Renewable Energy Law for India

Various countries around the world have recognised the growing importance of renewable energy and hence have passed specific legislations in order to ensure a healthy and robust growth of the sector. European countries are leading the way in this regard and as is evident from the tremendous growth of renewables in Europe, their legislations are definitely one of the important factors driving this growth.

Most countries do not have special Renewable Energy laws but instead have special directives, ordinances or provisions for renewable energy in their existing energy or electricity laws. These directives usually specify some long term RE target.

Some of the specific renewable energy laws from around the world have been very briefly summarised below.

The German renewable energy law is a prime example of what properly designed, stable energy policy can do to bolster the growth of renewables. It has created a booming internal and external market, for wind and solar technology in particular, and has simultaneously helped Germany towards meeting its GHG emissions reduction targets.

The stated objective of the Act, introduced in 2000 and subsequently revised in 2004 is to, “facilitate a sustainable development of energy supply, particularly for the sake of protecting our climate, nature and the environment, to reduce the costs of energy supply to the national economy, also by incorporating long-term external effects, to protect nature and the environment, to contribute to avoiding conflicts over fossil fuels and to promote the further development of technologies for the generation of electricity from renewable energy sources.”Additionally the act will help implement EU directives on renewable energy and contribute to the increase in the percentage of renewable energy sources in the country’s power supply to at least 12.5 % by 2010 and to at least 20 per cent by 2020.

The Act regulates priority grid connection and transmission for renewables and also deals with the purchase and compensation paid for such electricity. Renewable energy sources are defined to include hydropower including wave power, tidal power, salt gradient and flow energy, wind energy, solar radiation, geothermal energy, energy from biomass including biogas, landfill gas and sewage treatment plant gas as well as the biodegradable fraction of municipal and industrial waste.

The core provision of the Act is to provide priority status for renewables particularly in the compensation paid for such electricity through the mechanism of feed-in laws or minimum price standards. A feed-in law is a legal obligation on utilities to purchase electricity from a renewable source at a preferential purchase price. Producers of renewable energy are guaranteed the sales price and access to market through an obligation from utility companies to purchase the green electricity on an annual fixed-rate basis. The price paid is subject to periodic adjustments by regulators. The price and the duration of the contract are set at levels that maintain investor confidence, allowing healthy growth in the sector in a low-risk environment.

RE Source	Minimum Price for Electricity laid down in the 2004 Amendment
Hydropower	At least 9.67 cents/kWh for plants with a capacity up to and including 500 kilowatts and at least 6.65 cents/kWh for plants with a capacity up to and including 5megawatts.
Landfill Gas, Sewage Treatment Plant Gas and Mine Gas	at least 7.67 cents/kWh up to and including a capacity of 500 kilowatts and at least 6.65 cents/kWh up to and including a capacity of 5 megawatts. The fees paid for electricity from mine gas plants with a capacity of over 5 megawatts shall be 6.65 cents/kWh. All above the minimum prices shall be reduced annually by 1.5%
Biomass	at least 11.5 cents/kWh up to and including a capacity of 150 kilowatts, at least 9.9 cents/kWh up to and including a capacity of 500 kilowatts, at least 8.9 cents/kWh up to and including a capacity of 5 MWs and at least 8.4 cents/kWh for a capacity of over 5 MWs and up to 20 MWs. All above the minimum prices shall be reduced annually by 1.5%
Geothermal	at least 15 cents/kWh up to and including a capacity of 5 Megawatts, at least 14 cents/kWh up to and including a capacity of 10 Megawatts, At least 8.95 cents/kWh up to and including a capacity of 20 Megawatts and at least 7.16 cents/kWh for a capacity of 20 Megawatts and over. All above the minimum prices shall be reduced annually by 1.0%
Wind	8.7 cents/kWh for first five years till plants achieve 150% of reference yield. After five years the minimum price will be 5.5 cents/kWh. 9.1 cents/kWh for offshore installation for first 12 years for installation before 2010. After 12 years the rate will be reduced to 6.19 cents/kWh. All above the minimum prices shall be reduced annually by 2.0%
Solar	45.7 cents/kWh for ground mounted installations. If the plant is attached to or integrated on top of a building or noise protection wall, the fees shall be at least 57.4 cents/kWh up to and including a capacity of 30 kilowatts, at least 54.6 cents/kWh for a capacity 30 kilowatts and over, and at least 54.0 cents/kWh for a capacity of 100 kilowatts and over. An addition of 5 cents/kWh will be allowed for BIPV systems. All above the minimum prices shall be reduced annually by 5.0%

All above minimum prices are to be paid from the date of commissioning for a period of 20 calendar years as well as for the year of commissioning and for 30 years for hydropower plants. A nation-wide equalization scheme has been implemented to reduce the cost differentials paid by grid operators in different parts of the country for the purchase of renewably-generated electricity. Under the law, energy from renewable sources commands premium prices, but the additional costs are not covered through taxation but are included in household electricity bills. The total additional costs are currently estimated to cost only about €1 per month per household.

Plant operators are to bear the cost of grid connection and metering while costs associated with grid up-gradation are to be borne by the grid operators. Plant operators are defined as anyone who, notwithstanding the issue of ownership, uses the plant for the purpose of generating electricity from renewable energy sources or from mine gas. Grid system operators are defined as the operators of all types of voltage systems for general electricity supply.

Environmental verification organizations are required to issues certificates certifying guarantee of origin of electricity from renewable sources. The act also requires the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety to prepare progress reports from time to time.

This act came into effect in 2005 primarily for regulating the promotion of electricity generation from renewable energy sources in the Czech Republic in accordance to the existing EU laws and directives.

RE sources [non-fossil natural energy sources] have been defined in the act to include, wind energy, solar energy, geothermal energy, energy of water, energy of soil, energy of the air, energy of the biomass, energy of landfill gas, energy of sewage treatment plant gas and energy of biogases.

The RE producer has been given two choices with regard to electricity pricing, (1) Sell the electricity to the grid operator pursuant to the conditions and prices set under this Act or (2) to avail a green bonus for this electricity and sell it on the market. A green bonus has been defined in this Act as a, “financial amount increasing the market price of electricity that is paid by the operator of a regional grid system or transmission system to a producer of electricity from renewable sources, taking account of reduced damage to the environment resulting from use of a renewable sources compared to combustion of fossil fuels, of the type and size of the production plant and of the quality of supplied electricity”. Captive users are also allowed the benefit of the green bonus under the act. The Energy Regulatory Office is in charge of setting prices for renewable electricity purchase subject to certain conditions laid down in the law. These prices will come into effect for the first time in 2007. The above body is also responsible for publishing an annual progress report on status and progress of renewables. Heavy fines have been laid down for non-compliance both for the grid operator and the electricity producer. Preferential grid connection for RE sources is guaranteed under section 4 of the Act and the costs are to be borne entirely by the grid operator.

Special Condition: Wind power plants located over an area of 1 km2 with a total installed capacity of 20 MWe will be excluded from the purview of this Act.

China’s Renewable Energy Law was endoresed by the Chinese Govt. on 28 February 2006 and comes into effect from 2007. The stated objective of the law is, “to promote the development and utilization of renewable energy, improve the energy structure, diversify energy supplies, safeguard energy security, protect the environment, and realize the sustainable development of the economy and society”.

According to the law, renewable energy includes hydroelectricity, wind power, solar energy, geothermal energy and marine energy, all of which need to be taken consideration in state and local development plans.

Authorities of the State Council are entrusted with organizing and coordinating national surveys and management of renewable energy sources. The council also has to set medium and long term targets for development and utilization of renewable energy. Based on these targets the council will develop a national renewable energy development and utilization plan.

The government has listed R&D and utilization of renewable energy as the preferential area for hi-tech industrial development in their national program. It further allocates funding for R&D to reduce costs of renewables, improve quality of RE products and promote technical advancements in the development and use of renewables.

The law requires power grid operators to enter into grid connection agreements and provide grid-connection to renewable energy power producers and also purchase power from registered renewable energy producers. The law also offers financial incentives, such as a national fund to foster renewable energy development, discounted lending and tax preferences for renewable energy projects. The law includes other details related to the purchase and use of electricity from solar photovoltaics (PV) and solar water heating as well as renewable energy fuels. Finally, the law includes specific penalties for non-compliance with the law.

The grid's buying price for renewables are to be set by the National Development and Reform Commission (NDRC), a regulatory department of the State Council based on the principle of “being beneficial to the development and utilization of renewable energy and being economic and reaosnable” with timely adjustment in the buying price as is necessary. The cost of purchasing this power will be spread across all customers on the grid. The law is expected to foster use of renewable energy up to 10 percent by the year 2020.

Austria’s Green Electricity Act of 2003 has been established to enact new provisions related to renewable electricity generation and combined heat and power (CHP).

This Act regulates various renewable electricity related matters including mainly,

“Renewable energy sources” are defined as renewable non-fossil energy sources (wind, solar, geo-thermal, wave, tidal, hydropower, biomass, waste containing a high percentage of biogenous materials, landfill gas, sewage treatment plant gas and biogases);

Grid operators are required to treat all connection applications equally and in a transparent manner. They also require to issue “guarantee of origin” certificates for electricity generated from registered renewable projects. There is an obligation to purchase electricity from solar PV nationwide capacity of upto 15 MW and a certain percentage of electricity from hybrid and co-firing plants based on renewable energy. CHP plants are eligible for support only if used for public heating and if primary energy use and CO2 emissions are reduced in comparison to separate electricity and heat generation.

The Act requires new feed-in tariffs to be set for all new renewable electricity plants. Customers are also required to pay a nation wise uniform support fee (cent per kWh of energy supplied to final customers) to create a fund to cover the additional costs.

UK has three major acts covering use of renewables. These are briefly described below.

This act deals with the provisions for the development and promotion of a sustainable energy policy. The act makes it mandatory for the secretary of state to publish annually a “sustainable energy report” which would indicate progress made towards-

The act also requires the Secretary of State to specify targets for electricity production from Combined Heat and Power (CHP) Plants.

The Secretary of State is required to publish a strategy for promotion of micro-generation after considering its possibility for

(e) enhancing the availability of electricity and heat for consumers in Great Britain.

The sources of energy and technologies that are permitted under the microgeneration initiative are as below

(j) other sources of energy and technologies for the generation of electricity or the production of heat, the use of which would, in the opinion of the Secretary of State, cut emissions of greenhouse gases in Great Britain.

The act lays down specific guidelines and regulations for the use of areas outside the territorial sea for exploration and exploitation of energy especially from water and wind energy. The act also lays down regulations for the transmission, distribution and supply of electricity generated in such areas and also for de-commissioning of such renewable energy projects. The government has also reserved the right to declare such an area as a “Renewable Energy Zone” for the above purpose.

Renewables obligation relating to electricity [Under Section 32 (9) of the Electricity Act 1989]

The Renewables Obligation order was first introduced in 2002 and subsequently revised in 2006. Electricity distribution companies are required under this order to produce/source a minimum percentage of their electricity from renewables. The minimum yearly percentages are specified below.

Year	Percentage of total sales of electricity to customers
2006-07	6.7
2007-08	7.9
2008-09	9.1
2009-10	9.7
2010-11	10.4
2011-12	11.4
2012-13	12.4
2013-14	13.4
2014-15	14.4
2015-16	15.4

The power to establish a Renewable Transport Fuel Obligation Programme is provided under the Energy Act 2004 under section 124. From 2008 fuel suppliers will require that a certain minimum percentage of their fuel sales will have to be made up of biofuels. The 2010 target has been set at 5% by volume and is likely to deliver a 1 million tonne carbon emission reduction. The operational and settlement mechanism for the RTFO is similar to the renewable electricity obligation explained above.

This is one of the latest Acts passed in UK which complements the Sustainable Energy Act 2003 and the Energy Act 2004. It purpose is “to make provision about the reduction of emissions of greenhouse gases, the alleviation of fuel poverty, the promotion of microgeneration and the use of heat produced from renewable sources, compliance with building regulations relating to emissions of greenhouse gases and the use of fuel and power, the renewables obligation relating to the generation and supply of electricity and the adjustment of transmission charges for electricity; and for connected purposes.”

The UK govt is also considering a Climate Change Bill, which will put a limit on the GHG emissions and set a national target for GHG reductions of 60% below 1990 levels by 2050.

The official objective of the draft bill is to, “Set a target for the year 2050 for the reduction of carbon dioxide emissions; to provide a system for carbon budgeting; to establish a Committee on Climate Change; to confer powers to establish trading schemes for the purpose of limiting green house gas emissions or encouraging activities that reduce such emissions or remove green house gas from the atmosphere; to make other provision about climate change; and for connected purposes.”

This act has been specifically passed to establish and administer a scheme for encouraging electricity production from renewables. The various objectives being pursued by this Act are encouragement of electricity generation from renewables; reduction of GHG emissions and seeing to it that use of renewable energy sources is ecologically sustainable.

The above objectives are to be met, first through issuance of certificates acknowledging the generation of electricity from renewables and secondly by requiring certain purchasers (liable entities) of electricity to surrender a specified number of such certificates which they acquire during the year. Lastly if the purchaser of electricity is not able to surrender the required number of certificates by the year end, then he is liable to pay penalties in the form of renewable energy shortfall charges.

Renewable energy certificates are created by people generating power from RE sources and liable entities that need to acquire such certificates can do so by purchasing them. The creation and transfer of certificates needs to be registered and the certificate ceases to be valid when finally surrendered by the liable entity. The act also has provisions for solar water heaters that displace non-renewable electricity to be issued similar certificates.

The law has put down the required yearly additional amount of renewable electricity generation. Its increases from 300 GWh in 2001 to 9500 in 2010 and later years.

A renewable energy shortfall penalty is levied on the liable entity, which fails to procure of produce the required amount of RE certificates. No penalty is levied if the shortfall is within 10% of the required amount but the shortfall is carried forward to the next year for accounting purposes. The penalty amount has been set out in the Renewable Energy (Electricity) Charge Act 2000.

Another provision in the Act allows for the refund of the above paid penalty under certain conditions. If the liable entity is able to surrender the required amount of RE certificates (equal to the shortfall amount in the year in which the penalty was paid) within 3 years of paying the penalty, then the entity is liable for a refund of the previously paid RE shortfall charge penalty once administrative fees have been deducted.

Philippines Biofuels Act of 2006 was signed into law in January 2007. The act makes the limited use of biofuels (biodiesel and bioethanol) mandatory. The rationale behind the act is to substitute a fraction of the costly imported crude oil with indigenously made renewable liquid fuel.

The official Govt policy as per the law is “to reduce dependence on imported fuels with due regard to the protection of public health, the environment, and natural ecosystems consistent with the country’s sustainable economic growth that would expand opportunities for livelihood by mandating the use of biofuels as a measure to:

(a) develop and utilize indigenous renewable and sustainably-sourced clean energy sources to reduce dependence on imported oil;

(d) ensure the availability of alternative and renewable clean energy without any detriment to the natural ecosystem, biodiversity and food reserves of the country.”

All liquid fuels for motors and engines sold in the Philippines require locally-sourced biofuels components as follows:

“Within two years from the effectivity of this Act, at least five percent (5%) bioethanol shall comprise the annual total volume of gasoline fuel actually sold and distributed by each and every oil company in the country, subject to the requirement that all bioethanol blended gasoline shall contain a minimum of five percent (5%) bioethanol fuel by volume: provided that the ethanol blend conforms to Philippines National Standards (PNS).

Within four years from the effectivity of this Act, the National Biofuel Board (NBB) created under this Act is empowered to determine the feasibility and thereafter recommend to the Department of Energy (DOE) to mandate a minimum of ten percent (10%) blend of bioethanol by volume into all gasoline fuel distributed and sold by each and every oil company in the country.

Within three months from the effectivity of this Act, a minimum of one percent (1%) biodiesel by volume shall be blended into all diesel engine fuels sold in the country: provided That the biodiesel blend conforms to PNS for biodiesel.

Within two years from the effectivity of this Act, the NBB created under this Act is empowered to determine the feasibility and thereafter recommend to DOE to mandate a minimum of two percent (2%) blend of biodiesel by volume which may be increased taking into account considerations including but not limited to domestic supply and availability of locally-sourced biodiesel component.”