Vineet Mittal Shares Insights on India’s Renewable Energy Policies

There are numerous acts and policies concerning solar energy in the country which vaguely state rules and plans for better utilization, transmission, and generation of solar energy.

Electricity Act, 2003

Electricity Act, 2003 governs solar energy legislation in the country. The act mentions provisions for preferential tariffs and quotas for opting for renewable energy. Mandatory procurement of renewable energy for distribution licensees and facilitation of grid connectivity were incorporated. The act governs the generation, transmission, distribution, and trading of electricity, including the tariff for the sale of electricity.

Under this, the Central Government was supposed to prepare the National Electricity Policy and tariff policy, in consultation with the State Governments and the Authority for the 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.

Under Electricity Act 2003, co-generation of electricity from renewable sources of energy was allowed. Stand-alone systems based on renewable and non-renewable sources were permitted for rural areas back then.

This was the first step in India’s journey towards the inclusion of renewable energy in the energy mix. National Electricity Policy, 2005.

Non-conventional sources of energy are the most environment friendly. There was an urgent need to promote electricity generated by such sources of energy. For this purpose, efforts need to be made to reduce the capital cost of projects based on renewable sources of energy. The cost of energy was also reduced by promoting competition within such projects. Adequate promotional measures were also needed for new technology & development for sustainable growth of renewable resources.

Indian Electricity Grid Code, 2010

Under this policy, concerned RLDC and SLDC were supposed to maintain a record of schedule from renewable power generating stations based on the type of renewable energy sources i.e wind or solar from the point of view of grid security.

Under this policy, all renewable energy power plants, except for biomass and non-fossil fuel-based cogeneration plants whose tariff is determined by the CERC shall be treated as ‘MUST RUN’ power plants. Renewable energy-based plants were not subjected to ‘merit order dispatch’ principles in this policy which made a huge difference in the power industry.

CEA has formulated a plan for interstate as well as intra-state transmission systems. The transmission requirement for evacuating power from renewable energy sources was also taken into consideration while formulating the policy. The transmission system required for open access was taken into the account according to the National Electricity Policy so that congestion system operation is minimized.

Renewable Energy Certificates (REC) 2010

In the year 2010, RECs were introduced. The Central Electricity Regulatory Commission (CERC) has issued a notification in which the functions of the Central Agency were to undertake: registration of eligible entities, issuance of certificates, maintaining and settling accounts in respect of certificates, a repository of transactions in certificates, and such other functions incidental to the implementation of renewable energy certificate mechanism from time to time. The prices of the Certificate were discovered in the Power Exchanges.

There were two categories of certificates, viz., solar certificates issued to eligible entities for electricity generation based on solar as a renewable energy source, and non-solar certificates issued to eligible entities for electricity generation based on renewable energy sources other than solar. ‘Renewable Purchase Obligation’ was also introduced which means the requirement specified by the State Commissions for the obligated entity to purchase electricity from renewable energy sources.

The solar and non-solar certificates were supposed to be sold to the obligated entities to enable them to meet their Renewable Purchase Obligation (RPO) for solar and non-solar respectively.

National Tariff Policy 2016

The Tariff Policy 2016 has many measures to promote sustainable sources of power. Most of the SERCs have provided a trajectory to achieve the target of 8% solar RPO by March 2022.

Implementation status and issues relevant to various important provisions of the Tariff Policy 2016 were under five broad areas like Electricity for All, Efficiency Enhancement, Promoting Environment-friendly measures, Ease of doing business, and Tariff Rationalization.

Efficiency enhancement in various activities of the power sector, be it generation, transmission, or distribution, results in a reduction in the cost of the respective utility and therefore it should lead to a reduction in tariff. One way of achieving better efficiencies is through competition. In the cost-plus tariff regime, efficiency improvement can be achieved through performance-based regulation.

The Tariff Policy 2016 has provisions for efficiency enhancement through both these routes. Procurement of power be it short-term, medium-term, or long-term through competitive bidding is a major success story. The policy regarding competitive bidding for procurement of transmission service has been fully implemented at the inter-state level.

ALMM & BCD

Ministry of Finance, Government of India imposed Basic Customs Duty (BCD) based on MNRE (The Ministry of New and renewable Energy)’s proposal as 40% on Solar Module imports and 25% on Solar Cell imports effective from 1st April,2022 which encouraged domestic manufacturers. The ministry has amended the Approved List of Models and Manufacturers (ALMM) of Solar Modules to include open access and net-metering projects by April 1, 2022. As per the amendment, for all government projects, government-assisted projects, government-sponsored projects, open access projects, and net metering installations across the country, only products from manufacturers on the ALMM list will be allowed to be used.

Green Energy Open Access

The government of India has notified the green energy open access. The Green Energy Open Access(GEOA) Rules, 2022 are as below:

According to the rules, the consumers having a load >100 kW can directly purchase electricity through Renewable Power Producers (RPP) rather than only depending on DISCOMs.

Any consumer can opt to purchase renewable power by Own Generation from RE sources, Open Access from direct Developers/ via trading licensee/via power markets, by requisition from DISCOMs, by consuming green energy from the captive power plant, by purchasing REC(Renewable Energy Certificates), by purchasing green hydrogen.

There have been hindrances on the banking of green power by the DISCOMs, it has been mandated that DISCOMs will provide the banking of green power. To boost the green hydrogen, the GOI has provided additional benefits in terms of removing the open access charges if green energy is used to generate hydrogen.