Set out below are some of the major recent developments1 in the renewable energy sector in India:
1. Green Hydrogen
- The much-awaited National Green Hydrogen Mission
("Mission") was approved on January 4,
2023 by the Indian Government. The Mission envisages an initial
outlay of INR 19,744 crore, including an outlay of INR 17,490 crore
for the strategic interventions for green hydrogen transition
("SIGHT") programme, INR 1,466 crore for pilot projects,
INR 400 crore for R&D, and INR 388 crore towards other Mission
components (such as skill development). Some of the key objectives
of the Mission are:
- to make India, a global hub for production, usage and export of green hydrogen and its derivatives. It also aims to make India a leader in technology and manufacturing of electrolysers and other enabling technologies for green hydrogen;
- support replacement of fossil fuels and fossil fuel-based feedstocks with renewable fuels and green hydrogen-based feedstocks;
- to build capabilities to produce at least 5 million metric tonne of green hydrogen per annum by 2030, with potential to reach 10 million metric tonne per annum with growth of export markets;
- maximize the utilization of renewable energy potential in various islands which are either remote or in proximity to the mainland in India;
- undertake steps to enable cost reduction inter alia of electrolysers and input renewable energy, and to further enhance cost-competitiveness of green hydrogen and reduce the cost of capital required to build projects;
- xplore mechanisms for dollar denominated bids for green hydrogen/ ammonia.
The Green Hydrogen Mission envisages the achievement of these objectives through a comprehensive strategy that comprises of interventions for: (i) demand creation by making green hydrogen produced in India competitive for exports and through domestic consumption; (ii) addressing supply side constraints through an incentive framework; and (iii) building an enabling ecosystem to support scaling and development.
Considering the nascent status of this sector and the rapidly evolving profile of the industry, the Green Hydrogen Mission is proposed to be implemented in a phased manner. In the first phase (i.e., from 2022-23 to 2025-26), the focus would be on deployment of green hydrogen in sectors that are already using hydrogen, and evolving an ecosystem for research and development, regulations and pilot projects. The second phase (i.e., from 2026-27 to 2029-30) would be built on these foundational activities and similar initiatives would be taken in other sectors of the economy.
- The Ministry of Power, Government of India
("MoP"), on January 3, 2023, announced
that NTPC Limited commissioned India's first green hydrogen
blending project. The green hydrogen blending has been started in
the piped natural gas ("PNG") network of
NTPC Kawas township, Surat. The project is a joint effort of NTPC
and Gujarat Gas Limited.
- The Ministry of Railways on February 3, 2023 announced that it envisages to run 35 hydrogen trains under the "Hydrogen for Heritage" at an estimated cost of INR 80 crore per train and ground infrastructure of INR 70 crore per route on various heritage/ hill routes. This step is an initiative in the direction of green transportation technology to support zero carbon emission goals.
2. Wind and Solar Power
- The Ministry of New and Renewable Energy, Government of India
("MNRE"), on January 9, 2023 has decided
to amend the bidding process for procurement of wind power to
ensure faster capacity addition of wind projects. MNRE has decided
that:
- The bids for a cumulative capacity of about 8 GW would be issued each year from January 1, 2023 onwards up to 2030. A detailed breakup of this capacity would be issued by Solar Energy Corporation of India ("SECI").
- To ensure that wind energy capacity comes up in all the 8 windy states, every bid would be a composite bid consisting of state specific sub-bids for each of the 8 windy states.
- The power generated from capacity established in each of the state sub-bids would be pooled and offered at pooled tariff to all procurers. The pooling of tariff would be as per the Electricity (Amendment) Rules, 2022 and would be offered to distribution companies on a single tariff under the power sale agreements.
- The bids would be on a single stage two criteria (technical and financial) closed bid basis. The financial bid of only those bidders who qualify in the technical bid would be opened. The requirements for qualifying in the technical bid would be laid down in the bidding document.
- The bidders who fail to complete the project within the prescribed timelines would be debarred for 5 years.
- Necessary amendments in the Guidelines for Tariff Based
Competitive Bidding Process for Procurement of Power from Grid
Connected Wind Power Projects for above purpose would be notified
separately.
- On January 25, 2023, the MNRE extended the timeline for
completion of solar PV/ solar PV-wind hybrid power projects for
which bids were finalized before March 9, 2021 up to March,
2024.
- ALMM
On March 10, 2023, the MNRE has held in abeyance the Approved Models and Manufacturers of Solar Photovoltaic Modules (Requirements for Company Registration) Order, 2019 (as amended from time to time) for one financial year (i.e., FY 2023-24). Accordingly, projects commissioned by March 31, 2024 would be exempted from the requirement of procuring solar PV modules from Approved List of Models and Manufacturers.
- ISTS Charges
The Central Electricity Regulatory Commission ("CERC") on February 7, 2023 amended the CERC (Sharing of Inter-State Transmission Charges and Losses) Regulations, 2020. Relevantly, RE projects based on solar, wind, solar-wind hybrid, Hydro PSP and BESS whose bidding was completed on or before January 15, 2021 and which achieved commercial operation date ("COD") within the date specified in their respective power purchase agreements; would be exempt from payment of transmission losses.
Further, waiver of transmission charges for use of Inter State Transmission System is inter alia proposed as follows:- for renewable energy generating stations ("REGS"), renewable hybrid generating stations ("RHGS") and pumped hydroelectric stations which declare COD by June 30, 2025 for a period of 25 years from COD;
- for battery storage systems that are charged using energy from REGS or RHGS with COD before June 30, 2025 for 12 years from COD;
- for solar power projects operating under the SECI manufacturing-linked capacity program to sell power to entities with renewable purchase obligations for 25 years from the COD;
- for hydro-generating stations with power purchase agreements signed between December 1, 2022 and June 30, 2025 and where construction work is awarded by June 30, 2025 for 18 years from the COD;
- for REGS, RHGS, pumped hydroelectric stations, and battery
storage systems that achieve COD after June 30, 2025 but before
June 30, 2028 or new hydro projects where construction work is
awarded and the power purchase agreement is signed after June 30,
2025 to be considered in a staggered manner based on prescribed
methodology.
- RGOs
On February 27, 2023, the MoP notified the Renewable Generation Obligation ("RGO") as per Revised Tariff Policy, 2016; which requires generating companies establishing a coal/ lignite based thermal generating station to (unless it meets its renewable purchase obligations):- establish renewable energy generating capacity (in MW) i.e., RGO of a minimum of 40% of the capacity (in MW) of a coal/lignite-based thermal generating station or procure and supply renewable energy equivalent to such capacity, for projects expected to achieve COD on or after April 1, 2023;
- comply with RGO of 40% by April 1, 2025 for projects having COD between April 1, 2023 and March 31, 2025;
- comply with RGO of 40% by COD for projects having COD after April 1, 2025.
3. Electricity Rules, Regulations and Orders
- On January 27, 2023, the MoP issued an amendment to the
Electricity (Promoting Renewable Energy Through Green Energy Open
Access) Rules, 2022. The amendment inter
alia provides:
- any consumer may apply for procurement of green energy and not only one who has a contracted demand or sanctioned load of 100 kW or more;
- the credit for banked energy would not be permitted to be carried forward to subsequent banking cycles and would lapse at the end of the month;
- Green Energy Open Access charges have been expanded to include banking charges and other fees and charges such as load despatch centre fees and scheduling charges, deviation settlement charges as per the relevant regulations of the appropriate commission;
- no cross-subsidy surcharge and additional surcharge would be
applicable for waste-to-energy plants; and for offshore wind
projects commissioned upto December, 2025 no additional surcharge
would apply.
- On February 15, 2023, MNRE issued an order directing the PM
Gati Shakti National Master Plan related to renewable energy. This
order contemplates a Cell to be created which would ensure mapping
of all RE projects (of differing capacity) on the PM Gati Shakti
portal.
- On February 24, 2023, the MNRE announced that it is planning to establish an office in Gujarat's GIFT City i.e., Gandhinagar to finance renewable energy projects in foreign currency. The said office would be classified as an overseas office, allowing Indian Renewable Energy Development Agency ("IREDA") to avoid foreign exchange hedging cost.
Footnote
1. Please note that the information contained in this Newsletter is from January 1, 2023 to February 28, 2023.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
