Renewable Energy 2025 Comparisons

Last Updated September 25, 2025

Contributed By CMS INDUSLAW

Law and Practice

Authors



CMS INDUSLAW is a top-tier full-service law firm with offices in Bengaluru, Chennai, Delhi, Gurugram, Hyderabad and Mumbai, ensuring a strong pan-India presence. Backed by over 400 lawyers, it is an Indian member of CMS, an international organisation of independent law firms. The firm’s renewable energy team offers comprehensive legal support in renewable energy, clean fuel, biogas, waste management, electric vehicle and water sector projects. The team’s expertise spans the entire project life cycle, from advising on regulatory frameworks to project planning, construction, financing and disposal. Marquee clients include Acme Energy, Adani Green Energy, Axis Energy, Azure Power, Blueleaf Energy, Cleantech Solar, GAIL India Limited, Hero Future Energies, Mahindra Group, Orb Energy, Renew Power, Sunsure Energy, Torrent Power and Vibrant Energy. CMS INDUSLAW also represents clients before key regulatory bodies and courts, ensuring robust compliance and strategic guidance in this sector.

India is making substantial progress in its energy transition, with the ambitious goal of achieving net-zero emissions by 2070. The commitments made at the 21st Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC), held in Paris, have not only been met but surpassed, as the country achieved the goal of 50% of its power being derived from non-fossil fuels in 2025, nearly five years ahead of schedule. The growth of solar and wind energy in India’s energy mix has also been remarkable, reinforcing its dedication to a sustainable future.

At the COP26 in Glasgow, United Kingdom, India introduced the Panchamrit framework, which outlines the five key elements of its climate strategy. The country is on track to achieve both its short- and long-term objectives under this plan, including:

  • reaching a non-fossil fuel energy capacity of 500 GW by 2030;
  • ensuring that at least 50% of its energy requirements are met through renewable sources by 2030;
  • reducing CO₂ emissions by 1 billion tonnes by 2030;
  • decreasing carbon intensity by over 45% by 2030; and
  • ultimately achieving the net-zero emissions target by 2070.

In light of the aforementioned targets, India is making significant progress towards a smooth energy transition. As of June 2025, India’s total non-fossil fuel installed power capacity has reached 235.7 GW (including 226.9 GW from renewable energy sources and 8.8 GW from nuclear sources). The increase in India’s installed renewable energy capacity from 76.37 GW in March 2014 to 226.79 GW in June 2025 represents approximately threefold growth. India has also achieved the Panchamrit goal of ensuring that at least 50% of its energy requirements are met through renewable sources, as alluded to previously, five years ahead of schedule.

According to IRENA RE Statistics 2025, India ranks fourth globally in renewable energy installed capacity, fourth in wind power capacity and third in solar power capacity.

India utilises various renewable energy technologies, with solar power being the most significant. As of June 2025, solar power has the highest share of renewable energy in India, with an installed capacity of 110.9 GW, followed by wind power, which has an installed capacity of 51.3 GW. Other renewable energy technologies include large hydro (48 GW), biopower (11.6 GW), nuclear energy (8.8 GW) and small hydro (5.1 GW).

To enhance India’s solar capacity, the International Solar Alliance (ISA) was established to scale up solar energy and reduce the cost of solar power generation by aggregating the demand for solar finance, technology, innovation, research and development, and capacity building.

In 2024, India added over 4.15 GW of wind capacity, representing the largest annual installation since 2014. The National Electricity Plan forecasts that India’s installed wind capacity will reach around 73 GW by 2026–27 and approximately 122 GW by 2031–32.

Biofuels are an emerging renewable energy technology of strategic importance in India. They align well with government initiatives like “Make in India” and “Clean India Mission” (Swachh Bharat Abhiyan), offering significant opportunities to contribute to the ambitious goals of doubling farmers’ income, reducing imports, generating employment, creating wealth from waste and mitigating air pollution.

Looking ahead, India is also focusing on accelerating energy sources, like green hydrogen, with its National Green Hydrogen Mission (NGHM) – a flagship initiative to position India as a global leader in green hydrogen production and export as well as green ammonia. The NGHM aims to develop at least 5 million metric tonnes of green hydrogen production capacity per annum by 2030, with the corresponding addition of about 125 GW of renewable energy capacity.

The Indian renewable energy sector is undergoing continuous evolution, driven by changes in the regulatory framework.

Recently, the Ministry of Power, Government of India (MoP) has provided guidelines for a viability gap funding (VGF) scheme for the development of battery energy storage systems (ESSs) (the “VGF Guidelines”). The VGF Guidelines aim to support the deployment of 30 GWh of battery energy storage systems (BESSs) by providing VGF of INR1.8 million per MWh.

Further, the Central Electricity Regulatory Commission (CERC) has issued regulations for the waiver of inter-state transmission charges for ESS, where ESSs have been categorised into two types:

  • ESSs connected to renewable energy generating systems, which will be eligible for a waiver of the Inter-State Transmission System (ISTS) charges for a period of 12 years, if the commercial operation date (COD) occurs on or prior to 30 June 2028; and
  • ESSs not connected to renewable energy generating systems, where a step-down structure (100% to 25% waiver, for a period of 12 years from the COD) for the waiver of ISTS charges has been provided, depending on the COD of the project.

CERC has also clarified that renewable energy generating stations (REGS) based on wind or solar sources, and renewable hybrid generating stations (RHGS) based on a combination of wind and solar sources or battery ESSs, which are eligible for a waiver of ISTS charges and have a scheduled date of commercial operation (SCOD) on or before 30 June 2025, will be granted an extension to meet the SCOD on account of any force majeure event, to avail themselves of the exemption benefit. Each extension to meet the SCOD is not to exceed a period of six months (and with no more than two such extensions), where the extension is provided for a period beyond 30 June 2025.

In a noteworthy development, the Ministry of New and Renewable Energy (MNRE) has provided revised guidelines for establishing hydrogen valley innovation cluster (HVIC) and green hydrogen hubs (“GH2 Hubs”) under the NGHM (the “Revised Scheme Guidelines”). HVICs are expected to build localised hydrogen value chains, create demand commitments from end-users for green hydrogen and ensure long-term sustainability beyond the period of NGHM funding. Further, the Revised Scheme Guidelines provide that the GH2 Hubs will be developed as geographically concentrated zones where hydrogen production, end use (domestic or export) and associated infrastructure, such as that pertaining to storage, processing and transport, will be co-located.

Additionally, CERC has issued regulations for the waiver of ISTS charges for green hydrogen and green ammonia plants. A 100% waiver will be available for projects achieving the COD on or before 31 December 2030, versus 75% for a COD between 1 January 2031 and 31 December 2031, 50% for a COD between 1 January 2032 and 31 December 2032, and 25% for a COD between 1 January 2033 and 31 December 2033, for a period of 18 years from their COD.

CERC also recently published draft guidelines on virtual power purchase agreements (VPPAs) (the “Draft VPPA Guidelines”) to address challenges in increasing renewable energy adoption by commercial and industrial (C&I) consumers. VPPAs are financial contracts that support renewable energy adoption without requiring physical delivery of power. Under a VPPA, the generator sells electricity on power exchanges as conventional (brown) power but transfers the associated green attributes, such as renewable energy certificates (RECs), to the corporate consumer. This allows the consumer to obtain the environmental benefits of renewable energy while continuing to source electricity through distribution companies (DISCOMs), exchanges or captive sources. The VPPA includes a pre-agreed strike price, which is compared to the real-time market price of electricity. The difference is financially settled between the generator and the consumer, enabling effective hedging against market price fluctuations without disrupting existing physical power arrangements.

Additionally, CERC has also released the Draft Power Market (First Amendment) Regulations, 2025 (the “Amendment to Power Market Regulations”) to further integrate VPPAs into the regulatory framework. Building on the Draft VPPA Guidelines, the Amendment to Power Market Regulations aims to enhance the bankability of renewable energy projects. Key proposals include formal recognition of VPPAs, greater recognition of over-the-counter (OTC) platforms and the inclusion of VPPAs, battery energy storage contracts and similar instruments among the instruments eligible for OTC market trading.

In another significant market development, CERC, by its Order dated 23 July 2025, announced the coupling of the day-ahead market (DAM) of the power exchanges in “round-robin mode” by January 2026. Under this mode, India’s three power exchanges, viz the Indian Energy Exchange, Power Exchange of India and Hindustan Power Exchange, will act as the market coupling operator (MCO) on a rotational basis, with Grid India being the fourth MCO for backup and audit purposes. Market coupling is governed by Regulations 37–39 of the CERC Power Market Regulations, 2021, which mandate the designation of the MCO by CERC. The round-robin mode is expected to assist in the effective operations of the power exchanges. In the absence of market coupling, similar contracts on different exchanges often clear at different prices. Presently, participants prefer exchanges with higher liquidity to improve the chances of bid clearance, further reinforcing liquidity on that exchange. Market coupling will ensure uniform market clearing prices for similar contracts across exchanges.

Electricity is a Concurrent List subject under Entry 38 of the Seventh Schedule of the Constitution of India, meaning that both the federal and state governments have legislative authority. In India, there is no comprehensive legal framework exclusively for renewable energy. Instead, the renewable energy sector is governed by a combination of laws, rules and regulations and guidelines – some of these are directly applicable to the renewable energy sector, while others apply more broadly to the energy sector. Some of the key laws and regulations that broadly govern the energy market in India are detailed in the following.

Electricity Act, 2003

The Electricity Act, 2003 (the “Electricity Act”) is the primary legislation governing the electricity sector in India. It covers the generation, transmission, distribution, trading and use of electricity. The Electricity Act aims to take measures conducive to the development of the electricity industry, promote competition, protect the interests of consumers and ensure rational electricity tariffs. The Electricity Act also provides for the constitution, along with the powers and functions, of the central and state electricity regulatory commissions (SERCs), the Appellate Tribunal for Electricity (APTEL), the Central Electricity Authority (CEA) and other statutory bodies regulating the electricity ecosystem in the country. 

Electricity Rules, 2005

The Electricity Rules, 2005 (the “Electricity Rules”) were notified under Section 176 of the Electricity Act. The Electricity Rules, inter alia, provide for the requirements to be fulfilled by power plants to qualify as captive generating plants under Rule 3, the power of load despatch centres to give directions to transmission licensees for ensuring the availability of transmission systems of such transmission licensees and timelines for filing appeals against the decisions of electricity regulatory commissions before APTEL. They also empower the central government to issue orders and practice directions vis-à-vis implementation of the Electricity Rules and matters incidental and ancillary thereto.

Electricity Regulatory Commission(s) and Central Electricity Authority

CERC is a statutory body and the principal regulator of inter-state activities in India’s power sector, having quasi-judicial authority. CERC issues regulations on a wide range of topics, including the deviation settlement mechanism, grid connectivity rules, general network access (GNA), tariff regulations, transmission licences and other critical aspects of the energy market. In parallel, SERCs and the Joint Electricity Regulatory Commission (JERC) discharge analogous functions within their respective states/union territories, regulating the intra-state generation, transmission, distribution and trading of electricity.

The CEA is entrusted with key technical functions under the Electricity Act. The CEA specifies the technical standards for the construction of electrical plants and electric lines, as well as connectivity to the grid. The CEA also lays down safety requirements for the construction, operation and maintenance of electrical plants and electric lines. In addition, it specifies the grid standards for the operation and maintenance of transmission lines and prescribes the conditions for the installation of meters used in the transmission and supply of electricity.

Energy Conservation Act, 2001

The Energy Conservation Act, 2001 (the “Energy Conservation Act”) was enacted to reduce energy intensity in energy-intensive sectors of the economy, such as the industrial sector. This Act established the Bureau of Energy Efficiency (BEE), which is responsible for promoting energy efficiency in accordance with the Energy Conservation Act. Recently, the Energy Conservation Act’s scope has been expanded to include commercial buildings, vehicles and vessels, all of which must now adhere to energy intensity standards. The Act also provides mechanisms for the issuance of energy-saving certificates (ESCs) and carbon credit certificates (CCCs).

The government is currently prioritising innovative approaches to meet energy demands through renewable sources.

Electricity is listed under the Concurrent List of the Seventh Schedule of the Indian Constitution, granting both the federal and state governments the authority to legislate on matters related to electricity. The central government has enacted the Electricity Act, which serves as the primary legislation governing the sector. To the extent that there is any inconsistency with state electricity laws, the provisions of the Electricity Act prevail. The Electricity Act mandates the creation of CERC at the national level, a distinct SERC for each state, APTEL and the CEA. These entities are vested with various powers and responsibilities under the Electricity Act. Further, the power sector is primarily overseen by the central government through the MoP and the MNRE. The specific functions discharged by the different regulatory authorities are as follows.

MoP

The MoP is responsible for issuing electricity-related legislation in India, including the Electricity Act and the Electricity Rules, as well as other laws governing the generation, transmission, distribution and trading of electricity. One of the MoP’s primary roles is the formulation of policies and the enactment of relevant laws.

MNRE

The MNRE is the designated nodal ministry of the Indian government for all matters related to new and renewable energy. Its main objective is to promote the development and deployment of renewable energy sources to meet the country’s energy needs. The MNRE holds several rights, including the authority to terminate projects, establish standards for the deployment of solar photovoltaic (SV) systems and devices, and grant waivers for ISTS charges for solar and wind power projects.

CERC

Established under Section 76 of the Electricity Act, 2003, CERC is responsible for determining and regulating tariffs within India’s electricity sector, issuing transmission licences, adjudicating disputes, specifying grid codes and standards, and setting trading margins, as outlined in Section 79. Under Section 94, CERC is vested with the same powers as a civil court under the Code of Civil Procedure, 1908, including issuing summons, receiving evidence, passing interim orders, issuing directions, levying penalties and reviewing decisions. CERC also has the authority to enter any premises where documents related to an inquiry may be found and to seize such documents.

SERC

SERC serves as the regulatory authority at the state level. As per Section 86 of the Electricity Act, 2003, SERC is responsible for determining tariffs, regulating electricity purchases and procurement, facilitating intra-state transmission, issuing transmission licences, adjudicating disputes and specifying grid codes and standards related to the quality, continuity and reliability of services provided by licensees.

JERC

JERC serves as the regulatory authority for the state of Goa and the Indian Union Territories.

APTEL

Section 120 of the Electricity Act, 2003 grants APTEL the same powers as a civil court under the Code of Civil Procedure, 1908. APTEL functions as an appellate body, allowing appeals against decisions made by SERC and CERC. Disputes with SERC can be appealed to CERC, and further appeals can be brought before APTEL. Like other civil courts, APTEL also has the right to order inspections, make binding decisions, levy penalties, etc.

CEA

Section 73 of the Electricity Act, 2003 outlines the functions and duties of the CEA. Under Section 74, the CEA has the authority to require licensees to submit statistics, returns or other information related to electricity generation, transmission, distribution, trading and usage. Failure to comply with these requirements may result in penalties under Section 146, which include imprisonment or a fine. Additionally, the CEA has investigative powers under Section 74 of the Electricity Act, 2003 for matters related to the generation, transmission or distribution of electricity.

The renewable energy sector in India involves four key activities: generation, transmission, distribution and trading. These activities are detailed in the following.

Generation

The generation of renewable energy in India is a de-licensed activity, meaning it can be carried out without obtaining a specific licence from the electricity regulators. However, the process still requires adherence to various legal approvals and procedures, including those related to land acquisition, environmental compliance, safety standards and labour regulations. An indicative list of the different approvals required for setting up and operating generating stations follows.

  • Application to the concerned state nodal agency: this is required for setting up a solar, wind or other type of renewable energy project.
  • Land-related approvals: these include land conversion and acquisition approvals from relevant state authorities, which can vary in every state. It is crucial to ensure a clear title of the land, as land ownership complexities, such as tribal land holdings, may complicate the transfer process.
  • Municipal and local authority approvals: these involve getting building plans approved by local authorities and obtaining design and drawing approvals for the generating station from the CEA. Approval is contingent on compliance with relevant local and central laws.
  • Environmental approvals (primarily for conventional and ISTS projects): these include conducting an environmental impact assessment (EIA) and obtaining permission to establish from state pollution control boards (SPCBs). While solar and wind power plants are generally exempt from the EIA requirement and permission to establish, approvals from the Central Pollution Control Board (CPCB) and SPCBs may still be needed, especially for projects involving the ISTS.
  • Factory and labour compliance: approvals under factory rules and adherence to labour regulations are also necessary before commencing construction.

Transmission

Transmission licences for inter-state activities are issued by CERC in accordance with CERC regulations. For intra-state transmission services, licences are granted by the respective SERC. A transmission licensee must enter into a transmission services agreement with transmission customers, and the terms and conditions of this agreement will govern the licensee’s operations. A transmission licence is also issued through an application procedure under Sections 14 and 15 of the Electricity Act, 2003.

Additionally, developers of transmission projects must secure various approvals, consents and clearances from state, central and statutory authorities. These requirements differ between inter- and intra-state transmission systems and can also vary by state. The key approvals needed to construct an inter-state transmission line include the following.

  • Overhead line approval: obtaining approval from the appropriate government for laying overhead lines is required under Section 68 of the Electricity Act, 2003.
  • Right of way approval: securing approval under Section 164 of the Electricity Act, 2003 from the MoP and relevant landowners for right of way.
  • Environmental clearances: obtaining environmental clearances for laying transmission lines, including additional clearances from wildlife authorities if the lines pass through protected areas. Approval from local forest officers is required for tree felling in forest areas. Furthermore, insulated conductors must be used for lines passing through protected zones.
  • Charging approval: approval from the Central Power and Telecommunication Coordination Committee for charging the transmission line or element of the transmission system.
  • No objection certificate (NOC) for tower height: securing an NOC regarding the height of towers.

Distribution

Electricity distribution in India is primarily regulated by the Electricity Act along with the associated rules and regulations, including performance standards, a grid code and an electricity supply code issued by SERC. A licence is mandatory for undertaking distribution activities, except in rural areas indicated by the relevant state government and for entities exempted by notification (such as local authorities and non-governmental organisations). The appropriate SERC issues the distribution licence, and the licensee must adhere to the conditions specified in the licence. A distribution licence is procured through an application procedure under Sections 14 and 15 of the Electricity Act.

Additionally, various approvals may be necessary for the construction and operation of distribution facilities, including:

  • approval for laying overhead lines – obtained from the relevant state government;
  • a connectivity grant – permission to connect to the transmission network;
  • open-access/transmission network use approval – authorisation to access and use the transmission network;
  • energisation approval – secured from the electricity inspectorate for energising electricity installations;
  • electrical installation approvals – as required under the CEA (Measures Relating to Safety and Electric Supply) Regulations, 2023; and
  • land acquisition approvals – in accordance with the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation, and Resettlement Act.

Trading

Trading of electricity is also a licensed activity under the Electricity Act. Similar to the transmission of electricity, for inter-state trading of electricity the licence is issued by CERC, while for intra-state trading the licence is granted by the relevant SERC. CERC issues various categories of trading licence depending on the volume expected to be traded by the applicant entity.

Trading on energy exchanges

Energy trading in India primarily takes place on three power exchange platforms: the Indian Energy Exchange (IEX), Power Exchange India Limited (PXI) and Hindustan Power Exchange Limited. IEX and PXI are the dominant players in the market, with IEX holding 85% of the total market share. These exchanges are regulated by CERC under the Power Market Regulations, 2021. Power markets enable generators to respond to sudden increases in demand and to sell excess energy at market prices. The Indian power market also includes various contracts or transactions that differ based on duration and delivery timing, as outlined in 5.1 Electricity. Additionally, energy stored in an ESS can be traded on the power exchange in accordance with the mechanism provided under the CERC (Ancillary Service) Regulations, 2022, detailed in 5.1 Electricity.

Moreover, trading licensees can also engage in the trading of RECs, ESCs and CCCs to meet their renewable purchase obligations (RPOs) or achieve greenhouse gas emission intensity (GEI) targets as per the carbon credit trading scheme (CCTS). The detailed mechanism of the carbon market in India is discussed in 5.5 Renewable Energy Certificates and (Corporate) Power Purchase Agreements.

For the sale of utilities, the Electricity Act requires that licensees secure prior approval from the relevant licensing authority, such as CERC/SERC. This approval is necessary before acquiring the utility of another licensee or merging their utility with that of another licensee, as well as for the assignment of a licence or the transfer of a utility. Without the necessary approvals, any such transaction is considered void. These requirements are applicable only to licensees and do not extend to generators, who are not subject to licensing. Furthermore, mergers and acquisitions in India are generally governed by the Companies Act, 2013 and the Competition Act, 2002. Additionally, establishing and selling renewable energy projects will require approval from the concerned states’ Renewable Energy Development Agency.

Over the past decade, the Indian government has gradually liberalised the energy sector, but state-owned enterprises remain as significant participants. Foreign direct investment (FDI) of up to 100% is permitted in electricity generation (excluding nuclear power), transmission, distribution and power trading. Additionally, up to 49% FDI is allowed in power exchanges without the requirement for prior regulatory approval. These investments are subject to sector-specific regulations and policies. The updated consolidated FDI policy retains the 49% FDI cap in power exchanges but has removed the restriction whereby foreign institutional investors (FIIs) and foreign portfolio investors (FPIs) could only invest in power exchanges through the secondary market.

Foreign Investment Review Process

Foreign investment in India is primarily regulated by the Foreign Exchange Management Act, 1999, along with the related Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, and policy announcements from the Department for Promotion of Industry and Internal Trade (DPIIT). The existing framework provides two routes for FDI: the automatic route, where no prior approval is necessary, and the approval route, which requires prior government approval.

In the power sector, there are no restrictions on investment limits, with 100% FDI allowed under the automatic route for activities such as electricity generation (excluding atomic energy), transmission, distribution and trading. However, prior government approval is mandatory for investments from entities based in countries that share a land border with India or where the beneficial owner of the investment is located in, or is a citizen of, such countries. For power exchanges, investment is limited to 49% under the automatic route.

As of June 2025, the total installed capacity of non-fossil fuel sources in India stands at 235.7 GW, with solar and wind power leading the way with a total installed capacity of 110.9 GW and 51.3 GW, respectively. With a target to achieve net zero by 2070, the renewable energy sector is set to witness massive expansion in installed capacity in the coming years. The market for renewable energy generation in India is dominated by robust private sector participation, and the union government has also built momentum towards the growth of the private sector by issuing energy tenders. In June 2025 alone, India has issued private-energy tenders for approximately 6.8 GW of renewable energy capacity. The foreign investment policy in India, as detailed in 2.5 Market Access and Foreign Investment, allows for 100% FDI in power generation (except nuclear energy). The market is thus dominated by private players, and even international companies, across the solar and wind energy sectors.

Electricity generation (except for hydropower and nuclear) is a delicensed activity by virtue of Section 7 of the Electricity Act. The generating companies, however, must comply with the technical standards issued by the CEA under Section 73 of the Electricity Act relating to the construction, safety and connection to the electricity grid of generating plants. In addition to compliance with the technical standards of the CEA, a generating power plant must also procure various approvals from central, state and local authorities, which are detailed in 2.3 Regulated Activities.

Considering the massive livestock population of 536.76 million, the biogas sector in India holds tremendous potential for growth. The MNRE has recently notified the National Bioenergy Programme with the aim of setting up small and medium biogas plants and providing clean cooking fuel, lighting and organic enriched manure to rural households. There has also been an increase in the development of micro-biogas plants catering to individual rural households under the National Biogas and Manure Management Programme. At the international level, India has initiated programmes for co-operation with the Global Biofuel Alliance to enhance the technical expertise of private- and government-sector participants.

To set up biogas generation facilities, approval needs to be procured from the MNRE, the Ministry of Petroleum and Natural Gas (MoPNG) and the Petroleum and Natural Gas Regulatory Board (PNGRB). Land-related approvals, municipality and local authority approvals, environmental approvals, and factory and labour approvals – as detailed in 2.5 Market Access and Foreign Investment for energy-generating companies – are applicable to biogas generators. In addition to the foregoing, all biogas plants need to procure approvals issued by the Petroleum and Explosive Safety Organisation (PESO) for the processing and storage of biogas.

Geothermal energy in India holds tremendous potential for growth, with 23.75 GW being projected to be achieved by the end of this decade. The Geological Survey of India has studied approximately 380 sites in India with high geothermal energy potential, including the Himalayan region, Cambay basin, western coastal region, Son-Narmada Tapi basin and Godavari basin, to name a few.

Geothermal energy is regulated by the MNRE, which has finalised the Draft National Policy on Geothermal Energy (the “Draft Policy”). The Draft Policy aims to establish a national framework for the exploration and development of geothermal resources in India. Furthermore, the Draft Policy aims to provide non-fiscal support to stakeholders developing geothermal energy in India, and it includes a streamlined approval process and simplifies land acquisition.

The geothermal energy sector in India is in its initial stages and still does not have a mature market. Natural Gas Corporation Limited (ONGC), a state-owned company, is the largest corporate entity operating in the geothermal energy sector in India. ONGC is currently developing a geothermal energy plant in Puga and Chumathang in eastern Ladakh, in the Himalayas, and it plans to develop plants in the Cambay basin of Gujarat in the coming years.

The green hydrogen legislative ecosystem is governed by the MNRE, MoP, and MoPNG, with individual programmes and projects being governed by the regulations of the Ministry of Chemicals and Fertilisers, Ministry of Steel, etc. The MNRE has also fixed the green hydrogen standard, outlining the emission thresholds to meet for classification of produced hydrogen as “green”.

The green hydrogen standard in India is defined by well-to-gate emissions of not more than 2 kg CO₂ equivalent/kg H₂. This is inclusive of emissions associated with water treatment, electrolysis, gas purification, and the drying and compression of hydrogen. BEE is the designated nodal agency for accrediting agencies for the monitoring, verification and certification of green hydrogen production projects.

All green hydrogen production plants must procure the land-related approvals, municipality and local authority approvals, environmental approvals, and factory and labour approvals detailed in 2.5 Market Access and Foreign Investment.

India is focusing on expanding its solar rooftop ecosystem. Pursuantly, the Indian government launched the Prime Minister’s Rooftop Solar: Free Electricity Scheme (PM Surya Ghar Muft Bijli Yojana), with a target total solar rooftop capacity of 30 GW for the country. In the Union Budget for FY 2025–26, the scheme’s budgetary allocation was increased from INR111billion (RE 2024–25) to INR200 billion to accelerate installations.

Small-scale solar rooftop plants installed by households and private parties are governed as per the regulations of the relevant state electricity regulatory authorities and managed by the local state electricity DISCOMs. The installed capacity for solar rooftop power plants is usually limited to the sanctioned load of the consumer by the relevant electricity DISCOM. The main features of state policies are the compensation mechanisms for installing solar rooftop plants. The compensation is usually comprised of either net metering or gross metering. The net-metering structure allows consumers to be billed for the net units of electricity they consume against the units of electricity generated. Alternatively, some states allow for gross metering compensation, where the electricity DISCOMs compensate for the electricity generated at the fixed feed-in tariff. Similarly, the billing mechanism also varies from state to state; while most states allow for monthly compensation, some states like Andhra Pradesh allow for quarterly billing, and Telangana allows for half-yearly billing.

Transportation

Transportation of electricity involves two stages: transmission and distribution. The transmission stage involves the supply of electricity from the generating station to electrical substations at high voltages via interconnected transmission lines, whereas the distribution stage involves the supply of electricity from local DISCOMs to the end consumers. Both activities are regulated under the Electricity Act, 2003. CERC/SERC issues licences for providing transmission and distribution services in the country.

The Central Transmission Utility (CTU) – at the union level – and State Transmission Utility (STU) – at the state level – are responsible for the transmission of electricity through the ISTS and intra-state transmission system. Furthermore, the Electricity Act provides for the constitution and function of the National Load Despatch Centre (NLDC) at the apex level, the State Load Despatch Centre (SLDC) at the state level and the RLDC at the regional level. The SLDC and RLDC ensure integrated operation of the power system. They are responsible for optimum scheduling and dispatch of electricity within their jurisdiction, monitoring inter-state (for the RLDC) and intra-state (for the SLDC) transmission services, and forecasting and supervising grid operations.

Transmission

The union government-owned Power Grid Corporation of India is the largest power transmission utility in India. At the state level, the majority share in the transmission infrastructure is owned and operated by the STU. Therefore, the government has a monopoly on the provision of transmission services. While the Electricity Act promotes competition within the electricity market, it does not apply any specific restrictions on the existence of a monopoly. Considering the vast costs and economies of scale involved in transmission projects, transmission companies continue to be monopolies in their areas of operation. Some major private parties have managed to own and operate their transmission utilities in India, like Adani Energy Solutions Limited, Tata Power Company Limited, Powerlinks Transmission Limited, Sterlite Power Transmission Limited and India Grid Trust.

Regulatory framework

To construct and operate a transmission line, a transmission licence needs to be procured from SERC/CERC depending upon the geographical scope of the project. SERC issues a licence for intra-state transmission, while CERC issues a licence for inter-state transmission. The transmission licensees must also comply with the regulations issued by the CERC/relevant SERCs and the terms and conditions present under their transmission licence.

Furthermore, the licensee must be in compliance with the Compendium of CEA Regulations, 2024, which provides technical regulations for the construction of electrical plants and electric lines and safety regulations for the construction, operation and maintenance of electrical plants and lines.

Lastly, constructing and operating a transmission line requires the developers to obtain authorisations, approvals and clearances from various statutory authorities, which may differ among states. An indicative list of approvals required for laying transmission lines has been provided in 2.3 Regulated Activities.

Distribution

Electricity distribution is primarily a monopoly in a given area of supply in India, where a single DISCOM (usually a state- or union government-owned company) is responsible for the maintenance of an electricity distribution network in a specific geographical area. While most states have government-owned DISCOMs, some states – like Gujarat, Maharashtra, Delhi and Odisha – have private entities licensed to operate electricity distribution networks.

Regulatory framework

Distribution, being a licensed activity, is governed by the Electricity Act. A distribution licence is issued by the relevant SERC following the mechanism provided under Section 14 of the Electricity Act, 2003. Once the distribution licence has been obtained, the licensee must adhere to the terms and conditions imposed by the relevant SERC under the licence.

The licensee must comply with the Compendium of CEA Regulations, 2024, which provides safety and technical requirements for grids, and with the CERC (Indian Electricity Grid Code) Regulations, 2023, which ensure stable and secure grid operation. Finally, the licensee must also procure authorisations, approvals and permits for constructing and operating distribution networks (summarised in 2.3 Regulated Activities).

Storage

The CEA estimates that India would require pumped storage systems equivalent to 26.7 GW, and BESSs equivalent to 47.2 GW, by 2032 to meet the growing renewable energy demand. To ensure that the anticipated demand is met, a national framework for promoting ESSs was issued, introducing various incentives for supporting the infrastructure required for ESSs. The framework also provides that the rules and regulations for the deployment of ESSs shall be framed in a manner that encourages the deployment and purchase thereof. Furthermore, the MoP has detailed a long-term trajectory for energy storage obligations (ESOs) – ie, 1% in FY 2023–24, increasing by 0.5% annually thereafter.

From a regulatory perspective, there is no dedicated statute to specifically cater to ESSs, which are regarded as part of the power system under Section 2(50) of the Electricity Act, 2003 and are governed by the Electricity Act, 2003. The energy stored may also be traded on a power exchange, as per the CERC (Ancillary Services) Regulations, 2022.

Regulatory framework

Procurement of approvals and permissions for operating an ESS

An ESS can be utilised in two ways: (i) as a standalone system; and (ii) in conjunction with a generation, transmission and distribution system. Rule 18 of the Electricity Rules, 2005 provides that operating an ESS is a delicensed activity, like generation. However, when an ESS is utilised as an independent storage system or a standalone system, it must be registered with the CEA and comply with the technical and safety guidelines thereof under the Compendium of CEA Regulations, 2024.

Grant of connectivity to the ISTS

As per the CERC’s Connectivity and General Network Access to the ISTS Regulations, 2022, a generation station with or without an ESS or standalone ESS, as well as a renewable energy-generation station/standalone ESS already having connectivity to the ISTS, is eligible for connectivity provided that the installed capacity of the generation station or ESS is 50 MW or more. Standalone ESSs can apply for a grant of connectivity or add additional capacity only with the prior permission of the CTU. A standalone ESS is also eligible to apply for temporary general network access (T-GNA) for up to 11 months from the NLDC/RLDC.

Ancillary services

Energy storage is regarded as an ancillary service in relation to the power system under the CERC (Ancillary Service) Regulations, 2022. The ancillary services under these regulations are the services necessary to maintain grid stability and reliability. There are three kinds of ancillary services under the regulations:

  • primary reserve ancillary service (PRAS) – an ancillary service that comes into service in the event of a sudden change in frequency of the power supply, which ranges from 49.5 to 50.5 Hz;
  • secondary reserve ancillary service (SRAS) – refers to reducing or increasing the active power injected into, or withdrawn from, the power system through a secondary control signal (an automated signal from the RLDC); and
  • tertiary reserve ancillary service (TRAS) – refers to the ancillary service of reducing or increasing power injection or withdrawal in response to despatch instructions from the RLDC.

An operator of an ESS may choose to provide any of these services to the RLDC, provided it meets the eligibility criteria of the CERC (Ancillary Service) Regulations, 2022.

To ensure stable operation of the grid, every grid-connected entity must comply with its schedule, as per the CERC (Indian Electricity Grid Code) Regulations, 2023. The NLDC/RLDC shall manage any deviation therefrom, as per the CERC (Ancillary Service) Regulations, 2022. As elaborated on in 4.1 Electricity, an ESS is also part of the ancillary services provided under the CERC (Ancillary Service) Regulations, 2022. The ESS, as an off-grid solution, has gained considerable importance for ensuring smoother grid operations. Services (PRAS, SRAS and TRAS) may be deployed by the NLDC/RLDC for managing congestion and tackling the intermittent nature of renewable energy. Furthermore, the CERC (Deviation Settlement Mechanism and Related Matters) Regulations, 2022 detail the charges payable by the seller (generating station) for over- or under-injection and the charges payable by the buyer for under- or overdrawing electricity.

Moreover, as per the Electricity (Promotion of Generation of Electricity from Must-Run Power Plant) Rules, 2021, “must-run” status has been accorded to wind, solar, wind-solar hybrid and hydropower plants. These plants can be subject to curtailment only by reason of transmission constraint or restoration of grid stability, as provided under the CERC (Indian Electricity Grid Code) Regulations, 2023. Upon such curtailment, compensation must be provided to the must-run power plant as per the rates provided under the agreement between the seller and buyer.

The MoPNG is the nodal ministry overseeing the petroleum and natural gas sector in India. The PNGRB, established under the Petroleum and Natural Gas Regulatory Board Act, 2006 (PNGRB Act), issues regulations for the natural gas pipeline sector and the city gas distribution (CGD) sector. In 2024, the MoPNG issued guidelines for the development of pipeline infrastructure for the purposes of injecting compressed biogas (CBG) into the CGD network. This represents a major step towards developing customised infrastructure for the supply of biogas. Currently, in India, biogas is transported using the existing infrastructure for natural gas. Therefore, the regulatory framework for the transportation of natural gas also applies to biogas.

Procurement of Licences, Approvals and Permissions for the Construction of Pipelines and Transportation of Biogas

The transportation and storage of both natural gas and biogas are governed by the PNGRB Act. The specific approvals required for laying a gas pipeline are as follows.

  • Permission from the PNGRB for the development of a gas pipeline.
  • Permission from the landowners whose lands shall constitute the route of the pipeline. This permission may be obtained individually from the landowners or under the Petroleum and Minerals Pipelines (Acquisition of Right of User in Land) Act, 1962, which provides a mechanism for the entity to acquire land along the route of the pipeline.
  • Environment-related approvals and clearances for passing the pipeline through roads, highways, villages and municipalities.

Adherence With Other Laws and Regulations for Laying a CGD Network

Once a pipeline has been laid, the entity must seek authorisation from the PNGRB for the distribution of natural gas therethrough under the PNGRB (Authorising Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008. These regulations provide that pipeline entities submit proposals to the PNGRB, which will consider the proposals and authorise them, quoting the lowest amount. Furthermore, as per the PNGRB (Exclusivity for City or Local Natural Gas Distribution Network) Regulations, 2008, only one entity is granted the exclusive right to develop the CGD network. CGD developers are also required to declare their CGD network capacity, calculated as per the PNGRB (Determining Capacity of City or Local Natural Gas Distribution Network) Regulations, 2015. Lastly, the developer must also adhere to the PNGRB (Technical Standards and Specifications including Safety Standards for Natural Gas Pipelines) Regulations, 2009, which provide technical and safety standards for constructing and operating a pipeline.

Regulatory Framework for the Storage of Biogas

CBG is defined under the Gas Cylinder Rules, 2016, which also detail the restrictions, prohibitions and technical and general specifications to be adhered to while in possession of – or while filling, transporting or importing – gas cylinders. These general provisions apply to gas cylinders filled with CBG or compressed natural gas (CNG). Therefore, while there is no specific rule for CBG or CNG, there are certain additional specifications for CBG- and CNG-filled gas cylinders.

The regulatory framework in India for the transportation and storage of geothermal energy is currently under development. Features of the draft geothermal policy have been discussed briefly in 3.3 Heat.

The hydrogen ecosystem in India is at a nascent stage. The MNRE recently issued scheme guidelines for the funding of testing facilities, infrastructure and institutional support for the development and upgrading of testing facilities for the production, storage, transportation and utilisation of green hydrogen. From a regulatory perspective, there are no clear regulations governing the transport and storage of hydrogen. The transport and storage of hydrogen are governed by the same regulations that govern the transport and storage of biogas and natural gas, as discussed in 4.3 Gas. Therefore, the PNGRB will be the regulatory body approving the construction or operation of a pipeline (see 4.3 Gas).

However, certain regulatory bodies overseeing the hydrogen sector may provide additional standards for green hydrogen. The Oil Industry and Safety Directorate (OISD), which is a technical directorate of the MoPNG, has recently detailed safety standards for the production, storage and transportation of hydrogen and hydrogen blends. Furthermore, the Ministry of Road, Transport and Highways (MoRTH), which is in charge of formulating standards for the transportation sector, has issued safety and procedural requirements for the approval of hydrogen-powered vehicles under Rule 125M of the Central Motor Vehicle Rules, 1989. Lastly, for the storage or establishment of a manufacturing facility for green hydrogen, prior permission from PESO must be procured.

There is no dedicated framework for the development of hydrogen grids or hydrogen infrastructure for the transportation and storage of hydrogen in India. The development of grid infrastructure is regulated by the Compendium of CEA Regulations.

The three primary power exchanges (see 2.3 Regulated Activities) are regulated by the CERC under the Power Market Regulations, 2021. Power markets allow generators to meet any sudden rise in the demand for power, and to sell off the excess energy generated at market prices. Essentially, the buyer of the electricity submits a bid, and sellers make an offer. The electricity is finally traded at the market clearing price. The Indian power market also allows for several contracts or transactions that differ based on duration and electricity delivery timing. Furthermore, the energy stored in an ESS may also be traded on a power exchange as per the CERC (Ancillary Service) Regulations, 2022.

Trading licensees may also engage in the trading of RECs, ESCs and CCCs to fulfil their RPOs or achieve the greenhouse gas emission intensity targets of the CCTS. The mechanisms of the carbon market in India are detailed in 5.5 Renewable Energy Certificates and (Corporate) Power Purchase Agreements.

Procurement of a Trading Licence

To trade electricity, an entity must procure a trading licence from the CERC. The CERC (Procedure, Terms and Conditions for grant of trading licence and other related matters) Regulations, 2020 detail the general, technical and financial requirements for a trading licence. An applicant may be disqualified from receiving a licence if they are insolvent, have a conviction or have been found guilty of non-compliance. Furthermore, transmission licensees – ie, the CTU, STU, NLDC, SLDC and RLDC – are not allowed to trade electricity.

Provision of Contracts Under the Power Market Regulations, 2021

The Power Market Regulations, 2021 provide a list of the contracts transacted on the power exchanges, such as day-ahead contracts, real-time contracts, intra-day contracts, contingency contracts, term-ahead contracts, capacity contracts, ancillary services contracts, RECs, ESCs, VPPAs, contracts for the OTC market and any other new contracts that may be approved by the power exchanges with the permission of the CERC. The mechanisms for price discovery and the scheduling and delivery differ for each transaction and are detailed in the Power Market Regulations, 2021. Ancillary services contracts are separately governed by the CERC (Ancillary Service) Regulations, 2022.

Peer-To-Peer (P2P) Energy Trading

In many Indian states, like Delhi, Uttar Pradesh and Karnataka, P2P trading regulations are gaining traction. Essentially, “prosumers” who have installed rooftop solar plants may consume the electricity generated and sell off the excess energy to consumers directly. To engage in P2P energy trading, these prosumers are required to register with DISCOMs. The P2P regulations also govern the scheduling of P2P transactions, billing procedures, the application of other charges and dispute resolution. Entities are allowed to meet their RPOs according to the quantum of electricity generated.

The regulatory framework for the trade and supply of biogas is similar to that for electricity (see 5.1 Electricity).

The geothermal ecosystem in India is still under development. Currently, India does not have regulations governing the trade and supply of geothermal energy; the draft geothermal policy of India, as discussed in 3.3 Heat, is silent on regulation of the trade and supply of geothermal energy.

There is no separate regulatory framework for the trade and supply of hydrogen in India. The regulatory framework for transportation of biogas, as discussed in 4.3 Gas, is applicable to hydrogen as well.

Structure of the Carbon Market in India

India has a well-established and robust carbon credit market that was established in the early days following the implementation of the Clean Development Mechanism (CDM) under the Kyoto Protocol of the United Nations Framework Convention on Climate Change (UNFCCC). India started developing its own domestic carbon market in 2010 by introducing RPOs under Section 86 of the Electricity Act and the National Tariff Policy, 2006. The RPO mandated certain obligated entities, like electricity distribution utilities and large captive generation plants, to purchase a certain percentage of electricity from renewable energy sources. Entities that failed to fulfil their RPOs could purchase RECs from the open market.

In addition to RECs, the union government also developed an energy efficiency programme, helmed by the BEE, which monitored the energy efficiency targets fixed under the Perform, Achieve and Trade (PAT) scheme. This regulatory tool focuses on reducing specific energy consumption (SEC) in certain industries. The union government is now planning to transition to a fully developed domestic carbon credit market under the Energy Conservation (Amendment) Act, 2022 and the CCTS established by the BEE in July 2024. The CCTS aims to leverage the practises developed under the PAT and REC schemes in accordance with the cap-and-trade mechanism. The carbon credit market introduced under the CCTS will be open to voluntary participants – ie, not only to the entities for which reducing greenhouse gas emissions is compulsory. The pool of participants is composed of both private and government entities, which will enable a large number of carbon credits to be issued. The participants will be able to leverage the increased funds to increase renewable energy generation.

Recently, the BEE has notified approved sectors under the CCTS offset mechanisms, which pertain to waste handling and disposal, agriculture, construction, carbon capture and storage of CO₂ and other removal methods, and has issued a detailed procedure setting out the project registration steps, eligibility criteria and methodology approval processes. The Ministry of Environment, Forest, and Climate Change (MoEF&CC) also published the draft Greenhouse Gases Emission Intensity Target Rules, 2025 (the “Draft GEI Rules”), prescribing the greenhouse GEI targets for obligated entities under the CCTS. The Draft GEI Rules prescribe GEI targets, for compliance years 2025–26 and 2026–27, for the obligated entities identified in the aluminium, iron and steel, petroleum refinery, petrochemical units and textile sectors. Obligated entities must achieve GEI targets or purchase CCCs from the Indian carbon market to meet the GEI targets. Obligated entities achieving reductions greater than the GEI targets will be issued CCCs. Non-compliance under the Draft GEI Rules will attract the levy of environmental compensation, which shall be equal to twice the average trading price of CCCs, for the year in which the non-compliance has occurred, payable within 90 days of imposition by the CPCB.

Long-Term Power Purchase Agreements (PPAs)

In India, there is a significant trend towards executing long-term PPAs – ie, PPAs with terms of more than ten years, and sometimes even as long as 25 years. Long-term PPAs provide stable revenue for generators and enable them to raise funds. Due to the high demand for renewable energy, corporate entities are also shifting towards long-term power purchase models.

The judicial landscape in India also prevents long-term PPAs from being re-opened, providing parties with security and predictability. The Supreme Court of India, in the case of Gujarat Urja Vikas Nigam Limited and Ors v Renew Energy Private Limited (Civil Appeal No 3480–3481 of 2020), restricted state regulatory commissions from open and executed PPAs due to change in law events, stating that – unless amendments have an overriding effect – existing agreements will continue to bind the parties.

India has a mature onshore project market, with a combined installed capacity of approximately 226 GW (and with robust participation from the private sector across all sectors). Project development in India is mostly done through private auctions due to their cost efficiency and transparency; this has been the case since the National Solar Mission in 2010. Through this approach, India has managed to lower renewable energy tariffs dramatically over a short period; this is exemplified by the recent 2,000 MW solar tender of Uttar Pradesh Power Corporation Limited, where the lowest tariff was INR2.56/kWh. The average size of renewable energy power plants in India has been growing significantly, while the union government is incentivising small-scale rooftop power plants. The sector has also achieved significant growth in large-scale solar parks. India currently has 58 solar parks across the country, with a combined capacity of 40 GW

With a coastline spanning over 7,000 kilometres, India holds tremendous potential for harnessing offshore wind energy. The National Institute of Wind Energy has estimated that India could develop offshore wind energy projects providing 70 GW along the Gujarat and Tamil Nadu coasts alone. The union government promulgated the National Offshore Wind Energy Policy in 2015; however, due to the high cost of building offshore wind energy power plants, the projects did not achieve significant traction. India is currently aiming to build offshore wind energy assets by soliciting competitive bids from the private sector and providing viability gap funding (VGF).

To reduce the cost of energy generation through offshore wind energy projects, the union government has exempted offshore wind energy projects commissioned before 31 December 2032 from ISTS charges for a period of 25 years from their COD. The union government has also approved the provision of VGF in the amount of INR74.53 billion for offshore wind energy projects, with INR6,853 being earmarked for the installation of 1-GW wind energy projects on the shores of Gujarat and Tamil Nadu. In addition to VGF, the union government is providing assistance with the development of evacuation infrastructure for energy projects, with the help of the Power Grid Corporation of India. Furthermore, to streamline the process of land acquisition for offshore projects, the Ministry of External Affairs issued the Offshore Wind Energy Rules, 2023 to govern the leasing of offshore wind energy projects, to provide developers with a stable regulatory mechanism for the acquisition of land.

The applicable regulations and approvals for constructing a renewable energy power plant are discussed in 3.1 Electricity. The standard contracts for project development are discussed in 6.1 Onshore Project Development.

Project financing for renewable assets in India is currently stable, in terms of risk, as compared to the initial situation in and around 2010. With the steady decline in tariffs, to an average of INR2.5/KWh, renewable energy assets are now seen as competitive with thermal power in terms of costs. However, despite the growth in the market and stabilisation of the regulatory regime, risks still exist in terms of equipment costs, technological changes and supply chain problems, as well as offtaker risk, as state power DISCOMs continue to be plagued by financial problems.

There is no overarching legislation in India governing project finance, and various aspects of transactions are governed by separate statutes and regulatory bodies. Furthermore, there are no separate regulatory mechanisms for financing renewable energy assets, which are governed under the extant regulations applicable to domestic lending transactions in India. The principal regulations governing rupee-lending transactions are the Banking Regulation Act, 1949 and the Reserve Bank of India Act, 1934, along with the relevant master directions, guidelines, notifications and circulars issued by the Reserve Bank of India.

Foreign lending transactions are governed by the Foreign Exchange Management Act, 1999, the Trade Credit, Borrowing and Structured Obligations, FDI policies issued from time to time by the Department of Industrial Policy and Promotion, and relevant directions issued by the Reserve Bank of India. Transaction documents have to be in compliance with the provisions of the Indian Contract Act, 1872. To create and perfect securities over immovable assets, the parties would be governed by the Transfer of Property Act, 1882. Enforcement of securities is separately governed by the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 along with the Insolvency and Bankruptcy Code, 2016 and Code of Civil Procedure, 1908.

The Indian government is keen to expand renewable energy generation to achieve 500 GW of installed capacity by 2030. The subsidies and incentives provided in relation to renewable energy in India are varied and wide ranging, including direct subsidies, general assistance, VGF as well as tax waivers and exemptions. Some of the key incentives and subsidies available to the renewable energy sector in India are as follows.

  • Must-run status for renewable energy: renewable energy power plants in the solar, wind and hydropower sectors have must-run status, as discussed in 4.2 Intermittency, Grid Congestion and Flexibility.
  • Exemption from payment of surcharges and duties: the union government has provided a waiver from ISTS charges to promote the growth of the renewable energy sector in India. The current waiver from ISTS charges has been discussed in 1.3 Renewable Energy Market and Recent Developments.
  • Rooftop solar subsidies: under PM Surya Ghar Muft Bijli Yojana, every household installing rooftop solar power plants will be eligible to claim subsidies based on the capacity of the installed system; for example, INR30,000 will be provided in the case of a 1 KW system, and INR78,000 for solar power systems with capacities of 3 KW and above.
  • Production-linked incentives: the MNRE provides production-linked incentives for the manufacture of solar panels in India to boost domestic production and reduce the reliance on imports. The scheme has an outlay of INR240 billion and a target to manufacture solar modules with a cumulative capacity of more than 40,000 MW.
  • VGF: the union government also provides VGF for sectors requiring high start-up capital. The union government has approved VGF for offshore wind energy, with a total outlay of INR74.53 billion. Furthermore, the union government also covers 40% of the capital cost for manufacturing BESSs in order to lower the cost of energy storage solutions in India.
  • Research funding and subsidised land allocation: the Green Hydrogen Policy – launched in 2022 – and the NGHM, along with the Strategic Intervention for Green Hydrogen Transition Scheme, provide direct incentives for research programmes. Uttar Pradesh provides capital subsidies for the first five projects established in the state covering up to 40% of the capital cost, with a cap of INR2.25 billion per project per year. In addition, land lease rates have been fixed by the Uttar Pradesh government for green hydrogen projects for private investors, up to a maximum of INR15,000 per acre per year. Similarly, the Gujarat state government has earmarked 63,000 hectares of land for the development of green hydrogen projects.

Decommissioning Requirements

A power plant may be decommissioned by notifying the CEA. Thereafter, the CEA will remove the installed capacity of the plant from the database of total installed capacity and provide notice of the same to the power plant.

Disposal of Renewable Energy Installations

The disposal of renewable energy installations is primarily governed by the E-Waste Management Rules, 2022 and Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016. The E-Waste Management Rules, 2022 define e-waste as electrical or electronic equipment that has been rejected for usage in manufacturing and repair processes. E-waste includes photovoltaic (PV) modules, cells and panels.

These rules also introduced the extended producer responsibility mechanism for the disposal of e-waste, whereby every manufacturer or producer of solar PV modules, cells and panels must register at the e-waste management portal of the MoEF&CC and adhere to the guidelines issued by the CPCB for the storage of solar PV modules, cells and panels. The producer or manufacturer must ensure that the processing of waste, except that of solar PV modules, is as per the E-Waste Management Rules, 2022.

Furthermore, the disposal of batteries from BESSs or electric vehicles requires the entity undertaking the processing, recycling, storage or disposal to obtain permission from the SPCB as per the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016. Upon authorisation, the entity can dispose of the waste as per the E-Waste Management Rules, 2022.

As India moves towards becoming the third-largest economy in the world, it has become crucial to harness the potential of renewable energy to empower marginalised sections of its society. The Sixth Five-Year Plan, which introduced renewable energy into the national planning framework, took notice of renewable energy as a tool to provide decentralised and reliable energy to hinterlands. The aim was for renewable energy to serve all four corners of the nation, and to provide not only electricity but also empowerment and opportunities for all people.

The time has arrived to expand renewable energy in India to fuel the country’s economic growth; however, this expansion has to be done while maintaining ecological balance in the country and ensuring the welfare of its population. The Supreme Court of India, in a landmark ruling in MK Ranjit Singh v Union of India, delivered in March 2024, underlined the importance of renewable energy for the growth of the nation and recalled the blanket ban on overhead transmission lines in Rajasthan. The apex court implored authorities to strike a critical balance between the expansion of renewable energy and ecological conservation. The Economic Survey 2024–25 also highlighted the need to balance India’s steady expansion of renewable energy with the welfare of its population.

India, with per capita emissions of approximately 2.5 tonnes, is only emitting greenhouse gases equivalent to one-third of the global average, and it is crucial that it recognises that the increase in renewable energy should not come at the expense of welfare and equity. A nuanced approach to energy expansion is critical to reduce inequalities in access while increasing generation capacity.

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Law and Practice in India

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CMS INDUSLAW is a top-tier full-service law firm with offices in Bengaluru, Chennai, Delhi, Gurugram, Hyderabad and Mumbai, ensuring a strong pan-India presence. Backed by over 400 lawyers, it is an Indian member of CMS, an international organisation of independent law firms. The firm’s renewable energy team offers comprehensive legal support in renewable energy, clean fuel, biogas, waste management, electric vehicle and water sector projects. The team’s expertise spans the entire project life cycle, from advising on regulatory frameworks to project planning, construction, financing and disposal. Marquee clients include Acme Energy, Adani Green Energy, Axis Energy, Azure Power, Blueleaf Energy, Cleantech Solar, GAIL India Limited, Hero Future Energies, Mahindra Group, Orb Energy, Renew Power, Sunsure Energy, Torrent Power and Vibrant Energy. CMS INDUSLAW also represents clients before key regulatory bodies and courts, ensuring robust compliance and strategic guidance in this sector.