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Policy Framework for Renewable Energy in India

Commercialization of Renewable Energy (RE) technologies is highly dependent on support from the government through mix of policy and regulatory instruments.

Electricity Act (EA) 2003

  1. Section 86: It promotes Renewable Energy (RE) by ensuring grid connectivity and sale of RE.
  2. Section 3: Central Government to develop a national policy for optimal utilization of resources including RE.


  • Section 86: To fix a minimum percentage energy purchase from RE sources (RPO)
  • Section 61: To determine tariffs for the promotion of RE

National Electricity Policy (NEP) 2005

  1. Section 5.2.20 of NEP promotes private participation in RE.
  2. Section 5.12.1 of NEP targets capital cost reduction in RE through competition.
  3. Section 5.12.2 of NEP states that SERCs should specify appropriate tariffs to promote RE and specify targets for RE.

National Tariff Policy (NTP) 2006

  1. A minimum percentage procurement should be made applicable latest by April 1, 2006
  2. A preferential tariff to be determined by SERC to enable RET’s to compete
  3. Procurement of RE by distribution licensee through competitive bidding

2011 Amendment in Tariff Policy: 0.25% Solar RPO by 2013 and 3% by 2022

Integrated Energy Policy (IEP) 2008

  1. Design of incentive structures that are linked to energy generated
  2. Regulators to mandate feed-in laws for RE, where appropriate
  3. Environmental subsidy for RE through cess on conventional energy generation
  4. FI’s should be encouraged to set-up Capital Funds for RE entrepreneurs
  5. Need to auction sites on public property for wind energy development
  6. To encourage solar thermal a higher premium of feed-in tariff needs to be provided

Chronology of Events

  • 1982: Creation of Department of Non-conventional Energy Sources: It was an independent department for development, demonstration and application of Renewable Energy
  • 1992: Creation of MNRE - The Department of Non-Conventional Energy Sources was upgraded into a full-fledged ministry.
  • 1993: Introduction of MNRE Policy and Tariff
  • 1994: Introduction of Accelerated Depreciation (100% AD for promotion of wind projects, changed to 80% AD in 1999
  • 1995: National Wind Resource Monitoring and Demonstration Program
  • 1999: Establishment of Center for Wind Energy Technology (C-WET)
  • 2003: Electricity Act 2003 
  • 2004 onwards: Preferential Tariffs for RE from SERCs
  • 2006: National Tariff Policy
  • 2006: Integrated Energy Policy
  • 2008: Introduction of Generation Based Incentives (GBI) for solar and wind energy
  • 2008: National Action Plan on Climate Change (NAPCC)
  • 2010: Jawaharlal Nehru National Solar Mission (JNNSM)

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