The Renewable Energy Law Review: India

Introduction

In India, the primary legislation governing electricity (including renewable energy (RE)) is the Electricity Act 2003 (EA 2003). The power to legislate on matters concerning electricity is shared between the central government and the state governments.2 However, in case of inconsistency between the two, central legislation will prevail over state legislation.3

While the EA 2003 itself does not define RE, other regulations have done so. For example, the Central Electricity Regulatory Commission (CERC) (Terms and Conditions for Tariff Determination from Renewable Energy Sources) Regulations 2020 issued under the EA 2003 define RE as 'electricity generated from renewable energy sources'.4 An RE source is further defined in these regulations as a 'renewable source of energy such as water, wind, sunlight, biomass, bagasse, municipal solid waste and other such sources as approved by the [Ministry of New and Renewable Energy]'.5 Additionally, in 2019, the Ministry of Power (MoP) categorised large hydropower projects with a capacity of more than 25MW under the ambit of RE sources.6

India occupies the fourth position for overall installed RE capacity in the world.7 Foreign direct investment up to 100 per cent is permitted in the RE sector under the automatic route (i.e., no government approval is required),8 making it an attractive option for foreign investors.

The Indian government aims to achieve 175GW of installed RE capacity by the end of 2022 and establish installed RE capacity of 450GW by 2030.9 As at 31 December 2021, the cumulative installed RE capacity was 151.37GW, which included 49.34GW of solar capacity, 40.08GW of wind capacity, 10.61GW of biopower and 51.34GW of hydropower.10

The year in review

During the covid-19 pandemic, India experienced a steady stream of deal traffic in the RE realm. Below are the key developments in the RE sector over the past year.

i Extensions of time granted during the covid-19 pandemic

In 2020 and 2021, the Ministry of New and Renewable Energy (MNRE) granted two extensions to developers of RE projects due to the covid-19 pandemic. The first extension was for five months, while the second was to be decided depending on covid-19 developments. Subsequently, the MNRE on 17 March 2022 permitted wind power developers a further extension of three months in the scheduled commissioning date on account of disruptions to the supply chains due to covid-19. However, this extension was conditional on the wind power developers having executed the power purchase agreement (PPA) and placed orders for wind turbines prior to 15 June 2021.11

ii Supreme Court's ruling on the great Indian bustard

The great Indian bustard (GIB) has been identified as a critically endangered species in India. On 19 April 2021, the Supreme Court passed an order12 classifying certain areas as priority areas and potential areas of GIB habitat, requiring undergrounding of all future and existing low-voltage lines in such areas. Similarly, for future and existing high-voltage lines, the order mandated that these lines be converted into or laid as underground lines unless a Supreme Court-appointed committee determines that this is not technically feasible. In such a case, only bird diverters will be installed. The order is crucial as it will cause an increase in the project cost for projects that were situated in the identified GIB habitats, which are in the states of Rajasthan and Gujarat, both of which are known for their RE potential.

Subsequently, the MNRE filed a review petition contending that the undergrounding of transmission lines was unfeasible due to logistical complexities and cost implications. The Supreme Court, in its 21 April 2022 order, ordered that the installation of bird divertors is mandatory for overhead transmission lines in the GIB priority areas and developers seeking an exemption from undergrounding the transmission lines may move the committee constituted by the Supreme Court. The matter is listed for further directions on 20 July 2022.

iii Green Hydrogen Policy

The MoP notified the Green Hydrogen Policy on 17 February 2022. Some salient features of the policy are:

  1. waiver of interstate transmission charges for a period of 25 years;
  2. banking shall be permitted for 30 days for RE used for making green hydrogen or green ammonia; and
  3. connectivity will be provided on a priority basis.13

iv General Network Access Rules

The CERC, on 7 June 2022, issued the Central Electricity Regulatory Commission (Connectivity and General Network Access to the inter-State Transmission System) Regulations 2022 (the GNA Rules), which will come into force on the date of notification by the CERC. Such regulations seek to replace the current regulations related to connectivity to the interstate transmission system.

The GNA Rules allow developers and consumers to interconnect with the grid for the injection or withdrawal of power without having to specify the transmission route. Further, developers will not have to specify their target beneficiaries when seeking connectivity.14

v Removal of additional surcharge and interstate transmission system charges

Previously, there was ambiguity regarding whether captive consumers were required to pay a surcharge on open access, known as 'additional surcharge'. On 10 December 2021, the Supreme Court clarified that the additional surcharge will not be leviable on captive consumers as they form a different class of consumers (under the EA 2003) to whom open access to the transmission system has been granted as a right.15

Further, the MoP has extended the waiver on the payment of interstate transmission system charges on transmission of electricity generated from projects that utilise solar and wind resources (whether for self-consumption or sold to any entity through competitive bidding, or power exchange or bilateral agreements). For the first time, the MoP has granted the waiver to hydro-pumped storage plants and battery energy storage system projects to be commissioned until 30 June 2025, subject to certain conditions.16

vi Key deals in the past year

In August 2021, Copenhagen Investment Partners and Amp Energy India Pvt Ltd entered into an investment agreement that enabled joint equity investments in excess of US$200 million in RE projects in India.17

In April 2022, Shell Overseas Investment signed an agreement with Actis Solenergi Limited to acquire 100 per cent of Solenergi Power Private Limited for US$1.55 billion. The transaction is expected to close later in 2022.18

In April 2022, it was reported that Mitsui and Co is acquiring a 49 per cent stake in ReNew Power's 400MW round-the-clock (RTC) utility-scale RE project.19

In December 2021 and February 2022, respectively, KKR-backed Virescent Infrastructure acquired:

  1. a 49MW portfolio of operating solar projects from Focal Energy; and
  2. a 50MW solar project from Godawari Power and Ispat Limited.

The Virescent Renewable Energy Trust also raised approximately US$87 million through a domestic bond issuance in February 2022 to fund its immediate acquisition-related debt requirements.20

In February 2022, Sify Technologies Limited entered into PPAs with Vibrant Energy Holdings for a total capacity of 231MW to supply power to Sify's hyperscale data centres.21

The policy and regulatory framework

i The policy background

The EA 2003 requires the central government to issue a national energy policy and a tariff policy from time to time.22 Additionally, every five years and based on the national energy policy, the central government is required to issue a national electricity plan.23

In April 2021, the MoP issued the draft National Energy Policy 2021,24 which is yet to be notified, to replace the existing National Electricity Policy 2005. The draft policy houses various aspects, including grid operation, energy efficiency and security, optimal generation mix, and transmission distribution.

Further, the draft Electricity (Amendment) Bill 202025 has been released to, among other things, boost private sector participation, reduce subsidies in the power sector and set up a contract enforcement authority to regulate contractual disputes in the power sector.

Under the EA 2003, project tariffs may be undertaken by competitive bidding26 or may be predetermined by the relevant electricity commission.27 The National Tariff Policy 2016 encourages the states to procure power through competitive bidding to keep the tariff low.28

Key policy developments impacting RE development in India are as follows.

Competitive Bidding Guidelines

To promote fairness and standardisation in the competitive bidding process, the Indian government has notified guidelines for tariff-based competitive bidding processes for grid-connected solar,29 wind,30 hybrid31 and RTC32 projects (the Competitive Bidding Guidelines).

The Competitive Bidding Guidelines apply to long-term procurement of electricity by the distribution licensees from projects that are above the respectively prescribed capacities, through competitive bidding. Any deviation from the relevant Competitive Bidding Guidelines needs to be approved by the relevant regulatory commission.

RTC tender issued by Solar Energy Corporation of India

To tackle intermittency issues in RE-based projects by reverse bundling high-cost power with cheaper RE power, in 2020, Solar Energy Corporation of India (SECI) issued a tender for 2.5GW of RTC power from RE projects on a reverse-bundling basis with power from any other (i.e., non-RE) source. The tender was won by Hindustan Thermal Project for 250MW. From public sources, we understand that SECI is considering retendering the remaining 2.25GW.33

Captive generating plants

A captive generating plant is a power plant set up by any person or association of persons to generate electricity primarily for their own use that meets the following criteria:34

  1. captive users must collectively hold not less than 26 per cent of the equity share capital (with voting rights) in the project company that owns such a plant; and
  2. captive users must collectively consume not less than 51 per cent of the aggregate electricity generated by such plant in a financial year and such consumption (i.e., up to 51 per cent) must be proportionate to each captive user's equity share capital, with a permissible variation of plus or minus 10 per cent.

However, note that the Appellate Tribunal for Electricity (APTEL) has held that the proportionality requirement is not required to be complied with if the captive generating plant is set up by a special purpose vehicle (SPV).

The advantage of structuring a project as a captive generating plant is that such plants are exempted from payment of certain regulatory charges, such as the cross-subsidy surcharge and additional surcharge.35

Renewable purchase obligations

Section 86(1)(e) of the EA 2003 states that each state electricity regulatory commission (SERC) must specify a percentage of electricity to be purchased from RE sources. Pursuant to this, various SERCs have notified regulations specifying the renewable purchase obligations (RPO) for the obligated entities as defined under each state's regulations, typically including the distribution licensees and open access consumers for such states.

Similar to the RPO, the MoP is considering setting targets for the purchase of green hydrogen by refineries and fertiliser plants, called the hydrogen purchase obligation (HPO). A proposal has been submitted to Cabinet to this effect, wherein the initial HPO is proposed to be set at 10 per cent.36

Renewable generation obligations

The Indian government has taken certain policy measures, through national tariff policies, relating to a renewable generation obligation37 that seeks to encourage coal-based thermal power generators to diversify into an RE portfolio. It imposes, subject to the central government prescribing limits from time to time, a compliance regime whereby conventional plants are also required to produce a share of their generation from RE sources, by either establishing their own RE sources and generating RE equivalent to the required capacity or procuring the required capacity from another RE source. We have not seen any notification yet wherein the central government has prescribed such limits.

Electric vehicles

India is steadily adopting policy initiatives for electric vehicles with states such as Delhi releasing focused policy measures and providing incentives of up to 150,000 rupees to speed up the process.38 The National Institution for Transforming India (NITI Aayog), which is a policy think tank of the Indian government,39 has also released a report highlighting the need for increased investment to speed up India's transition to electric mobility.40

Energy storage

India currently lacks regulation in the energy storage sphere. However, both the MNRE and NITI Aayog are coordinating to formulate such regulation. In 2019, NITI Aayog modelled the Energy Storage System Roadmap for India for 2019 to 2032 and implementation of this is under way.41 In addition, the MoP has notified the Guidelines for Procurement and Utilization of Battery Energy Storage Systems as part of Generation, Transmission and Distribution Assets, along with Ancillary Services (the ESS Guidelines). The objective of the ESS Guidelines is to tackle the issues that arise due to the variable and infirm nature of RE, and to enable RE projects to maintain a continuous supply of energy.42 Meanwhile, tenders are continuously being issued for energy storage, with one of the most recent being that of NTPC Renewable Energy Limited (NREL) to set up pilot projects of 3,000MWh battery energy storage systems on a build–own–operate model, either as a stand-alone project or adjacent to or within NREL's upcoming projects.

ii The regulatory and consenting framework

As previously mentioned, the EA 2003 is the primary legislation on electricity in India. Additionally, there are regulations specific to each state. India is a common law jurisdiction, and relies on precedents and decisions of the Supreme Court, the APTEL, and the central and state electricity regulatory commission to shape the jurisprudence with regard to RE.

In relation to the supply of power, in terms of the electricity regulatory commission, the CERC exercises interstate jurisdiction while the SERCs or joint electricity regulatory commissions (JERCs) (set up for each state or group of states in India) regulates intra-state matters. The appeals from the CERC and SERCs or JERCs are decided by the APTEL. An appeal to an order of the APTEL lies with the Supreme Court.

Each state also has a State Nodal Agency in place, as may be designated by the MNRE, to promote efficient use of RE in that state. Additionally, the EA 2003 constituted the Central Electricity Authority as the technical advisory body to the Indian government and the electricity regulatory commissions.

Permits and approvals

Unlike for transmission, distribution and trading of electricity, the generation of electricity itself is a delicensed activity under the EA 2003, provided that a generating station complies with all technical standards for grid connectivity. However, during the lifetime of the project (including the pre-construction and construction phases), there are numerous approvals that are required by the developer from government authorities for other activities, including for adoption of the tariff discovered through competitive bidding, connectivity with the grid, utilising the transmission utility's network, charging the electrical infrastructure, laying of overhead transmission lines, etc. Further, if the project is situated within a certain distance from an airport or a defence base, approval from the relevant ministry will also be required. Additionally, developers are required to ensure compliance with the industrial and labour laws prevalent in the area where the project is being undertaken.

During the process of land acquisition, there are state-specific permits and approvals required to be obtained. There are also certain restrictions on setting up a power project within sensitive areas – such as sanctuaries, national parks and reserve forests – that must be kept in mind.

With respect to environmental approvals, solar and wind projects have been exempted from obtaining typical environmental clearances that are required for other projects and industries such as the environmental clearance from the Ministry of Environment, Forest and Climate, and the consent to establish (CTE) and the consent to operate (CTO) from the state pollution control board.43 In relation to the CTE and the CTO, an intimation to the relevant state pollution control board will suffice.

Renewable energy project development

i Project finance transaction structures

An RE project is generally housed under an SPV incorporated for the specific purpose of undertaking the project, which normally has no pre-existing businesses, rights or liabilities except for the ones related to the project that it is undertaking. In this structure, the assets of the renewable project are ring-fenced and can be securitised in favour of the lenders.

The principal participants in a project finance transaction typically involve the following parties:

  1. the lender or lenders who lend for the purposes of project development;
  2. the borrower (i.e., the SPV) who avails themselves of the loan;
  3. the lenders' agent, appointed by the lenders in a syndicated financing to act on their behalf;
  4. the security trustee, who will hold the security on behalf of and for the benefit of the lenders – usually when the security package needs to be created in favour of a group of lenders or a non-resident lender;
  5. the arranger (typically the lead bank) who, in case of a syndicated loan, facilitates or arranges for the loan; and
  6. the promoter (entity holding the shares of and controlling the borrower) who will provide project-related undertakings, such as an obligation to provide cost overrun support to the SPV as well as a pledge over the shares of the SPV.

The SPV, while availing project finance, will typically enter into a variety of documentation including:

  1. the loan agreement between the lender and the SPV (i.e., the primary document governing the terms of the loan);
  2. security documentation, in which security over the project assets is created and includes a combination of a mortgage over immovable properties, hypothecation over movable properties and pledge on the shares of the SPV by the promoter; and
  3. undertaking from the promoter or a corporate guarantee guaranteeing, among other things, the liabilities of the SPV and cost overrun support.

Depending on the structure, other documentation may also be required. For example, if a security trustee or a lender's agent is appointed, then a security trustee agreement or a lender's agent agreement will also be entered into.

RE projects in India may be financed by domestic or non-resident lenders. Non-resident lenders need to be residents of a country compliant with the Financial Action Task Force or the International Organization of Securities Commissions to be eligible to lend in compliance with Reserve Bank of India (RBI) (i.e., India's central bank) guidelines on external commercial borrowings (ECB).44 Multilateral financial institutions – such as the International Finance Corporation and the Asian Development Bank, among others – can also lend in accordance with the ECB guidelines.

Generally, for domestic lenders, the tenor of debt for the purposes of infrastructure development (including RE projects) is for a lengthy term (typically 15 to 20 years) to ensure that the debt repayment can be actualised during the operational phase of the project. Non-resident lenders need to ensure that the loan meets the minimum average maturity requirement as applicable to the loan under the ECB guidelines.

To promote development of RE projects, the RBI has mandated that domestic lenders, as part of priority sector lending, extend a certain prescribed percentage of loans out of their total lending for RE projects such as biomass-based power generators, windmills and micro-hydel plants.45 Further, for loans from non-resident lenders, approval of the RBI (which is typically required) will not be required if the loan amount is up to US$750 million per financial year and complies with the ECB guidelines.46

ii Power purchase

There is a robust market for power purchase from RE projects in India, both by government entities and by commercial and industrial consumers. The key RE purchasers in India are the following.

State distribution licensees

Power generated from a power plant may be sold to distribution licensees (either directly or through a government intermediary procurer). In such cases, the tariff is either:

  1. determined by the relevant SERC, which occurs periodically and a feed-in tariff for a specific period (a control period) is established; or
  2. adopted by the relevant electricity regulatory commission, wherein developers have been selected on the basis of tariff-based competitive bidding.

In case of an intermediary procurer, such intermediary procurer enters into a PPA with the producer and, in turn, sells the power to the distribution licensees through a power sale agreement on a pass-through basis and levies a trading margin on the distribution licensee for this arrangement.

One landmark tender in the past year was Rewa Ultra Mega Solar Limited's award of solar power projects across three solar parks with a cumulative capacity of 1,500MW in Madhya Pradesh in September 2021.47

Third-party and captive open access consumers

Electricity generated from a power plant may be sold directly to captive consumers and third parties at mutually agreed rates through open access (i.e., by using the transmission network of the transmission utility or the distribution network of the distribution licensee in whose area the purchaser is located). In that context, the EA 2003 requires transmission utilities and distribution licensees to provide non-discriminatory access to their networks for use by power generators and consumers on payment of certain charges known as open access charges.48

Rooftop and distributed solar customers

Please refer to Section V for an analysis of the rooftop and distributed solar segment in India.

Sale on the power exchanges

Generators may choose to sell power generated from their project on power exchanges in India. This sale of power is governed by the CERC (Open Access in inter-State Transmission) Regulations 2004.49

Additionally, there is also a market for renewable energy certificates (RECs). To enable obligated entities to meet their RPO (as discussed in Section III.i), the government has introduced a voluntary opt-in market mechanism – REC trading.50 RECs represent the power generated with RE as a primary source. The traits of RECs are unbundled from the electric power produced and both are sold or purchased separately in India. RECs can be traded on the power exchanges at market price or through electricity traders at prices mutually agreed between the issuer and electricity trader. Obligated entities can fulfil their RPO by purchasing RECs in accordance with the prevailing regulations.51

If a producer chooses to remain out of the REC system, it may register itself with other voluntary environmental attribute tracking systems, such as the International REC Standard.

iii Non-project finance development

While larger projects are typically funded through project financing, smaller projects (especially rooftop projects) may be funded by way of inter-company loans or balance sheet financing.

Distributed and residential renewable energy

The Indian government has set an ambitious target of reaching 40GW of installed rooftop solar capacity by the end of 2022 to strengthen the grid, reduce land requirements and improve energy security.52 According to market sources, the total capacity of rooftop installation in India surpassed 7.7GW as at June 2021,53 with 1.7GW being added in 2021.54

To encourage rooftop projects, the MNRE has issued programmes55 aimed at providing financial assistance for setting up rooftop solar plants and incentives to distribution licences for installing additional grid-connected rooftop capacity.56

There are currently two prevailing business models for the installation of solar rooftop projects in India: operational expenditure (OPEX) or capital expenditure (CAPEX). Under the OPEX model, the developer develops and installs the rooftop solar system at its own cost and sells power to the rooftop owner or occupier through a PPA to recover the costs incurred, plus profit. The developer retains ownership of and operates and maintains the rooftop solar system, and is granted access to the rooftop by the owner through a registered contractual right of way, licence or lease. Under the CAPEX model, the rooftop owner or occupier owns the rooftop solar system and bears capital expenditure for the installation of a rooftop solar system, whereas the developer merely acts as an engineering, procurement and construction (EPC) or operation and maintenance (O&M) contractor.

Per market sources, the key Indian players in the rooftop solar sphere in 2021 were Tata Power Solar, Fourth Partner Energy, Sunsure Energy, Amplus Solar and Jakson Power.57

Renewable energy supply chains

India's RE sector is backed by a strong manufacturing base owing to entities such as Adani Group, Tata Power, Vikram Solar, ReGen Powertech and Vestas India, among others. However, as a result of cost factors, Chinese imports still constitute approximately 80 per cent of Indian solar cells and modules requirements.58

Previously, tenders issued under various government schemes contained a domestic content requirement (DCR) mandating the use of domestically manufactured modules and cells for solar projects. However, after the World Trade Organization (WTO) in 2016 held India's DCR requirement to be in breach of international trade rules, India ceased to impose DCR measures that were inconsistent with the WTO's findings.59 Government support policies to encourage domestic production and procurement include the following.

i MNRE policies

The MNRE has issued guidelines for enlistment of eligible models and manufacturers of solar cells and modules that comply with certain standards. It has also issued the Approved List of Modules and Manufacturers (ALMM) for solar projects in India.60 Only the modules and manufacturers listed in the ALMM will be eligible for use in government, government-assisted projects, and projects under government schemes and programmes installed in India. From 1 October 2022, these requirements will also apply to projects that apply for open access and net metering status. As at May 2022, only Indian manufacturers have been included in the ALMM, which was issued on 10 March 2021 and last updated on 5 April 2022.61 However, it will be updated as and when other manufacturers and modules are tested and approved by the MNRE.

On 9 March 2021, the MNRE imposed a basic customs duty of 40 per cent and 25 per cent on the import of solar modules and solar cells, respectively, with effect from 1 April 2022.62 However, as the customs notification for such customs duty is awaited, there is certain ambiguity regarding its applicability.

In April 2021, the MNRE approved the Production-Linked Incentive Scheme in the high-efficiency solar modules sector, rewarding manufacturers for higher efficiencies in solar modules and sourcing their materials from domestic markets.63 ReNew Power tapped into this scheme to set up its solar cells and modules manufacturing unit in Gujarat in May 2021.64 Further, tenders have been awarded recently to Reliance New Energy Solar, Shirdi Sai Electricals and Adani Infrastructure to set up manufacturing units with a cumulative capacity of over 8.7GW for the production of solar modules under the scheme.65

ii Foreign policies

In view of the globalised supply chain for RE equipment and technologies, the Indian government has also formed foreign alliances and released various trade policies, including the International Solar Alliance (ISA) under the Paris Declaration66 with 75 signatory countries. An Indian public sector undertaking, NTPC Limited, has already entered into project management consultancy contracts for developing solar parks and providing consultancy services in ISA's member countries from Africa.67

In addition, in May 2021, India entered into a comprehensive connectivity partnership with the European Union to collaboratively support standards, regulatory environment and concrete infrastructure projects, and to implement the EU–India Clean Energy and Climate Partnership.68

Other key considerations

i O&M

Typically, in India, O&M of an RE project is undertaken through a third-party contractor who, usually, is the same as the EPC contractor. Nowadays, there is a trend for larger independent power producers to carry out the O&M activities in-house. Entities also sometimes enter into asset management agreements in which a project manager is appointed for managing the techno-commercial and operational issues for the project.

ii Multi-technology developments

Technology such as robotics and tracker systems are being more commonly implemented for Indian projects nowadays. In this regard, an Indian company, Enray Solutions, has developed a self-powering robot for the cleaning of ground-mounted solar modules without the use of water. The device has already been installed by solar power developers such as Adani, NTPC, Tata Power and Vikram Solar.69

Another interesting development is floating solar power plants, which are an alternative to ground-mounted solar plants that entail installation of solar units on water bodies and large reservoirs. While floating solar power plants have been around in India since 2014, currently the tender for India's – and the world's – largest floating solar power plant70 of 600MW, to be set up on the Omkareshwar Dam in Madhya Pradesh, was won by Amp Energy, NHDC and SJVN in May 2022.

iii M&A landscape in India

Despite the covid-19 pandemic, India has experienced a fair amount of M&A deal activity in 2021.

For under-construction utility projects selling power to distribution licensees, the standard PPAs typically contain a restriction on the change in controlling shareholding71 of the SPV undertaking the project until a number of years (usually one to three years) after the commercial operations' commencement date of the project. Due to such restrictions, investors tend to acquire a 'non-controlling stake' in the SPV until the lock-in period expires, following which they acquire the remaining shareholding of the SPV. Another structuring method is that the investor does not invest directly in the SPV, but operates at the parent level to avoid such restriction altogether. However, the more recent PPAs now also contain a restriction on promoters ceding control72 of the bidding entity (which, in many cases, is the promoter of the SPV), thereby creating a two-level lock-in.

For operational projects, if the timeline for the change in shareholding restrictions has elapsed, standard PPAs allow the parent company to transfer the shares of the SPV to another entity.

iv Repowering and decommissioning

Under the Competitive Bidding Guidelines, power producers are free to repower their plants during the PPA duration. Generally, bid documents in India allow repowering subject to grid stability, fulfilment of the AC capacity and the procurer's first right to purchase excess generation. However, the Competitive Bidding Guidelines and standard bid documents do not specifically contemplate any decommissioning procedure upon the expiry of the PPA.

Conclusions and outlook

With the advent of the regulatory pushes by the central and state governments towards RE coupled with the permitted 100 per cent foreign direct investment, interest from investors – including foreign investors – can only be expected to increase in the near future. The government's focus, in line with India's commitment under the Paris Declaration, is on periodic and sustained bidding of renewable projects of different technologies. Moreover, at the 26th Conference of Parties of the United Nations Framework Convention on Climate Change, India committed to achieving net zero emissions by 2070 and raising its installed capacity of non-fossil energy to 500GW by 2030.73 India has been contemplating various forms of RE that are different from the usual solar and wind sources, which have been around for a while. Examples of such new and exciting forms of RE include hydrogen, electric vehicles, storage projects and RTC projects.

While India's RE targets are certainly ambitious, the government, through its policies, amendments and subsidies, has been making progress in the right direction to ensure that such targets are within reach.

Footnotes

1 Amar Narula is a partner, Saachi Kapoor is a senior associate and Ujjwal Gupta is an associate at Trilegal.

2 The Constitution of India, 1950, Seventh Schedule, List III (Concurrent List), Entry 38.

3 id., Article 254.

4 CERC (Terms and Conditions for Tariff Determination from Renewable Energy Sources) Regulations 2020, Regulation 2(1)(w), available at www.cercind.gov.in/2020/regulation/159_reg.pdf.

5 id., Regulation 2(1)(y).

6 MoP, 'Office Memorandum (Measures to Promote Hydro Power Sector)', Reference Number F No. 15/2/2016-H-I (Pt), dated 8 March 2019, available at https://powermin.gov.in/sites/default/files/webform/notices/Measures_to_Promote_Hydro_Power_Sector_0.pdf.

7 Ministry of New and Renewable Energy (MNRE) annual report for 2020–2021, available at https://mnre.gov.in/img/documents/uploads/file_f1618564141288.pdf.

11 MNRE, 'Office Memorandum (Time-extension in Scheduled Commissioning Date of Wind Energy Projects considering disruption due to post-COVID supply chain and monsoon related disruptions)', Reference No. 117/32/2019-Wind-Part(1), dated 17 March 2022, available at https://mnre.gov.in/img/documents/uploads/file_f-1647844469901.pdf.

12 Supreme Court of India, IA No. 85618 of 2020 in Writ Petition (Civil) No. 838 of 2019, MK Ranjitsinh & Ors v. Union of India, dated 19 April 2021, available at https://main.sci.gov.in/supremecourt/2019/20754/20754_2019_31_1502_27629_Judgement_19-Apr-2021.pdf.

13 MoP, 'Green Hydrogen Policy', Notification No. 23/02/2022-R&R, dated 17 February 2022, available at https://powermin.gov.in/sites/default/files/Green_Hydrogen_Policy.pdf.

14 CERC (Connectivity and General Network Access to the inter-State Transmission System) Regulations 2021, available at https://cercind.gov.in/2021/draft_reg/Draft-CGNA-Regulations.pdf.

15 Maharashtra State Electricity Distribution Co Lt. v. M/s JSW Steel Limited & Ors (Civil Appeal Nos. 5074–5075 of 2019).

16 MoP Order No. 23/12/2016-R&R, dated 23 November 2021.

22 EA 2003, Section 3(2).

23 id., Section 3(4).

24 MoP, 'Preparation of draft National Electricity Policy 2021', Notification No. 23/23/2018-R&R, dated 27 April 2021, available at https://powermin.gov.in/sites/default/files/webform/notices/Invitingsuggestions_on_draft_NEP_2021_0.pdf.

25 MoP, Notification No. 42/6/2011-R&R (Vol-VIII), Proposed amendment to Electricity Act, 2003 – regarding, dated 17 April 2020, available at https://powermin.gov.in/sites/default/files/webform/notices/Draft_Electricity_Amendment_Bill_2020_for_comments.pdf.

26 EA 2003, Section 63.

27 id., Section 62.

28 MoP, 'National Tariff Policy', Resolution No. 23/2/2005-R&R (Vol-IX), paragraph 6.4(2).

29 MoP, 'Guidelines for Tariff Based Competitive Bidding Process for Procurement of Power from Grid Connected Solar PV Power Projects', Resolution Number No. 23/27/2017-R&R—1, dated 3 August 2017, available at https://mnre.gov.in/img/documents/uploads/62f71161a2f5482bbaa07cb77abb7258.pdf.

30 MoP, 'Guidelines for Tariff Based Competitive Bidding Process for Procurement of Power from Grid Connected Wind Power Projects', Resolution Number No. 23/54/2017-R&R, dated 8 December 2017, available at http://164.100.94.214/sites/default/files/schemes/guideline-wind.pdf.

31 MNRE, 'Guidelines for Tariff Based Competitive Bidding Process for procurement of power from Grid Connected Wind Solar Hybrid Projects — Reg', Reference Number F No. 238/78/2017-Wind, dated 14 October 2020, available at https://mnre.gov.in/img/documents/uploads/file_f-1603290789230.PDF.

32 MoP, 'Guidelines for Tariff Based Competitive Bidding Process for Procurement of Round-The Clock Power from Grid Connected Renewable Energy Power Projects, complemented with Power from Coal Based Thermal Power Projects', Reference Number No. 23/05/2020-R&R.—1, dated 22 July 2020, available at https://mnre.gov.in/img/documents/uploads/file_f-1595577684752.pdf.

34 Electricity Rules 2005, dated 8 June 2005, Rule 3, available at https://powermin.gov.in/sites/default/files/uploads/power_compendium.pdf.

35 EA 2003, Sections 39, 40 and 42.

37 National Tariff Policy 2016, paragraph 6.4(5).

39 Cabinet Secretariat, Resolution Number 511/2/1/2015-Cab, dated 1 January 2015, available athttp://niti.gov.in/sites/default/files/2018-12/cabinet-resolution_EN.pdf.

41 India Smart Grid Forum, 'Energy Storage System Roadmap for India: 2019-2032', dated 6 August 2019, available at https://niti.gov.in/sites/default/files/2019-10/ISGF-Report-on-Energy-Storage-System-%28ESS%29-Roadmap-for-India-2019-2032.pdf.

42 MoP, 'Guidelines for Procurement and Utilization of Battery Energy Storage Systems as part of Generation, Transmission and Distribution Assets, along with Ancillary Services', Resolution No. 23/16/2020-R&R Part (1), dated 10 March 2022, available at https://powermin.gov.in/sites/default/files/BESS.pdf.

43 Central Pollution Control Board, Notification No. B-29012/ ESS (CPA)/ 2015-16, dated 7 March 2016, available at www.indiaenvironmentportal.org.in/files/file/Final_Directions.pdf.

44 RBI, 'Master Direction – External Commercial Borrowings, Trade Credits and Structured Obligations', Reference No. RBI/FED/2018-19/67, dated 26 March 2019, available at www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=11510.

45 RBI, 'Master Directions – Priority Sector Lending (PSL) – Targets and Classification', Reference No. RBI/FIDD/2020-21/72, dated 4 September 2020, available at www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=11959#Renewable_Energy.

46 RBI, 'Foreign Exchange Management (Borrowing and Lending) Regulations, 2018', Reference No. FEMA.3(R)/2018-RB, dated 17 December 2018, available at https://rbi.org.in/Scripts/BS_FemaNotifications.aspx?Id=11441.

48 EA 2003, Sections 40 and 42.

49 As at May 2022, there are three power exchanges in India: Power Exchange of India Limited (PXIL); Indian Energy Exchange Limited (IEX); and Pranurja Solution Limited.

50 CERC, 'Approval of modification of REC Procedures', Reference No. F No. L-1/196/2015, dated 16 March 2018, available at www.recregistryindia.nic.in/pdf/REC_Procedures.pdf.

51 The amended CERC (Terms and Conditions for Renewable Energy Certificates for Renewable Energy Generation) Regulations 2022, which permit the bilateral trade of RECs between the issuer and the trader, will come into force from the date as may be notified by the CERC in the official gazette.

55 MNRE, 'Launch of Phase II of the Grid Connected Rooftop Solar Programme for achieving cumulative capacity of 40,000 MW from Rooftop Solar (RTS) Projects by the year 2022', Order No. 318/331/2017-GCRT Division, dated 8 March 2019, available at https://mnre.gov.in/img/documents/uploads/c48d969074544005bfff0fcd6b236e9a.pdf.

59 WTO, DS456, 'India — Certain Measures Relating to Solar Cells and Solar Modules'.

60 MNRE, 'Guidelines for enlistment under Approved Models and Manufacturers of Solar Photovoltaic Modules (Requirements for Compulsory Registration) Order, 2019', Office Memorandum No. 28315412018-GRID SOLAR, dated 28 March 2019, available at https://mnre.gov.in/img/documents/uploads/209841a146974a08860f86ebe31a440d.pdf.

61 MNRE, 'Approved Models and Manufacturers of Solar Photovoltaic Modules (Requirement for Compulsory Registration) Order, 2019 – Implementation – Reg', Office Memorandum No. 28315412018-GRID SOLAR – Part(l), dated 10 March 2021, available at https://mnre.gov.in/img/documents/uploads/file_f-1615380939218.pdf.

62 MNRE, 'Imposition of Basic Customs Duty (BCD) on Solar PV Cells & Modules/ Panels', Office Memorandum No. 283/3/2018-GRID SOLAR, dated 9 March 2021, available at https://mnre.gov.in/img/documents/uploads/file_f-1615355045648.PDF.

71 While the definition of 'controlling shareholding' may differ from PPA to PPA, it is usually along the lines of '50% of the voting rights and paid-up share capital'.

72 While the definition of 'control' may differ from PPA to PPA, it is usually along the lines of 'ownership, directly or indirectly, of more than 50% of the voting shares of such Company or right to appoint majority Directors'.

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