Non-conventional sources of energy being the most environment friendly there is an urgent need to promote generation of electricity based on such sources of energy. Potential of Renewable Energy sources in providing lasting solution for the energy security has been widely acknowledged and appreciated by the policy makers and entrepreneurs, alike. The scale of investment made in renewable generation, particularly, during XII Plan period bears ample testimony to the fact.
Renewable Energy sources form a considerable part of India’s Energy Sector portfolio and are on fast growth mode largely due to the favourable policy initiatives of the Government. Seized with the long term impact of fossil fuels in degrading the environment and resources available to various habitats, the law makers suggested fixing minimum purchase obligation for procurement of Renewable Energy by power distribution companies in the Electricity Act, 2003.
Subsequently, the National Electricity Policy (NEP) and Tariff Policy issued by the Government of India have followed up on this intent. NEP, inter-alia aims to increase the overall share of non-conventional energy sources in the electricity mix while stating that efforts will be made to encourage private sector participation through suitable promotional measures. In 2008, the Forum of Regulators (FoR) moved to proactively promote generation based on renewable energy sources in the country and constituted a Working Group which examined the potential of renewable resources in different States and suggested a national level action plan. The asymmetry of renewable energy sources available in various States led the Forum to recommend a facilitative framework for an inter-State exchange of power and introduction of Renewable Energy Certificate (REC) mechanism. To allay the concerns of lenders/financial institutions, the Forum also suggested adoption of preferential tariff for renewable sources, at least during the loan repayment tenor of the project(s). Overall intent of the Forum has subsequently been followed up by various State Electricity Regulatory Commissions (SERCs) and is also reflected in the initiatives of the Ministry of New and Renewable Energy (MNRE), including the flagship Jawaharlal Nehru National Solar Mission (JNNSM) to provide policy environment for its rapid adoption across the Country.
In its three-phase approach over the 12th and 13th Five Year Plans (ending by March, 2022), the Mission will promote solar energy technology, while targeting technology cost reduction and phasing out of subsidy support. The mission targets to encourage State Government to promote and establish solar generation parks with dedicated infrastructure for setting-up utility scale plants and aims to provide concrete shape to India’s vision of widespread participation in solar energy in both grid and off-grid applications.
Wind Power in India has been growing at a rapid pace making India the 5th largest global market for wind energy despite limited wind corridors. The development got fillip from various incentives given by the government to project developers. Generation Based Incentives - Rs. 0.50 over and above the feed in tariff; Accelerated Depreciation - developers can claim 80% depreciation for the first year of the project; and Renewable Purchase Obligations are some of the major policy initiatives giving boost to Wind generation in India. Recent incentives declared by Government of India include the creation of Clean Energy Fund and Renewable Regulatory Fund to promote wind power development in the country. Small Hydro Generation :
In an attempt to promote clean energy in the country the Government has been taking initiatives to increase the small hydro capacity. For Small Hydro Power (SHP) projects, the incentives include concessions on customs duty; a 10-year tax holiday; and other state-level incentives, including sales and electricity tax exemptions and preferential tariffs. While preparing DPRs for the project, financial support of Rs 2 lac for projects up to 1 MW and Rs 5 lac for projects with capacity over 1MW up to 25 MW is given - 50% of the incentives to be released, as advance. With the sanction the remaining 50% incentive is released on the receipt of approved DPR.