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  • Writer's pictureNyayshastram

India's Bid On Laws Regulating Renewable Energy Sources

Updated: Sep 25, 2020

Vidur Thanawala & Pavani Chugh, Nyayshastram


Resources like coal, oil, and natural gases have added to 33% of worldwide ozone-depleting substances to outflows. It is basic to increase the expectation of living by giving cleaner and increasingly solid power. India has a vitality request to satisfy the increase in energy demand so as to facilitate and implement the development of the country which has been formulated.

The National Electricity Plan (NEP) which has been monitored by the Ministry of Power has built up to 10 years detailed plan, with the goal to provide power to the entire nation, and has arranged a further arrangement to guarantee that the power is provided to the residents at a reasonable price.

“India emerged as a key player in the recent international climate talks in Paris. On the global stage, India reiterated its commitment towards clean energy and reducing the carbon emissions[1]”. “India’s increased thrust on renewable energy is outlined in the 2015 national budget, which sets a five-fold increase in renewable energy targets to achieve 175 GW by 2022. This Comprises 100 GW solar, 60 GW wind, 10 GW biomass and 5 GW small hydropower capacity, supported by a substantial budgetary allocation. The existing generation capacity is dominated by conventional coal-fired thermal power (211 GW as of May 2016, 70% of total capacity)[2]”.

In recent times India has seen an increase of over 12% in its demand for renewable energy not only this the renewable sector industry offers high rewards on its investments. The main reason behind such a unique opportunity FDI which may extend to up to 100% which is allowed in the sector, through the automatic route, Atomic Energy Sector being the exception.

The FDI under this sector is governed by the Central Electricity Regulatory Commissions (Power Market) Regulation, 2010, which restricts the FDI to 49% if done through the automatic route.

In order to create awareness among the citizens of India in regards to renewable energy, the government should use a blend of the push policies and Pull mechanisms, accompanied by particular strategies, such as the use of advanced technology, proper regulatory policies such as tax deductions and attempt to invest more in the research and development.

Constitutional Framework

India follows a quasi-federal form of government, wherein the Executive and Legislative powers are divided between the state and the central government. The Seventh Schedule of the Constitution assigns subjects over which the legislative power is appointed to the Center (List I), State (List II), and Concurrent (List III), wherein both the state and the central government can exercise their power.

The subject of energy is a simultaneous subject under Entry 38 that falls under the concurrent list where the state and the central government can make laws on. Matters identifying with interstate exchanges are in the Center’s space while the State government is answerable for the intra-state deal, buy, conveyance of the energy.

“Concurrent jurisdiction prevents the centre from directing the state to take specific actions on matters pertaining to energy, this can be observed in a manner that the Central Electricity Regulatory Commission (CERC) and the State Electricity Regulatory Commissions (SERCs) function[3]”. “In the context of renewable energy, the CERC issued a regulation in 2010 (CERC REC Regulations) to boost RPO compliance by states through the introduction of the Renewable Energy Certificate (REC) mechanism. However, the onus of framing RPO regulations, setting RPO targets and its implementation is on the respective SERCs, with the CERC acting as a facilitator[4]”.The CERC has defined “renewable energy” as the energy that is similar to the grid quality electricity but generated through renewable energy sources, which extend to small hydro, wind, solar, biomass, etc.

The Central Government in recent time has pushed on the advancement of sustainable power, but the issue of concurrent jurisdiction prevents the centre from taking certain measures without the states. While the centre can encourage and boost the states to accomplish sustainable power source targets, it can violate the limits of the concurrent jurisdiction and punish the rebellious states. States have regularly utilized this establishment power to push back on the changes initiated by the centre, which do not further their political plan. Dominant parts of the states have especially deployed to execute RPO as set out under the electricity act of 2003.

For example, even six years after the issuance of the CERC REC Regulations, most of the states have a low degree of RPO compliance and Sikkim has not given its RPO guidelines yet. Consequently, the issue of power area change, which tangibly affects the sustainable power source division, is a mind-boggling one from a protected and legitimate point of view as well as a result of its political underpinnings.

Aside from the issue of simultaneous purview which covers the whole power segment, there are additionally explicit empowering arrangements inside the Constitution which bolster the age and utilization of clean vitality. The Supreme Court[5], in an issue identifying with RPO compliance, perceived the sacred order to advance sustainable power source by depending on Article 21 which ensures the privilege to a right to life read with Article 51A (g) which forces the basic obligation on residents to secure and improve the common habitat. Further, Article 48A guides the state to ensure and improve the indigenous habitat.

Legislative Framework Concerning Renewable Energy in India

  1. The Electricity Act 2003: The Electricity Act aims to establish a liberal system of growth for the energy industry, by keeping the government at an arm's length. The goals of the Act are to combine the laws identifying the production, transmission, dissemination, exchanging and utilization of power and by large for taking estimates helpful for the improvement of the energy sector. The establishment of the Electricity Act of 2003 denoted a change in the perspective inside the energy sector, with an emphasis on the renewable energy sector. Section 86(1)(e) of the Act explicitly included advancement and cogeneration of electricity from inexhaustible sources and setting of RPO focus among the other tasks of the SERCs.The Act gives the power to the SERCs to set and adjust terms and conditions for regulating the tariffs, but while doing so one thing must be kept in mind which is “the promotion of co-generation and generation of electricity from renewable sources of energy[6]”.“The Act also lays down the procedure in regards to the establishment of the Electricity Regulatory Commissions at the central and state levels, with appeal provision provided to an Appellate Tribunal for Electricity (APTEL) which has been created under the Electricity Act, and from APTEL appeal to the Supreme Court of India[7]”.

  2. Energy Conservation Act, 2001: The Energy Conservation Act, 2001 advances the proficient utilization of vitality and its preservation has been connected with consideration of the Government of India for quite some time now. The expanding inclination for business vitality has prompted significant spray in the interest of power and petroleum derivatives. There is gigantic potential for diminishing vitality utilization by embracing vitality productivity measures in different areas of our economy.

  3. Renewable Power Purchase Obligation-: “(RPPO) RPPOs cast a legal obligation that a minimum percentage of energy, as specified by the State Regulatory Commission is to be purchased from RE sources[8]”.

  4. National Electricity Policy: With the establishment of the Electricity Act, sustainable power sources discovered more notice in national-level strategy instruments, for example, the National Electricity Policy (NEP), figured in 2005. The NEP specified a dynamic move from regular sources to sustainable power sources. It expressed that the acquisition of inexhaustible force by the Discoms should be through competitive bidding. Further, since it would take effort for sustainable innovation to accomplish lattice equality, the pertinent committee has the ability to decide special tariffs for power obtained from sustainable power sources.


The Indian power area is amidst a seismic move, with the Center focusing on 40% sustainable sources in the vitality blend by 2030. These yearning targets are supported by authoritative, administrative and strategy mediations at the national and state level. This is additionally in accordance with worldwide patterns preferring green modern approach for a perfect and manageable type of monetary development. Rather than command over the market, the accentuation has now moved to a commitment with the market through the making of an empowering strategy condition. Be that as it may, while there is clearness at the Central level on driving sustainable power source change, there is conspicuous anxiety at the state level. As talked about, the job of Discoms is basic to the achievement of any sustainable power source strategy.

The current condition that Discoms work under is a long way from perfect and obfuscated by state-level governmental issues. Changes at the focal level, for example, the isolation of substance and carriage, are important to destabilize existing force structures and diagram an attainable way to green development. Powerful usage of the RPO plot is critical to the accomplishment of India's sustainable power source targets. Sadly, earlier years have demonstrated that guaranteeing RPO consistency is a difficult task with a greater part of the Discoms unfit, and regularly reluctant, to meet RPO. While there have been cases of some SERCs pulling up Discoms for resistance, frequently SERCs have gone about as accessories by routinely permitting convey forward and waiver of RPO.

Without solid activity from the SERCs and state governments towards RPO satisfaction, the descending direction of RPO consistency is probably going to proceed. This additionally brings into the center the need to ponder the drawn-out nature of the change procedure. While an arrangement move may not really have the option to represent every one of the partners' inclinations, it should positively recognize it. This couldn't be all the more valid for the Indian vitality segment as a participatory instrument isn't simply suggested yet important, given the division of forces under the Constitution. While the move to a sustainable power source may not be grasped by all expressions, the Center additionally needs to investigate state-explicit real factors and address existing institutional wasteful aspects before pushing forward with its reform plan.


[1] Justin Worland, “Why No Country Matters More Than India at the Paris Climate Talks,” TIME, December 11, 2015, [2] “CEA Monthly Report on Installed Capacity,” May 2016, [3] Meghna Kaladharan, Renewable Energy in India: An Analysis of the Regulatory Environment and Evolving Trends.

[4] CERC (Terms and Conditions for recognition and issuance of Renewable Energy Certificate for Renewable Energy Generation) Regulations, 2010 - Section 66, Section 178(1) read with Section 178(2)(y) of the Electricity Act confer power on the CERC to make regulations to promote the development of the power market in a manner specified and guided by the National Electricity Policy- [5] Hindustan Zinc Limited v. Rajasthan Electricity Regulatory Commission, Judgment dated May 13, 2015, in Civil Appeal No. 4417, Supreme Court (2015). [6] Section 61(h) of the Electricity Act. [7] India: Energy Laws in India, by Piyush Joshi, RV Anuradha and Sumiti Yadava, Associates at Clarus Law Associates. [8] Heinrich Boll and Enviro Legal Defence Firm, Distributed Renewable Energy Projects in Rural Areas of India: A Guide to Implementation, at p. 28.

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