Renewable Energy And Policy Construction Essay

National Electricity Policy, 2005

The National Electricity Policy is one of the cardinal instruments for supplying policy counsel to the Electricity Regulatory Commissions in discharge of their maps and to the Central Electricity Authority ( CEA ) for readying of the National Electricity Plan.

The aims of the National Electricity Policy include:

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aˆ? Access to Electricity-Available for all families in following five old ages.

aˆ? Availability of Power-Demand to be to the full met by 2012. Energy and top outing deficits to be overcome and whirling modesty to be available.

aˆ? Supply of Reliable and Quality Power of specified criterions in an efficient mode and at sensible rates.

aˆ? Per capita handiness of electricity to be increased to over 1000 units ( kWh ) by 2012.

aˆ? Minimum line of life ingestion of 1 unit/household/day as a virtue good by twelvemonth 2012.

aˆ? Financial Turnaround and Commercial Viability of Electricity Sector.

aˆ? Protection of consumers ‘ involvements.

aˆ? The Plan prepared by CEA to be used by prospective bring forthing companies, transmittal public-service corporations and transmission/distribution licensees as mention papers.

aˆ? Development of Rural Electrification Distribution anchor, small town electrification and family electrification to accomplish the National Common Minimum Programme ( NCMP ) mark of finishing family electrification in following five old ages. Fiscal support in footings of capital subsidy to States for rural electrification. Particular penchant to Dalit Bastis, Tribal Areas and other weaker subdivisions for rural electrification. REC to be nodal bureau for rural electrification at Cardinal Government degree.

aˆ? Creation of equal coevals capacity with a whirling modesty of at least 5 % by 2012 with handiness of installed capacity at 85 % .

aˆ? Full development of hydro potency. Provision of long tenor finance for these undertakings.

aˆ? Choice of fuel for thermic coevals to be based on economic sciences of coevals and supply of electricity.

aˆ? Development of National Grid.

aˆ? Cost of recovery of service from consumers at duty reflecting efficient costs to guarantee fiscal viability of the sector.

aˆ? Provision of support to lifeline consumers ( families below poorness line holding ingestion of 30 units per month ) in footings of duties.

aˆ? Availability Based Tariff ( ABT ) to be extended to State degree for better grid subject through economic signaling.

aˆ? Particular accent on clip bound decrease of transmittal and distribution losingss.

aˆ? Measures to advance competition aimed at consumer benefits.

aˆ? Reliability and quality of power supply to be monitored by State Electricity Regulatory Commissions.

aˆ? Exploitation of non-conventional energy beginnings such as little hydro, solar, biomass and air current for extra power coevals capacity.

aˆ? Emphasis on accomplishing higher efficiency degrees of bring forthing workss through necessary redevelopment and modernisation.

aˆ? Cardinal Government to ease the continued development of national grid. Cardinal Transmission Utility ( CTU ) and State Transmission Utility ( STU ) to set about co-ordinated planning and development.

aˆ? Transmission capacity to hold redundancy degree and borders as per international criterions.

aˆ? Adequate transitional fiscal support for reforming power public-service corporations. Encouragement for private sector engagement in distribution.

Electricity Act 2003

The Electricity Act, 2003 was enacted and the commissariats of this Act were brought into force on 10.6.2003. With the coming into force of the Electricity Act, 2003 the Indian Electricity Act, 1910, Electricity ( Supply ) Act, 1948 and Electricity Regulatory Commissions Act, 1998 base repealed.

The salient characteristics of the Act are:

aˆ? Thrust to finish the rural electrification and supply for direction of rural distribution by Panchayats, Cooperative Societies, non-Government organisations, franchisees etc.

aˆ? Provision for license free coevals and distribution in the rural countries.

aˆ? Generation being de-licensed and confined coevals being freely permitted. Hydro undertakings would, nevertheless, need clearance from the Central Electricity Authority.

aˆ? Transmission Utility at the Central every bit good as State degree, to be a Government company – with duty for planned and coordinated development of transmittal web.

aˆ? Provision for private licensees in transmittal and entry in distribution through an independent web

aˆ? Open entree in transmittal from the beginning.

aˆ? Open entree in distribution to be introduced in stages with surcharge for current degree of cross subsidy to be bit by bit phased out along with cross subsidies and duty to supply.State Electricity Regulatory Commission ‘s ( SERC ) to border ordinances within one twelvemonth sing phasing of unfastened entree.

aˆ? Distribution licensees would be free to set about coevals and bring forthing companies would be free to take up distribution concerns.

aˆ? The State Electricity Regulatory Commission is a compulsory demand.

aˆ? Provision for payment of subsidy through budget.

aˆ? Trading, a distinguishable activity is being recognized with the precaution of the Regulatory Commissions being authorized to repair ceilings on trading borders, if necessary.

aˆ? Provision for re-organization or continuation of State Electricity Boards ( SEB ) .

aˆ? Metering of all electricity supplied made mandatary.

Are states independent in explicating their ain energy policy? Where do province energy policies differ from national energy policy?

The Electricity Act, 2003 empowers the SERCs ( State Electricity Regulatory Commission ) to stipulate the footings and conditions for the finding of duty and guarantee transparence in the duty puting procedure. SERCs have to represent proper steps to apportion gross demand in an economically efficient mode by cut downing the extent of cross subsidies. This is chiefly achieved by increasing the low-tension duty to a greater extent as compared to high-tension duty. The Act besides provides the guidelines and the process to be adopted for the intent of duty finding and issue of duty orders

Twenty-three provinces – viz. Andhra Pradesh, Assam, Bihar, Chhattisgarh, Delhi, Orissa, Goa, Gujarat, Jharkhand, Haryana, Himachal Pradesh, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Punjab, Rajasthan, Sikkim, Tamil Nadu, Tripura Uttar Pradesh, Uttaranchal, and West Bengal – have either constituted or notified the fundamental law of the SERCs. Of these, 18 provinces – viz. Andhra Pradesh, Assam, Delhi, Gujarat, Haryana, Himachal Pradesh, Jharkhand, Orissa, Madhya Pradesh, Maharashtra, Punjab, Karnataka, Kerala, Rajasthan, Tamil Nadu, Uttar Pradesh, Uttaranchal, and West Bengal – have already issued their first duty orders in the way of apologizing duties.

The SEBs ( State Electricity Board ) of Andhra Pradesh, Delhi, Haryana, Karnataka, Madhya Pradesh, Orissa, Rajasthan, Uttar Pradesh, and Uttaranchal have either been unbundled or corporatized. In Orissa and Delhi, the distribution concern has been privatized.

How is the energy market organized for electricity: province monopoly, province or private, competitory market? What is the legal footing for energy market organisation?


The Central Electricity Regulatory Commission ( CERC ) , an independent statutory organic structure with quasi-judicial powers, was constituted on 25 July 1998 under the Electricity Regulatory Commission Act, 1998 and has been continued under Electricity Act, 2003. Under the Electricity Act, 2003, the Central Commission discharges the undermentioned maps, viz. : –

a. to modulate the duty of bring forthing companies owned or controlled by the Cardinal Government

b. to modulate the duty of bring forthing companies other than those owned or controlled by the Cardinal Government, if such bring forthing companies enter into or otherwise have a composite strategy for coevals and sale of electricity in more than one State

c. to modulate the Inter-State transmittal of electricity

d. to find duty for Inter-State transmittal of electricity

e. to publish licences to individuals to work as transmittal licensee and electricity bargainer with regard to their Inter-State operations

f. to judge upon differences affecting bring forthing companies or transmittal licensee in respect to affairs connected with clauses ( a ) to ( d ) above and to mention any difference for arbitration

g. to impose fees for the intents of this Act

h. to stipulate Grid Code holding respect to Grid Standards

i. to stipulate and implement the criterions with regard to quality, continuity and dependability of service by licensees

j. to repair the trading border in the Inter-State trading of electricity, if considered, necessary

k. to dispatch such other maps as may be assigned under this Act.

What is the ownership construction of energy endeavors? What is the portion of foreign ownership and from which states?

ONGC ( Oil & A ; Natural Gas Coporation Ltd ) is the major participant in the Indian E & A ; P sector. Other participants include Oil India Ltd. , Reliance Industries, Indian Oil Corporation, Gas Authority of India Ltd. , British Gas, Essar Oil, Videocon, Cairn Energy, Hindustan Oil Exploration Company, Niko Resources, Gazprom, Energy Equity, Geoenpro Petrol Ltd. , Geopetrol International, Enpro India Ltd. , Hardy Oil, Tata Petrodyne, Gujarat State Petroleum Corporation, Selan Exploration Technologies Ltd. , L & A ; T, Joshi Tech. , Interlink Petroleum, Mosbacher, Tullow Oil, Phoenix, Okland International, Premier Oil and Geo Global Resources

Government Controlled Companies: ONGC, OIL, IOC, HPCL, BPCL and GAIL. CPCL, BRPL and IBP have now become subordinates of IOC. KRL and NRL are now subordinates of BPCL.

Joint Sector Companies: MRPL used to be a joint sector company with equal interest of HPCL and Aditya Birla Group. However, ONGC has bought the interest of the Aditya Birla Group in MRPL doing it a public sector company.

Private Sector Companies: Reliance Petroleum Ltd. ( RPL ) – which has now been merged with parent Reliance Industries Ltd. ( RIL ) , Gujarat Gas

Renewable energy policies and programmes

Are there specific policies refering renewable energies? Are these policies defined in policy paperss ; delight supply papers name and beginning? What are the chief features of these policies?

Yes, there are specific policies enterprises for renewable energy engineerings. The policies are defined in the papers “ Renewable Energy in India – Business Opportunities ” , Ministry of Non-Conventional Energy Sources, February 2004.

Are there specific statute laws to advance renewable energy in general or certain engineerings?

Some of the specific steps for investing publicity and industrial capacity edifice in Renewable Energy undertakings including power from renewable are:

aˆ? Industrial clearances non required for puting up a renewable energy industry

aˆ? Up to 74 % foreign equity engagement in renewable energy undertakings and endeavors and 100 % engagement possible with FIPB blessing

aˆ? Customss and Excise responsibility grants for renewable energy equipment and spare parts

Some of the promotional steps and inducements which are available for undertakings for coevals of power from renewable are:

aˆ? Exemption from revenue enhancements for the first five old ages ;

aˆ? No techno-economic clearance required from the Central Electricity Authority ;

aˆ? Accelerated depreciation of 80 % in the first twelvemonth of undertaking commissioning ;

aˆ? Exemptions and concessional rate of cardinal gross revenues revenue enhancement and imposts responsibility on imported equipment and stuffs.

A host of financial inducements and installations are available to both makers and users of renewable energy systems, which include:

aˆ? 80 % accelerated depreciation for revenue enhancement intents in the first twelvemonth of the installing of projects/systems.

aˆ? No excise responsibility on industry of most of the finished merchandises.

aˆ? Low import duties for capital equipment and most of the stuffs and constituents.

aˆ? Soft loans to makers and users for commercial and close commercial engineerings.

aˆ? Five twelvemonth revenue enhancement vacation for power coevals undertakings.

aˆ? Compensable monetary value under surrogate power purchase policy by State Government for the power generated through renewable energy systems, fed to the grid by private sector.

aˆ? Facility for Banking and Wheeling of power.

aˆ? Facility for Third party sale of renewable energy power.

aˆ? Financial Incentives/Subsidies for devices with high initial cost.

aˆ? Involvement of adult females non merely as donees but besides for their active part in execution of renewable energy programmes.

aˆ? Encouragement to NGOs and little enterprisers.

aˆ? Special push for renewable energy in North-Eastern part of the state. 10 % of Plan financess earmarked for North-East towards enhanced and particular subsidies.

Allotment of land on long term footing at nominal rental rent and supply of refuse free of cost at undertaking site by State Governments, in regard of undertakings on energy recovery from municipal waste.

Are there national programmes to advance renewable energy? Please supply inside informations on these programmes.

The major national programmes to advance renewable energy are given below:

aˆ? National Biogas Programme

aˆ? Integrated Rural Energy Programme ( IREP )

aˆ? Remote Village Electrification Programme

aˆ? Solar Water Heating Programme

aˆ? Solar Photovoltaic Programme

aˆ? Biomass Gasifier Programme

aˆ? National programme on Energy Recovery from Urban & A ; Industrial Wastes

State programmes to advance renewable energy?

For promoting investing by the private and public sector companies in power coevals through renewable energy, a set of guidelines have been issued by the Ministry of Non-Conventional Energy Sources for consideration of the States.

As a consequence a figure of States have announced policy bundles to promote power coevals undertakings from renewable energy including Wheeling, Banking, Third Party sale and Buy-Back which have been outlined.

A sum of 14 province authoritiess have so far proclaimed promotional policies for power from renewables:

Examples of such province degree policies include:

aˆ? Compensable buy-back monetary values for power from renewable energy undertakings by the province owned public-service corporations every bit good as installation to bank and wheel energy ;

aˆ? Facility to sell the generated energy to 3rd parties other than the public-service corporation by wheeling ;

aˆ? Concessions and freedoms on gross revenues revenue enhancement and Octroi for industrial and commercial constitutions which invest in renewable energy.

Who is in charge of these programmes?

The Ministry of Non-Conventional Energy Sources ( MNES ) is the cardinal nodal bureau for organizing renewable energy activities in India which provides fiscal and financial inducements, such as involvement subsidy and capital subsidy for renewable energy undertakings. In add-on, soft loans are provided through the Indian Renewable Energy Development Agency ( IREDA ) , a populace sector company of the Ministry and besides through some of the nationalized Banks and other fiscal Institutions for identified technologies/systems. MNES besides coordinates with the province nodal bureaus for airing of renewable energy engineerings at province degree.

Cardinal and State Governments provide assorted types of financial inducements for the renewable energy sector, which include direct revenue enhancements -80 % depreciation in the first twelvemonth of the installing of the undertaking, exemption/reduction in excise responsibility, freedom from cardinal gross revenues revenue enhancement, and imposts responsibility grants on the import of stuff, constituents and equipment used in renewable energy undertakings.

How are these programmes financed?

IREDA offers concessional loans to renewable energy undertakings by moving as an mediator between international developmental fiscal establishments, such as World Bank, Asian Development Bank, Kreditanstalt fur Wiederaufbau ( KfW ) GEF, DANIDA, Govt. of Netherlands, and other funding bureaus, through market adoptions and through MNES programmes. Since incorporation in 1987, IREDA has so far committed fundss to 1569 renewable energy undertakings, largely in the private sector. Out of the entire committednesss of 52 billion rupees ( US $ 1300 million ) , 27 billion rupees ( US $ 675million ) have been disbursed so far.

Some illustrations of funding from bi-lateral and multi-lateral International development bureaus intermediated by IREDA are:

aˆ? World Bank Renewable Resources Development Project – the first and 2nd recognition lines numbering US $ 250 million through IREDA have financed air current and little hydro power among other renewable energy undertakings. The bank is presently sing a 3rd recognition line.

aˆ? The Asian Development Bank ‘s Renewable Energy Development Project, is a US $ 100 million recognition line through IREDA has financed bagasse-cogeneration and air current power undertakings ;

aˆ? KfW recognition line of DM 120 million ( US $ 60 million ) through IREDA was used to finance bagasse cogeneration and air current power undertakings ;

aˆ? Danish Export Finance Corporation Credit line of US $ 15 million through IREDA to finance wind power developments.

Apart from IREDA, other public fiscal establishments and Bankss have been involved in funding renewable power undertakings on a limited graduated table. MNES provides subsidies to fiscal establishments, which soften the involvement rate to the undertaking developer. Private sector finance companies in the non-banking sector have besides played a important function in the funding and leasing of renewable power undertakings, particularly air current and solar.

Are at that place ( pilot ) undertakings under CDM – Clean Development Mechanism? What sort of undertakings?

India is playing an active function in CDM related activities. India participated in the pilot stage for Activities Implemented Jointly ( AIJ ) , to derive experience with the CDM procedure. Indian undertakings have been submitted to major GHG emanation decrease programmes, notably CERUPT, the Finnish CDM/JI Programme Tender and the Prototype Carbon Fund ( PCF ) . Several undertakings have been accepted under these programmes and are presently being implemented.

The type of undertakings under CDM in India includes:

aˆ? Wind

aˆ? Hydro

aˆ? Biomass energy ( including incineration of household- and other wastes )

aˆ? Biogas

aˆ? Geothermal

aˆ? Natural gas power

aˆ? Fugitive ( oil, gas, coal, wood coal )

aˆ? Energy distribution

aˆ? Energy efficiency, industry

aˆ? Energy efficiency, families

aˆ? Energy efficiency, service

aˆ? Conveyance

aˆ? Fossil fuel switch

aˆ? HFCs, PFCs, SF6

aˆ? N2O

aˆ? Cement

aˆ? Other industrial procedures

aˆ? Landfill gas flair

aˆ? Agribusiness

aˆ? Reforestation

aˆ? Afforestation

Renewable energy and industrial policy

Established regulations for engineering transportation, licensing and patents for foreign and national makers?

Ministry of Non-Conventional Energy Sources is advancing medium, little, mini and micro endeavors for fabrication and service of assorted types of renewable energy systems and devices. Industrial policy steps include:

aˆ? Industrial clearance is non required for setting-up of renewable energy industry.

aˆ? No clearance is required from Central Electricity Authority for power coevals undertakings up to Rs. 100 crores ( Rs. 1000 million ) .

aˆ? A five twelvemonth Tax vacation allowed for renewable energy power coevals undertakings.

aˆ? Soft loan is being made available through IREDA for renewable energy equipment fabrication.

aˆ? Facilities for publicity of export oriented units are available for renewable energy industry besides.

aˆ? Financial support is available to renewable energy industries for taking up R & A ; D undertakings in association with engineering establishments.

aˆ? Power undertaking import allowed.

aˆ? Private Sector Companies can put up endeavors to run as licensee or bring forthing companies.

aˆ? Customs responsibility grant is available for renewable energy parts/equipment, including for machinery required for redevelopment and modernisation of power Plants.

aˆ? Excise responsibility on a figure of capital goods and instruments in the renewable energy sector has been reduced/exempted.

Are the licensing and command unit of ammunitions attractive for new companies?

100 % Foreign Direct Investment is allowed in regard of undertakings associating to the electricity sector including renewable energy with the exclusion of atomic reactor power plants6. This means that a Foreign Investor can offer or use for licences in the name of the Subsidiary Company formed here. However, a command by a Foreign Company straight would depend entirely on the footings of the Tender or Bid, though there are no restrictive clauses and will depend on the party inviting for the Bid.

However, whether the footings of the Bid will be attractive for a new Company will depend entirely on the Footings of the Bid Contract. Selection Criteria could include proficient capableness in footings of figure of old ages of being of the company, relevant yesteryear undertaking experience, etc and fiscal strength in footings of minimal net-worth of the company, minimal turnover of the Company, etc. In instances where the Company has been late formed and the Holding Company ( Foreign Investor ) meets the above demands in footings of proficient and fiscal capableness, such commands may be considered capable to the footings of the Bid Contract.

Is it ( lawfully ) allowed to reassign net incomes of foreign endeavors abroad, particularly for energy sector endeavors and makers of renewable energy equipment?

There are no limitations on repatriation of net incomes for energy sector endeavors and makers of renewable energy equipment.

Is there specific statute law refering foreign investing?

aˆ? Foreign Investors can come in into a joint venture with an Indian spouse for fiscal and/or proficient coaction and besides for puting up of renewable energy based Power Generation Projects.

aˆ? Liberalized foreign investing blessing government to ease foreign investing and transportation of engineering through joint ventures.

aˆ? The proposals for up to 74 % foreign equity engagement in a joint venture qualifies for automatic blessing.

aˆ? 100 % foreign investing as equity is allowable with the blessing of Foreign Investment Promotion Board ( FIPB ) .

aˆ? Assorted Chambers of Commerce and Industry Associations in India can be approached for supplying counsel to the Investors in happening appropriate spouses.

aˆ? Foreign Investors can besides put up a affair office in India.

aˆ? Government of India is besides encouraging foreign Investors to put up renewable energy based power coevals undertakings on Built- Own and Operate footing.

The undermentioned ordinances cover INR adoptions:

aˆ? A foreign fund can put in Equity Shares of an Indian NBFC. If the retention is upto 51 % , the min sum to be invested is USD 0.5 Mill. If the retention is 51 % to 74 % , so, an sum of USD 5 Mill is to be brought in.

aˆ? The foreign fund can besides put in penchant portions which offer a fixed rate of return.

aˆ? The dividend on both Equity Shares & A ; Preference Shares can be repatriated abroad.

aˆ? The Foreign Fund can non offer a loan to the Indian NBFC as it is presently non permitted.

aˆ? With the financess provided by the Foreign Fund, the Indian NBFC can impart to the ultimate borrowers.

aˆ? There is no involvement rate ceiling on such loanings.

Interest Rates to the concluding end-user vary from a low 9 % to a high 20 % -24 % for little loans to persons. Within this wide scope, corporate sector and Agencies avail loans at 9 % to 14 % for footings runing from 3 old ages to 7 old ages, depending on the usage to which the financess are put. Normally, the personal warrant of Directors in closely held companies is taken. Persons and micro degree recognition is usually for lower periods runing from 1 twelvemonth to 3 old ages. Persons are expected to give either warrant or indirect security for such loans.


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