NOVEMBER 2023
Renewable Energy
Central Government
Pursuant to a resolution dated November 17, 2023, the MoP amended the guidelines related to the tariff-based competitive bidding process for the procurement of power from grid-connected wind power projects ("Wind Energy Bidding Guidelines"). The amendment substituted clause 14.4 of the Wind Energy Bidding Guidelines to enable wind energy generators to sell a part or full capacity of their renewable power even before the scheduled commercial operation date of a project, by giving 15 days' advance notice to end procurers and intermediary procurers, including by notifying them about the advance commissioning of such project. Accordingly, wind energy generators can sell such power (i) to end procurers and intermediary procurers, with a priority given to end procurers, at a price agreed upon in the Power Purchase Agreement ("PPA"); and in the event of refusal, (ii) on power exchanges.
Pursuant to a public notice dated November 1, 2023, the Central Electricity Authority ("CEA") invited comments from stakeholders on the draft procedure for verifying the captive status of generating plants – where captive generating plants and their captive users are located in more than one state, as required under the rule 3(3) of the Electricity Rules, 2005 ("Electricity Rules").
BEE Issues Procedure for Compliance Mechanism under the Indian Carbon Market
On November 8, 2023, the Bureau of Energy Efficiency ("BEE") issued a detailed procedure for the compliance mechanism under the Carbon Credit Trading Scheme, 2023 ("CCTS," and such procedure, the "CCTS Procedure"). Among other things, the CCTS Procedure provides detailed instructions for the compliance mechanism under the CCTS, including in respect of greenhouse gas emissions intensity trajectory and targets; the monitoring, reporting and verification process; as well as the issuance and trading of carbon credit certificates ("CCCs").
In the last week of October, pursuant to a notification dated October 26, 2023, the CERC issued the third amendment to the CERC (Sharing of Inter-State Transmission Charges and Losses) Regulations, 2020. The amendment was issued for the purpose of incorporating stakeholder comments with respect to the consideration of yearly transmission charges related to inter-regional high voltage direct current transmission systems that have a bi-directional flow of power, since the national component based on its capacity for power flow is in the reverse direction. In our previous quarterly update on clean energy (available here), a prior amendment to such regulations, as issued through a notification dated October 20, 2023, had been mentioned.
State Government
Pursuant to an order dated November 17, 2023, the Karnataka Electricity Regulatory Commission ("KERC") reduced the existing additional surcharge of INR 1.48/kWh to INR 1.40/kWh for the financial year 2023-24 with respect to all open access transactions. Further, the KERC allowed a 50% concession in such additional surcharge for all open access consumers which procure electricity from renewable sources. As a result, the additional surcharge that will be levied on such transactions will amount to INR 70 paise/unit only.
TNERC Issues an Order to Waive Peak-Hour Electricity Charges for MSME Sector
Pursuant to an order dated November 17, 2023, the Tamil Nadu Electricity Regulatory Commission ("TNERC") waived off peak hour charges for LT-IIIB industries – largely comprising micro, small and medium enterprises ("MSME") – until the installation of smart meters by the Tamil Nadu Generation and Distribution Corporation Limited. The order further provided for a 50% reduction in solar rooftop network charges for MSMEs.
MERC Increases Banking Charges to 8%
Pursuant to a notification dated November 10, 2023, the Maharashtra Electricity Regulatory Commission ("MERC") issued the MERC (Distribution Open Access) (Second Amendment) Regulations, 2023 (the "DOA Amendment") for the purpose of incorporating changes in industry, as well as pursuant to amendments notified by the MoP to the Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules, 2022. Among other things, the DOA Amendment substituted regulation 20.4 of the original regulations to increase banking charges from two percent (2%) to eight percent (8%).
Haryana Issues Draft for Solar Power Policy 2023
The New and Renewable Energy Department of the Government of Haryana issued a draft of the Haryana Solar Power Policy 2023, which aims to replace the Haryana Solar Power Policy 2016. Among other things, such draft policy of 2023 aims to install a cumulative capacity of 6000 MW of solar power plants in the state, including rooftop and ground-mounted solar power plants.
Pursuant to a notification dated November 26, 2023, the MERC introduced the first amendment to the MERC (Grid Interactive Rooftop Renewable Energy Generating Systems) Regulations, 2019 for the purpose of incorporating changes introduced by the MoP Electricity (Rights of Consumers) Rules, 2020 and the Electricity (Rights of Consumers) Amendment Rules, 2021, respectively.
HPERC issues final order with levellised tariff for Solar PV projects
Pursuant to an order dated November 4, 2023, the Himachal Pradesh Electricity Regulatory Commission ("HPERC") finalized the generic levelized tariff for solar photovoltaic ("PV") power projects for FY 2023-24 as follows:
| No. | Capacity | Generic levelized tariff (INR Per kWh) |
| Projects to be set up in areas other than industrial or urban areas | ||
| i. | Up to 1 MW | 3.65 |
| ii. | Above 1 MW and up to 5 MW | 3.62 |
| Projects to be set up in industrial areas and urban areas | ||
| i. | Up to 1 MW | 3.70 |
| ii. | Above 1 MW and up to 5 MW | 3.67 |
Maharashtra Issues Green Hydrogen Policy 2023
The government of Maharashtra on October 17, 2023 approved Maharashtra Green Hydrogen Policy 2023. The Maharashtra Green Hydrogen policy 2023, among other things, is aimed at creating 500 kilotons of the green hydrogen production capacity in the Maharashtra by the year 2030.
APSERC Issues Draft Green Energy Open Access Regulations
Pursuant to a public notice dated November 29, 2023, the Arunachal Pradesh State Electricity Regulatory Commission ("APSERC") issued the draft APSERC (Terms and Conditions for Green Energy Open Access and Methodology for Calculation of Charges) Regulations, 2023, inviting comments and suggestions from interested parties. Such draft regulations aim to enable open access for electricity generated from renewable energy sources for the purpose of use in relation to the state's intra-state transmission and distribution system.
Pursuant to a notification dated November 17, 2023, the Uttar Pradesh Electricity Regulatory Commission ("UPERC") issued the UPERC (Rooftop Solar PV Grid Interactive System Gross/ Net Metering) Regulation, 2019 (Second Amendment). This amendment to the original regulations now extend the net metering facility to government and private educational institutions.
RERC Approves Procurement of 105.4 MW Power from Biomass Plants to Meet RPO Compliance
Pursuant to an order dated November 24, 2023, the Rajasthan Electricity Regulatory Commission ("RERC") allowed a petition that sought approval for the procurement of 105.4 MW of power from biomass plants in the state of Rajasthan for the purpose of meeting renewable purchase obligation ("RPO") requirements of the state. However, such approval is subject to compliance with the RERC Renewable Energy Tariff Regulations, 2020 with respect to the procurement of power from biomass plants.
Electric Vehicles
India
India and the EU Signed an MoU on Semiconductors
On November 24, 2023, India and the European Union ("EU") signed a Memorandum of Understanding ("MoU") which aims to increase collaboration between the two parties on semiconductor supply and innovation. Among other things, the MoU will enable the EU and India to share their respective experiences, best practices, and information on semiconductors ecosystems, as well as to promote skills, talent and workforce development for the semiconductors industry as a whole.
The Delhi Government Notified the Delhi Motor Vehicle Aggregator Scheme
On November 21, 2023, the Delhi State Government notified the Delhi Motor Vehicle Aggregator and Delivery Service Provider Scheme, 2023 ("Delhi Motor vehicle Aggregator Scheme"). Such scheme provides for a phased adoption of EVs by intermediaries that provide transport and delivery services, with the additional requirement to mandatorily switch to an all-electric fleet by April 1, 2030. While the scheme allows for the operation of bike taxi services, any vehicle that is on-boarded as part of a fleet of bike taxis is required to be an EV. Further, the scheme requires all aggregators which provide passenger transport and delivery services to obtain a license which will remain valid for five years.
MoRTH Notified the Central Motor Vehicles (Ninth Amendment) Rules, 2023
Pursuant to a notification dated November 6, 2023, the Ministry of Road Transport & Highways ("MoRTH") notified the insertion of a new rule 125M within the Central Motor Vehicles Rules, 1989. Such newly inserted rule provides definitions and approval requirements for electric power train vehicles, including in respect of pure and hybrid EVs, strong hybrid EVs, plug-in hybrid EVs, series hybrid EVs, as well as series parallel hybrid EVs.
International
Switzerland Ends Electric Car Tax Exemption
The federal council of Switzerland revised an existing policy and announced the removal of an automobile duty exemption, as previously provided with respect to the import of electric cars starting from January 1, 2024. This move is aimed to address the shortfall in tax receipts stemming from an increased number of EVs on Swiss roads.
Thailand Approves New EV Subsidy Package
The National Electric Vehicle Policy Committee of Thailand approved a new subsidy package for EVs. Such new package provides for a lower subsidy than the erstwhile scheme, which expired at the end of 2023. The erstwhile scheme had offered a government subsidy of up to 150,000 baht per vehicle, which may now be reduced to 100,000 baht per vehicle under the new package.
DECEMBER 2023
Renewable Energy
Central Government
Pursuant to a notification dated December 27, 2023, the MNRE extended the implementation of Solar Photovoltaics, Systems, Devices and Components Goods (Requirements for Compulsory Registration) Order, 2017 ("Quality Control Order, 2017") for solar PV inverters of a capacity in excess of 100 kW from December 31, 2023 to December 31, 2024 in order to provide more time to manufacturers for compliance purposes. Accordingly, further to this notification, manufacturers can now issue self-certification on solar PV inverters of a capacity of more than 100 kW until December 31, 2024. The Quality Control Order, 2017 has been implemented from January 1, 2024.
MoP Proposes Amendment to Electricity (Rights of Consumers) Rules, 2020
Pursuant to a letter dated December 13, 2023, the MoP proposed the draft Electricity (Rights of Consumers) Second Amendment Rules, 2023 (the "Draft ERC Amendment"), including for the purpose of seeking comments from select stakeholders. Among other things, the Draft ERC Amendment provides a fixed timeline for: (i) providing new connections or modifying existing consumer connections upon application; and (ii) performing checks on meters upon receipt of consumer complaints. The Draft ERC Amendment also proposes certain provisions to expedite the application process for rooftop solar installations and the duration of technical feasibility studies for rooftop solar plants. Further, pursuant to such proposed amendment, it may not be necessary to conduct a technical feasibility for rooftop solar projects which have a capacity of less than 10 kW.
MoP Issues Draft Electricity (Late Payment Surcharge and Related Matters) Amendment Rules, 2023
Pursuant to a letter dated December 13, 2023, the MoP proposed the draft Electricity (Late Payment Surcharge and Related Matters) Amendment Rules, 2023 (the "Draft LPS Amendment"), including for the purposed of seeking comments from select stakeholders. The Draft LPS Amendment proposes the insertion of a new rule 7 which provides for regulating transmission access in respect of distribution companies that fail to clear dues. Further, the Draft LPS Amendment proposes the substitution of rule 9(1) to now require distribution companies to mandatorily communicate their power requisition schedule for each day at least two hours before the closure of the applicable timeframe in respect of submitting proposals or bids in the day-ahead market.
MoP Issues Amendments to the Carbon Credit Trading Scheme, 2023
Pursuant to a notification dated December 19, 2023, the MoP amended the CCTS (such amendment, the "CCTS Amendment"). On account of the CCTS Amendment, the amended CCTS ("Amended CCTS") now provides for an offset mechanism (which is in addition to the compliance mechanism, in respect of which the BEE had issued a detailed CCTS Procedure a few weeks earlier, as mentioned above).
Further to the introduction of the offset mechanism through the CCTS Amendment, non-obligated entities can voluntarily register their projects under the Amended CCTS in sectors identified by the national steering committee, including for the purpose of accounting greenhouse gas emissions reduction, removal or avoidance in order to acquire tradable CCCs through prescribed modes of issuance.
For discussions and analyses of carbon credit trading in India, see our previous quarterly updates on clean energy here, here and here, as well as a separate overview of carbon credits here.
Background:
Previously, on March 27, 2023, the MoP had shared a copy of a proposed CCTS (the "Draft CCTS") among key industry stakeholders for the purpose of receiving their feedback on such draft. Thereafter, pursuant to a gazette notification dated June 28, 2023, the MoP, in consultation with the BEE, had issued a final version of the CCTS.
Importantly, the Draft CCTS, as released in March 2023, had contemplated both (i) a compliance mechanism, as well as (ii) a voluntary mechanism. On the other hand, the final version of the CCTS, as issued in June 2023 (i.e., before the CCTS Amendment was notified), did not refer to a voluntary mechanism – except to the extent that non-obligated entities could purchase CCCs on a voluntary basis.
Importantly, compliance carbon markets ("CCMs") consist of sovereign authorization and mandatory implementation. On the other hand, voluntary carbon markets ("VCMs") are driven by demand from those that aim to offset their emissions.
Further, under the Draft CCTS, non-obligated entities had been permitted to voluntarily register their projects for reducing or removing greenhouse gas emissions for the purpose of getting CCCs issued in their favor. However, unlike in the Draft CCTS, the June version of the CCTS (i.e., before the CCTS Amendment was notified) made no mention of whether non-obligated entities could register their projects for CCC issuances.
As it currently stands, the Amended CCTS defines a 'carbon credit' to mean a value assigned to the reduction or removal or avoidance of greenhouse gas emissions, which is equivalent to one ton of carbon dioxide equivalent (such measure, "tCO2e"). Under the Draft CCTS, such issuances could be made under either of the compliance or voluntary mechanisms, respectively. Each carbon credit is a marketable permit or certificate reflecting one tCO2e that a business is allowed to emit. Thus, these instruments are commonly used in the context of emissions trading in which companies are given a fixed number of credits depending on their greenhouse gas emissions. Such companies can later purchase more credits or sell their surplus, as required. In other words, companies with low(er) emissions can sell their extra allowance to larger emitters in a 'compliance' market.
Since the CCTS Amendment provides for an offset mechanism (similar to the voluntary mechanism under the Draft CCTS), it appears that the Amended CCTS may resemble the Draft CCTS in respect of a VCM.
As such, CCMs are more strictly regulated than VCMs. Further, CCMs involve certain limits imposed on the volume of greenhouse gas emissions that an entity or industry is allowed to generate. Eligible or obligated entities are compulsorily required to comply with such pre-set limits.
VCMs are another kind of carbon market, where businesses and individuals may buy or sell tCO2e-linked instruments of their own volition to 'offset' their respective emissions.
Thus, offsets are typically created when companies or individuals finance projects that reduce greenhouse gas emissions elsewhere either by lowering emissions or sequestering them. Offsets are granted to project owners who can then sell such instruments to third parties. When a company removes a unit of carbon from the atmosphere, they can generate an offset. Other entities may then purchase that offset to reduce their own carbon footprint.
Thus, offsets can be considered a unit of measurement to compensate a business for investing in green projects/initiatives that aim to reduce emissions. Carbon credits, on the other hand, are a unit of measure to cap (or limit) emissions. The number of carbon credits issued each year is typically based on emission targets. Thus, such credits are often issued under what is known as a 'cap-and-trade' ("CAT") system. When regulators set a limit on tCO2e-linked emissions, that forms the 'cap'. When a company obtains a CCC, it gains the right to generate one tCO2e. Companies which end up with excess CCCs at the end of a stipulated period can sell such excess to other entities.
Carbon credits and offsets form part of a larger ecosystem with respect to carbon markets where entities can trade, sell or buy tCO2e-linked instruments to meet their emission targets. Since offsets are typically traded on a voluntary market, market participants can purchase such offsets to achieve internal emission targets and/or for the purpose of reducing emissions for ethical, social or business reasons.
Key Takeaway:
Pursuant to the CCTS Amendment, it now appears that the offset mechanism under the Amended CCTS is a revived form of the voluntary mechanism under the Draft CCTS.
MEA Notifies the Offshore Wind Energy Lease Rules 2023
Pursuant to a notification dated December 19, 2023, the Ministry of External Affairs ("MEA") notified the Offshore Wind Energy Lease Rules, 2023. Such rules provide a framework for leasing areas within the exclusive economic zone of India for offshore wind energy and offshore wind transmission projects, respectively. These rules will be administered by the MNRE.
MNRE Issues National Repowering & Life Extension Policy for Wind Power Projects, 2023
Pursuant to a circular dated December 7, 2023, the MNRE issued the National Repowering and Life Extension Policy for Wind Power Projects 2023 ("Life Extension Policy"), which supercedes the erstwhile Policy for Repowering of Wind Power Projects, 2016. Among other things, the Life Extension Policy facilitates the refurbishment of wind turbines for life extension beyond their design life, subject to safety and performance assessments. The policy also allows for the repowering and/or replacement of older generation turbines with newer generation ones even before the design life of a wind power project has lapsed.
CERC Issues CERC (Cross Border Trade of Electricity) Regulations (First Amendment), 2023
Pursuant to a notification dated December 15, 2023, the CERC amended the CERC (Cross Border Trade of Electricity) Regulations, 2019 to provide for the charge related to the settlement nodal agency to be payable by participating entities from neighboring countries at the rate of INR 0.50 paisa/kWh with respect to the energy scheduled by such entities. For a statement of reasons in connection with this amendment, see here.
CERC Issues CERC (Terms and Conditions of Tariff) (Third Amendment) Regulations, 2023
Pursuant to a notification dated December 15, 2023, the CERC amended the CERC (Terms and Conditions of Tariff) Regulations, 2019. Among other things, the amendment inserted a new sub rule in Appendix II rule 4 of the CERC (Terms and Conditions of Tariff) Regulations, 2019, including for the purpose of providing that during the shutdown of a transmission line due to shifting or modification of such line, or due to projects of the National Highway Authority of India, Railways and the Border Road Organization, respectively, the transmission system will be deemed to be available. However, the member secretary of a relevant regional power committee will have the power to restrict the deemed availability period to one which is considered reasonable by such secretary for the work involved. For a statement of reasons in connection with this amendment, see here.
CERC Approves Compensation to Solar Developer in Change in Law Event
Pursuant to an order dated December 19, 2023 with respect to a petition filed by ReNew Sun Waves Private Limited ("ReNew"), the CERC approved compensation to offset the financial/commercial impact on ReNew due to a change-of-law event on account of the imposition of safeguard duty on solar cells/modules, as well as the rescission of Notification No. 1/2011 - Customs dated January 6, 2011 – which cumulatively resulted in an increase in the rate of basic customs duty for ReNew on the import of solar inverters.
State Government
MERC Disallows Levy of Cross Subsidy Surcharge on Open Access Consumers
Pursuant to an order dated December 27, 2023, the MERC denied the prayer of a distribution licensee with respect to levying a cross subsidy surcharge upon open access consumers.
MERC Rejects MEDA Petition to Meet 50% RPO Procurement Within Maharashtra
Pursuant to an order dated December 14, 2023, the MERC rejected a petition filed by the Maharashtra Energy Development Agency ("MEDA") praying for directions from MERC with respect to requiring distribution companies to meet 50% of their total RPO requirements through the purchase of energy from renewable sources within Maharashtra itself.
MPERC Rejects a Petition for Imposition of Grid Support Charges on Rooftop Solar Systems
Pursuant to an order dated December 13, 2023, the Madhya Pradesh Electricity Regulatory Commission ("MPERC") rejected a petition that had sought: (i) a levy of grid support charges on all categories of consumers with grid-connected rooftop solar systems; (ii) a reduction of the limit fixed for net metering connections from 1 MW to 100 kW; and (iii) the introduction of a net billing or net-feed-in arrangement for contract demand/sanctioned load up to 500 kW. Further, the order mentioned that MPERC would review the advisability of levying grid support charges, as prayed for in this petition, if and when necessary.
Pursuant to a notification dated December 8, 2023, the RERC amended the RERC (Terms and Conditions for Tariff Determination from Renewable Energy Sources) Regulations, 2020. Among other things, this amendment allows (i) for an annual revision in tariffs for biomass; and (ii) the use of up to 15% fossil fuel or solar power to a biomass project if it has already achieved commission before the applicability of these regulations.
Puducherry Issues Guidelines to Install Rooftop Solar and Ground-Mounted Solar Projects
The government of Puducherry released revised guidelines to allow property owners to install grid-connected, ground-mounted and rooftop solar power systems having a capacity between 5 KWp to 500 KWp under a net metering arrangement. Further, eligible consumers will be allowed to lease out spaces, including rooftops, to solar project developers.
OERC Determines Generic Tariff for Renewable Power Projects in Odisha from FY 2023-24 to FY 2025-26
Pursuant to an order dated December 4, 2023, the Odisha Electricity Regulatory Commission ("OERC") proposed generic levelized tariffs for various renewable energy sources for the control period between 2023-24 and 2027-28, as follows:
| RE Source and Description | Levelized Total Tariff (INR/kWh) |
| Wind Energy | To be procured only through a competitive bidding process |
| Small Hydro Electric Project of a capacity between 5 and 25 MW | 5.82 |
| Small Hydro Electric Project with a capacity below 5 MW | 5.93 |
| Solar PV, Solar Thermal and Floating Solar power Project | To be procured only through a competitive bidding process |
| Biomass | To be procured only through a competitive bidding process |
| Non-fossil Fuel-based Co-generation | To be procured only through a competitive bidding process |
| Municipal Solid Waste Power Project | To be procured only through a competitive bidding process |
Electric Vehicles
India
Parliamentary Standing Committee Lays Report on EV Promotion in Rajya Sabha
On December 20, 2023, the Department Related Parliamentary Standing Committee on Industry ("Standing Committee") presented and/or laid its report on the promotion of EVs in the country before the Parliament of India. Among other things, the Standing Committee recommended a broadening of scope, as well as an extension, in respect of the second phase of a scheme related to the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India ("FAME II") for at least three (3) additional years in consultation with industry stakeholders, including for the purpose of making such scheme more inclusive. In addition, the Standing Committee recommended that EVs should be brought under the priority sector lending category until the 30% penetration target, as fixed for the year 2030, has been achieved. For past developments on FAME II and its other phases, see our previous clean energy updates here, here and here.
Pursuant to a notification dated December 5, 2023, the Bihar State Government approved the Bihar Electric Vehicle Policy, 2023 ("Bihar EV Policy"). The Bihar EV policy was introduced with the aim of achieving a 15% target share comprising EVs across all vehicle registrations in the state of Bihar by the year 2028. Among other things, the Bihar EV policy also introduces certain measures to incentivize the adoption of EVs, including subsidies on Motor Vehicle Tax of up to 75%, as well as purchase incentives of up to INR 1.25 lakh for the first 1,000 four-wheeler EVs in the state, along with similar state incentives for the first 10,000 two-wheeler EVs.
MoM Proposes Changes to Mineral (Auction) Rules, 2015
Pursuant to a notice dated December 26, 2023, the Ministry of Mines ("MoM") invited comments from stakeholders for a proposed amendment to the Mineral (Auction) Rules, 2015 (the "Mineral Rules Amendment"). The proposed amendment seeks to cap the performance security and upfront amount, respectively, which are payable by a bidder after winning the right to extract minerals. As such, the proposed Mineral Rules Amendment aims to address certain existing concerns related to financial barriers. Such existing financial barriers, in turn, may restrict various bidders from participating in auctions that involve critical and strategic minerals with a high value of estimated resources ("VER") – especially because the uncapped performance security and upfront amount, respectively, are calculated as a percentage of such VER.
International
EU, UK Extend Trade Rules to Avoid Tariffs on EVs
On December 21, 2023, it was announced that the EU and the United Kingdom ("UK") have agreed to postpone the 'rules of origin' requirement in terms of the proposed imposition of a 10% tariff on EVs imported from the EU into the UK. As such, the two parties decided to extend existing trade rules on EVs until the end of 2026 to keep costs down for manufacturers and consumers. Accordingly, the EU and the UK mutually agreed to extend current battery and EV rules of origin under the EU-UK Trade Cooperation Agreement until such time.
China Bans Export of Critical Technology to Extract and Process Rare Earth Magnets
The Government of China banned the export of technology that is used to make rare earth magnets, which, in turn, are used in the manufacturing of EVs, wind turbines and electronics. This ban comes in addition to the ban that is already in place on the export of technology related to the extraction and separation of critical materials used in EV batteries.
This insight/article is intended only as a general discussion of issues and is not intended for any solicitation of work. It should not be regarded as legal advice and no legal or business decision should be based on its content.
