The Evolving Legal Framework for Renewable Energy in India

Authored By – DIVYANSHU TYAGI, Atal Bihari Vajpayee School of legal studies, CSJMU 

I. Introduction

Renewable energy holds paramount importance in India. In a bid to offset carbon emissions while securing a reliable energy supply for its rapidly expanding economy, the country plans to increase the renewable energy share of installed capacity to 500 GW by 2030. This transformation will be underpinned by a strong legal framework to support the development, financing, and operation of renewable energy projects. These legislative tools—from the Electricity Act to specific amendments and incentives—will propel the renewables sector forward. This article primarily focuses on the multifaceted legal regime governing renewable energy (the Screaming Green Transition) and its implications for sustainability in India.

II. Meaning, Definition & Explanation

Renewable Energy

Renewable energy is energy that is replenished at a rate greater than its consumption. There are various sources of renewable energy, such as solar energy, wind energy, geothermal energy, etc. The emissions caused by burning fossil fuels significantly exceed those from producing renewable energy.

Renewable energy sources are also more cost-effective than ever in most nations and generate three times more employment compared to fossil fuels. Currently, most countries still rely on fossil fuels and coal for energy production. The combustion of these fuels for heat and electricity is one of the biggest contributors to global warming due to the release of greenhouse gases into the atmosphere.

To prevent the worst consequences of burning fossil fuels—including global warming and air pollution—emissions need to be cut by half by 2030 and reach net zero by 2050. Fully renewable energy sources, provided by nature indefinitely, emit little or no pollutants or greenhouse gases. Such sources are abundant and available everywhere, including the sun, wind, water, waste, and Earth’s heat. The rapid expansion of renewable energy capacity is gaining traction, supported by aggressive targets and government incentives.

III. Historical Background of Renewable Energy in India

The Indian government was compelled to reassess its energy policy and investigate domestic unconventional energy sources. A significant milestone was the establishment of the Indian Renewable Energy Development Agency (IREDA) in 1987, which was tasked with funding renewable energy projects nationwide. Later, similar agencies were created at the state level to enhance local efforts in promoting renewable energy.

IV. Key Legislation Governing Renewable Energy

India has actively pursued legislative measures to transform its energy landscape. Alongside promoting clean energy, these laws provide a structured framework to ensure the systematic expansion and integration of renewable energy into the national grid.

A. National Electricity Policy, 2005

The policy emphasizes reducing the capital cost of renewable and unconventional energy projects. It also mandates the implementation of effective marketing strategies to support technological advancements and long-term growth. The policy further states that the percentage of electricity derived from non-conventional sources must progressively increase in accordance with state regulations.

Additionally, distribution companies must procure renewable energy through competitive bidding. Recognizing that non-conventional technologies may take time to achieve cost competitiveness with conventional sources, the Commission is authorized to determine an appropriate price differential to support these technologies.

B. National Tariff Policy

The Tariff Policy aligns with the Electricity Act and requires distribution companies to procure renewable energy. The State Electricity Regulatory Commissions (SERCs) are directed to establish mandatory purchasing percentages for renewable energy.

The policy mandates that SERCs determine a minimum Renewable Purchase Obligation (RPO) based on regional resource availability and retail price impacts. Feed-in tariffs (FITs) and RPOs serve as the foundation for renewable energy promotion, even as other policy and fiscal measures are introduced.

According to the Tariff Policy, renewable energy technologies must eventually become cost-competitive, and procurement must transition to competitive bidding. In December 2012, following extensive stakeholder consultations, the Ministry of New and Renewable Energy (MNRE) introduced guidelines and standard bidding documents for grid-connected renewable energy. The policy aims to lower total power procurement costs and boost market-driven growth.

C. Rural Electricity Policy, 2006

The Electricity Act, 2003, mandates the government’s responsibility to provide power to all regions, including rural areas. Notably, independent power generation and distribution systems—including those utilizing renewable energy—are exempt from licensing requirements in rural areas.

To facilitate rural electrification, Section 5 of the Act mandates the development of a National Rural Electrification Policy that promotes decentralized renewable energy-based solutions.

D. Ministry of New and Renewable Energy (MNRE)

The MNRE plays a crucial role in policy creation and implementation for renewable energy sources, including solar, wind, biomass, small hydro, geothermal, and tidal energy.

  • Policy Creation- The MNRE is responsible for developing policies to attract investments, expedite project approvals, and encourage private sector participation.
  • Implementation- The ministry monitors and oversees various renewable energy programs and projects to ensure effective execution.

V. Recent Developments in Renewable Energy in India

India has proposed a bill on unconventional energy sources to address climate change challenges and promote a greener economy. As a signatory to the Kyoto Protocol and UN Resolution A/RES/58/210, India is committed to sustainable development and renewable energy expansion.

With the help of advanced green technologies, the proposed bill aims to:

  • Enhance energy efficiency
  • Promote research, development, and large-scale deployment of renewable energy
  • Address challenges such as inadequate private funding, lax enforcement, and poor compliance with RPOs

The bill also proposes a National Renewable Energy Policy that sets 20-year renewable energy targets, broken into five-year increments and subject to annual expert review.

Furthermore, the bill establishes a National Committee on Renewable Energy to provide policy recommendations and oversee implementation. Renewable Purchase Obligations (RPOs) are set at 5%, with compliance enforced through renewable energy certificates or direct procurement from states.

To encourage private investments, the bill outlines funding mechanisms, incentives, and government-backed financial resources.

VI. Conclusion

The establishment of a dedicated ministry for renewable energy highlights India’s commitment to cleaner energy sources. The Electricity Act, 2003, provides a fair regulatory status to renewable energy, addressing its promotion and production in several provisions.

However, despite legislative efforts, non-conventional energy still represents a small fraction of India’s energy mix. Regulatory bodies are empowered to promote competition and economic viability, but renewable energy requires further policy and financial support.

A comprehensive legal framework is needed to address generation, transmission, grid connectivity, and purchase obligations, ensuring the independent growth of renewable energy. The proposed Renewable Energy Bill marks a positive step toward expanding renewable energy production and consumption, ensuring a fair market price for clean energy while reducing dependence on finite fossil resources.

VII. REFERENCES

  1. Online Articles / Sources Referred
  2. Statutes Referred
    • Rural Electricity Policy, 2006
    • Tariff Policy 2006
    • National Electricity Policy 2005
  3. Other sources
    • Ministry of New and Renewable Energy, Annual Report 2006-07
    • The Compulsory Promotion, Utilisation, Supply and Access of Renewable Energy Bill, 2014, the copy of the bill available at Supra 46.
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