Policy Action: Key announcements and regulatory initiatives in the past year

October 13, 2024

The past year was marked by important policy and regulatory developments. In the generation segment, a key announcement has been the tariff-based competitive guidelines for the procurement of stored energy from pumped storage plants (PSPs), which are expected to provide a fillip to the PSP segment. The MoP also extended the coal import advisory to tide over the power demand in the monsoon season. Important programmes and schemes were announced during the year, notably, the rooftop solar scheme (PM Surya Ghar Muft Bijli Yojana) and the viability gap funding (VGF) scheme for offshore wind energy projects. The release of the final National Electricity Plan for Transmission by the Central Electricity Authority (CEA) gives a clear visibility to industry players in the transmission segment.

Power Line presents a round-up of the policy and regulatory developments in the power sector in the past one year…

Generation

  • In June 2024, the MoP further extended its coal import advisory for domestic coal-based power plants till October 15, 2024, in view of the surging power demand and to ensure sufficient fuel reserves during the monsoon season. The coal blending requirement was revised to 4 per cent. Previously, in September 2023, the MoP had extended the mandate to generation companies for blending imported coal in thermal power plants (TPPs) till March 2024.
  • In August 2024, the MoP issued amendments in the guidelines governing the export of electricity. According to this amendment, for coal-based generation, export of electricity from India shall be allowed only if such electricity is generated utilising imported coal or coal obtained from commercial mining. Gas-based electricity exports are permitted only if the gas used is from approved sources. Also, Indian generating stations exclusively supplying electricity to neighbouring countries can now build dedicated transmission lines with the government’s approval.
  • In November 2023, the MoP updated the biomass co-firing policy to establish standard prices for biomass pellets used in co-firing at TPPs. The benchmark prices for non-torrefied biomass pellets in the northern region (excluding NCR) were fixed at Rs 2.27 per 1,000 kcal and for non-torrefied biomass pellets in the western region, at Rs 2.24 per 1,000 kcal.
  • In October 2023, the MoP extended its dispute avoidance mechanism to include all power sector projects, after the success in implementing the same for hydroelectric power
    (HEP) projects.

Transmission

  • In September 2024, the CEA notified the National Electricity Plan (Volume-II: Transmission), which provides a blueprint of transmission systems being planned by 2032. It is aimed at meeting the growing energy demand, targeting a peak demand of 458 GW by 2032. Various technology options have been explored to enhance the power systems’ overall development, including hybrid substations, digital substations and voltage-sourced converter-based high voltage direct current systems.
  • In August 2024, to further streamline transmission planning in the country, the CEA issued a draft amendment to the Manual on Transmission Planning Criteria, 2023. In order to cover the planning procedure, a new chapter (Chapter 7) is proposed to be added by the CEA.
  • In August 2024, the CERC notified the Deviation Settlement Mechanism and Related Matters Regulations, 2024, aimed at ensuring that grid users do not deviate from and adhere to their schedule of withdrawal and injection of electricity. As per the notification, the deviation shall generally be managed through the deployment of ancillary services, and the computation, charges and related matters in respect of such deviation shall be dealt with as per the provisions of these regulations.
  • In July 2024, the CERC notified the second amendment to the Connectivity and General Network Access to ISTS Regulations, 2024. Among other changes, the amended regulations introduce a new category for entities authorised to procure renewable energy for their own consumption or resale.
  • In May 2024, the CERC notified the Procedure, Terms and Conditions for grant of Transmission Licence and Other Related Matters Regulations, 2024. These regulations establish the eligibility criteria, procedures, and terms and conditions for entities involved in interstate power transmission and formalise the arrangement for regulated tariff mechanism, enabling licence acquisition by winning tariff-based competitive bidding (TBCB) bidders.
  • In January 2024, in a crucial development that removed the licence requirement to build dedicated transmission lines, the MoP notified the Electricity (Amendment) Rules, 2024. As per the new rules, a generating company or person setting up a captive generating plant or an energy storage system, or a consumer having a load of not less than 25 MW in the case of ISTS and 10 MW in case of intra-state transmission system shall not be required to obtain in licence under the act for establishing, operating or maintaining a dedicated transmission line to connect to the grid.

Distribution

  • In July 2024, the MoP notified the Electricity (Second Amendment) Rules, 2023, entailing measures to improve the financial health of discoms by streamlining the process of accounting, reporting, billing and payment of subsidy by states. The new rules mandate that a quarterly report shall be submitted by the distribution licensee within 30 days from the end date of the respective quarters. The report will inter alia cover findings regarding demands for subsidy based on accounts of the energy consumed by the subsidised categories, the subsidy payable to these categories as announced by the state government and the actual payment of subsidy.
  • In March 2024, the MoP amended the Electricity (Late Payment Surcharge and Related Matters) (Amendment) Rules, 2024, in order to ensure adequate supply of electricity to meet the growing demand in the country. A key amendment, which has been made, is related to surplus power that is within the declared generation capacity but not requisitioned by distribution companies. Some power generators were not offering this surplus power in the market, thus resulting in unused power capacity at the national level.
  • In February 2024, the CEA, in collaboration with distribution utilities, formulated the Distribution Perspective Plan (DPP) up to 2029-30. The DPP outlines the infrastructure plans for substations, feeders, capacitor banks, distribution transformers and low tension feeders and incorporates best practices employed by discoms for the efficient management of distribution systems.
  • In January 2024, the MoP notified the Electricity (Rights of Consumers) Second Amendment Rules, 2023. As per the amendments, the distribution licensee shall provide individual connections for the supply of electricity to owners(s) or occupier(s) of any premise in a group housing society or residential colony or resident welfare association or similar body registered with the appropriate government on their request, in the manner prescribed by the appropriate commission.
  • In October 2023, the MoP released the procedure for the implementation of a uniform renewable energy tariff for end power procurers, including discoms and open access consumers. The procedure establishes a framework for different categories of central pools, each catering to specific renewable energy sources. As per the procedure, there may be more than one category of central pool for solar-wind hybrid central pool, round-the-clock power (solar-wind hybrid + storage) central pool and peaking power (solar-wind hybrid + storage) central pool depending upon the technology, generation mix, etc., as decided by the central government.

Renewables

  • In September 2024, the Ministry of New and Renewable Energy (MNRE) released guidelines for the implementation of the VGF scheme for promoting 1 GW of offshore wind power projects. A corpus of Rs 68.53 billion has been allotted till 2031-32. A 500 MW project site off the Gujarat coast has been identified by the National Institute of Wind Energy, the nodal agency, with another 500 MW site off the Tamil Nadu coast awaiting finalisation.
  • In September 2024, providing a major relief to hydropower projects, the cabinet approved modifications to the scheme providing budgetary support for enabling infrastructure costs associated with HEPs. The scheme has a total outlay of Rs 124.61 billion and will be implemented from 2024-25 to 2031-32. The modifications include expanding eligible costs to cover roads, bridges, transmission lines, ropeways, railway sidings and communications infrastructure.
  • In September 2024, to boost domestic production, the MNRE issued a draft amendment to the Approved List of Models and Manufacturers (ALMM) List-II for solar photovoltaic (PV) cells from April 1, 2026 to accommodate the expected increase in solar PV cell capacity. Under the new guidelines, all projects falling under the purview of the ALMM must source their solar PV modules from models and manufacturers included in the ALMM List-I for solar PV modules. These solar PV modules will have to use solar PV cells from amongst the models and manufacturers listed in ALMM List-II for solar PV cells. Furthermore, solar PV modules already listed in ALMM List-I, with enlistment validity beyond March 31, 2026 will also be required to use solar PV cells from the ALMM List-II starting April 1, 2026. Projects with bid submission deadlines prior to the issuance of this order will be exempt from the mandatory use of ALMM-listed cells. Projects which have been bid after the amendment was issued will have to observe these new rules.
  • In August 2024, in a key development for the pumped storage segment, the MoP issued the draft TBCB guidelines for the procurement of storage capacity from PSPs. The draft proposes a single-stage two-part bidding process, consisting of technical and financial bidding stages for procuring storage capacity from pumped storage projects to address the renewable energy variability and grid balancing issues.
  • In February 2024, the PM Surya Ghar Muft Bijli Yojana was unveiled by the prime minister to provide free electricity through residential rooftop solar installations, entailing a budget of Rs 750 billion till March 31, 2027. It seeks to provide electricity to 10 million households by offering a monthly allocation of up to 300 units of free power. In June 2024, it released guidelines for the registration of solar PV modules and inverters under the scheme. Furthermore, to ensure higher participation from discoms, there is a progressive incentive mechanism in place. Incentives range from 5 per cent (if additional capacity is 10-15 per cent) over the base to 10 per cent on achieving 15 per cent additional installed capacity over the base.
  • In July 2024, the MNRE released guidelines for the disbursement of incentives for the production of up to 450,000 metric tonnes per year of green hydrogen as part of Component II (Mode 1, Tranche II) of the Strategic Interventions for Green Hydrogen Transition (SIGHT) programme. As per these, green hydrogen producers will receive incentives over three years, with limits set at Rs 50 per kg in the first year, Rs 40 per kg in the second year and Rs 30 per kg in the third year. For products derived from green hydrogen, such as green ammonia, incentives will be allocated based on the amount of green hydrogen used in their production. The MNRE has determined an equivalence factor of 0.1765 kg of green hydrogen per kg of green ammonia.
  • In May 2024, in order to simplify the solar park approval process, the MNRE declared a change in policy concerning the authorisation procedures for solar park infrastructure development and charges for operations and maintenance. As per the change, the state government committee’s approval will no longer be required for central public sector undertakings (CPSUs) and joint ventures of CPSUs to review detailed project reports (DPRs). The direct submission of these DPRs to the SECI, Indian Renewable Energy Development Agency Limited and the MNRE is now permissible.
  • In February 2024, the CERC notified draft Terms and Conditions for Tariff determination from Renewable Energy Sources Regulations, 2024, in order to provide a structured approach to determining tariffs. These regulations shall come into force on April 1, 2024 and unless reviewed earlier or extended by the commission, shall remain in force up to March 31, 2027.
  • In February 2024, the MNRE released guidelines for pilot projects aimed at utilising green hydrogen in the transport sector under the National Green Hydrogen Mission. These projects are expected to leverage the falling costs of renewable energy and electrolysers to make vehicles powered by green hydrogen cost-competitive. This scheme, with a budget of Rs 4.96 billion till 2025-26, will focus on developing technologies for buses, trucks and four-wheelers, using fuel cell-based or internal combustion engine-based propulsion, as well as establishing hydrogen refuelling stations.
  • In December 2023, the MNRE released the National Repowering and Life Extension Policy for Wind Power Projects 2023. This policy allows for the upgrading of older-generation turbines with more efficient ones before reaching the end of their design life.
  • In December 2023, the Ministry of External Affairs notified the Offshore Wind Energy Lease Rules, 2023. As per these rules, the central government has the option to grant leases for offshore areas located within the exclusive economic zone for projects related to offshore wind energy and offshore wind transmission.
  • In October 2023, the MoP announced the minimum share of renewable energy 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 renewable purchase obligations. In 2024-25, the required minimum share of renewable energy is 29.91 per cent. This increases 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.
  • In October 2023, the CEA issued guidelines for slope stability in hydropower projects. These guidelines are applicable to hydro project developers in hilly terrains, guiding them to take cognisance of past slope failures and the existence of unstable slopes in the project area covering affected zones and recommend necessary remedial measures for slope stabilisation of hydropower projects prior to construction, during construction and post commissioning of the projects.

Other key updates 

  • In September 2024, the MoP released the final Guidelines for Installation and Operation of Electric Vehicle Charging Infrastructure, 2024. These guidelines apply to public, semi-public and private charging stations across India. Notably, power utilities must provide electricity connections within specific timelines (3-90 days) depending on the area.
  • In August 2024, the CEA notified Cyber Security Regulations for the Power Sector Regulations, 2024. These regulations outline the responsibilities of a Computer Security Incident Response Team Power which include developing a cybersecurity framework, responding to incidents and coordinating with other cybersecurity bodies such as CERT-In (Indian Computer Emergency Response Team) and the National Critical Information Infrastructure
    Protection Centre.
  • In July 2024, the Bureau of Energy Efficiency announced the first detailed procedure for obligated entities under the Carbon Credit Trading Scheme’s compliance carbon mechanism. It covers nine sectors – aluminium (refinery/smelter), chlor alkali, cement, fertilisers, iron and steel, pulp and paper, petrochemicals, petroleum refineries and textiles. It serves as a guideline for monitoring, reporting, verification and trading within India’s carbon market framework to meet the national emission reduction goals. Entities can trade carbon credit certificates on the Indian carbon market platform and unused credits can be sold or stored for future use.
  • In February 2024, the CERC directed the power exchanges to hold a comprehensive review of operations at power exchanges to ascertain whether they comply with the CERC (Power Market) Regulations, 2021. As per the order, there shall be no manual entry of bids by power exchanges on behalf of their members within or after trading hours. No bids shall be accepted by power exchanges after trading hours for any reason whatsoever.