Electricity Regulation in India Overview

Electricity regulation in India: overview, Practical Law Country Q&A w-012-2860
Electricity regulation in India: overview

by Dibyanshu, Shikha Rastogi and Sathyajith Nair, Khaitan & Co
Country Q&A | Law stated as at 01-Jan-2021 | India
A Q&A guide to electricity regulation in India.
The Q&A gives a high-level overview of the domestic electricity market, including domestic electricity companies,
electricity generation and renewable energy, transmission, distribution, supply and tax issues. It covers the regulatory
structure; foreign ownership; import of electricity; authorisation and operating requirements; trading between
generators and suppliers; rates and conditions of sale and proposals for reform.
Overview
Electricity market
Electricity companies
Main companies
Electricity generation and renewable energy

Sources of electricity generation
Authorisation and operating requirements
Electricity transmission
Transmission charges
System balancing
Electricity distribution
Distribution charges
Electricity supply
Trading between generators and suppliers
Electricity price and conditions of sale
Statutory powers
Tax issues
Insurance
Reform
Contributor profiles
Dibyanshu, Partner
© 2023 Thomson Reuters. All rights reserved. 1

Shikha Rastogi, Senior Associate

Sathyajith Nair, Associate
Overview
Electricity market
1. What is the role of the electricity market in your jurisdiction?
Overview
The Constitution of India places electricity under the concurrent list. Therefore, both the Parliament (Union) and the State
Legislatures (State) in India can legislate on matters relating to electricity subject to the law made by Parliament, which have
precedence over the laws made by the State Legislature. The Electricity Act 2003 governs the activities relating to generation,
transmission, distribution, trading and use of electricity in India. The generation of electricity (except hydro) is an activity that
does not require a licence. Distribution, transmission and trading of electricity are licensed activities under the Electricity Act.
Before the Electricity Act entered into force, the activities of generation and distribution were state-owned. One of the key
objectives of the Electricity Act was promoting competition within its framework allowing private sector participation in power
generation, supply and distribution of electricity in India.
Government policy objectives
Electricity (Rights of Consumers) Rules 2020. The Ministry of Power (MOP) on 31 December 2020 notified the Electricity
(Rights of Consumers) Rules 2020 (Consumer Rights Rules). The Consumer Rights Rules intend to bring more accountability
in the distribution companies towards the consumers. The rules also envisage a robust grievance redressal mechanism between
consumers and a distribution licensee, and requires the distribution licensee to maintain a centralised toll-free 24/7 call centre
to address common services such as new connection, disconnection, and change of name and particulars. The Consumer Rights
Rules cover (among others) the following areas:
• Rights and obligations of consumers and distribution licensees.
• Connection, metering arrangement, billing and payment.
• Standards of performance of the licensee, and compensation in case of failure to meet those standards.
• Prosumers. A prosumer is a person who consumes electricity from the grid and can also inject electricity into the grid
for a distribution licensee, using the same point of supply. A prosumer continues to maintain consumer status and also

has the right to set up renewable energy generation unit (including roof top solar photovoltaic systems either on its
own, or through a service provider).
• Grievance redressal mechanism.
Bundling of electricity to ensure an uninterrupted supply. On 22 July 2020, the Government of India issued the Guidelines
for Tariff Based Competitive Bidding Process for Procurement of Round-The Clock Power from Grid Connected Renewable
Energy Power Projects, complemented with Power from Coal Based Thermal Power Projects (RTC Guidelines). The RTC
Guidelines were issued to address the issues of the intermittent nature of solar and wind power supply, and the low capacity
utilisation of the transmission infrastructure. The RTC Guidelines will enable long-term procurement of round-the-clock
electricity by distribution companies from inter-state transmission system-connected solar and wind electricity generation
projects (or a combination of both, with or without energy storage system) bundled or complemented with electricity generated
from thermal power projects with a spare generating capacity (with no power supply commitments or contracts).
Privatisation of distribution companies. Traditionally, distribution companies were owned by the respective states engaging
in both the generation and distribution of electricity. After the introduction of Electricity Act, distribution companies continued
being held by the state while gradually allowing private companies to engage in the distribution of electricity. In May 2020, the
Government of India announced the privatisation of the distribution companies in the union territories (administrative division
governed by the Government of India) to improve the operational and financial efficiency of the companies.
Waiver of inter-state transmission charges and losses. On 5 August, the Government of India waived the inter-state
transmission (ISTS) charges and losses on the transmission of electricity generated from solar and wind projects (for sale to
businesses) until 30 June 2023. The eligible power plants are now exempt from paying ISTS charges and losses for a period of
25 years from the date of commissioning. The waiver applies to power plants using solar and wind sources of energy, including
solar-wind hybrid power plants (subject to meeting the criteria).
Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) Scheme. With the primary objective to provide financial
and water security to farmers, the Government of India launched the PM-KUSUM scheme in March 2019. The scheme intends
to enable farmers to set up solar power generation capacity and sell it to the grid, and to reduce their dependency on diesel
and kerosene.
• Component-A. Setting up a 10,000 MW decentralised grid that solar or other renewable energy power plants on barren
or fallow land can connect to.
• Component-B. Installing 1.75 million stand-alone solar agriculture pumps to provide water security.
• Component-C. Solarising 1 million grid-connected agriculture pumps.
The Ministry of New and Renewable Energy (MNRE) on 13 November 2020 released an amendment/clarification to the PM-
KUSUM Scheme based on the findings from the first year of implementation. The amendments and the clarifications address
various issues observed from the first year of implementation. Under the amendment, the government has expanded the scope
of Component A to include pastureland and marshy land of farmers, and the size of the solar plant has been reduced with an
increased completion period of 12 months to allow more participation. MNRE has also proposed to retain 33% of the service
charges for nationwide information, education and communication activities and also to provide financial assistance to solar
pumps to be set up and used by water user associations, farmer producer organisations, primary agriculture credit societies or
for cluster based irrigation system with a capacity of higher than 7.5HP (that is, around 5.6kW) considering up to 5HP (that
is, 3.73kW) capacity for each individual in the group.
Saubhagya Scheme. The Saubhagya Scheme (or the Pradhan Mantri Sahaj Bijli Har Ghar Yojana) is a Government of India
project to provide electricity to all households. The scheme was launched on 11 October 2017 and the operational guidelines

for its implementation were released by the Government of India on 20 October 2017. As on 31 March 2019, all states reported
the electrification of all willing households under the scheme (except some households in the affected region of Chhattisgarh).
As of 20 December 2019, out of reported 1.909 million households from seven states of India who were earlier unwilling but
later became willing, electricity connections to 742,000 households have been released
Recent trends
India is the third-largest producer of electricity in the world. As of 30 September 2020, the total installed power capacity in India
is 373.029GW. The overall generation of electricity increased from 1.376 trillion kWh during 2018-19 to 1.389 trillion kWh in
2019-2020. The electricity demand in India is projected to grow together with the increased electrification and economic growth.
From time to time, the Government of India (in consultation with the state governments and Central Electricity Authority (CEA))
publishes the National Tariff Policy and National Electricity Policy to develop an electricity system based on optimal utilisation
of resources such as coal, natural gas, nuclear, hydro and renewable sources of energy. The Government of India (in consultation
with state governments) notified the National Tariff Policy in January 2016 (NTP). The key objectives of the NTP are to:
• Ensure that electricity is available to consumers at reasonable and competitive rates.
• Ensure the financial strength of the sector and that the sector attracts investments.
• Promote electricity generation from renewable sources.
• Ensure the adequate capacity (including reserves) in generation, transmission and distribution of electricity, and
therefore ensure the adequate and reliable supply of electricity.
The electricity market has seen a sustained growth over the period of time, especially after the Electricity Act introduced
multiple reforms in the electricity sector for the first time in India (including promoting competition in the sector). While the
electricity generation sector in India is going through a rapid growth because of a sustained interest in renewable energy, the
conventional energy sector is facing multiple issues like fuel shortages, cost increases and unviable long-term power purchase
agreements (resulting in electricity generation assets being stranded or stressed). Several state-owned distribution companies,
which are the key electricity offtakers in India, are also struggling financially.
Some of the key trends in the power sector are set out below.
Launch of the Real Time Market. In June 2020, the Government of India launched the pan-India Real Time Market (RTM)
in electricity, which allows buyers (including distribution companies) and sellers to trade electricity in real time through
simultaneous competitive bidding. Electricity on the RTM is traded in 30-minute settlement periods. Trades are based on double-
sided closed auction with a uniform price. There is also a gate closure, that is, after the bids are submitted to the electricity
exchange, they cannot be modified.
Setting up of renewable energy management centres. In February 2020, the Government of India launched the Northern
Region Renewable Management Centre (REMC) for renewable energy integration. The REMCs are dedicated for forecasting
and scheduling tools and provide enhanced situational awareness to the grid operators using the artificial intelligence. Currently,
55 GW of renewable energy is being monitored through the eleven REMCs.
Capacity addition in 2018-19 and its achievement. Generation of electricity increased by 5.49% (compounded annual growth
rate 2009-10 to 2018-19). Capacity addition target of 8,106.15 MW was fixed for 2018-19, of which 5,921.755 MW was
achieved. The electricity consumption increased from 6,12,645 GWh during 2009-10 to 11,58,310 GWh during 2018-19, with
a compound annual growth rate (CAGR) of 6.6%.

National Electricity Plan. Under the Electricity Act, the CEA must prepare a National Electricity Plan (NEP) in accordance
with the National Electricity Policy and notify the NEP every five years. The CEA released its latest NEP in January 2018,
focusing on the renewable sector. The NEP has also set a renewable energy capacity target of 175 GW, to be reached by 2021-22.
The plan also envisages reducing CO2 emissions and improving the efficiency of thermal power stations. The total coal
requirement in 2021-22 and 2026-27 is estimated as 735 megatonnes (MT) and 877 MT respectively (including imported coal
of 50 MT). The plan aims to improve the efficiency of the coal-based generation plants through renovation and modernisation
of old and inefficient units, and to close down units where renovation and modernisation are not possible.
Renewable energy sector
As of 30 November 2020, the total installed capacity of renewable energy in India was approximately 136,098.33 MW
(including large hydro) and segregated as follows:
• Solar power, 36,910.53 MW.
• Wind, 38,433.55 MW.
• Small hydro, 4,740.47 MW.
• Biomass, 10,145.92 MW.
• Waste-to-energy, 168.64 MW.
• Large hydro, 45,699.22 MW.
The Government of India has undertaken steps based on market demand and supply to promote the renewable energy resources
(see Question 8). The Indian Government (along with various state governments) has announced many schemes to promote
renewable energy. Previously, only small hydro projects with an installed capacity of not more than 25 MW were considered
to be a renewable energy source, but large hydro projects (that is, with an installed capacity of more than 25 MW) were also
included in 2019. Given the disruption in the supply chain caused by the 2019 novel coronavirus disease (COVID-19), the
Indian Government has been proactive in aiding independent power producers by giving a blanket extension (without no case-
by-case examination) of five months from 25 March 2020 to projects that are being developed under any schemes of the MNRE.
Similar extensions are also being given to other stakeholders down the supply chain. Also, the Indian Government, as part of
the financial stimulus package in the wake of COVID-19, announced a liquidity support of INR900 billion.
Safeguard duty on solar panels
The Government of India notification dated 30 July 2018 imposed a safeguard duty on the import of solar cells (whether
assembled in modules or panels). The Government of India has extended the imposition of a safeguard duty for another year
starting from 30 July 2020. The rates payable on any solar cell import from 30 July 2020 to 29 July 2021 are as follows:
• 14.9% ad valorem from 30 July 2020 to 29 January 2021.
• 14.5% ad valorem from 30 January 2021 to 29 July 2021.
There is an exemption under the notification on imports from developing countries (as notified from time to time), however it
does not exempt imports made from China, Thailand and Vietnam.
Regulatory structure

2. What is the regulatory framework for the electricity sector?
Regulatory framework
The Electricity Act is the principal legislation on generation, transmission, distribution, trade and use of electricity in India. It
also provides an elaborate framework of bodies to administer the activities under the Electricity Act. Among other things, the
Electricity Act delicensed generation activities except hydropower. The main objectives of the Electricity Act are:
• Promoting competition.
• Protecting the interest of consumers.
• Ensuring electricity supply to all areas along with a rationalisation of tariffs.
• Ensuring transparent policies and promotion of efficiency.
Regulatory authorities
The CEA is the statutory body under the Electricity Act that advises Government of India on establishing policies, safety
requirements and technical standards. The Government of India (in consultation with the states and the CEA) sets policies (such
as the NTP and National Electricity Policy) as a guideline for the Central Electricity Regulatory Commission (CERC) and the
State Electricity Regulatory Commissions (SERCs) when they make their regulations.
The regulatory commissions are set up at the central and state level to regulate and oversee generation, distribution and
transmission of electricity. They are independent bodies with functions as specified under the Electricity Act.
At the central level, CERC is responsible for the following:
• Regulating the tariffs of the generating companies that are owned or controlled by the Government of India.
• Regulating tariffs of generating companies (other than those owned or controlled by the Government of India), if these
generating companies enter into or otherwise have a composite scheme for generation and sale of electricity in more
than one state.
• Regulate inter-state transmission of electricity.
• Determine tariffs for inter-state transmission of electricity.
• Adjudicating disputes involving generating companies or transmission licensees in relation to any of the previous
matters.
• Issuing licences to transmission licensees and electricity traders.

At the state level, the SERCs perform similar functions to those of CERC. The functions of SERCs include the following:
• Regulating the purchase and procurement of electricity by distribution licensees.
• Facilitating intra-state transmission of electricity and issuing licences to applicants for transmission licensees,
distribution licensees and electricity traders within the state.
• Determining the tariffs for the generation, supply, transmission and wheeling of electricity (wholesale, bulk or retail)
within the state.
• Adjudicate disputes between the licensees and/or the generating companies.
• Specify state grid codes consistent with the grid code specified by CERC.
In relation to promotion of renewable energy, the MNRE is the relevant agency of Government of India for matters related
to the following:
• Solar energy.
• Bio-gas units.
• Small hydroelectric power (large hydropower projects have also been classified as renewable energy source, but they
are supervised by the MOP).
• Tidal energy.
• Geothermal energy.
MNRE is assisted by SECI, a government enterprise under the control of MNRE, in implementing and facilitating schemes
including the Jawaharlal Nehru National Solar Mission (NSM) and schemes for wind projects and solar-wind hybrid projects.
Electricity companies
Main companies
3. What are the main companies involved in electricity generation, transmission, distribution and supply?
There are four types of activities covered by the Electricity Act, that is:
• Three licensed activities:
• transmission of electricity;

• trading of electricity (purchase of electricity for resale); and
• distribution of electricity.
• De-licensed activity.
• Generation activity except hydropower.
Below is the list of some of the major players in the power sector across different activities.
Generation
The players undertaking generation activity include Adani Power Limited, NTPC Limited, Tata Power Company Limited,
NHPC Limited, JSW Energy Limited and Torrent Power Limited.
Transmission
The major players undertaking transmission activity include Power Grid Corporation of India Limited, Adani Transmission
Limited and Sterlite Power Transmission Limited. In addition to these companies, each state has its own state transmission
utility.
Distribution
The major distribution and supply companies in India include CESC Limited, Tata Power Delhi Distribution Limited, Adani
Electricity Mumbai Limited, and BSES Rajdhani Power Limited. Also, most states have state-owned power distribution
companies that regulate and facilitate the distribution activity within the state.
Supply
Under the Electricity Act, a supply of electricity means the sale of electricity to a licensee or consumer. Distribution and supply
of the electricity can therefore be undertaken by the same entities.
Unbundling requirements
Under the Electricity Act, generation, transmission, supply and distribution is unbundled. The generation of electricity (except
hydro) is delicenced.
Trading
The major electricity trading entities include PTC India Limited, Manikaran Power Limited, National Energy Trading &
Services Limited, NTPC Vidyut Vyapar Nigam Limited and Tata Power Trading Company Private Limited.
Foreign ownership

4. Are there any restrictions concerning the foreign ownership of electricity companies or assets?
Foreign direct investment up to 100% is permitted in the electricity sector (except atomic energy) under the automatic route
(that is, no approval from the Government of India is required). The following can invest in India only with prior approval
from the Indian Government:
• An entity that is incorporated in a neighbouring country.
• An entity whose beneficial owner is resident in or is a citizen of a neighbouring country.
Currently, up to 49% of foreign direct investment under the automatic route is allowed in electricity exchanges registered
under the CERC (Power Market) Regulations 2010. Foreign institutional investors and foreign portfolio investors can invest in
electricity exchanges on the primary market (including in initial public offering) as well.
Insolvency
5. Are there any special insolvency regimes that apply to companies operating in this sector?
The Insolvency and Bankruptcy Code 2016 (IBC) consolidated the law in relation to insolvency and reorganisation of (among
others) companies. The IBC also applies to the insolvency framework with respect to the electricity sector.
Import of electricity
6. To what extent is electricity imported and/or exported?
The MOP issued the Guidelines for Import / Export (Cross Border) of Electricity 2018 (2018 Guidelines) to replace the previous
guidelines (issued on 5 December 2016). Under the 2018 Guidelines, the import and export of electricity between India and its
neighbouring countries can be allowed by mutual agreements between Indian entities and entities of the neighbouring country
under the overall framework of agreements signed between India and the neighbouring country and the applicable law (including
through a bilateral agreement between two countries, through a bidding process or through mutual agreements between entities).
Under the 2018 Guidelines, any entity proposing to import or export electricity can only do so after obtaining approval from
the designated authority (subject to some specific exceptions). The Central Electricity Authority is the designated authority
under the 2018 Guidelines.

Under the 2018 Guidelines, the CERC issued the CERC (Cross Border Trade of Electricity) Regulations 2019 (CBTE
Regulations) which came into force on 14 May 2019. The CBTE Regulations apply to entities proposing to undertake cross-
border trade of electricity as approved by the designated authority. The CBTE Regulations set out the:
• Institutional framework.
• Tariff determination for import and export of electricity.
• Connectivity-related provisions.
Under the CBTE Regulations, the National Load Dispatch Centre acts as the system operator to grant short-term open access.
Power Grid Corporation of India Limited act as a central transmission utility responsible for granting long-term access and
medium-term open access.
Import of electricity
India imported approximately 4.657 billion kWh of electricity in the financial year 2018-19. In the last three years, the net
import of electricity has declined with a CAGR of 1.4%.
Export of electricity
For the financial year 2018-19, India exported approximately 8,494 GW of electricity. The export of electricity has increased
by 17.9%.
Electricity generation and renewable energy
Sources of electricity generation
7. What are the main sources of electricity generation?
Total installed capacity of electricity in India as of November 2020 was 374,199 MW. The total capacity consists of electricity
generated from fossil fuels, hydro, nuclear and renewable energy sources which include small hydro project, biomass gasifier,
biomass power, urban and industrial waste power, solar and wind energy.
Fossil fuels
Fossil fuels were used to generate 61.8% of all generated electricity. The fossil fuels contribution comprises:
• Coal, 53.3%.

• Lignite, 1.7%.
• Gas, 6.7%.
• Diesel, 0.1%.
Nuclear fission
Nuclear fission was used to generate 1.8% of all generated electricity.
Renewable energy
The renewable energy sources (including large hydro) as on 30 November 2020 corresponds to 36.37% of the total installed
capacity. Different renewable energy sources contributed to the total capacity of generated electricity as follows:
• Solar power, 27.12%.
• Wind power, 28.23%.
• Bio power, 7.45%.
• Hydro power, 33.57% large hydro and 3.48% for small hydro.
• Waste to energy, 0.12%.
8. Are there any government policies, targets or incentives in place to encourage the use of renewable or low
carbon energy?
Renewable energy targets
The Government of India has set a target of 175GW from renewable energy sources by 2022, as follows:
• 100GW from solar energy.
• 60GW from wind.
• 10GW from bio-power.
• 5GW from small hydro-power.
Government policies/incentives

Promoting electricity generation from renewable energy sources is one of the main objectives of the NTP and is also encouraged
under the Electricity Act. Therefore, one of the functions of SERCs under the Electricity Act is to also promote co-generation
and generation of electricity from renewable energy sources.
The MNRE has launched the:
• NSM.
• National Offshore Wind Energy Policy.
• Policy for Repowering of the Wind Power Projects.
• Solar scheme for Central Public Undertakings.
• Solar rooftop scheme.
• Development of transmission network through green energy corridor.
Recently in April 2020, the MNRE reiterated its position and clarified that renewable energy generations stations have been
granted a "must run" status even during the period of lockdown due to COVID-19. The MNRE also clarified that except for
grid safety reasons any curtailment of renewable energy would amount to deemed generation. Under the Electricity Act, SERCs
have issued regulations requiring distribution entities to procure specified percentages of electricity generated from renewable
energy sources, based on the total consumption in the relevant supply areas.
Waiver of inter-state transmission charges and losses.On 5 August, the Government of India waived the inter-state
transmission (ISTS) charges and losses on the transmission of electricity generated from solar and wind projects (for sale to
businesses) until 30 June 2023. The eligible power plants are now exempt from paying ISTS charges and losses for a period of
25 years from the date of commissioning. The waiver applies to power plants using solar and wind sources of energy, including
solar-wind hybrid power plants (subject to meeting the criteria).
There is a provision of bundling power generated from certain renewable energy projects (such as offshore wind power and
solar power projects) with conventional power to reduce the cost of power generated under schemes such as the National
Offshore Wind Energy Policy and the NSM. The Government of India has also issued guidelines for tariff-based competitive
bidding process for procurement of round the block power from grid-connected renewable energy projects complemented with
electricity from coal-based thermal projects.
Certain incentives are also available with respect to renewable energy. For example:
• Many states have state-specific renewable energy policies. Through these policies, the state governments grant various
fiscal incentives, such as:
• exemptions from electricity duty;
• exemptions from cross-subsidy surcharge;
• waiver from paying stamp duties;
• waiver from paying land registration charges; and
• waiver from transmission and distribution charges for wheeling power.

• Open access on priority basis. In certain states, the state-specific regulations and policies provide for open access on
priority basis or deemed to be given (if the application for open access for renewable power projects is not granted
within the time frame specified in the regulations).
See Question 1, Government policy objectives and table, Common forms of renewable energy
9. What are the main obstacles to the development of renewable energy?
India has a significant portion of global wind and solar power installed capacity. However, there are certain challenges and
issues that continue to restrain the development of renewable energy projects in India.
Offtake risk is a challenge given the financial health of distribution utilities in India (who are the primary buyers of power in
India). As a result, adequate payment security mechanism is in many cases not available to the stakeholders. Another major
challenge is not having adequate transmission infrastructure for power evacuation (that is, evacuating power generated from
the generator to the grid for distribution.
Enforcement of the RPO is another challenge, considering that some states have been lax in enforcing this mandate. To ensure
compliance with the Electricity Act and ensure that RPO targets are met, the Electricity Amendment Bill has specifically
addressed the issue of non-compliance and proposed penalties for non-compliance with the RPO targets.
Another concern in relation to renewable energy projects has been the renegotiation of the tariffs approved for the projects
affecting the sacrosanctity of the tariff discovered through the competitive bid process for renewable energy projects. This
has therefore led to uncertainty in the sacrosanctity of the bid process for purchase of renewable energy. Other obstacles in
this sector include delays in relation to procurement of land/delay in obtaining approvals from local authorities in relation to
land that delay the project and withdrawal of certain exemptions such as payment of wheeling, banking and the cross subsidy
surcharge for solar projects in states like Karnataka. Also, the increased incidence of taxation after the introduction of the goods
and service tax regime has also weakened the momentum. While the imposition of safeguarding duties has been considered as
a change in the legal regime, the delay in the disbursement of the claims has impacted the project cost. In view of COVID-19,
certain distribution companies have also restricted electricity from renewable energy sources. However, the Government of
India has clarified its stance that renewable energy projects have been accorded ‘must run’ status and any curtailment except
in case of grid security would amount to deemed generation.
10. Are there any plans to build new nuclear power stations?
In India, the operator of a nuclear installation can be the Government of India or any authority or corporation established by it
or a Government company who has been granted a licence under the Atomic Energy Act 1962. India has an installed nuclear
power capacity of 6,780 MW (as per the data as on 30 September 2020). Nine new reactors are currently under construction in
India and 12 other nuclear reactors have been accorded administrative approval and financial sanction.

11. What are the authorisation requirements to construct electricity generation plants?
Generation of electricity (except hydro) is a delicensed activity and setting up a generation plant does not require any licence
(however, only central government and state-owned companies or authorities can produce, develop, use or dispose of atomic
energy in relation to atomic energy) under the Electricity Act. However, generating electricity is still subject to the requisite
environmental and other approvals relating to construction, development and implementation of the generation plant. In terms
of hydro power plants, developers often enter into a memorandum of understanding or implementation agreements with the
state government where the project is being set up.
The Government of India no longer requires techno-economic clearance for a thermal energy project from the CEA (however,
this is still required for setting up a hydro plant).
As regulations can be at central and state level, authorisation requirements vary depending on the location of each project. The
following are key authorisations required to set up a power plant (depending on the nature of fuel, location and project, certain
consents may be additionally required):
• Environmental clearance for the specific project from the Ministry of Environment, Forests and Climate Change
(MoEFCC).
• Consent to establish for the specific project by the state pollution control board under the Air (Prevention and control of
Pollution) Act 1981 and the Water (Prevention and Control of Pollution) Act 1974.
• Approvals to acquire land for the project, including approvals from local bodies such as the village council (gram
panchayat).
• Approval for site and building plan (including clearance for fire safety standards and protection apparatus and system)
and licensing and registration of the project under the Factories Act 1948 (issued by the Chief Inspector of Factories).
• Certificate for use of boilers under the Indian Boilers Act 1923.
• Licence for storage and use of explosives under the Explosives Act 1884.
• Licence for storage and use of petroleum products under Petroleum Act 1934.
• Approvals, clearances or no objection certificates from authorities such as the Archaeological Survey of India, Ministry
of Defence and Airports Authority of India (as applicable).
The consents required for renewable energy projects are state-specific and may vary from one state to another.

12. Are there any requirements to ensure new power stations are ready for carbon capture and storage (CCS)
technology, or requiring a plant to retrofit CCS technology once this is ready?
There are no requirements for new power stations or existing plant to retrofit CCS technology.
13. What are the authorisation and main ongoing requirements to operate electricity generation plants?
No licence is required under the Electricity Act for operating a generation plant (except hydro). However, a number of approvals,
consents and permits must be obtained and maintained during the operation of the plant from various central and state bodies.
The key authorisations include:
• Consent to operate by the state pollution control board under the Air (Prevention and Control of Pollution) Act 1981
and the Water (Prevention and Control of Pollution) Act 1974 in relation to the project.
• Connectivity-related approvals to connect the interconnection facility to the transmission or distribution network.
• Commissioning certificates from the relevant authority.
• Compliance with the regulations issued by CEA such as:
• CEA (Safety Requirements for Construction, Operation and Maintenance of Electrical Plants and Electrical
Lines) Regulations 2011; and
• periodical inspection of the electrical installations under the CEA (Measures relating to Safety and Electric
Supply) 2010.
• Compliance with the electricity supply code, including the metering code and metering regulations framed by the
relevant SERC.
The consents required for renewable energy projects are state-specific and may vary from one state to another.
14. What requirements are there concerning connection of generation to the transmission network or a
distribution network?

For supply of power from the point of injection to the point of drawal, the generating unit must connect to the inter-state
transmission system (in case of inter-state supply) for which application for connectivity is filed and an agreement for the same
is entered with the Central Transmission Utility (CTU). For inter-state supply of power, the following are required:
• The right to use the inter-state transmission system (that is, open access) must be applied for to the CTU.
• After open access is granted, an agreement for long-term or medium-term access must be entered with the CTU.
The connectivity and grant of open access in relation to inter-state transmission system is governed by CERC (Grant of
Connectivity, Long-term Access and Medium-term Open Access in Inter-State Transmission and related matters) Regulations
2009 (in case of inter-state supply). Similarly, connectivity and open access for intra-state supply is governed as per the relevant
SERC regulations.
15. What requirements are there concerning the decommissioning of a generation plant at the end of its period
of operation?
All state specific laws for the disposal of the equipment must be complied with at the time of decommissioning a generation
plant. In terms of nuclear power plants, the Atomic Energy Regulatory Board (AERB) has issued safety manuals setting out
the requirements to be complied with when facility is taken out of operation. These include an approval of a decommissioning
plan to ensure safety of the workers, the public and the environment.
Electricity transmission
16. What are the authorisation requirements to construct electricity transmission networks?
No person can transmit electricity unless authorised to do so by a licence from the appropriate commission, that is:
• CERC for inter-state transmission facilities.
• The relevant SERC for intra-state transmission.
(Section 12, Electricity Act.)

However, no transmission licence is required for the construction of dedicated transmission lines. Dedicated transmission lines
are electric supply lines for point-to-point transmission that connect, electric lines, electric plants of a captive generating plant
or generating stations to:
• Any transmission lines or sub-stations.
• Generating stations.
• The load centres.
Apart from the transmission licence, the key authorisations that are required for constructing a transmission network include:
• Approval from the appropriate government for installing overhead lines.
• Forest clearance from the MoEFCC for the project (if transmission lines are passing through forest land).
• Permission for tree cutting or felling in urban sites.
• Approvals, clearances or no objection certificates from authorities such as Archaeological Survey of India, Ministry of
Defence, Airports Authority of India (if applicable).
• Right of way from landowners for laying transmission lines.
• Approval for construction of transmission lines (under section 164 of the Electricity Act).
• Energisation approvals for electrical installations or apparatus under the CEA (Measures Relating to Safety and Electric
Supply) Regulations 2010.
17. What are the authorisation and main ongoing requirements to operate electricity transmission networks?
The transmission of electricity is a licensed activity and therefore requires a transmission licence for the construction, operation
and maintenance of a transmission system (see Question 16).
The transmission licence is issued in accordance with the procedure for granting the licence under the CERC/the relevant SERC
regulations. While issuing licences, the appropriate commission can set conditions which the licensee must comply with (in
addition to compliance with the grid code, technical standards and CEA specifications). The transmission licence is granted
for 25 years and provides for the duties and functions of the transmission licensee. If the useful life of the transmission asset
extends beyond 25 years, the appropriate commission may grant the licence for another term after an application under the
regulations is made. Under the CERC (Procedure, Terms and Conditions for grant of Transmission licence and other related
matters) Regulations 2009 in relation to inter-state transmission of electricity, the transmission licensee:
• Is prohibited from entering into any contract in relation to, or otherwise engaging in the business of, trading of
electricity during the licence period.

• The licensee must report to the CERC as soon as practicable any changes to the majority shareholding, ownership or
management of the licensee.
• If an application is made by the lenders (if the transmission licensee has defaulted on a debt repayment), CERC may
assign the licence to a nominee of the lenders.
In addition to a transmission licence, the key authorisations for operating a transmission network in India include:
• Periodical inspection of the electrical installations under the CEA (Measures relating to Safety and Electric Supply)
2010 and compliance with these Measures.
• Approval of the appropriate commission to create security over the project.
• Compliance with standards of performance (such as restoration time for different transmission lines) as issued by the
appropriate commission.
• Compliance with CEA regulations, such as the CEA (Safety Requirements for Construction, Operation and
Maintenance of Electrical Plants and Electrical Lines) Regulations 2011.
Transmission charges
18. How are the charges and conditions for the transmission of electricity regulated?
Electricity Act empowers the CERC to determine tariff for inter-state transmission of electricity and SERC for facilitating intra-
state transmission.
Under the Electricity Act, the tariff for transmission of electricity is either:
• Determined by the CERC or SERC in accordance with the applicable commission's regulations (section 62, Electricity
Act). The regulations for determining the tariff must be specified by the appropriate commission considering (among
others) the following (section 61, Electricity Act):
• The factors which would encourage competition, efficiency, economical use of the resources, good performance
and optimum investments;
• The National Electricity Policy and the NTP;
• Safeguarding consumers' interest and at the same time, the reasonable recovery of the cost of electricity; and
• Multi-year tariff principles.
• Adopted following a competitive bidding process (section 63, Electricity Act).

The CERC has published the CERC (Terms and Conditions of Tariff) Regulations 2019 (CERC Tariff Regulations) which came
into force on 1 April 2019 and are effective for five years. The CERC Tariff Regulations provide guidelines for determining
the tariff for inter-state electricity transmission. The transmission licensee can apply for a determination of the transmission
system tariff, which will be based on (among others) the:
• Capital expenditure incurred (duly certified by the auditors) or projected to be incurred up to the date of commercial
operation.
• Additional capital expenditure incurred (duly certified by the auditors) or projected to be incurred during the tariff
period of the transmission system.
The transmission tariff comprises of transmission charges to recover the annual fixed cost (which includes depreciation, return
on equity, interest on working capital, and operation and maintenance expenses).
For intra-state transmission of electricity, the terms and conditions of tariff are similarly specified by the relevant SERCs.
The tariff for a transmission project can be adopted by the appropriate commission if it has been determined through a
transparent bidding process following the guidelines issued by the Government of India (section 63, Electricity Act; Tariff
Based Competitive-Bidding Guidelines for Transmission Service; Guidelines for Encouraging Competition in Development of
Transmission Projects, issued by MoP dated 13 April 2006).
Also, charges for the use of transmission system and connectivity must be paid by the open access consumers (such as licensees
and generating companies).
System balancing
19. How is electricity supply and demand balanced?
For optimum scheduling and despatch of electricity, load despatch centres are established at the national, regional and state
level (sections 26, 27 and 31, Electricity Act). The National Load Despatch Centre is responsible for ensuring the integrated
operation of the national power system. It supervises the regional load despatch centres (RLDCs) by:
• Monitoring the national grid operations.
• Scheduling and despatching electricity over the inter-regional links (following grid standards specified by the authority
and grid code specified by CERC in co-ordination with regional load despatch centres).
The Government of India has established RLDCs for each region having territorial jurisdiction. Some of the functions of RLDCs
are to:
• Ensure the optimal scheduling and despatch of electricity in the region (under the contracts with the licensees or
generating companies that operate in the region).

• Monitor grid operations.
• Keep accounts of quantity of electricity transmitted through the regional grid.
• Exercise supervision and control over the inter-state transmission system.
• Carry out real-time operations for grid control and despatch of electricity in the region through secure and economic
operation of the regional grid (under the grid standards and the grid code).
The RLDCs collect fees and charges from the generating company and transmission licensees, as specified by the CERC.
The RLDCs give directions to ensure the stability of grid operations, and every licensee, generating company and any person
connected with the operation of the power system must comply with the directions of the RLDCs.
For intra-state transmission, different state governments have similarly established a State Load Despatch Centre (SLDCs) for
the purposes of exercising the functions above. The SLDCs levy charges and collect fees from generating stations and intra-
state transmission licensees. The SLDCs give directions that the generating company, licensees and every person connected
with the operation of the power system must comply with.
Electricity distribution
20. What are the authorisation requirements to construct electricity distribution systems?
Electricity distribution is a licensed activity and the licence is issued by the respective SERC. Section 15 of the Electricity Act
sets out the framework and procedure for obtaining the licence. The SERCs grant the distribution licence for 25 years from the
date of issue (subject to compliance with the terms and conditions of licence).
In addition to the distribution licence, additional authorisations may be required from the state authorities and other bodies. For
the key required authorisations from various authorities and bodies, see Question 16.
21. What are the authorisation and the main ongoing requirements to operate electricity distribution systems?
Under the Electricity Act and the SERCs regulations, a distribution licensee:
• Must not engage in any other business without the approval of the SERC.

• Must not merge its utility with the utility of any other licensee without the approval of the SERC.
• Must develop and maintain an efficient, co-ordinated and economical distribution system in its area of supply.
• Must not transfer or assign its licence without the approval of the SERC.
• Must supply electricity on request and has a duty to recover charges in accordance with the tariff.
• Must comply with the directions of the load despatch centres and other conditions, such as:
• periodical inspection of the electrical installations under the CEA (Measures relating to Safety and Electric
Supply) 2010 and must comply with the Measures;
• approval is required from the appropriate commission before the security is created over the project;
• compliance with standards of performance as issued by the relevant SERC; and
• compliance with the electricity supply code, and the metering code and metering regulations by the relevant
SERC.
Distribution charges
22. How are the charges and conditions for the distribution of electricity regulated?
Procurement by distribution licensee
The electricity procurement tariff payable by distribution licensees to the generating companies, can be determined by:
• Determining tariff by the CERC or the relevant SERC (section 62, Electricity Act).
• The adoption of the tariff by the CERC or the relevant SERC, if the tariff is determined under the competitive bidding
guidelines issued by the Government of India (section 63, Electricity Act).
The appropriate commissions (that is, the CERC or the relevant SERC) are guided by the principles of tariff determination
(see Question 18).
Supply of electricity by distribution licensee to consumers
The tariff for electricity distribution payable to distribution licensees in India is determined on a cost-plus basis (the cost includes
the cost of power purchase, wheeling and supply expenses) by the relevant SERC for the tariff period. The relevant SERCs
determine the tariff and charges for wheeling and supply of electricity based on principles such as the recovery in a reasonable
manner of cost incurred in the operation of the licensed business (section 61, Electricity Act). The distribution licensees can
apply to the SERC for electricity supply tariff determination. The application procedure and the fees payable for the application

are set out in the relevant SERC regulations. The SERCs determine the average per unit energy supply cost that can be recovered
from the consumers, taking into account the distribution losses and other factors (such as voltage level and whether the customer
is domestic, non-domestic, industrial or agricultural).
Other charges such as charges payable for using the distribution system of the distribution licensee also apply, that is open
access charges and cross subsidy charges.
Electricity supply
23. What are the authorisation and the main ongoing requirements to supply electricity to end consumers?
See Question 20 and Question 21.
Trading between generators and suppliers
24. How is electricity traded between generators and suppliers?
A trader must have a licence from the appropriate commission under the Electricity Act to purchase and resale electricity.
However, distribution licensees are exempted and do not need a separate licence for trading. The Electricity Act specifically
excludes certain entities from trading in electricity, such as the load despatch centres (at regional, national and state level),
transmission licensee, and CTUs.
Electricity can be traded on a registered power trading platform. There are two power trading platforms in India and they are
governed under the CERC (Power Market) Regulations 2010:
• Indian Energy Exchange.
• Power Exchange of India Limited.
In June 2020, the Government of India launched the RTM, which is an organised platform to the buyers (including distribution
companies) and sellers to trade electricity in real time.

The electricity to a generator or a distribution licensee (which is also a supplier in India) is traded at a trading margin (see
Question 25).
25. How is electricity trading (between generators and suppliers) regulated?
The CERC notified the CERC (Procedure, Terms and Conditions for grant of trading licence and other related matters)
Regulations 2020 which governs grant of trading licence including the procedure and applicability for grant of such licence and
the applicability of trading margin in relation to the transactions.
Under those regulations, trading margin is applicable in relation to the following transactions undertaken by the trading licensee:
• Short-term contracts. Those are contracts entered into by the trading licensee with both the seller and the buyer
including through power exchanges where the period of contract is up to one year. The trading margin must not exceed
INR0.07 per kWh
• Long-term contracts. Those are contracts entered into by the trading licensee with either the seller and the buyer or
both where the period of contract is more than one year. The margin is negotiable between the trading licensee and the
seller.
• Cross-border trade of electricity. The margin is negotiable between the trading licensee and the seller.
• Back-to-back contracts. Those are contracts in which a trading licensee buys a specific quantity of power for a
particular duration and simultaneously sells it to another party on similar terms and conditions. Parties can specifically
agree for a contract to be a back-to-back contract.
• Banking of electricity. The cumulative trading margin must not exceed INR0.07 per kWh.
However, in contracts (short-term, long-term and back-to-back contracts) where escrow arrangement or irrevocable and
revolving letter of credit is not provided by the trading licensee to the seller, the margin will not exceed INR0.02 per kWh.
Electricity price and conditions of sale
26. How is the price for electricity and conditions of sale regulated at the consumer and wholesale level?
See Question 22.
Statutory powers

27. Do companies involved in the generation, transmission, distribution or supply of electricity have any
statutory powers to undertake work (for example, compulsory purchase powers or street works powers)?
The licensees can do any of the following within their area of supply or transmission (subject to the terms and conditions of
the licence:
• Carry out works.
• Lay down or place any electric supply line or works.
• Fix any support of overhead lines.
(Section 67, Electricity Act.)
Under the Electricity Act, the central or state government may specify:
• Cases and circumstances in which the consent in writing of the central or state government, local authority, owner or
occupier may be required for carrying out the works.
• The nature and period of notice to be given by the licensee before carrying out works.
• The procedures for carrying out works and alterations of the electrical, sewer and telegraph lines. The licensee can also
be directed to restore in a specific manner property that is affected by its works and maintenance.
The Works of Licensees Rules 2006 have been notified under the Electricity Act providing for the procedure for carrying out
works, repairs and works to be undertaken during emergency and so on.
The Electricity Act gives statutory power to licensees to undertake works, including:
• Open and break up the soil and pavement of any street, railway or tramway. The licensee must serve prior notice to the
authority responsible for the railway, tramway, canal or waterway before performing any such works.
• Open and break up any sewer, drain or tunnel in or under any street, railway or tramway.
• Carry out other works near sewers, pipes or other electric lines or works.
• Lay down and place electric lines, electrical plant and other works.
• Repair, alter or remove electric lines, electric plants and other works.
• Perform all other acts that are necessary for the transmission or supply of electricity.
Tax issues

28. What are the main tax issues arising on electricity generation, distribution, transmission and supply?
There are no particular tax issues to be addressed in relation to electricity generation, distribution, transmission and supply.
Insurance
29. Are there any insurance requirements from the regulatory authority?
There are no insurance requirements from the regulatory authority. However, the operator of the nuclear power plant must
take out insurance policy or such other financial security under the Civil Liability for Nuclear Damage Act 2010 in relation
to nuclear power plants. The India Nuclear Insurance Pool has been launched to provide comfort to operators and suppliers
by providing for insurance policies.
Reform
30. What reform proposals are there for the regulation of the electricity sector?
The Government of India has recently presented certain reform proposals for the regulation of the electricity sector (see below).
Amendment to the Electricity Act
The Indian Government has issued a draft Electricity (Amendment) Bill 2020. Some of the changes proposed in the Electricity
Amendment Bill include:
• New definitions, such as "cross border trade of electricity", "distribution sub-licensee" and "franchisee". Under the
Electricity Amendment Bill, both the distribution sub-licensee and the franchisee are not required to obtain a separate
licence for the distribution of electricity.
• Setting up the Electricity Contract Enforcement Authority (ECEA). To provide for a stricter contract enforcement
in the power sector, under the Electricity Amendment Bill, the ECEA would be the sole authority to adjudicate on

contractual enforcement matters relating to the sale and purchase or transmission of electricity. The ECEA will
not have any jurisdiction on regulating or determining tariffs, or any tariff disputes (which would remain under the
jurisdiction of the CERC and the relevant SERCs). ECEA orders would be enforceable as civil court decrees. Appeals
against ECEA orders of the ECEA would be heard by the Appellate Tribunal for Electricity (APTEL).
• National Renewable Energy Policy. The Electricity Amendment Bill provides that Government of India (in
consultation with the state government) will notify a National Renewable Energy Policy for the promotion of
generation of electricity from renewable energy sources and prescribe a percentage of purchase of electricity from
renewable and hydro sources of energy.
• Payment Security Mechanism. The Electricity Amendment Bill also provides that no electricity will be scheduled or
despatched unless adequate security of payment is in place between the parties, under the contract.
• Deemed adoption of tariff discovered through bidding. The Electricity Amendment Bill provides that a tariff introduced
under section 63 of the Act will be adopted in a timely manner and within 60 days from the date of application. After
the end of that 60-day period, the tariff will be deemed to be adopted.
• Penalties in case of non-compliance with renewable purchase obligation or hydropower purchase obligation.
Draft amendments to the NTP
The MOP released the draft amendments to the existing NTP that was notified in 2016 on 30 May 2018. The draft amendments
to the NTP include:
• Offtake of power by distribution companies through long or medium-term power purchase agreements.
• Imposing a penalty (and crediting the amount to the account of the respective consumer) on distribution companies if a
power cut occurs other than because of a force majeure event and technical faults.
• That the reduced tariff benefit is passed on to consumers after full depreciation of assets.
• That from 31 March 2019, the relevant commissions will not consider passing off the aggregate technical and
commercial losses of more than 15% for determination of tariff. Aggregate technical and commercial losses are also
proposed to be decreased to 10%.
• That a shift is made from a post-paid basis to pre-paid basis in three years. The meters are proposed to be designed to
automatically cut off supply when the credit is exhausted.
• Cross-subsidies are reduced and the tariff for all consumer categories is brought within plus/minus 20% of the average
supply cost (effective from 1 April 2019 or earlier).
Draft amendment to the Electricity Rules 2005
Under the current rules, a captive power plant (CPP) is a power plant set up by industrial (commercial) users for their own
consumption. A CPP must meet the following criteria:
• The users must own at least 26% of equity share capital.
• The users must consume at least 51% of the annual aggregate electricity generated by the CPP.

The Draft Electricity (Amendment) Rules 2018 propose various changes on the way CPPs are currently structured. The Draft
Rules also aim to clarify whether the rule of proportionality applies by specifying the requirements for classification as a CPP
(it proposes a change in the definition of ownership and a normative debt equity ratio of 70:30 to also be considered). The
Draft Rules also set out the certification requirements of a CPP.
National Wind-Solar Hybrid Policy
The MNRE released the National Wind-Solar Hybrid Policy in May 2018 to promote large-grid connected wind-solar
photovoltaic systems for optimal and efficient utilisation of transmission infrastructure and land. The policy aims to encourage
new technologies and methods involving a combination of solar and wind power plants.
The MNRE also released the Draft Renewable Energy Act 2015 to promote renewable energy and provide state level plans,
authorities and an institutional structure for its promotion. The Draft Renewable Energy Act 2015 has still not been passed.
Contributor profiles
Dibyanshu, Partner
Khaitan & Co
T +91 120 479 1000
E dibyanshu@khaitanco.com
W www.khaitanco.com
Professional qualifications. Lawyer, India
Areas of practice. Energy infrastructure resources; M&A; corporate law; commercial law; private equity.
Non-professional qualifications. LLM, Columbia University School of Law, New York (2009), Harlan Fiske
Stone Scholar; BA, LLB (Hons), National Law Institute University, Bhopal (2005)
Recent transactions
• Advises domestic and international clients including government entities, project sponsors and developers
in the oil and gas sector, power sector (conventional and non-conventional), mining, transportation
(including roads, ports, railways and aviation) on the entire range of project development issues in the
infrastructure sector.
• Advses on domestic and cross border investments, entry strategies, transaction structuring, financing and
regulatory issues.
• Key clients include:
• Abu Dhabi Ports;
• Torrent Power;

• Torrent Gas;
• Delhi International Airport Limited;
• CESC Limited;
• Oil and Natural Gas Corporation Limited;
• GAIL (India) Limited;
• Total SA;
• Inox Wind Limited;
• Xylem Inc;
• Gazprom EP International B.V.;
• Bharat Heavy Electricals Limited;
• FRV Group; and
• Hanwha Group.
Publications. Regular contributor to various publications and conferences on policy and regulatory issues, and
thought leadership initiatives.
Shikha Rastogi, Senior Associate
Khaitan & Co
T +91 120 479 1000
E shikha.rastogi@khaitanco.com
W www.khaitanco.com
Professional qualifications. Lawyer India
Areas of practice. Energy, infrastructure and resources, project finance.
Non-professional qualifications. BBA, LLB (Hons), National Law University, Odisha (2014)
Recent transactions
• Represented and advised various stakeholders such as power developers, investors, contractors on a broad
range of energy and infrastructure transactions in India.
• Advised developers and contractors on renewable energy projects, including drafting and review of bid/
project documents and ascertaining the legal and regulatory compliances under Indian law.
Languages. English, Hindi
Sathyajith Nair, Associate

Khaitan & Co
T +91 120 479 1000
E sathyajith.nair@khaitanco.com
W www.khaitanco.com
Professional qualifications. Lawyer, India
Areas of practice. Energy, infrastructure and resources
Non-professional qualifications. LLB Campus Law Centre, University of Delhi (2018), BCom (Hons) University
of Calcutta (2014)
Recent transactions
• Represented and advised various stakeholders, such as power developers, investors, contractors on a broad
range of energy and infrastructure transactions in India.
• Acted for investors on acquisition of power and oil and gas, and other infrastructure projects.
• Worked on a number of transactions involving financing of various infrastructure projects in the energy
sector, acting for borrowers as well as lenders.
Languages. English, Malayalam, Hindi, Bengali
Professional associations/memberships. Bar Council of Delhi.
Publications. Regular contributor to various publications on electricity and oil and gas regulatory issues.
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Electricity regulation in India: overview, Practical Law Country Q&A w-012-2860

Electricity regulation in India: overview

Country Q&A | Law stated as at 01-Jan-2021 | India

A Q&A guide to electricity regulation in India.

Electricity generation and renewable energy

Authorisation and operating requirements

Trading between generators and suppliers

Electricity price and conditions of sale

© 2023 Thomson Reuters. All rights reserved. 1

Shikha Rastogi, Senior Associate

1. What is the role of the electricity market in your jurisdiction?

Government policy objectives

• Rights and obligations of consumers and distribution licensees.

• Connection, metering arrangement, billing and payment.

© 2023 Thomson Reuters. All rights reserved. 2

• Grievance redressal mechanism.

• Component-C. Solarising 1 million grid-connected agriculture pumps.

© 2023 Thomson Reuters. All rights reserved. 3

• Ensure that electricity is available to consumers at reasonable and competitive rates.

• Promote electricity generation from renewable sources.

© 2023 Thomson Reuters. All rights reserved. 4

Renewable energy sector

• Solar power, 36,910.53 MW.

• Wind, 38,433.55 MW.

• Small hydro, 4,740.47 MW.

• Biomass, 10,145.92 MW.

• Waste-to-energy, 168.64 MW.

• Large hydro, 45,699.22 MW.

Safeguard duty on solar panels

• 14.9% ad valorem from 30 July 2020 to 29 January 2021.

• 14.5% ad valorem from 30 January 2021 to 29 July 2021.

© 2023 Thomson Reuters. All rights reserved. 5

2. What is the regulatory framework for the electricity sector?

• Protecting the interest of consumers.

• Ensuring electricity supply to all areas along with a rationalisation of tariffs.

• Ensuring transparent policies and promotion of efficiency.

At the central level, CERC is responsible for the following:

• Regulate inter-state transmission of electricity.

• Determine tariffs for inter-state transmission of electricity.

• Issuing licences to transmission licensees and electricity traders.

© 2023 Thomson Reuters. All rights reserved. 6

• Regulating the purchase and procurement of electricity by distribution licensees.

• Adjudicate disputes between the licensees and/or the generating companies.

• Three licensed activities:

© 2023 Thomson Reuters. All rights reserved. 7

• trading of electricity (purchase of electricity for resale); and

• Generation activity except hydropower.

© 2023 Thomson Reuters. All rights reserved. 8

• An entity that is incorporated in a neighbouring country.

• An entity whose beneficial owner is resident in or is a citizen of a neighbouring country.

6. To what extent is electricity imported and/or exported?

© 2023 Thomson Reuters. All rights reserved. 9

• Tariff determination for import and export of electricity.

Electricity generation and renewable energy

Sources of electricity generation

7. What are the main sources of electricity generation?

© 2023 Thomson Reuters. All rights reserved. 10

Nuclear fission was used to generate 1.8% of all generated electricity.

• Solar power, 27.12%.

• Wind power, 28.23%.

• Bio power, 7.45%.

• Waste to energy, 0.12%.

Renewable energy targets