Over the past year, India has witnessed significant strides in the policy and regulatory frameworks within the renewable energy sector. The government has been proactive in implementing measures aimed at promoting renewable energy development across all verticals. In addition to advancements in traditional renewable energy sources, the year has seen noteworthy developments with respect to the renewable purchase obligation (RPO) trajectory, the National Green Hydrogen Mission, solar and wind-solar hybrid projects, the green energy open access rules, and the biomass co-firing policy. The government’s focus on these technologies underscores a commitment to diversify the energy mix and explore innovative solutions for long-term sustainability. Renewable Watch provides a roundup of the key policies and regulations introduced for the renewable energy sector during the past year…
Transmission system planning: The Ministry of Power (MoP) constituted a high-level committee to plan the transmission system required to have 500 GW of non-fossil-fuel-based installed capacity by 2030. The committee prepared a detailed plan titled “Transmission System for Integration of over 500 GW of Renewable Energy Capacity by 2030” in consultation with states and other stakeholders. The transmission plan comprises 8,120 ckt. km of high voltage direct current transmission corridors, 25,960 ckt. km of 765 kV AC lines, 15,758 ckt. km of 400 kV lines, and 1,052 ckt. km of 220 kV cables at an estimated cost of Rs 2.44 trillion. It also includes the transmission system required for the evacuation of 10 GW of offshore wind energy from projects located in Gujarat and Tamil Nadu at an estimated cost of Rs 0.28 trillion. With the planned transmission system, the inter-regional capacity will increase to about 150,000 per MW by 2030 from 112,000 per MW at present.
Rooftop solar programme: The Ministry of New and Renewable Energy (MNRE) notified that the Rooftop Solar Programme has been extended till March 31, 2026. Therefore, subsidies under the programme will be available until the target of the programme is achieved. All residential consumers are advised not to pay any additional charges to any vendor on account of the fee for application on the national portal or any additional charges for net-metering or testing that are not prescribed by the respective distribution company.
National Green Hydrogen Mission: The Union cabinet approved the National Green Hydrogen Mission on January 4, 2023 with an initial budget outlay of Rs 197.44 billion (comprising Rs 17,490 million for the Strategic Interventions for Green Hydrogen Transition (SIGHT) programme, Rs 14,660 million for pilot projects, Rs 400 million for research and development (R&D), and Rs 388 million for other components). The hydrogen mission will build capabilities to produce at least 5 million metric tonnes (mmt) of green hydrogen per annum by 2030, with an associated renewable energy capacity addition of about 125 GW in the country by 2030. This has the potential to reach 10 mmt per annum with the growth of export markets. The MNRE has been given the responsibility of overall coordination and implementation of the mission and also for formulation of the scheme guidelines.
Revision of auction process for wind power: The MNRE has revised the auction process for wind power projects. Bids for a cumulative capacity of about 8 GW will be issued each year from January 1, 2023, onwards, up to 2030. To ensure that wind energy capacity comes up in all eight wind-rich states, every bid will be a composite bid consisting of state-specific sub-bids. The power generated from the capacity established in each of the state sub-bids will be pooled and offered at a pooled tariff to all procurers. SECI will issue bids of a cumulative capacity of about 8 GW during the 2023-30 period.
Union Budget 2023-24: In the Union Budget 2023–24, the finance minister mentioned the country’s rapid progress towards achieving its net zero targets by 2070. The budget builds on the government’s focus on green growth. The National Green Hydrogen Mission, which has been allocated a budget of Rs 197 billion, will help the economy transition to a low-carbon-intensity and sustainable future. Under the hydrogen mission, the target is to produce 5 mmt of green hydrogen annually by 2030. Accordingly, a priority investment fund of Rs 350 billion has been set aside. A viability gap funding scheme was proposed to support the development of battery energy storage systems with a 4,000 MWh capacity and a detailed framework for pumped storage projects was also proposed. An interstate transmission system (ISTS) for the grid integration of 13 GW of renewable energy from Ladakh, estimated to cost Rs 207 billion, was also provided for. Under the GOBARdhan scheme, 500 new waste-to-wealth plans were proposed for promoting circular economy.
Green Energy Open Access Rules, 2023: The MoP issued the Electricity (Promoting Renewable Energy through Green Energy Open Access) Amendment Rules, 2023. It includes measures for the banking settlement cycle, new charges, and exemptions for offshore wind energy projects from additional surcharges. This will enable consumers to purchase green energy based on their consumption. These rules are intended to align with the existing ones. The amendments came into effect from January 27, 2023.
Revised tariff policy: In exercise of powers conferred under Section 3(3) of the Electricity Act, 2003, the central government had notified the revised Tariff Policy vide Resolution No. 23/2/2005-R&R (Vol-IX) on January 28, 2016. In pursuance of clause 6.4(5) of the Tariff Policy, 2016, it has been decided that any generating company establishing a coal- or lignite-based thermal generating station and having the commercial operation date (COD) of the project on or after April 1, 2023 shall be required to establish renewable energy generating capacity, that is, meet a renewable generation obligation (RGO) of a minimum of 40 per cent of the capacity of a coal- or lignite-based thermal generating station, or procure and supply renewable energy equivalent to such capacity.
Approved List of Models and Manufacturers (ALMM) exemption: On March 10, 2023, the MNRE announced that the Approved Models and Manufacturers of Solar Photovoltaic Modules (Requirements for Compulsory Registration) Order, 2019 and subsequent amendments and clarifications will be in abeyance for one financial year. As per this order, all solar projects that are commissioned by March 2024 will be exempt from the requirements of procuring solar PV modules that comply with the ALMM list.
Bidding trajectory: The MNRE announced its bidding plan for renewable energy projects, with a target of 50 GW for fiscal year 2023-24. The renewable energy implementing agencies (REIAs), such as SECI, NTPC, NHPC and SJVN, have been asked to coordinate with each other to avoid concurrent bids. SECI and NTPC Limited have been assigned the responsibility of issuing tenders for a total of 15 GW of renewable energy projects each, of which 12.5 GW will be for solar/hybrid/round-the-clock (RTC) projects and 2.5 MW for wind energy projects. Similarly, NHPC and SJVN have been tasked with issuing tenders for 10 GW each, of which 7.5 GW will be for solar/hybrid/RTC projects and 2.5 MW for wind projects each. The bidding process will follow the standard guidelines issued by the government and the instructions for renewable energy tenders issued by the MNRE.
Green Port Guidelines, 2023: For achieving net zero emissions, the Ministry of Ports, Shipping, and Waterways has launched the Harit Sagar – Green Port Guidelines. The objective of the guidelines is to promote eco-friendly practices in port development, and operations and maintenance.
National Electricity Plan: The Central Electricity Authority (CEA) notified the National Electricity Plan (NEP) (Vol. I Generation) for the period 2022-32. According to the NEP document, the projected all-India peak electricity demand and electrical energy requirement is 277.2 GW and 1907.8 BUs for 2026-27 and 366.4 GW and 2473.8 BUs for 2031-32. The energy requirement and peak demand are inclusive of the impact of the increased adoption of electric vehicles, installation of solar rooftops, production of green hydrogen, the Saubhagya scheme, etc. Based on generation planning studies carried out under the purview of preparation of the NEP for 2022-27, the likely installed capacity for 2026-27 is 609,591 MW, comprising 273,038 MW of conventional capacity and 336,553 MW of renewable-based capacity along with battery energy storage system (BESS) capacity of 8,680 MW/34,720 MWh. The installed capacity for 2031-32 is estimated to be 900,422 MW, comprising 304,147 MW of conventional capacity and 596,275 MW of renewable-based capacity along with BESS capacity of 47,244 MW/236,220 MWh. The projection for the total capacity addition is in line with the country’s target of achieving a non-fossil fuel-based installed capacity of around 500 GW by 2029-30.
Guidelines for energy storage: The MoP issued guidelines for a tariff-based competitive bidding process to procure firm and despatchable power from grid-connected renewable energy projects with energy storage. The objective of the guidelines is to ensure a consistent and predictable supply of renewable energy to distribution firms while addressing the intermittent nature of renewable energy and transmission system underutilisation. The recommendations emphasise the need for generators to produce firm and despatchable renewable energy in accordance with the demand profile described in the request for selection, with consequences for non-compliance. Energy storage systems are required to meet availability and performance requirements. Bids will be solicited in terms of power capacity, with a minimum bid quantum of 50 MW.
Revised biomass co-firing policy: The MoP announced its decision to benchmark the prices of biomass pellets used for co-firing in thermal power plants (TPPs). The decision comes in view of the evolving market conditions for biomass pellets and requests received from stakeholders including thermal power plants, pellet manufacturers, farmers and bankers. The benchmarked price shall take into account business viability, the impact on electricity tariffs, and pellet procurement by power utilities. Price benchmarking of pellets will enable TPPs as well as pellet vendors to establish a sustainable supply mechanism for co-firing of pellets. The benchmarked price, as finalised by the committee under the CEA, will be effective from January 1, 2024.
Scheme for electrolysers and green hydrogen production: The MNRE notified incentive schemes for the domestic production of electrolysers and green hydrogen, with a total financial investment of Rs 174.9 billion. The framework outlines two incentive schemes as part of the SIGHT programme – the Incentive Scheme for Electrolyser Manufacturing (having a financial outlay of Rs 44.4 billion and scheduled to be implemented from 2025-26 to 2029-30) and Incentive Scheme for Green Hydrogen Production (under Mode 1 with a budget outlay of Rs 130.5 billion and scheduled to be implemented from 2025-26 to 2029-30). The scheme would give funding for electrolyser manufacturing in the form of Rs per kW. A direct incentive in terms of Rs per kg of green hydrogen production will be paid under the scheme for a period of three years from the date of beginning of green hydrogen production.
Guidelines for grid-connected wind power projects: The MoP issued new guidelines for the tariff-based competitive bidding process to procure power from grid-connected wind power projects. This will allow distribution licensees to meet their renewable purchase obligations and raise renewable energy capacity. By creating a framework for long-term wind power transactions between states, the goal is to stabilise and reduce risks in the segment. The new guidelines will apply to ISTS projects of 10 MW and above as well as 50 MW and above.
Guidelines for grid-connected solar power projects: The power ministry issued new guidelines for the tariff-based competitive bidding process to procure power from grid-connected solar PV projects. This would enable fair procurement of electricity as well as ensure transparency and competitive prices. By creating a framework for long-term solar power transactions between states, the goal is to stabilise and de-risk the solar segment. The new guidelines will be applicable to all forthcoming solar projects with or without energy storage.
Offshore wind strategy: In August 2023, the MNRE released a revised plan for the creation of offshore wind energy projects. Eight zones each off the coasts of Gujarat and Tamil Nadu were selected as possible offshore wind energy zones based on a multi-criteria approach. The plan suggested three models with a focus on the need for development of the country’s offshore wind farms. Model A will be applicable to the offshore wind zones for which the MNRE or NIWE have already completed studies. For Model B, offshore wind sites would be allocated under a lease with site exclusivity over the seabed throughout the survey period, and project development would take place without any viability gap funding (VGF). This model envisions the development of offshore wind projects for the sale of electricity under open access, captive or third-party mode. For Model C, a study would be conducted without exclusive use of the seabed during the survey period, and projects will be developed without any VGF support. This model will be used for the sites chosen by the developers within the country’s exclusive economic zones, excluding the ones selected under Models A and B.
Green hydrogen standards for India: The MNRE, under its National Green Hydrogen Mission, has announced green hydrogen standards. The central government has defined green hydrogen as the hydrogen generated by utilising renewable energy methods, such as electrolysis or biomass conversion, as well as the power produced from renewables and stored in an energy storage system or supplied to the grid. As per the notification, the limit for electrolysis-based green hydrogen and green hydrogen produced through biomass for non-biogenic greenhouse gas emissions should not exceed 2 kg of carbon dioxide, which is equal to per kg of hydrogen when averaged over the previous 12-month period.
Guidelines for grid-connected solar-wind hybrid projects: The MoP issued new guidelines for the tariff-based competitive bidding process to procure power from grid-connected wind-solar hybrid power projects. This will enable fair procurement of electricity at competitive prices. The new guidelines will be applicable to both intra-state and interstate transmission projects with capacities of 10 MW and above as well as 50 MW and above. The revisions will be applicable to all forthcoming with or without energy storage wind-solar hybrid projects.
National framework for energy storage: The MoP has announced the National Framework for Promoting Energy Storage Systems. The initiative aligns with the country’s commitment to use renewable energy sources and reduce greenhouse gas emissions. The main objectives of this framework are to encourage the deployment of energy storage systems (ESSs) while reducing reliance on fossil fuel power plants, ensuring a steady supply of round-the-clock (RTC) renewable energy, cutting down emissions, and minimising energy costs. It also aims to promote innovation in energy storage technologies, enable fair access to energy storage for all segments of the population, and improve grid stability and dependability through the deployment of ESSs. In addition, the framework intends to use policy and regulatory measures, financial and fiscal incentives, and performance-based incentives to assist in the development and installation of ESSs.
Green hydrogen roadmap: The MNRE has introduced a Rs 4 billion R&D roadmap as part of its efforts to create an ecosystem that promotes the commercialisation of green hydrogen for the National Green Hydrogen Mission. The objective of the R&D roadmap is to advance new materials, technologies and infrastructure to improve the efficiency, reliability, and cost-effectiveness of various aspects of green hydrogen production, storage and transportation. Additionally, it places a strong emphasis on safety and aims to address technical challenges and barriers in the development of a hydrogen-based economy.
RPO trajectory: The MoP announced the minimum share of consumption of renewable energy by designated consumers from April 2024 to March 2030. These rules apply to all designated consumers, including captive users, open access consumers, and energy distribution licensees. A new category of distributed renewable energy has been added under the RPO. Moreover, the portion of distributed renewable energy must be derived exclusively from the energy generated by renewable energy projects with a capacity of less than 10 MW. This includes solar energy installations in all forms, such as net metering, gross metering, virtual net metering, group net metering, behind-the-meter installations, and any other configurations as specified by the central government. For 2024-25, the required minimum share of renewable energy has been set at 29.91 per cent. This will increase to 33.01 per cent in 2025-26, 35.95 per cent in 2026-27, 38.81 per cent in 2027-28, 41.36 per cent in 2028-29 and 43.33 per cent in 2029-30.
Standards and labelling programme for solar panels: The Bureau of Energy Efficiency (BEE) has developed a standards and labelling Programme for solar modules to simplify the process for individuals to make well-informed choices when buying and installing solar panels. It will be effective from January 1, 2024 till December 31, 2025, with no labelling fees during this time frame. Upgrading from a 1-Star to a 2-Star solar panel on a 10 square metre roof area will yield an additional electricity generation of approximately 12 per cent. Furthermore, the increase in electricity generation compared to a 1-Star solar panel can be as high as 29 per cent to 35 per cent for 4-Star and 5-Star solar panels. Furthermore, the government has stated that the programme will be voluntary for the first two years, and thereafter it will become mandatory.
Outlook
In sum, several policy and regulatory initiatives have been taken in the past year to resolve lingering issues and stimulate growth within the sector. Observing the trends of the past year, it is evident that future policy interventions will prioritise diversification, moving beyond conventional solar and wind projects to embrace hybrid and RTC renewables. Additionally, there will be a concerted effort to encourage open access procurement of renewable power, domestic manufacturing, and emerging segments such as green hydrogen and energy storage, all pointing towards exciting changes in the renewables sector.
By Anusshka Duggal
