The state regulations aforesaid, primarily deal with the following aspects:

• Promotion of renewables in terms of mandatory open access to any distribution licensee’s or distribution system
• Determination of tariff by the state regulatory commissions for purchase of power from each kind of new and renewable sources;
• Purchase of electricity by the distribution licensees are required to purchase a  minimum quantum of its total consumption from renewable sources
• Requirement of signing energy purchase agreement and energy wheeling agreement by the distribution licensee with the state regulatory commission.

State governments also provides subsidies and incentives to encourage investment in renewable and non-conventional sources of energy like concessions or exemptions from value added tax or sales tax, renewable energy purchase obligations or minimum procure of renewable energy by distribution licensees, etc.

Rural Electrification
Village electrification is the best example of exploring the potential of renewable energy. The policies (with the aid of central subsidy through central financial assistance) aim to identify villages in need of electricity and thereby generate electricity primarily through renewable energy sources.  It can be through Small hydro power plants, biomass systems in conjunction with 100 per cent producer gas engines or with dual-fuel engines using non-edible vegetable oils and solar photovoltaic power plants. The rural electrification policy supports non-grid connectivity on stand alone basis. In order to encourage use of renewable sources at village level, the government has introduced the natural bio-gas and manure programme. This is with the aim of providing fuel for cooking purposes and organic manure to rural households through family type biogas plants. This in turn reduces pressure on forests and accentuate social benefits and also to improve sanitation in villages by linking sanitary toilets with biogas plants.
State agencies have been authorized to implement the policies.  As such, Gram Panchayats and Zila Panchayats have been empowered with supervisory/advisory role as well as to act as in intermediary between the consumers and agencies. Â
Income tax benefit

Section 80IA of the IT act, provides for a deduction of an amount equal to 100 per cent  the profits and gains for ten consecutive years from the total income of an assessee derived by an undertaking or an enterprise from the following business:
1 ­ business of generation or generation and distribution of power during the period between 1April 1993 and 31March 2011
 2 transmission or distribution by laying a network of new transmission or distribution lines during the same period                                                                                                                                                  3 undertakes substantial renovation and modernisation of the existing network of transmission or distribution lines between 1 April 2004 and  31 March 2011

Foreign Investments
Under the foreign exchange regulations, FDI upto 100 per cent is allowed in the power sector under the automatic route which includes generation, transmission, distribution and trading of power. FDI in new and renewable sources would fall within the ambit of power sector and hence 100 per cent FDI would be permissible. However, atomic energy is excluded from the purview of power sector.

Under the automatic route, no prior approval  is required, however, those companies receiving FDI would be required to comply with reporting requirements in accordance with the law.         

In the light of the above discussions it can be said that ‘renewable and non-conventional energy sources’ are important portfolio addition to the energy sector. The need for development of sources of energy alternative to conventional energy stems for the following reasons:

• Green House Gas (GHG) emissions mostly being carbon dioxide
• Adverse local environmental impacts
• Adverse global environmental impacts by use of fossil fuels
• Need to develop energy from various sources to meet with the growing demand of the country

The advantage of harnessing non-conventional energy sources may be as follows:                                                                                                                                                                   Renewable energy could be environmentally friendly;
Renewable energy may be locally available resulting in faster transmission and distribution of energy than conventional methodologies;
Renewable energy could be means of livelihood and generate employment among the poor.    

With 100 per cent FDI allowed in the sector, foreign investors have also been given the scope to tap the sector in commercial areas as well as in areas of research and development which in turn will benefit the industry. Thus it can be inferred that New and Renewable Energy Sector has ample opportunity for growth and expansion.

Also Read

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• A guide to Renewable Energy Certificate mechanism
• US experts interact with power board officials
• Orissa may miss RGGVY deadline, seek’s Centre’s help
• Distributed generation, solution for villages: Jairaj Phatak

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