Over the past decade, the renewable energy sector has witnessed various path-breaking reforms that have shaped it and helped it grow. Many of these will likely continue to help the sector sustain growth in the future as well. Renewable Watch recalls the 10 most crucial policy and regulatory reforms of the decade…
Launch of the JNNSM
The launch of the Jawaharlal Nehru National Solar Mission (JNNSM) in 2010 catapulted the Indian solar market into the global league. The incentives on offer included generation-based tariffs at Rs 15 per unit, assured offtake through purchase obligations, and a payment security fund to insure against defaults. Given the overwhelming industry response to various rounds of bidding, the mission clearly has been one of the biggest policy drivers for the sector, leading to a sharp reduction in solar power prices, and attracting developers and investors.
Net metering framework
Net metering was introduced in the early part of the decade to provide a boost to the solar rooftop segment. It allows consumers to make use of convenient two-way flow of power and get billed only for the “net” power consumed. Net metering guidelines have been issued by most states to encourage the development of rooftop solar projects. Although the progress differs from state to state, net metering has been instrumental in creating the required market demand for rooftop solar projects due to favourable cost economics.
Promotion of solar parks
A scheme was rolled out in 2014 to set up at least 25 solar parks and ultra-mega solar power projects, targeting over 20,000 MW of installed solar power capacity (this was later enhanced to 40,000 MW). These parks greatly helped in minimising the risks for developers by essentially serving as one-stop shops for clearances, land allocation, assured power offtake and connectivity. They were successful in attracting both public and private sector players to invest in large-scale solar projects and bringing down solar power tariffs.
Scaling up of renewable energy targets
In January 2015, the central government scaled up the renewable energy capacity targets to 175 GW by 2022. This included 100 GW from solar, 60 GW from wind, 10 GW from bioenergy, and 5 GW from small-hydro power. This target gave a big push to renewables, with the Indian renewable energy market becoming one of the most attractive investment destinations globally. Many other significant policy and regulatory decisions followed to facilitate the achievement of these targets.
Competitive bidding for wind
In a bold policy move, the government decided to break away from the feed-in tariff regime in early 2017 and introduced competitive bidding in the wind power segment. Since this was a reverse auction process, with developers quoting the lowest tariffs to win a project, the allocation of wind projects through competitive bidding helped bring down wind power tariffs to sub-Rs 3 per unit, making it as cost competitive as solar power and attracting larger independent power producers.
Waiver of ISTS charges
Yet another move with a significant long-term impact was the issuance of the National Tariff Policy, 2016, which waived inter-state transmission system (ISTS) charges for electricity transmitted from solar and wind projects allocated through competitive bidding. The waiver is applicable to wind and solar power projects commissioned till March 2022, for a period of 25 years from the date of commissioning of the projects. This move has significantly helped boost capacity addition and bridge the gap between renewable energy demand and supply across states.
Forecasting, scheduling and deviation settlement
After the central regulator issued the forecasting and scheduling framework in August 2015, the Forum of Regulators notified model forecasting and scheduling regulations in November 2015. The regulations recommend that all renewable energy generators should forecast and submit their generation schedule on a day-ahead basis, which will form the basis for commercial settlements. Since then, a number of states have issued their respective regulations. While these regulations differ from state to state, they will help ease the grid integration challenge.
PM-KUSUM scheme
An important policy development in the decentralised renewables space was the launch of the Pradhan Mantri Kisan Urja Suraksha evem Utthan Mahabhiyan (PM-KUSUM) scheme in March 2019, to help farmers install solar pumps and grid-connected solar power projects. The Ministry of New and Renewable Energy (MNRE) has issued detailed guidelines for the implementation of this scheme. The solarisation of irrigation pumps will help reduce their dependence on conventional sources of energy. This will also provide an additional source of income to farmers, who can sell the surplus power.
Inclusion of hydropower in renewables
Hydropower is ideal for peaking power, spinning reserves and grid balancing, allowing for the integration of massive renewable capacities into the grid. However, discoms have been reluctant to sign power purchase agreements for hydropower due to high tariffs, particularly in the initial years. To address these concerns, the union cabinet, in March 2019, approved a policy change to categorise large hydro projects as renewable energy projects. Until then, only hydro projects under 25 MW, that is, small-hydro projects, were recognised as renewables.
Round-the-clock power procurement
In July 2020, the MNRE announced guidelines for procuring round-the-clock (RTC) power from grid-connected renewable energy projects supported by conventional thermal power projects. The Solar Energy Corporation of India also issued an exploratory tender for a total of 5,000 MW of RTC power. The share of cost-competitive but intermittent renewable power is increasing in the energy mix. Thus, these guidelines are considered a landmark development, as the combination or “bundle” of power will ensure power supply throughout the day with conventional power mitigating the intermittency of renewable power.
The way forward
As the sector steps into a new decade, several important reforms are currently in the making. The long-awaited amendment to the Electricity Act, 2003 is perhaps the most critical of them, as it proposes a host of landmark provisions for removing the inefficiencies of the power sector as well as for giving an impetus to renewables. Greater clarity on import duties, creation of an ancillary services market, contract sanctity, easing of open access, and avoiding payment delays are the other critical issues that need to be addressed in the near future.
