Policy issues (new)

Since very beginning, Indian government has recognised that renewable energy could play a pivotal role in conserving fast depleting nation’s finite energy resources and also can contribute effectively in promoting power generation, adopting energy conservation measures, fostering efficient use of indegenous technology and sustainable economic development. In the past years, the government has therefore, put substantial efforts to formulate policies, frameworks and supported growth of the sector through financial incentives. Although a comprehencesive renewable eenrgy policy is in the offing, following are the some important policies available for the sector.

Energy Policy

Rural Electrification Policy
Energy Conservation Act-2001

Renewable Energy Policy

Policy for All-round Development of Renewable Energy
Foreign Investment Policy
Industrial Policy
Policies by State Governments
Policies for Small-scale Industries
Incentives for Investing in RETs
The National Small Industries Corporation

Alternative Energy Use Scheme

Rural Energy Programmes
Solar Energy Programmes
Power Generation Programme
Urban and Industrial Wastes
New Technologies
Other Programmes

Rural Electrification Policy

India is endowed with a wealth of rich natural resources and sources of energy. The sources of energy for India are fossil fuels like gas, coal, oil etc, nuclear, hydel and, non-conventional energy sources such as solar, wind, biomass, small hydro, geo-thermal, tidal etc. These can be appropriately and optimally utilized to make available reliable supply of electricity to each and every household. Electricity supply at globally competitive rates would also make economic activity in the country competitive in the globalized environment. Consumers, particularly those who are ready to pay a tariff which reflects efficient costs have the right to get uninterrupted 24 hours supply of quality power. Rural Electrification (“RE”) is viewed as the key for accelerating rural development . The Policy aims at :-
- Provision of access to electricity to all households by year 2009.
- Quality and reliable power supply at reasonable rates.
- Minimum lifeline consumption of 1 unit per household per day as a merit good by year 2012.
- The progress of Rural Electrification would be reviewed in terms of the achievements vis-à-vis the above Goal.

Full policy document is available at http://powermin.nic.in/whats_new/pdf/RE%20Policy.pdf

Energy Conservation Act-2001
The main features of the Act are:
- Specify standards, specify appliances and equipment to be subjected to labeling regime
- Prohibit manufacture, sale, import or deal in appliances and equipment not meeting S&L requirements/standards
- Inspect and enforce compliance
- Order mandatory energy audits in specified industries and for "designated consumers"
- Designate consumers, with powers to exempt
- Prescribe energy consumption norms
- Direct any consumer to furnish energy related information
- Directions for appointment of energy manager
- Direct any designated consumers to prepare and implement energy efficiency measures (if not meeting norms, and if economical)
- Prescribe energy conservation building codes
- Enforce compliance to: building codes, mandatory norms, mandatory energy audit regime, energy efficiency measure implementation
- Levy penalties (Company as well as individuals in Company)
- Certification of energy auditors and energy managers
- Adjudication and appellate procedures
- Training in techniques for efficient use of energy and its conservation
- Awareness and dissemination, pilot project demonstration and innovative financing

For details of Energy Conservation Act 2001 please refer BEE website
http://www.bee-india.com/downloads/ec_act.htm

Renewable Energy Policy

The Prime Minister of India has announced a goal of 10% share for RE or 10,000 MW in the power generation capacity to be added during the period up to 2012. Keeping this in mind, a comprehensive RE Policy for all-round development of the sector, encompassing all the key aspects, has been formulated by MNES. The broad objectives envisaged in the policy are:
- Meeting the minimum energy needs through RE
- Providing decentralised energy supply in agriculture, industry, commercial and household sectors in rural and urban areas
The policy envisages 10% of additional grid power generation capacity to be from RE by 2012. The policy is awaiting approval by the Government.

Policy for All-round Development of Renewable Energy
Policy measures aim at
- Overall development and promotion of RETs and applications
- Policy initiatives encourage private as well as FDI including provision of fiscal and financial incentives for a wide range of RE programmes
- The procedures for investments in the sector have been simplified, and provide excellent opportunities for increased investment in technology upgradation, induction of new technologies, market-development and export promotion.

Foreign Investment Policy
- Foreign investors can enter into a joint venture with an Indian partner for financial and/or technical collaboration and for setting up of RE-based power generation projects
- Proposals for up to 100 per cent foreign equity participation in a joint venture qualifies for automatic approval
- Hundred per cent foreign investment as equity is permissible with the approval of the Foreign Investment Promotion Board (FIPB)
- Foreign investors can also set up a liaison office in India
- The Government of India also encourages foreign investors to set up RE-based power generation projects on BOO basis. Various Chambers of Commerce and industry associations in India provide guidance to the investors in finding appropriate partners

Industrial Policy
- MNES is promoting medium, small, mini and micro enterprises for manufacturing and servicing of various types of RE systems and devices
- Industrial clearances are not required for setting-up of an RE industry
- No clearance is required from Central Electricity Authority (CEA) for power generation projects up to Rs 1,000 million
- A five-year tax holiday is allowed for RE power generation projects
- Soft loans are available through IREDA for RE equipment manufacturing
- Facilities for promotion of Export Oriented Units (EOUs) are available for the RE industry
- Financial support is available to RE industries for R&D projects in association with technical institutions
- Import of power projects are allowed
- Private sector companies can set up enterprises to operate as licensee or generating companies
- Customs duty concession is available for RE spares and equipment, including those for machinery required for renovation and modernisation of power plants. Excise duty on a number of capital goods and instruments in the RE sector has been reduced or exempted

Policies by State Governments
- A number of states have announced policy packages including wheeling, banking, third party sale and buy-back, which have been outlined in the respective technology or programme areas in this publication
- Some states are providing concessions or exemption in state sales tax and octroi. These rates vary widely from state to state for different technologies and devices and in periodicity
- Fourteen states have so far announced policies for purchase, wheeling and banking of electrical energy generated from various RE sources

Policies for Small-scale Industries
- An industrial undertaking is defined as a small-scale unit if the investment in fixed assets in plant and machinery does not exceed Rs 10 million
- Small-scale industries (SSIs) are not permitted more than 24 per cent equity in its paid up capital from any industrial undertaking, foreign or domestic
- SSIs can get registered with the Directorate of Industries or District Industries Centre in the state government concerned
- SSIs are free to manufacture any item including those notified as exclusively reserved for the small-scale sector
- SSIs are free from locational restrictions, which are mandatory for large industries

Incentives for Investing in RETs
- MNES provides financial incentives, such as interest and capital subsidy
- Soft loans are provided through:
    - IREDA, a public sect-r c-mpany of the Ministry
    - Nationalised banks and other financial institutions for identified technologies/systems
- The government also provides various types of fiscal incentives for the RE sector, which include:
    - Direct taxes - 100 per cent depreciation in the first year of the installation of the
project
    - Exemption/reduction in excise duty
    - Exemption from Central Sales Tax, and customs duty concessions on the import of material, components and equipment used in RE projects

The National Small Industries Corporation
The National Small Industries Corporation (NSIC), under the Ministry of Industry and Commerce, also provides assistance to small- and medium-sized investors and entrepreneurs through a number of schemes, which include financial and marketing services, technical services and training, and exports facilitation. NSIC:
- Helps procure and deliver machinery and equipment, including imported equipments, at the doorsteps of entrepreneurs on Hire Purchase and Lease Terms
- Stimulates marketing of products and services of SSIs to government departments and other agencies by identifying capable SSI units
- Provides working capital, finance and term-loans schemes
- Helps to create confidence in purchasing agencies about the SSI units they are dealing with
- Facilitates exports for and on behalf of export-oriented entrepreneurs through network and infrastructure
- Facilitates sourcing of critical raw materials and components required during production
- Arranges training in technical trades, both traditional and high-tech
- Provides common facility support through its technology centres located in different parts of the country and sensitises entrepreneurs to technology issues through technology missions abroad
- Facilitates enterprise-to-enterprise cooperation through its international programmes
[Source: www.mnes.nic.in]

Alternative Energy Use Scheme

The Ministry of Non-conventional Energy Sources (MNEC) is the apex body responsible for the promotion of Non-conventional Energy Sources in India. It is implementing a wide range of schemes, throughout the country, for utilising Non-conventional Energy Sources.

The major schemes of the Ministry relates to meeting rural energy needs, utilisation of solar energy, generation of power from non-conventional energy sources, energy from urban, industrial and municipal wastes and development of new technologies. The Ministry has adopted a strategy of providing monetary support to these schemes through institutional finance, international assistance and private investment. The ministry has been able to tap international funding from both bilateral and multilateral agencies like USAID, DANIDA, SDC, World Bank and Asian Development Bank.

The major programmes/schemes undertaken in these areas are as follows and are open for implementation in all States/UTs.

Rural Energy Programmes
- National Programme on Improved Chullas
- Biogas Development Programme
- National Project on Biogas Development
- Community, Institutional and Night Soil based biogas plants programme.
- Biomass Programme
- Biomass Production, conversion & utilisation programme
- Biomass gasification programme.
- Animal Energy Programme
- Integrated Rural Energy Programme.

Solar Energy Programmes
- Solar Thermal Programme.
- Solar Photovoltaics
- Solar Photovoltaic Programme
- SPV Water Pumping Programme

Power Generation Programme
- Wind Power Programme
- Small-Hydro Power Development Programme
- Biomass based power generation
- National Programme on Bagasse based Cogeneration
- Biomass combustion based power generation
- Solar Thermal Power Generation Programmes
- Grid Interactive Solar Photovoltaic Power Programme

Urban and Industrial Wastes
- Energy recovery from Urban, Industrial and Municipal wastes

New Technologies
- Hydrogen Energy
- Chemical Sources of Energy
- Geo-Thermal Energy
- Alternate Fuels/Fuel System for Surface Transport
- Ocean Energy

Other Programmes
- Wind Energy conversion systems for rural and remote applications
- International Assistance/cooperation
- Information and Publicity
- Seminars/Symposia/Workshop

[Source: http://www.smallindustryindia.com/schemes/enersch.htm; www.mnes.nic.in]