India RE Law/Policy

Table of Contents

Last updated Jan. 31, 2024.

Electricity Sector Overview

Under the Indian constitution, electricity comes under the purview of both the Central and State governments. Both Central and State governments conduct policy-setting as well as generation and transmission of electricity, but the distribution and end-user supply of electricity, and the associated tariff setting, are exclusively governed by the State governments.

In 2003, the Electricity Act was enacted in place of the Indian Electricity Act, 1910 and the Electricity Supply Act, 1948 to promote the participation of the private sector and competition.

The institutional structure of the Indian power sector is illustrated below:

Source: Centre for Energy Finance

The Indian power sector has undergone many changes, leading to a commercial environment with independent regulators, restructuring, and privatization in the sector. After the Electricity Act, 2003, private entities no longer need to obtain licenses to generate electricity and connect to the grid. Distributed generation and open access to the grid is allowed in India, with captive power and distributed generation traditionally used by industries.

The following charts illustrate India’s electricity mix:

Source: OurWorldinData.org. Click to access interactive graphs.

The following charts display India’s energy mix (not just the electricity sector):

Source: India Climate & Energy Dashboard (NITI Aayog). Interactive versions of these graphs, as well as other related graphs, are available on the Dashboard.

Other References

Summary of RE Laws/Policies

In India, the central government and state governments share the power to legislate on electricity-related matters, but in cases of conflict the central government prevails. The CBIP & IREDA website hosts a compendium of India’s national and state laws and policies governing renewable energy. State policies are not listed in this document, so please see the compendium (linked below) for more details.

The primary law governing electricity, including electricity generated from renewable sources, is the Electricity Act 2003. The Central Electricity Regulatory Commission (CERC) (Terms and Conditions for Tariff Determination from Renewable Energy Sources) Regulations 2020 issued under the EA 2003 defines RE as as “electricity generated from renewable energy sources” and further specifies renewable sources as “water, wind, sunlight, biomass, bagasse, municipal solid waste and other such sources as approved by the [Ministry of New and Renewable Energy].”1Amar Narula, Atyotma Gupta & Ujjwal Gupta, The Renewable Energy Law Review: India, Trilegal (Jul. 20, 2023), https://thelawreviews.co.uk/title/the-renewable-energy-law-review/india

The Electricity Act 2003 was enacted to reform and consolidate laws relating to generation, transmission, distribution, trading, and use of electricity (which were previously governed by the Indian Electricity Act 1910 and the Electricity Supply Act 1948). The Electricity Act 2003 aimed to promote competition, protect the interests of the consumer, rationalize electricity tariffs, ensure supply of electricity to all areas, establish Regulatory Commissions and an Appellate Tribunal for Electricity, lower cross-subsidization levels, and provide for new concepts such as power trading and open access in transmission and distribution.2Privthi Raj, Legal Framework Related to Renewable Energy in India—A Critical Study, GAP iNTERDISCIPLINARITIES (Mar. 2022), https://www.gapinterdisciplinarities.org/res/articles/(27-32)%20LEGAL%20FRAME%20WORK%20RELATED%20TO%20RENEWABLE%20ENERGY%20IN%20INDIA-%20A%20CRITICAL%20STUDY.pdf The Electricity Act 2003 also mandates the State Commission to “provide suitable measures” for connectivity to the grid and sale of electricity from renewable sources.

The draft National Renewable Energy Act of 2015 seeks to promote renewable energy by creating a legislative framework that is integrated with the energy and electricity system, and to level the playing field between renewable energy and conventional energy sources. Under the proposed law, the Central Government is to formulate, monitor, and revise the National Renewable Energy Plan, carry out research and development to support and programs to deploy RE, issue guidelines to support state-level RE plans, etc. State Governments are to formulate, monitor, and implement RE plans at the state level. There has been skepticism about the discretionary nature of the obligation to set up a State Green Fund. The National Renewable Energy Act appears to remain in the draft stage.

Indian policies such as the PLI Scheme supporting domestic manufacturing of solar panels have already shown results in promoting renewable energy, more than doubling India’s capacity to reach 6.6GW of cells and 38GW of modules in 2023.3https://ieefa.org/resources/indias-rising-prominence-solar-photovoltaic-manufacturing

The National Solar Mission also plays an important role in India’s renewable energy development due to India’s high solar energy potential. The National Solar Mission’s objectives include establishing India as a global leader in solar energy by creating the policy conditions for its rapid diffusion across the country.4Jawaharlal Nehru National Solar Mission, https://www.seci.co.in/upload/static/files/mission_document_JNNSM(1).pdf

New Policies

In 2023, the National Electricity Plan Volume I: Generation was notified.5Central Electricity Authority notifies the National Electricity Plan for the period of 2022-32, Ministry of Power (May 31, 2023), https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1928750.

On December 7, 2023, the Ministry of New and Renewable Energy issued the Policy for Repowering of the Wind Power Projects. The policy enables old wind energy turbines to be repowered or refurbished with technological advancements to increase their operational life and efficiency while considering safety. The policy revises the former iteration issued in August of 2016.

On January 1, 2024, the Ministry of New and Renewable Energy issued the New Solar Power Scheme (for Particularly Vulnerable Tribal Groups (PVTG) Habitation / Villages) under Pradhan Mantri Janjati Adivasi Nyaya Maha Abhiyan (PM JANMAN). The Scheme covers electrification of one lakh un-electrified households in PVTG areas identified by the Ministry of Tribal Affairs (MoTA) and located in 18 states through the provision of off-grid solar systems where electricity supply through the grid is not techno-economically feasible.

The Delhi government announced a new Solar Policy 2024 in January, 2024.6Delhiites to pay ‘zero electricity bills’ if…: CM Arvind Kejriwal announces new Solar Policy 2024 (Jan. 29, 2024), https://www.livemint.com/news/delhi-people-to-pay-zero-electricity-bills-if-cm-arvind-kejriwal-govt-new-solar-policy-2024-11706526425461.html. Under the new policy, those who install solar panels on their rooftops will have zero electricity bills, and government buildings with an area of 500 square meters or more must mandatorily have solar panels installed within the next three years.7Livemint, supra.

Great Indian Bustard Case

On April 19, 2021, the Supreme Court of India passed an order classifying certain areas as priority and potential areas of habitats of the endangered great Indian bustard (GIB) and requiring the undergrounding of all future and existing low-voltage lines in those areas. Among these areas are Rajasthan and Gujarat, which are known for RE potential. The undergrounding requirement would increase project costs, and the MNRE filed a review petition, arguing that undergrounding of transmission lines is unfeasible. The Supreme Court ordered that the installation of bird diverters is mandatory for overhead transmission lines in the GIB priority areas and constituted a committee that power companies could move to seek exemptions to the undergrounding order.8Regulator’s guidelines on Rajasthan power lines ‘flout’ Supreme Court orders, threaten the Great Indian Bustard: Petitioner, https://www.thehindu.com/sci-tech/energy-and-environment/regulators-guidelines-
on-rajasthan-power-lines-flout-supreme-court-orders-threaten-bustard-petitioner/article66584006.ece On February 1, 2023, the Central Electricity Authority (CEA) issued Draft Central Electricity Authority (Construction of Electric Lines in Great Indian Bustard Area) Regulations, 2023 proposing that only lines below 33 KV need to go underground. The case seems to be still ongoing.

Initial Critique of RE Laws/Policies

India’s policy framework has been criticized for disparity between states, the lack of a conducive policy environment for rooftop or captured RE plants in significant states, and the drive for more gas uptake in some cities such as Mumbai. Furthermore, while some states are more advanced in renewable deployment than others, their laws and policies lack sufficient safeguards for social and ecological harms that can result from renewables projects, especially with regard to use of lands classified as “fallow” but claimed by local communities as common land.

In 2018, the Central Electricity Authority (CEA) stated that India does not need any more coal power and produced a list of power plants to be retired.9Silvio Marcacci, India Coal Power Is About to Crash: 65% of Existing Coal Costs More than New Wind and Solar, Forbes (Jan. 30, 2018), https://www.forbes.com/sites/energyinnovation/2018/01/30/india-coal-power-is-about-to-crash-65-of-existing-coal-costs-more-than-new-wind-and-solar/ In 2023, however, the CEA reversed its stance on closing the coal plants, and the government is currently promoting coal in addition to renewable energy.10Sudarshan Varadhan, India asks utilities to not retire coal-fired power plants till 2030 – notice, Reuters (Jan. 29, 2023), https://www.reuters.com/business/energy/india-asks-utilities-not-retire-coal-fired-power-plants-till-2030-notice-2023-01-30/; Joshua W. Busby et al., The case for US cooperation with India on a just transition away from coal, Brookings (Apr. 20, 2021), https://www.brookings.edu/articles/the-case-for-us-cooperation-with-india-on-a-just-transition-away-from-coal/ Although a large volume of renewable energy is being produced, due to the push for coal and gas, potential renewable energy contributions to the grid are being offset and wasted. Large hydro, which has a large ecological footprint and potential for social harm, is also being promoted by the government as a renewable energy source.

The disbursement of payment to renewable power developers has posed a hurdle to renewable expansion in India; payments have often been backlogged or delayed. Also, due to India’s high technical and commercial losses, many distribution companies have not been able to meet renewable energy percentages mandated by Renewable Power Obligations (RPOs).

IEEFA’s analysis concludes that continued government support and policy stability are necessary to push Indian solar PV manufacturing into a globally competitive position. The National Electricity Plan (NEP) Vol. II (Transmission) was released in 2019 under the Electricity Act 2003, which incorporates review of 2017-2022 development of the transmission system and planning for 2022-2027 and 2027-2032 offers opportunities to speed up the transition.

India’s National Policies vs. UN Commitments

India’s international targets declared in its NDC submitted to the UNFCCC are notably less ambitious than its national policies.11A tale of two climate policies: India’s UN commitments aim low, but its national policies are ambitious – here’s why that matters, The Conversation (Aug. 23, 2022, last updated Aug. 27, 2022), https://theconversation.com/a-tale-of-two-climate-policies-indias-un-commitments-aim-low-but-its-national-policies-are-ambitious-heres-why-that-matters-188865. Two of India’s primary targets stated in its 2022 NDC are to (1) reduce emissions per unit of gross domestic product (GDP) by 45% relative to 2005, and (2) increase “non-fossil fuel-based” electric power installed capacity to about 50% by 2030.12India’s NDC, https://unfccc.int/sites/default/files/NDC/2022-08/India%20Updated%20First%20Nationally%20Determined%20Contrib.pdf.

On the other hand, while India’s current installed electricity capacity from non-fossil fuel sources is about 25%, its national policies state the intention to more than triple that capacity to 500 gigawatts by 2030.13The Conversation, supra. It is possible that India’s past failures to meet ambitious renewable energy targets have contributed to its reluctance to formally commit to higher international targets.14The Conversation, supra.

The disparity between India’s national policies and its NDC pledges could hinder India’s energy transition and its ability to raise international climate finance.15The Conversation, supra.

Renewable Energy-Round the Clock (RE-RTC)

In February of 2024, India’s Central Electricity Authority released the Techno-Economic Analysis of Renewable Energy-Round the Clock (RE-RTC) Supply for Achieving India’s 500 GW Non-Fossil Fuel Based Capacity Target by 2030. RE-RTC combines renewable sources with storage systems like battery energy storage or pumped storage hydro (PSP) to ensure a steady power supply, and the paper considers generation profiles, storage solutions, investment costs, and demand patterns.16Mohan Gupta, Driving India’s Renewable Energy Future: A Closer Look at RE-RTC Solutions to Achieve 500 GW by 2030, In Light of CEA Report, Solar Quarter (Feb. 12, 2024), https://solarquarter.com/2024/02/12/driving-indias-renewable-energy-future-a-closer-look-at-re-rtc-solutions-to-achieve-500-gw-by-2030-in-light-of-cea-report/. RE-RTC offers the advantages of reliable power supply, reduced dependency on fossil fuels, and enhanced grid stability, but there is still need for accelerated research and development in storage technologies and the establishment of supportive policy frameworks.17Gupta, supra.

Other References

Renewable Energy Targets

National Renewable Energy Laws/Policies

**NOTE**

Compendium of Central and State Government Policies on Renewable Energy Sources in India
Hosted on Central Board of Irrigation and Power (CBIP) & Indian Renewable Energy Development Agency (IREDA) website

The Compendium also lists and links to renewable energy policies in each Indian state, including wind and solar. I have not listed them all here due to the volume and because they are already well-organized on the website. Please visit the Compendium page to investigate State policies.

**END NOTE**

General

Incentives for RE Development

MNRE Solar Policies and Guidelines (Link)

  • New Solar Power Scheme (for PVTG Habitation / Villages) under PM JANMAN (January 2024)
  • OM – Opening and maintaining of adequate letter of credit (LC) as payment security mechanism under Power Purchase Agreements by distribution licensees – clarification (5.8.2019)
  • OM – Letter of credit as payment security clarification on fixed charge (31st July 2019)
  • Waiver of inter state transmission for Solar by 2022 order of Ministry of Power (13th February 2018)
  • Guidelines for Tariff Based Competitive Bidding Process for Procurement of Power from Grid Connected Solar PV Power Projects (3rd August 2017)

MNRE Wind Policies and Guidelines (Link)

  • Policy for Repowering of the Wind Power Projects (December 2023)
  • Wind Data Sharing Policy (WDSP)- NIWE (September 2019)
  • Amendment in National Wind-Solar Hybrid Policy – Reg. (13th August 2018)
  • National Wind Solar Hybrid Policy (14th May 2018)
  • National Offshore Wind Energy Policy (6th October 2016)

De-incentivizing Fossil Fuels

International Cooperation

  • Agreed Minutes of the 5th session of the Indian-Hellenic Joint Economic Committee
  • Agreement between the Government of the Federal Republic of Germany and the Government of the Republic of India on financial cooperation 2012
    • Info / PDF / Backup PDF
    • Enables a low-interest loan from the German Development Bank for renewable energy projects

Energy Efficiency

  • Energy Conservation Building Code 2017 (ECBC 2017)

Prioritizing Types of RE

Government Studies

  • Techno-Economic Analysis of Renewable Energy-Round the Clock (RE-RTC) Supply for Achieving India’s 500 GW Non-Fossil Fuel Based Capacity Target by 2030

State Laws/Policies Not in Compendium

General

Incentives for RE Development

References