Energy-jan-feb2011

INFOCUS | INDIA-CHINA | ENERGY

Shawahiq Siddiqui

E

Effective Renewable Energy Policy

Bottom-up, not top down If India has to emerge as global leader in clean energy without compromising its development needs then it has to formulate a renewable energy law.

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nergy security, inflating economy, employment generation, environmental concerns and rising population are few trends that are common between India and China. In order to address these trends there is a need for effective policy measures that provide solution to these emergent issues in an integrated and sustainable manner. Among the crucial challenges that both the countries face today, lowering emissions and providing energy security without compromising the development needs remains the major challenge for both countries. The International Energy Agency (IEA) in its World Energy Outlook, 2007 noted the crucial role that India and China would play in meeting the world’s energy challenges.

The IEA noted that the next ten years will be crucial, as the pace of expansion in energy-supply infrastructure is expected to be particularly rapid. The report concludes that China’s and India’s energy challenges will thus be the world’s energy challenges and call for collective responses.

Renewable energy plays a key role in this scenario for both the countries.

There is thus need for an effective Renewable Energy Framework to take it to a stage where it is able to substitute energy harnessed from conventional sources. The policy initiatives on renewable energy in India and China are at different phases of maturity.

While China has a more dedicated legal and policy framework, India has been trying to promote renewable energy through long and short term polices.

So far, almost all policy initiatives on renewable energy in India are being undertaken in a centralized manner where the Ministry of Power (note that the nodal authority for RE development and promotion at the centre in India is the Ministry of New and Renewable Energy) with its regulatory body, the Central Electricity Regulatory Commission has the central role. There has been no involvement of civil society in the policy formulation process for renewable energy in India.

State and local level authorities are also least aware about the developments happening on the energy front. In this scenario, it is feared that with this low level of sensitization at the local level (read consumer level-where these programmes will be ultimately implemented) the policies are likely to be deferred without the community’s acceptance of choice of energy alternatives. The manner in which the National Solar Mission is being carried out is a case in point.

Among the most recent policy initiatives on renewable energy in India, the National Solar Mission (the

development in the country. Phase I (2009-2012) aims at producing solar generation capacity of 1,000 to 1,500 MW. Phase-II (2012-2017) targets production capacity of 6,000-7,000 MW and Phase III would boost capacity to 20,000 MW. At any rate the first phase envisions a quantum leap and is considered to be the most important phase as it aims to achieve various objectives including rapid scaling up of domestic solar equipment manufacturing, consolidation and expansion of ongoing projects for various applications and promotion of local manufacturing capacity and

Mission) assumes special significance due to its potential to foster clean energy driven economy and reduce Green House Gas emissions (GHGs).

It is realized that the Mission sub assumes all other policy initiatives on solar energy in India. Undoubtedly, the Mission reflects India’s energy planning, strategy and India’s institutional preparedness on energy governance.

The Mission identifies three important phases of solar energy

establishment of solar technology parks or Solar Ultra Mega Power Plants (UMPP). More importantly mandatory objectives to be implemented in Phase-I of the Mission include deployment of solar rooftops (panels) in all government buildings, public sector undertakings, commercial and industrial establishments; installations of solar generation facility at all thermal power plants and use of vacant land in existing power plants for installation of solar panels. There is also a proposition

January-February 2011  India-China Chronicle |45|

INFOCUS | INDIA-CHINA | ENERGY

for mandatory installation of solar water heating systems in all privately owned buildings if the minimum plot area is 500 sqm. The total area to be covered with solar panels is 40 million m2 excluding the land required for setting up solar manufacturing units for scaling up domestic manufacturing of equipments in the country. On environmental aspect, the Mission envisages that there is “zero” environmental impact of solar energy development in the country.

The Mission seeks to achieve these objectives through a centralized institutional framework created under the Mission. The institutional framework under the Mission consists of an autonomous Solar Energy Authority (which would also be the Mission Secretariat to be headed by a Mission Director with the rank of

an Additional Secretary) embedded within the existing structure of MNRE has been identified as the body responsible for overall implementation of the Mission. The Authority (Mission Secretariat) is deemed responsible for day to day functioning and also achieving the goals laid out in a time bound manner. The Mission Secretariat would have Joint Secretary, Scientist, G level officers including other scientists, experts and consultants.

The Mission Steering Group consisting of representatives from all relevant ministries and chaired by the Minister for MNRE has been made fully empowered to approve various schemes, projects, policies and the related financial norms for all schemes covered under the National Solar Mission and to authorize any modifications, deviations in the norms on ongoing schemes. For the periodical review of the projects and progress of Mission implementation, a Mission Executive Committee chaired by Minister MNRE has been identified.

An empowered Solar Research Council headed by an eminent scientist will advise the Mission on all R&D, technology and capacity building related matters. In addition, the Industry Advisory Council will advise the Mission on all matters relating to industrial development, technology transfer, absorption, joint ventures, incentives and investment related matters.

Very clearly, India’s flagship Mission on solar Energy has a top down policy approach with very unclear objectives such as “to make India a leader in solar energy globally,” a number of assumptions such as “zero environmental cost of solar energy development,” number of contingent targets such as targets set for Phase II and III of the Mission are dependent on the targets of Phase-I. The Mission will be made operational by central level agencies with no involvement of local people or local level authorities.

This is not the case with Solar Mission alone. As stated earlier, almost Street light by Solar energy in Mumbai

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all policy initiatives on renewable energy have no involvement of state, district or local authorities in the policy formulation process. Therefore, India’s renewable energy policies are not only in contrast with policies elsewhere where renewable are doing better but are also depicts a shift from the 74th Constitutional Amendment Act, 1994 that involves municipalities and urban local bodies in the developmental planning and process. The 73rd Constitutional Amendment Act, 1992 has also not been borne in the RE policy formulation process. As per this Act village level institutions (Gram Sabha and Panchayat) assumes crucial role in the development planning and energy choice for the local area. While there is a legal mandate for bottom up policy formulation, lessons can also be learned from China. The country follows a multi-tier policy formulation process where local governments are also clued in the policy formulation process.

In China, policies on renewable (solar) energy development fall into three categories. China’s central government establishes the first two levels of policy. Local governments, including provincial, munici¬pal, and county governments, establish the third level of policy with overall direction from the central government.

China’s first-level policies provide general direction and guidance, and include speeches of state leaders about development of renewable energy and the Chinese government’s standpoint on the global environment. Secondlevel policies specify goals/objectives and developments plans, and focus on rural electrification, renewable energy-based generation technologies and fuel wood. These policies attempt to standardize the directions, focal points, and objectives of renewable energy development from different viewpoints. Third-level policies consist of practical and specific incentives and managerial guidelines. These outline specific supporting measures for developing and using renewable energy. These third-level government policies provide crucial support to help develop renewable energy in its early growth stages. In order to be advised

on trade related matters, the Chinese government seeks advice from its State Economic and Trade Commission (SETC). Thus, the Chinese model of renewable energy governance showcases a good example of involvement of functionaries at all tiers of governance thus ensuring a uniform level of information, awareness and sensitization which is crucial for the implementation of renewable energy policies and programmes.

China also has a dedicated Renewable Energy Law to support its renewable energy initiatives, which India has not been able to achieve so far. China’s Renewable Energy Law was endorsed by the Chinese Government on 28 February 2006 and came into effect at the start of 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 into 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 Chinese government has listed research and development and utilization of renewable energy as the preferential area for hi-tech industrial development in their national programme. It further allocates funding for research and development to reduce costs of renewable energy plants, improve quality of renewable energy products and promote technical advancements in the development and use of renewable energy.

The law requires power grid operators to enter into grid connection

agreements and provide gridconnection 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. Other details in the law relate to the purchase and use of electricity from solar photovoltaics 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 renewable energy is set by the National Development and Reform Commission, 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 reasonable” 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% by the year 2020.

Thus far, India’s stride towards a clean energy future has been carried in a programmatic manner, which

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undergo a series of implementation and institutional challenges in a small time frame. As the programmes do not involve different tiers of government institutions and do not seek view of civil society, they are likely to be defeated in their purpose. Without the law, it’s difficult to meet targets and carryout the regulatory functions in a streamlined manner. Chinese model gives a case where policies have to be formulated in a more decentralized manner. Above all, need for a renewable energy law is quintessential if India has to emerge as global leader in clean energy without compromising its development needs. 

Shawahiq is an Advocate in the Supreme Court and is part of the team drafting the Renewable Energy Law

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