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ENERGY NEWSLETTER – OCTOBER TO DECEMBER 2024

Energy-2024

ENERGY NEWSLETTER – OCTOBER TO DECEMBER 2024

DID YOU KNOW?

India has achieved a major milestone in its renewable energy journey by crossing the 200 GW mark in total installed capacity, showcasing its unwavering commitment to clean energy goals! As of October 2024, the country’s renewable energy capacity surged to 203.18 GW, a remarkable increase of 24.2 GW (13.5%) from the previous year. This growth has been powered by a 20.1 GW (27.9%) surge in solar capacity, reaching 92.12 GW, alongside a 3.43 GW (7.7%) increase in wind capacity, which now stands at 47.72 GW​.

On that note, welcome back to our tri-monthly edition of the Energy Newsletter. We are excited to bring you the latest updates in India’s dynamic energy sector. From policy shifts to court decisions, we have got all the news you need to stay ahead in the energy law landscape.

Let us dive in!

REGULATORY UPDATES

  • National Electricity Plan for Transmission: The Ministry of Power’s (“MoP”) National Electricity Plan (Transmission) aims to transmit 500 GW of renewable energy by 2030, with a target of over 600 GW by 2032. Key objectives include deploying 47 GW of battery storage, and 31 GW of pumped storage, adding 191,000 km of transmission lines, and increasing inter-regional transmission capacity to 168 GW by 2032. The plan also envisions extensive cross-border connections, including potential links with Saudi Arabia and UAE, with an estimated investment of over INR 9.15 trillion. It emphasizes advanced technologies like hybrid substations and dynamic line ratings, along with prioritizing skill development in the transmission sector.
  • Amendments to Renewable Energy Procurement Guidelines Proposed: MoP is revising its guidelines for tariff-based competitive bidding for solar, wind, and hybrid renewable energy projects with storage. Proposed amendments include reducing the PPA term from 20 to 15 years, imposing penalties for failure to meet minimum power availability, and requiring new performance guarantees, such as insurance surety bonds. Additionally, generators will be mandated to install GPS-enabled weather stations and comply with cyber security standards.
  • PM E-Drive Scheme for Electric Vehicle Adoption: The Ministry of Heavy Industries (“MHI”) has launched the INR 109 billion PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-Drive) Scheme, from October 2024 to March 2026. This initiative, succeeding the Electric Mobility Promotion Scheme 2024, offers incentives for EV buyers and funds for charging stations, with a focus on electric buses, ambulances, and other green public transport. State governments will provide additional incentives, such as road tax exemptions and reduced parking fees, with the MHI overseeing implementation in collaboration with stakeholders.
  • MNRE Unveils ₹500 Crore ‘Innovative Projects’ Component Under PM-Surya Ghar Yojana: The Ministry of New and Renewable Energy (“MNRE”) introduced the ₹500 crore ‘Innovative Projects’ component under the PM-Surya Ghar: Muft Bijli Yojana to promote advanced rooftop solar technologies and integration solutions. The initiative supports startups, institutions, and industries working on concepts like blockchain-based solar trading and EV-integrated solar systems. Selected projects can receive financial assistance up to 60% of costs, with innovation awards up to ₹1 crore. The overall PM-Surya Ghar Yojana aims to increase solar adoption by FY 2026-27. The MNRE, earlier this year, released vendor registration guidelines for the Yojana and introduced central financial assistance for the same Yojana.
  • Electricity Distribution Rules for Enhanced Transparency: MoP has notified the Electricity Distribution (Accounts and Additional Disclosure) Rules, 2024, to enhance financial transparency and regulatory compliance for Distribution Companies (“DISCOMs”). The rules require detailed reporting on revenue, receivables, subsidies, and losses, and mandate the adoption of a new reporting structure. It also ensures minimum provisioning for trade receivables, aiming for better financial health and accountability in the sector.
  • Amendments to the Indian Electricity Grid Code Regulations Notified: Central Electricity Regulatory Commission (“CERC”) notified the CERC (Indian Electricity Grid Code) (First Amendment) Regulations, 2024, on October 29. The amendments shorten the allowed period for injecting infirm power to 45 days for renewable energy and storage systems, with extensions possible on request. It also permits hydropower plants to declare commercial operation at low water levels and provides guidelines for scheduling new plants. Thermal plants will receive compensation for underutilization, and the amendment introduces provisions for minimum generation levels during off-peak hours and limits on capacity revisions.
  • Amendments to Sharing of Inter-State Transmission Charges and Losses Regulations Proposed: The CERC on October 9, 2024, circulated the draft CERC (Sharing of Inter-State Transmission Charges and Losses) (Fourth Amendment) Regulations, 2024. The draft introduces a 25-year waiver on transmission charges for offshore wind projects commissioned by December 2032 and a 12-year waiver for battery ESS commissioned by June 2025. It also includes provisions for dual connectivity, terminal bay usage, and updates on transmission charge delays, aimed at enhancing grid reliability and promoting renewable energy.
  • Coal Ministry’s Mine Opening Permission Module: The Ministry of Coal launched the Mine Opening Permission module on its Single Window Clearance System portal on November 7, 2024. The new system streamlines the approval process for new coal mining operations, enabling online applications, real-time tracking, and reducing paperwork. This initiative aims to boost investment in the coal sector, support energy security, and further India’s sustainable development goals.
  • Rescission of 1991 Environmental Notification: The Ministry of Environment, Forest and Climate Change (“MoEFCC”) has rescinded the 1991 notification (GSR 85(E)) through the new notification GSR 595(E), effectively nullifying the previous resolution. This marks the discontinuation of the “ECOMARK” labeling scheme, which aimed to promote environmentally friendly products. The rescission does not impact any actions or decisions made under the scheme before the notification of repeal, ensuring continuity and protection of past compliances.
  • Green Hydrogen Innovation Programme Launched: MNRE has initiated a Rs 2 billion program under the National Green Hydrogen Mission (NGHM) to foster innovation in green hydrogen production and usage through F.Y. 2025-26, focusing on decentralized hydrogen production using floating solar, biomass, and wastewater. Applications span energy, cooking, and industrial sectors, with Scheme Implementing Agencies overseeing projects and funding. Eligible entities include CPSUs, State-PSUs, NGOs, and R&D bodies, with funding linked to milestones. The mission aims to reduce fossil fuel dependency in sectors like ammonia production and gas blending, emphasizing sustainability and energy transition​
  • Compliance Eased for Renewable Energy Projects: The MoEFCC has vide Gazette Notifications no.  G.S.R. 702(E) and G.S.R. 703(E) exempted certain renewable energy projects from obtaining Environmental Clearance (EC) and Consent to Establish (CTE). Specifically, solar module manufacturing units, solar and wind power projects and mini hydel projects under 25 MW are now exempt from these requirements. Projects that have already obtained an EC are also exempt from obtaining a CTE or Consent to Operate. A standard operating procedure will integrate CTE considerations into the EC process, with State Pollution Control Boards consulted for environmental safeguards. However, industries remain liable to pay CTE fees to sustain state revenue.
  • Carbon Credit Trading Framework Proposed: CERC has issued draft regulations for trading Carbon Credit Certificates (“CCCs”) on power exchanges, designating the Grid Controller of India as the registry. BEE will manage CCCs under the Energy Conservation Act, 2001, ensuring compliance and facilitating transactions. Monthly trading will occur in compliance and offset markets, with bidding-based pricing within approved ranges to prevent volatility. Power exchanges will need CERC approval for trading rules, while BEE will set CCC validity guidelines. CERC in consultation with the BEE, may impose the fees and charges payable by the obligated as well as non-obligated entities to the Registry for the purpose of meeting the cost and expense towards the management of the Registry and software platform.
  • Revised Type Test Guidelines Proposed: Central Electricity Authority has issued draft guidelines standardizing type test periodicity for major power system equipment to ensure consistency and reduce redundant testing. The revisions address stakeholder concerns over varied test requirements across the power sector. The guidelines standardize type test intervals to reduce redundant testing, save resources, and prevent overloading testing facilities, ensuring capacity for new equipment and research & development while benefiting all the stakeholders.
  • Framework for Resource Adequacy Regulations: Haryana Electricity Regulatory Commission (“HERC”) vide Gazette Notification dated November 19, 2024, issued HERC (Framework for Resources Adequacy) Regulations, 2024. The Regulations aim to implement a Resource Adequacy framework to ensure reliable demand fulfillment by planning the generation and transmission of resources per reliability standards. The framework includes demand assessment and forecasting, generation resource planning, procurement planning, monitoring, and compliance.
  • Amendment Bill for Acquisition and Development of Coal Bearing Areas: The Ministry of Coal has issued a draft Coal Bearing Areas (Acquisition and Development) Amendment Bill, 2024, which extends the Act’s applicability to Jammu and Kashmir, aligning definitions with updated legislation, enabling land de-notification when no longer required, introducing provisions for compensation and resettlement under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, and exempting related awards from income tax and stamp duty. The bill also includes changes to mining lease durations and provisions for reusing unviable or closed mining lands.
  • Terms and Conditions for Green Energy Open Access: Delhi Electricity Regulatory Commission (“DERC”) vide Gazette Notification datedNovember 12, 2024, issued DERC (Terms and Conditions for Green Energy Open Access) Regulations, 2024, to promote renewable energy use and enhance consumer choice. It applies to consumers with a demand of 100 kW or more, detailing application processes, fee structures, compliance standards, payment security mechanisms, and dispute resolution. Additionally, they provide guidelines for calculating transmission and wheeling charges, ensuring fair treatment among consumers. The initiative supports environmental sustainability and simplifies green energy access within Delhi, aligning with the broader goals of renewable energy promotion and consumer empowerment.
  • First Amendment to Deviation Settlement Mechanism Regulations Notified: CERC vide gazette notification dated December 24, 2024, notified the CERC (Deviation Settlement Mechanism and Related Matters) (First Amendment) Regulations, 2024. The amendment introduced zero charges for injecting “infirm power” during testing phases, provided it is scheduled as per the Grid Code. However, deviations from scheduled infirm power after a trial run will incur charges, except in cases where system frequency exceeds 50.05 Hz, in which over-injection deviations will be exempted.
  • Second Amendment to Cross Border Trade of Electricity Regulations Introduced: CERC vide notification dated December 31, 2024, introduced the draft CERC (Cross Border Trade of Electricity) (Second Amendment) Regulations, 2024. The amendment aims to integrate the concept of General Network Access (“GNA”) and Temporary GNA (“T-GNA”), replacing terms like long-term access. These regulations introduce provisions for cross-border transmission links, clarifying their scope and application. They also aim to streamline terminologies, aligning regulations with the GNA framework.
  • Verification Procedure for Captive Status of Generating Plants in Telangana: Telangana Electricity Regulatory Commission (“TGERC”) on November 30, 2024, issued a detailed procedure for verifying the captive status of generating plants under Terms and Conditions of Open Access Regulations, 2024. This procedure applies to plants and users in Telangana, detailing ownership and consumption criteria to classify facilities as captive generating plants. Distribution licensees must submit the consolidated report to TGERC every year before June 30, based on information furnished by captive generating plants and captive user(s) in the formats specified. The framework aligns with the Electricity Act, 2003, and subsequent amendments, emphasizing equity shareholding and energy usage requirements for compliance.
  • Draft Meghalaya Power Policy: TheGovernment of Meghalaya, has published draft Meghalaya Power Policy, 2024. The policy outlines sustainable energy development objectives for Meghalaya, focusing on inclusive growth and efficient energy management. Key provisions include forming a state power trading company, enhancing renewable energy projects like hydro, solar, and wind, and improving transmission and distribution infrastructure. The policy emphasizes achieving renewable purchase obligations and integrating clean energy technologies. The policy aims to attract investments, optimize resource utilization, and ensure energy access for all while addressing climate goals.
  • MoP Proposes EV Charging Guidelines: MoP has proposed a draft amendment to the guidelines for Electric Vehicle Charging Infrastructure 2024. It defines it as a network of stations equipped with components like DISCOM connections, power management, renewable integration, and communication systems. Under the proposal, states will designate nodal agencies to coordinate the establishment of charging connections, with DISCOMs as the default option for facilitating these connections.
  • New Guidelines for Rooftop Solar Systems: The Karnataka Electricity Regulatory Commission (“KERC”), has simplified the adoption of rooftop solar systems for consumers with loads up to 10 KW, with automatic load enhancements to match capacity. Distribution licensees are required to upgrade infrastructure, and consumers are responsible for additional costs like security deposits. For rooftop systems, 10% tolerance for DC capacity is allowed, but inverter AC capacity cannot exceed the sanctioned load.
  • Sustainable Electric Mobility Policy 4.0: Andhra Pradesh has launched the sustainable Electric Mobility Policy 4.0, targeting the registration of 2,00,000 electric two-wheelers, 10,000 electric three-wheelers, and 20,000 electric four-wheelers, by 2029. The policy also mandates 100% electrification of the Andhra Pradesh State Road Transport Corporation (“APSRTC”) fleet and plans to establish EV changing stations every 30 km on green corridors and every 3×3 km in e-mobility cities. It offers incentives like up to 35% investment subsidies for Micro Small and Medium Enterprises (“MSMEs”) in the EV sector, research grants, and purchase incentives for buyers. 
  • MNRE introduced ALMM List-II for Solar PV Cells: MNRE has introduced List-II for solar photovoltaic (“PV”) cells under the Approved Models and Manufactures of Solar Photovoltaic Modules (“ALMM”) framework, effective June 1, 2026. This new requirement mandates that all solar projects, including those under government schemes and open-access renewable energy initiatives, must source their PV cells from ALMM List-II. Exemptions apply to projects bid out before the order was issued, even if they are commissioned after June 1, 2026.
  • New Green Energy Regulations by BERC: The Bihar Electricity Regulatory Commission (“BERC”) has released a consultative paper and draft green energy open access regulations and proposed to reduce the minimum limit for green energy open access from 1 MW to 100 KW, enabling small consumers to purchase renewable power. The draft facilitates renewable energy procurement from DISCOMs or directly from developers. Open access is subject to transmission, wheeling, and cross-subsidy surcharges, capped at 20% of the average supply cost.
  • Mizoram Launches PM-SGMBY for Rooftop Solar: Mizoram launched a scheme under the PM-Surya Ghar Muft Bijli Yojana (“PM-SGMBY”) to promote rooftop solar systems with government subsidies. The scheme is available to Indian citizens with good fiscal record and applies to private residential properties. Financial assistance is available through banks like SBI and Mizoram Rural Bank. Installation costs are Rs. 12,000 within Aizwal Municipal Corporation limits and Rs. 18,000 for areas 200km beyond. Households can install systems up to 10 KW by registering on the state and PM-SGMBY portals. Over 2,990 households have registered, with 557 applications approved.   

JUDICIAL UPDATES

  • APTEL Criticizes MERC for Denying Relief During COVID-19 Lockdown: The Appellate Tribunal for Electricity (“APTEL”) nullified Maharashtra Electricity Regulatory Commission’s (“MERC”) denial of relief to the appellant, which had sought relaxation of banking periods for wind energy, credit adjustments for unused power, and a waiver of fixed charges during the COVID-19 lockdown. APTEL found that MERC failed to consider the appellant’s unique pandemic-related hardships and relied inappropriately on a prior case. MERC has been directed to reassess the appellant’s petition and issue a fresh, case-specific order within two months.
  • No Wheeling Charges for Dedicated Lines, Rules APTEL: The APTEL ruled that the appellant, operating a 4.8 MW Captive Power Plant, is exempt from paying wheeling charges for power transmitted between its units via privately owned, dedicated transmission lines. It clarified that wheeling charges apply only when a distribution licensee’s network is used. APTEL also overturned a later MERC order attempting to impose such charges, ensuring that the appellant remains exempt.
  • Supreme Court Clarifies Liability Continuity in Electricity Act: The Supreme Court clarified that liabilities under the Electricity Act of 1910 are not subject to the two-year limitation period in the 2003 Act. This reinforced the continuity of liability for electricity consumed. The court overturned the Madhya Pradesh High Court’s decision, emphasizing the issue of estoppel and allowing the appellants to recover minimum guarantee charges.
  • APTEL Directs CERC to Reassess Delay in Power Project Case: The APTEL partially allowed the appeal, remanding the matter back to the CERC to reconsider the refusal to condone a delay of 583 days due to violence and bandhs from April 2013 to January 2015, and the 30-day delay related to the change in the course of the Champamati river, while affirming the CERC’s decision on the non-availability of RCC bridges which the Tribunal found could have been managed more prudently by the appellant. The Tribunal ordered the CERC to issue a consequential order within two months.
  • Supreme Court Ruling on Informal Releases and Power Purchase Agreement Interpretation: The Hon’ble Supreme Court clarified that releases such as press notes or cabinet decisions, which bypass formal legal procedures, do not qualify as “law” for the purpose of claiming “change in law” compensation.  It also emphasized that the doctrine of promissory estoppel was not applicable in this case, as the procurer was not seen as making any promise. Finally, the court emphasized that Power Purchase Agreements should be interpreted strictly as commercial contracts, without relying on informal or non-legally binding statements.
  • Affirming Captive Power Criteria and Remanding Cross-Subsidy Issue: APTEL addressedthe interpretation of the “consumption test” under the Electricity Act, 2003, in the context of captive power generation. A power plant qualifies as a captive generating plant if: (a) at least 26% of its ownership is held by captive users and (b) a minimum of 51% of the electricity generated is consumed for captive use. The Tribunal dismissed TANGEDCO’s appeal, which sought to disqualify the plant’s captive and impose cross-subsidy surcharge on its users and affirmed TNERC’s decision, which upheld the plant’s captive status and exempted its users from cross-subsidy surcharge. Further, the issue of cross-subsidy surcharge recovery was remanded to TNERC for adjudication, emphasizing that such matters should be addressed at the state level.
  • Karnataka High Court Holds Government Cannot Override Electricity Act with Rules: Karnataka High Court ruled that Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules, 2022, and KERC (Terms and Conditions for Green Energy Open Access) Regulations, 2022 were ultra vires to the Electricity Act, 2003. The court emphasized that regulatory commissions like KERC are supreme in their domain and the government cannot use its rule-making powers to interfere with their exclusive authority. It further concluded that Section 176 of the Electricity Act, which allows the central government to make rules, cannot be used to create substantive rights or obligations not already provided in the Act. If the government wants these commissions to be under its oversight, it must amend the Act itself. The court emphasized that such interference undermines the objective of electricity reforms.

DISCLAIMER

The content provided in this newsletter is intended for general awareness and should not be considered as legal advice. Readers are advised to consult with a qualified legal professional regarding any specific issues mentioned herein. If you have any questions about any of these developments or would like to see something different next month, reach out to us at knowledge@sarthaklaw.com.

We will be back next month with another update. Thank you for reading!