims to
achieve better generation prediction using weather forecasting tools and
immunize wind generators from paying deviation in Unscheduled Interchange
(UI)charges up to a certain level of variation, beyond which the deviation
charges will be socialized across states. Then in the year 2015 the third
amendment was made to the CERC regulations which were; Sharing
Inter-State Transmission Charges and Losses. The transmission charges (POC)
charges and losses are applied on wind generation. However solar projects
commissioned before 30th June 2017 will be exempted from payment of
transmission charges and application of transmission loss.[30]
These objectives of tariff policy are not only applicable to energy created
from fossil fuels but also applicable to renewable sources of energy.
Gaps in the Governance of Indian Renewable Energy Sector
·
The
involvement of too many agencies has given rise to the gaps in the governance
of renewables in India by giving rise to the overlapping jurisdiction.
·
The
renewable energy sector of India lacks technical competence and skill
sets.These skill sets are far different from the conventional sources of energy
and the states who share higher amount of renewable power are facing
challenges. Thus, a planned approach is required to ensure that power system
safety, security, and stability remains intact at all operating conditions.
·
The
state nodal agencies facilitates the clearance of renewable energy projects,
these state nodal agencies helps in
clearance from pollution control boards,
mining, fisheries, forests, etc. in some states the clearance responsibilities
lies on the developers thus on an average it takes an year for the land
acquisition. As per Karnataka state policy, the private developers cannot
acquire agricultural land for renewable energy projects. The land has to be
converted to non-agriculture land to be acquired. The whole process of
identifying suitable land, conversion, and finally acquisition is an extremely
time-consuming process.
·
The
Jawaharlal Nehru National Solar Mission aims to make India a hub for the
manufacturing solar equipments. However this mission did not lived up to the
expectations as the Indian manufacturers were unable to compete with the
international market. Thus India needs a strong mechanism for the manufacturing
and enhances the research and developments capabilities of the solar industry.
·
Many
states have specified RPO targets form renewables but the regulatory compliance
lacks the enforcement of RPO regulations. Even in many state nodal agencies the
records for RPO compliance are not available. The non-compliance with RPO
targets also has had implications on the REC market.
·
The
renewable energy sector has shown a massive growth and to keep this going it
requires huge investments from the government as well as from the private
entities. However it is seen that it lacks budgetary investment as per the
financial need of the sector.
·
The
renewable energy sector has praised for the transparency and accountability
still there are certain issues to be addressed regarding the National Clean
Energy Fund which is being administered by the Ministry of Finance. There were
inconsistencies between the stated objectives and the final approval of
project. Hence there is a need of more transparency on the process of disbursal
of funds.
·
Generally
the renewable energy projects do not create any adverse effect on the
environment and these projects are outside the purview of Environmental
assessment. But there are certain projects which created problems but they are
very few in number. The main problem related to these projects is the
availability of land as they are set up in forests, government or private land.
The other major problem here is acquiring private lands as it involves high
cost.
·
The
renewable energy certificate (REC) market is facing a huge demand and supply
mismatch which has impacted the REC’s trading.
Hence all these gaps must be addressed and reforms must be
brought for the better functioning of this sector. Though renewable energy is
one part of energy sector but it has immense potential to overpower all the
other energies if regulated appropriately and make India energy efficient.
Conclusion
Due to the involvement of multiple agencies the promotion of
renewable energy is taking place at a very slow pace. Though the growth in
renewables in the past five years is remarkable; hence to continue this growth
the sector needs a reform. The sector needs to set ambitious targets at both
central and state level with effective implementation of the regulations. The
RPO enforcement has to be made stringent with regulators imposing penalties on
discoms in case of non-compliance in a fair and transparent manner. The solar
industry needs to be elevated by making strategic changes in the policies
implemented and financing the solar manufacturing industries to make India a
hub for solar industry. The technical capabilities should be sound enough at
the institutional level as the technical skills required for renewables are far
different from the conventional sources of energy. The investments made by the
Ministry should be increased as the renewables are highly efficient in meeting
the energy demands of the country. Lastly the land acquisition issues faced by
the project developers could be removed if the land and revenue department
enable the availability of land by creating the land banks.
[1]Michael Waldron, Commentary: Energy is at the heart of India’s
transformation, www.iea.org/newsroom/news/2017/april/commentary-energy-is-at-the-heart-of-indias-transformation.html (April
23, 2019).
[2] Talai
Husseini, World Energy Outlook 2018: five take-homes for fossil fuels, www.power-technology.com/features/world-energy-outlook-2018-fossil-fuels/ (April
23, 2019).
[3] Center
For Climate and Energy Solutions, OUTCOMES OF THE U.N. CLIMATE CHANGE
CONFERENCE IN PARIS, 21st Session of the Conference of the Parties to the
United Nations Framework Convention on Climate Change (COP 21), December 2015.
[4] 48(A) Protection and improvement of
environment and safeguarding of forests and wildlife.“State shall endeavor to
protect and improve the environment and to safeguard the forests and wildlife
of the country”.
[5] Electricirty
Act 2003, Section 3. (National Electricity Policy and Plan) --- (1) The Central
Government shall, from time to time, prepare the National Electricity Policy
and tariff policy, in consultation with the State Governments and the Authority
for development of the power system based on optimal utilization of resources
such as coal, natural gas, nuclear substances or materials, hydro and renewable
sources of energy.
[6] Electricity
Act 2003, Section 61. (Tariff regulations): The Appropriate Commission shall,
subject to the provisions of this Act, specify the terms and conditions for the
determination of tariff, and in doing so, shall be guided by the following,
namely (h) the promotion of co-generation and generation of electricity from
renewable sources of energy.
[7] Electricity
Act 2003, Section 63. (Determination of tariff by bidding process):
Notwithstanding anything contained in section 62, the Appropriate Commission
shall adopt the tariff if such tariff has been determined through transparent
process of bidding in accordance with the guidelines issued by the Central
Government.
[8]P R Krithika and Siddha Mahajan,
Background paper Governance of renewable energy in India: Issues and challenges, The Energy and Resource
Institute, 2014.
[9]
Government of India, Ministry for New and Renewable Energy,
mnre.gov.in/ireda, (June 10, 2019).
[10] Government of India, Ministry of
Power, powermin.nic.in/en/content/national-electricity-policy, (June 10, 2019).
[11] Government of India, Ministry of
Environment, Forest and Climate Change,
envfor.nic.in/division/funding/
(June 10, 2019).
[12] Government of India, Ministry
for New and Renewable Energy, mnre.gov.in (June 10, 2019).
[14] Ibid.
[15] Government of India, Ministry of
Power, powermin.nic.in/en/content/national-electricity-policy, (June 10, 2019).
[16] Renewable Energy Regulatory Framework,
mnre.gov.in, (June 10, 2019).
[17] Section 63. (Determination of
tariff by bidding process): Notwithstanding anything contained in section 62,
the Appropriate Commission shall adopt the tariff if such tariff has been
determined through transparent process of bidding in accordance with the
guidelines issued by the Central Government.
[18] Planning Commission of India,
Government of India, “Integrated Energy Policy Report of the Expert
Commitment”, http://planningcommission.gov.in/reports/genrep/rep_intengy.pdf, (April 24, 2019).
[19] Anjali
Viswamohanan and Kanika Chawla, “NITI Aayog's Draft
Energy Policy Fuels Doubts about India's Commitment to Renewables”,
thewire.in/environment/niti-aayog-draft-energy-policy-thermal-power (April 24,
2019).
[20] United Nations Conference on
Trade and Development, “The State of Play of the Clean Development Mechanism
Review of Barriers and Potential Ways Forward”, unctad.org,(April 24, 2019).
[21] Bureau of Energy Efficiency
(Ministry of Power, Government of India), “Annual Report
2013-2014”,beeindia.gov.in, (April 24, 2019).
[22] Ministry of New and Renewable
Energy, Jawaharlal Nehru National Solar Mission Phase II – Policy Document,
2012,mnre.gov.in/file-manager/UserFiles/draft-jnnsmpd-2.pdf (June 7, 2019).
[23] Ministry of New and Renewable
Energy, Solar RPO and REC Framework,mnre.gov.in/solar-rpo, (June 7, 2019).
[24] DSK Legal, India: National
Offshore Wind Energy Policy, 2015, http://www.mondaq.com/india/x/441280/Renewables/National+Offshore+Wind+Energy+Policy+2015,
(June 7, 2019).
[25] Government of India, “National
Offshore Wind Energy Policy”,
mnre.gov.in/file-manager/UserFiles/National-Offshore-Wind-Energy-Policy.pdf
(April 23, 2019).
[26] Ministry of Power, “Draft
Amendments to Tariff Policy”,
powermin.nic.in/sites/default/files/webform/notices/Proposed_amendments_in_Tariff_Policy_0.pdf,
(April 23, 2019).
[27] Government of India, Ministry
for New and Renewable Energy, mnre.gov.in (June 10, 2019).
[29] Energy Sector Management
Assistance Program, Unleashing the Potential of Renewable Energy in India, http://www.indiaenvironmentportal.org.in,(June 11, 2019).
[30] Power System Operation
Corporation Ltd, Corporate Plan 2017-18,
posoco.in/wp-content/uploads/2017/05/Corporate-Plan-2017-18.pdf, (June 11,
2019).
Article Information
LAWS GOVERNING RENEWABLE ENERGY IN INDIA
Authors: PRITEE DEOTALE
- Journal IJLRA
- ISSN 2582-6433
- Published 2023/10/04
- Issue 7
About Journal
International Journal for Legal Research and Analysis
- Abbreviation IJLRA
- ISSN 2582-6433
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