Greetings to you and your loved ones, wishing you safety and good health!
We extend a warm and enthusiastic welcome as we reconnect with you through our newsletter for the remarkable month of May 2023. In our continuous commitment to keeping you well-informed about the ever-evolving legal landscape of energy sector in India, we have dedicated ourselves to curating a selection of the latest updates which includes regulatory and policy developments and a noteworthy case law. So, take a moment to unwind, savor a delightful cup of coffee, and embark on a journey with us to explore the fascinating developments that unfolded during the month of May 2023.
- Reforms by Ministry of New and Renewable Energy (MNRE) in Approved List of Models and Manufactures (ALMM) Mechanism for Solar Photovoltaic (PV) Modules
On May 10, 2023, the MNRE introduced reforms to its ALMM mechanism for solar PV modules to reduce costs, streamline the enlistment process, and improve the ease of doing business in the ALMM framework. Some key reforms include an 80% reduction in application fees, up to 70% reductions in inspection fees, exemption from factory inspections for additional models with lower wattage, and an increase in the validity period of ALMM enlistment from 2 years to 4 years. These reforms are expected to simplify procedures, reduce compliance burdens, and facilitate the growth of domestic production of solar PV modules to meet current and future demand.
- Green Port Guidelines introduced by Ministry of Ports, Shipping, and Waterways (MoPSW)
On May 11, 2023, the MoPSW introduced the ‘Harit Sagar’ Green Port Guidelines which focuses on incorporating ecosystem dynamics into port development, operation, and maintenance while minimizing the impact on the harbor ecosystem. The guidelines highlight the importance of using clean energy in port operations and encourage the development of port infrastructure for storing and processing greener fuels such as green hydrogen, green ammonia, green methanol, and ethanol. One of the key objectives of the guidelines is to reduce waste by promoting the principles of reduce, reuse, repurpose, and recycle within port operations. The aim is to achieve zero waste discharge and encourage the monitoring of environmental performance indicators to ensure sustainability.
- Ministry of Power waives Inter-State Transmission Charges
The Ministry of Power has made a significant decision to grant waiver of Inter-State Transmission Charges (ISTC) to offshore wind projects and extend the waiver to green hydrogen/green ammonia projects. According to the notification, offshore wind power projects commissioned on or before December 31, 2032, will receive a complete waiver of ISTC for a period of 25 years from the date of commissioning. Only offshore projects commissioned after January 1, 2033, will be subject to graded ISTC. This decision extends the applicability of the waiver of green hydrogen/green ammonia production units from June 30, 2025, to December 31, 2030. Moreover, the ISTC on the drawl of energy from energy storage projects will now be available for each individual user of the project, provided that at least 51% of the energy utilized for charging the storage system is from renewable sources. Lastly, if a project is eligible for a waiver of transmission charges based on its original date of commissioning, the same benefit will continue to be available if this date is extended by the competent authority.
- Ministry of Power asks State Electricity Regulatory Commissions (SERCs) to comply with Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules, 2022
On May 13, 2023, Ministry of Power issued a direction to all the SERCs to comply with the Electricity (Promoting Renewable Energy Through Green Energy Open Access), Rules 2022 (Green Open Access Rules)and align their States’ Open Access Regulations with the said notified rules. The SERCs were asked to mandatorily report their compliance by May 28, 2023. As per the Ministry, only few states have determined the Green Tariffs, however such tariffs had been set at a rate much higher than the Average Power Purchase Cost of renewable energy procured by the DISCOMs which is not in accordance with the Green Open Access Rules. Also, it was noticed that some SERCs which have notified their respective Green Energy Open Access regulations have not completely aligned their regulations with the Green Open Access Rules.
- Ministry of Power amends Electricity (Promoting Renewable Energy Through Green Energy Open Access), Rules, 2022
The Electricity (Promoting Renewable Energy Through Green Energy Open Access) (Second Amendment) Rules, 2023 came into effect on May 23, 2023. These amended rules expanded the scope of the definition of ‘entity’. With the expanded definition, any consumer who has contracted demand or sanctioned load of 100 kW or more either through single connection or through multiple connections aggregating 100 kW or more located in same electricity division of a distribution licensee can elect to procure renewable energy through Open Access from any developer either directly or through a trading licensee or through power markets. Earlier, both cross subsidy surcharge and additional surcharge were not leviable if green energy was utilized for production of green hydrogen and green ammonia. Now, only additional surcharge shall be exempted if electricity is produced from offshore wind project commissioned up to December 2032 and supplied to the Open Access Consumers.
- Central Electricity Regulatory Commission (CERC) notifies Grid Regulations
CERC has notified the CERC (Indian Electricity Grid Code) Regulations, 2023 on May 29, 2023, which is applicable to all users, National Load Despatch Centre, State Load Despatch Centres (SLDCs), Regional Load Despatch Centres (RLDCs), renewable energy management centres, central transmission utility, state transmission utilities, licensees, five regional power committees, settlement nodal agencies, qualified coordinating agencies and power exchanges to the extent applicable. These Regulations cover various aspects, including grid connectivity, scheduling and dispatch, grid operations, system reliability, and grid security. It outlines procedures and requirements for grid participants and emphasizes the need for efficient grid operation, promoting grid stability, and maintaining the quality of power supply. It addresses issues like grid planning, inter-state coordination, metering arrangements, power system studies, and grid performance monitoring. Additionally, these Regulations highlight provisions for renewable energy integration, energy accounting, and settlement mechanisms.
- Rajasthan proposes annual banking to promote captive renewable projects
The Rajasthan Electricity Regulatory Commission (RERC) has proposed draft regulations titled ‘Terms and Conditions for Tariff Determination from Renewable Energy Sources (First Amendment) Regulations, 2023‘ to facilitate the development of renewable energy projects for captive use. The Regulations address various aspects such as transmission and wheeling charges, captive generating projects, energy banking, green energy tariff, and green certificates. Banking would be allowed on an annual basis and banking charges would be payable at 10% of the banked energy. Renewable Energy Certificates can be provided to renewable energy captive projects with lapsed energy at the end of the year. Further, projects supplying electricity to third parties through open access or those installed behind the meter would not be eligible for energy banking facilities.
- Establishment of Indian Carbon Market
The Indian government is planning to establish the Indian Carbon Market (ICM) as a national framework with the aim of decarbonizing the country’s economy by pricing greenhouse gas (GHG) emissions through the trading of Carbon Credit Certificates. The Bureau of Energy Efficiency, Ministry of Power, and the Ministry of Environment, Forest & Climate Change are collaborating to develop a Carbon Credit Trading Scheme for this purpose. Carbon Credit Certificates will be traded based on performance against the sectoral trajectories of GHG emissions. This will also provide incentives for adopting low-cost and sustainable options to attract technology and finance in projects generating carbon credits. The ICM is expected to create new mitigation opportunities by creating demand for emission credits among private and public entities.
- Gujarat Issues Policy on Land Allotment for Green Hydrogen Production
On May 8, 2023, the Government of Gujarat issued the Policy 2023 for leasing out government fallow land for green hydrogen production using non-conventional energy sources such as solar, wind, wind solar hybrid energy. The duration of the lease would be 40 years under this Policy for any company to produce at least 100,000 metric tonnes of green hydrogen per year. The nodal agency would create a land bank for these projects to produce green hydrogen, but allotment would be limited to a cumulative generation of 3 million metric tonnes per annum of green hydrogen. The annual rent of the allotted land would be Rs. 15,000 per hectare, subject to a 15% increment every three years and attract 12% interest upon non-payment within three months of the due date.
- Lithium deposits discovered in Rajasthan
Officials in the Rajasthan government have announced the discovery of vast lithium reserves in the Renvat hill of Degana and its surroundings, following the Geological Survey of India’s (GSI) previous announcement of 5.9 million tons of lithium reserves in Jammu and Kashmir (J&K), which are planned to be auctioned in December 2023. According to reports, the lithium deposits found in Rajasthan are even larger than those found in J&K and have the potential to end China’s monopoly in the lithium market as it could meet 80% of India’s total lithium demand.
- K C Ninan v. Kerala State Electricity Board & Ors., Civil Appeal No. 2109-2110/2004, Supreme Court
In this case, the new owners who purchased the properties in an auction on an “as is where is basis” were denied electricity connections due to the previous owners’ failure to pay electricity dues. The Supreme Court examined the duty to supply electricity under Section 43 of the Electricity Act 2003, where it held that this duty is not absolute and is subject to charges and compliances stipulated by the Electric Utilities (State Electricity Regulatory Commissions and State Electricity Boards) as part of the application for supply of electricity. The Court concluded that the duty to supply electricity is limited to the owner/occupier of the premises. Although, the Court recognized the regulatory powers of State Commissions to stipulate conditions for the recovery of electricity arrears from subsequent owners, it clarified that electricity arrears do not automatically become a charge on the premises, and the creation of such a charge requires an express provision of law.
Regarding the limitation period for recovery, the Court held that the two-year limitation under Section 56(2) of the Electricity Act applies to the remedy of disconnection, while the right to recover outstanding arrears through civil remedies or statutory power under the conditions of supply persists. The Court held that since the sale was conducted on an “as in where is” basis, every bidder was informed that the seller is not responsible for any liabilities for the payment of dues such as service charges, electricity dues for power connection and taxes of local authorities. The Court, while exercising its authority under Article 142 of the Constitution, also directed Electric Utilities to waive outstanding interest accrued on principal dues from the date of application for supply of electricity by auction purchasers, considering the public interest.
- On May 18 and 19, 2023, the Renewable Watch Magazine organized the 16th edition of the conference Solar Power in India at Le Meridien, New Delhi, where it discussed the key trends and developments in the solar sector and examined emerging opportunities in manufacturing, C&I, hybrid power and other sectors. Sarthak Advocates and Solicitors was the legal partner of the conference and among the participants were policymakers, tendering agencies, renewable energy developers, manufacturers, technology providers, financiers, and consultants.
We hope you find this edition informative and helpful in your daily work. If you have any queries regarding these developments or would like to see something different next month, kindly reach out to us at.
We will be back next month with another update. Until then, stay safe and stay healthy!
Thank you for reading.
– Sarthak Advocates & Solicitors