How the legal framework can be modified to facilitate the expansion of the renewable energy industry

The advent of globalisation led to a competition for “power” – political, economic and commercial advancement governed much of the strategies of the developed and developing nations of the world. With the ever-increasing commercialisation and urbanisation, the requirement for energy, most importantly electricity, keeps rising and so rises the demand for the same. Harnessing the renewable energy resources such as the solar, wind, water, waste to energy, biomass etc. have proven to be the new goal for most of the countries in the world for meeting their energy requirements as well as reducing their carbon footprints.

India surpassed a significant milestone in the renewable energy sector in the year 2021 when it achieved one of its Paris 2030 Nationally Determined Contributions (NDC) commitment 9 years in advance after crossing the 40% installed capacity target from non-fossil sources in November, 2021 itself. The country surpassed the 100 GW renewable energy installed capacity (excluding large hydro) landmark, on August 12th, 2021. India stands at 4th position in the world in terms of overall installed Renewable Energy capacity. As on December 31, 2021, India’s renewable energy (RE) capacity stood at 104.88 GW and stands at more than 174.53 GW (including large Hydro) as of February 2023.

Legal framework
The Electricity Act, 2003, principally governs the power/electricity sector in India. The provisions of the Electricity Act, which provides a framework for the generation, transmission, distribution, trading and use of electricity, governs the regime of renewable energy in India. In terms of the Electricity Act, apart from discharging other functions, the Appropriate Commission has the power to determine the tariff for renewable sources of energy. The nodal agency relating to the matters of the development and growth of renewable energy in India is the Ministry of New and Renewable Energy.

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Schemes for the Renewable Energy Sector:

Government of India, in association with the Ministry of New and Renewable Energy and other dedicated ministries and organisations like SECI, has been focusing on articulating and initiating various schemes like development of Solar Park and Ultra Mega Solar Power projects and others to create and facilitate the necessary infrastructure like land, power evacuation facilities, road connectivity etc., required for propelling the use of renewable energy sources. The Solar Parks scheme is under implementation with a target capacity of 40 GW capacity by March 2024.
A number of subsidies were formulated and announced before the COVID-19 crisis, such as PM KUSUM (Pradhan Mantri Kisan Urja Suraksha evam Utthan Mahabhivan), and Phase II of FAME India scheme (Faster Adoption and Manufacturing of Hybrid & Electric Vehicles in India). The Government launched the PM-KUSUM scheme for the farmers to provide energy and water security, de-dieselise the farm sector and also generate additional income for farmers by producing solar power.
The Ministry of New & Renewable Energy, on 30.09.2022, has issued Scheme Guidelines for implementation of the Production Linked Incentive Scheme (Tranche II) on ‘National Programme on High Efficiency Solar PV Modules’, with an outlay of Rs. 19,500 crore. The Tranche-II is expected to result in setting up of around 65 GW of fully / partially integrated solar PV manufacturing.
MNRE is also developing the National Green Hydrogen Mission. The Ministry of Power notified provisions for facilitative open access and banking of renewable energy for green hydrogen production vide the green open access rules.
The Government of India along with relevant ministries has been consistently endeavoring towards enhancing and expanding the RE infrastructure. For facilitating and achieving the goal of 500 GW of installed electricity capacity from non-fossil sources by the year 2030, the Government has formulated schemes for solar rooftop, off-grid solar, green energy corridor, production linked incentive Scheme, schemes for wind and bio energy, etc.

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Government initiatives for domestic manufacturers:
With a view to promote the domestic manufacturers of solar PV cells and modules, MNRE has devised a scheme for setting up 12,000 MW grid connected Solar Photovoltaic (PV) Power Project by Government Producers. The said scheme is under the domestic content requirement, meaning that the project has to use domestically manufactured solar PV cells and modules.In addition, the central government imposed anti-dumping duty on “electrogalvanised steel” originating in or exported from Korea RP, Japan and Singapore, for a period of 5 years, to minimise the material injury caused to the domestic industry on account of import of such goods at reduced prices.With the Government of India and its instrumentalities paving way for fostering and encouraging the domestic manufacturers of RE goods and products, the concerns that loom large pertains to the capacity and ability of such domestic manufacturers to fulfil the growing demands of such products in India. Therefore, there is a need for the Indian Government to revisit the regulatory framework pertaining to imported goods required for the RE Sector.

Legislative framework for strengthening the RE sector:
The prevailing legislative framework governing the renewable energy sector in India lacks the structure and the approach required for the assimilation and accentuation of the different kinds of renewable energy sources for its optimum utilisation. For example, there is no provision for mandatory use of the renewable energy resources for energy generation and consumption in the prevailing legal framework.

The Electricity (Amendment) Bill, 2022 aims at giving impetus to the renewable energy sector. Addressing some of the prevailing challenges, the Bill seeks to bring modifications in strengthening and consolidating the legal framework for the renewable energy sector:

The Bill proposes to impose a penalty for the non-compliance by licensees in meeting Renewable Purchase Obligation (RPO). The proposed amendment seeks to achieve uniformity in the procurement mechanism of renewable energy.
It provides for promotion of generation of electricity from renewable sources of energy by providing suitable measures for connectivity with the grid and sale of electricity to any person.

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India’s participation in the generation and consumption of energy is increasing with each passing day. For a holistic and sustainable development, there is a requirement for further expansion of the renewable energy infrastructure. For this purpose, there is an urgent requirement for a separate regulatory framework governing the renewable energy sector, which will assimilate the pertinent issues of the renewable energy sector and facilitate the achievement of a robust and reliable renewable energy industry.

Rajdutt Shekhar Singh is Partner and Swekcha Singh is Sr. Principal Associate at S&A Law Offices.

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