Legal Framework for Renewable Energy in India

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In India, renewable energy is not a trend or a style statement; rather, it is a necessity. It aims to increase the share of renewable energy capacity installed in the country to 500 GW by 2030, arising from its need to decrease carbon emissions while securing a continuous supply of energy for its burgeoning economy. At the very core of that transformation will be a robust legal framework stimulating the development, financing, and operation of renewable energy projects. From the Electricity Act to specific amendments and incentives, these legal instruments will help guide the renewables sector none other than forward. In this article, we will explore the intricate legal landscape for Renewable Energy (ambitious green transition) and why it's so important for India's sustainable future.

Overview of Renewable Energy in India

Renewable energy has recently come to the forefront of the Indian energy arena. The country is in the process of exploiting its resources to provide non-conventional green sources of energy for the future. Barring ambitious targets and government impetus, rapid growth in renewable energy capacity is being understood.

Present Renewable Energy Capacity

The renewable energy space in India has seen outstanding growth. Of late, the total installed capacity of renewable energy reached about 144 GW as of March 31, 2024. A breakup of this total capacity of about 144 GW is as follows:

  • Solar Power: Solar energy has taken a clear lead with an installed capacity of about 82 GW. This is inclusive of both the ground-mounted solar plants and grid-connected solar rooftops.
  • Wind Power: The installed capacity for wind energy is around 46 GW.
  • Biomass Energy: The installed capacity from biomass energy resources is 10 GW.
  • Hydropower: Small hydro projects add an installed capacity of 6 GW to the mix of renewables. This jumps to about 47 GW if large hydropower projects are inducted into the calculus of renewables.

This diversified mix underlines not just the commitment taken towards sustainable energies by India but also brings to the fore the potentials that exist within the country when one speaks of using its rich natural resources.

Goals and Targets for the Future

Ahead of India lies ambitious targets in expanding its renewable energy capacity, including the attainment of a renewable energy capacity of 500 GW by 2030. This accession comes as a part of India's commitment to combating climate change and breaking dependency on fossil fuels. By 2025, these translate to:

  • 175 GW of solar;
  • 60 GW of wind;
  • 10 GW from biomass energy;
  • 5 GW from small hydropower projects.

It finds support from various government initiatives and policies that attract investment, promote research, and facilitate the development of renewable energy projects. Ambitious targets are driven by policy support from initiatives such as the National Solar Mission to incentives for wind power. The commitment towards renewable energy is much more than a few numbers for India; it purports to be a future sustainable and green. If anything, when India treads the path of focus on clean energy, it is actually walking on two different agendas—mitigating climate change and providing the burgeoning population with adequate energy requirements.


Key Legislation Governing Renewable Energy

India has been reshaping the dynamics of its energy landscape by aggressively pursuing a set of legislative initiatives aimed at the propagation of renewable energy. In this way, besides encouraging the adoption of clean energy, the legislation also came up with a structured framework to ensure its proper growth and integration into the national grid. Let us understand the three key legislations that are changing the renewable energy domain in India.

Electricity Act, 2003

This is a landmark legislation in so far as the regulation and development of India's electricity sector are concerned. It provides the foundation for various stakeholders, including the central and state electricity regulatory commissions, which would now drive the country's renewable energy policies forward.

  • Provisions for Renewables: The Act provides for the promotion of electricity generation from renewable sources. It also states that the state government should formulate state policies relating to grid connectivity and tariff determination in a manner favorable to renewables.
  • Stakeholder Roles: It is stipulated in defined roles for the central government, state governments, and regulatory bodies towards the growth of renewable energy projects. This comes with setting up targets achieved for renewables and ensuring compliance with the same.
  • Renewable Purchase Obligations (RPOs): To keep clean energy in vogue, this act has brought in RPOs for distribution companies wherein a certain percentage of their power has to be mandatorily bought from renewable sources.

This Act provides a uniform approach towards integrating renewable energy into India's power system, thereby assuring a stable environment for investors and developers.

National Tariff Policy

Another key tool towards this overall objective of parity in tariffs and pricing for electricity generated from renewable sources is the National Tariff Policy. How it affects renewable energy:

  • Setting Tariff: The policy provides guidelines about setting tariffs for the electricity generated from renewable sources. This shall include long-term power purchase agreements or PPAs, and feed-in tariffs to ensure project viability.
  • Investment Encouragement: Predictable and preferential tariff structures under the policy attract investments into the renewable sector. The sustenance of Renewable Projects is a long-term requirement.
  • Cross-Subsidies: The policy also contemplates cross-subsidies, thereby compelling that the cost of promotion of renewable energy does not acquire fabulous dimensions for the consumer. This balance between the two is very critical to perceptible acceptance and wide implementation.

The National Tariff Policy has a significant role in designing the financial scenario so that renewable energy projects are economically viable.

Energy Conservation Act, 2001

The Act provides for the efficient use of energy and also prevents its profligate use; it indirectly helps propagate the renewable energy initiative. Here's how it helps:

  • Energy Efficiency: It is implemented through the Bureau of Energy Efficiency, an autonomous body established under the Act. Efficient energy use reduces the overall demand and allows the grid penetration of more renewables.
  • Incentives for Renewables: Policies for incentivizing energy efficiency projects are declared in this Act, as well as incentives for Renewable Energy solutions such as Solar Water Heaters and Green Buildings.
  • Public Awareness: This act triggers a sense of energy conservation awareness. This cultural change, thus advances wider acceptance and development of renewable technology.

With these, the Energy Conservation Act supplements other renewable energy policies to ensure that energy use is least wasted and efficiency is maximized to usher in a sustainable future. Along with this, the National Action Plan on Climate Change (NAPCC), launched in 2008, outlines India’s strategy for addressing climate change, focusing on promoting renewable energy. It includes eight national missions, such as the National Solar Mission and the National Mission for Enhanced Energy Efficiency, which aim to enhance energy security and promote sustainable development.

All these regimes collectively make a strong environment for the growth and development of renewable energy in India. Their assurances include that the transition to greener sources of energy is orderly, sustainable, and economically viable. 

Statutory Bodies and Their Roles

There are a variety of regulatory bodies that are strategically placed to oversee the renewable energy sector in India. Nearly all these bodies are deeply involved in policy-making, tariff regulation, and project facilitation. Understanding the role of these regulatory bodies is important to appreciate the legal framework within which renewable energy is governed in India. 

Ministry of New and Renewable Energy (MNRE)

The Ministry of New and Renewable Energy is at the forefront of catalyzing India's renewable energy revolution. It is concerned with the overall policy framework governing the development of renewable energy sources.

  • Policy Formulation: One such ministry engaged in formulating policies for encouraging renewable energy is the MNRE. It plans to attract more investment, make project clearances easier, and involve private participation.
  • Implementation: MNRE monitors the implementation of several Programs/Projects on Renewable Energy. It coordinates with other Ministries/Departments of the Central Government, State Governments, and the private sector for smooth implementation.
  • Incentives and Subsidies: MNRE offers a range of fiscal incentives on renewable energy projects, that involve subsidies, grants, and tax benefits. Such incentives reduce the financial burden on developers, thereby providing an impetus for the growth of renewable energy.
  • Research and Development: Emphasis is also given to research and development for new renewable energy technologies or upgrading existing ones. The Ministry funds research initiatives and also partners with academic and research institutions.

Coming into multifaceted roles, MNRE acts as a catalyst in India's journey toward renewable energy, ensuring that the policies are not just available but also put into practice.

Central Electricity Regulatory Commission (CERC)

The function of the Central Electricity Regulatory Commission is to regulate the electricity sector in India on issues relating to tariffs and the integration of renewable energy into the grid.

  • Tariff Regulation: It is the CERC that shall approve the tariffs for electricity generated from renewable sources. It sets competitive tariffs for the Renewable Energy Sector, hence making it an attractive sector for investors as well as consumers.
  • Integration promotion: CERC develops guidelines and frameworks for the integration of renewable energy into the national grid. This includes addressing related technical challenges and smooth grid connectivity of projects pertaining to renewable energy.
  • Market development: It promotes electricity markets for renewable energy. This pertains to facilitating trading mechanisms such as Renewable Energy Certificates and power purchase agreements.
  • Dispute Resolution: It also serves as a mediator in case of disputes between two stakeholders of the electricity sector. This would carry forward a fair and efficient regulatory environment.

The role of CERC assumes perceptible prominence for the maintenance of a balanced and equitable electricity market so that renewable energy can co-exist with conventional sources of energy.

State Regulatory Commissions

State regulatory commissions, therefore, become hugely important in enabling renewable energy projects at the state level. Each state has a regulatory commission within India that modifies policies and regulations to suit local conditions and requirements.

  • Regulatory Oversight: This involves regulating the state-level implementation of the national renewable energy policy by state commissions. They adapt such policies to meet specific state needs, ensuring compliance.
  • Tariff Setting: Like CERC, state commissions are also tasked with determining tariff projects for renewable energy in respective states. They consider local factors and wish to come up with exciting tariffs that will attract investors.
  • Project Facilitation: Such commissions facilitate the setting up of renewable energy projects by way of issuance of relevant clearances while sorting out local problems. In most cases, the timely execution of such projects is worked out by developers closely liaising with them.
  • Monitoring and Compliance: State regulatory bodies monitor the performance of renewable energy projects and make sure that State and National regulations are complied with at the grassroots level. This further creates awareness and folklore for the adoption of renewable energy.


India is expected to become the world leader in adopting renewable energy by making use of regulatory mechanisms, incentives, and strategic policies. Its journey into the ambit of Renewable Energy Laws and Clean Energy Regulations is a pointer toward the dedication of the country towards Sustainable Development. Stakeholders must work together to overcome obstacles and seize opportunities in the renewable energy sector as the nation continues to negotiate the intricacies of the energy transition. As India refines its policies and regulations further, the wind of change will definitely blow in for a brighter, greener future for the nation and the world. 


1. What is India’s future scope regarding renewable energy?
2. What are the challenges and future directions in the case of the legal framework for renewable energy in India?