Regulation of electricity utilities – power generation

Authorisation to construct and operate generation facilities

What authorisations are required to construct and operate generation facilities?

Generation is a delicensed subject; however, construction, operation and maintenance of a generation facility require permits, consents and approvals under other laws relating to land acquisition, environmental clearance, corporate and labour compliances, approvals for use of restricted land and consent to establish and operate the power station from pollution control authorities (except for renewable energy projects that fall under the white category and are exempt from the requirement of obtaining consent to establish and operate). Further, in the case of power stations using domestic coal, the developer is required to obtain a coal linkage (which provides for assured fuel supply from the coal mines of Coal India Ltd and its subsidiaries) or use coal extracted from a coal block specifically allotted to it by a government entity. If coal is used from an allotted mine, the developer is also required to obtain specific approvals (such as an environmental clearance) concerning the coal mine. The Ministry of Environment, Forests and Climate Change, Government of India (Environment Ministry), mandates that standalone coal-fired thermal power plants of all capacities are required to be supplied with, and are required to use, raw, blended or beneficiated coal with an ash content not exceeding 34 per cent, on a quarterly average basis.

All power-generating stations are also required to comply with technical standards prescribed by the Central Electricity Authority (CEA), including those concerning the construction of power plants, safety requirements for construction, operation and maintenance. Hydropower projects above 25 megawatts have an additional requirement to obtain a techno-economic clearance from the CEA before the commencement of construction works. Similarly, a clearance is required from the Atomic Energy Regulatory Board for atomic energy based power plants.

Grid connection policies

What are the policies with respect to connection of generation to the transmission grid?

Under the Electricity Act 2003 (the Electricity Act), each transmission licensee is required to provide non-discriminatory use of transmission lines, distribution systems or associated facilities to a licensee, consumer or a person engaged in generation. An applicant is first required to obtain connectivity to the transmis­sion network and then obtain long, medium or short-term open access, as the case may be, depending on the period for which it requires the transmission capacity. On obtaining these approvals, an applicant can interchange power with the transmission grid.

Grant of connectivity and long, medium or short-term open access is governed by regulations issued by the Central Electricity Regulatory Commission (CERC) and the respective state electricity regulatory commissions (SERCs). The CERC in January 2019 issued amendments to regulations dealing with the interstate transmission system with the aim of planning and developing an efficient, coordinated, reliable and economical system for the smooth flow of electricity from generating stations to the load centres. These amendments specifically include renewable energy developers and operators of solar and wind power parks. The amendments provide an enabling framework for the transfer of connectivity (in limited circumstances such as transfer to the parent company) granted for renewable energy projects. Under the amendments made to CERC connectivity regulations in 2019, CERC on 20 February 2021 issued revised detailed procedures for grant of connectivity to projects based on renewable sources to interstate transmission systems. This provides much-needed clarity on procedures to be followed by solar and wind park developers.

Through a recent order issued in November 2020, the Ministry of Power (the Power Ministry) mandated that all conventional grid-connected electricity units (coal, gas, liquid fuel, hydro), nuclear-generating stations, captive power plants, renewable energy generators, off-grid generating units of more than 0.5 megawatt capacity, and all generating units supplying power to neighbouring countries, irrespective of whether they have connected to the Indian Electricity Grid, must obtain a unique registration number from the CEA.

Alternative energy sources

Does government policy or legislation encourage power generation based on alternative energy sources such as renewable energies or combined heat and power?

The regulatory environment increasingly seeks to incentivise renewable energy, with favourable tariff regimes established by SERCs. The Electricity Act, the National Electricity Policy 2005 and the Tariff Policy 2016 encourage private-sector participation in renewable energy through measures such as fixing Renewable Purchase Obligations (RPOs) for obliged entities. In 2017, tariff-based competitive bidding guidelines for the procurement of power were introduced for solar and wind power projects where the procurer sets a benchmark tariff above which a bid cannot be made and the bidder with the lowest tariff bid discovered through a reverse auction is selected to enter into a power purchase agreement with the procurer. These bidding guidelines have introduced several provisions to enhance the attractiveness of the solar and wind bids through measures such as:

  • generation compensation by the procurer to the developer in the case of power evacuation constraints;
  • the payment security mechanism for tariff payments; and
  • termination compensation in the event of procurer default.

 

On 10 May 2021, the Ministry of New and Renewable Energy (MNRE) issued an amendment to the guidelines for setting up 12,000 megawatts grid-connected solar projects where:

  • the amount of viability gap funding available on a per megawatt basis has been decreased;
  • the usage charges have been decreased; and
  • the timeline for project commissioning from the date of the letter of award has been increased.

 

Other than the above monetary incentives provided for solar and wind bids, the feed-in tariff regime continues to be applicable for solar and wind plants with capacities under 5 megawatts and 25 megawatts respectively. Benefits such as the continued availability of accelerated depreciation for wind power projects and exemptions from payment of electricity duty (which are state-specific but are typically granted by a majority of the states) are also provided to renewable power generators. Further, the Power Ministry has recently ordered that no interstate transmission charges (and losses) shall be levied on the interstate sale of power from solar and wind power projects that have been awarded through competitive bidding with a power purchase agreement for the sale of power to a distribution company and other entities for the compliance with their RPOs, provided these projects are commissioned by 30 June 2025. This waiver of transmission charges has also been allowed for the trading of electricity generated from solar, wind, hydro pumped storage plants in the green term ahead market and green day ahead market until 30 June 2023. Nonetheless, unlike conventional power generation, renewable power projects are primarily based on state-specific policies that provide incentives and policies that are not always consistent, leading to developers choosing states based on their financial model and operational expertise. This is why some states have witnessed tremendous growth in the renewable energy sector compared to others.

The MNRE has also made amendments to the implementation guidelines of the Pradhan Mantri Kisan Urja Suraksha evam Utthan Mahabhiyaan Scheme on 13 November 2020. The new amendments allow solar plants to be installed on pastures and marshland owned by farmers. The size of the solar plant that can be implemented has also been reduced, and this will allow the participation of small farmers. The period for completion has also been increased from nine to 12 months, coupled with the abolition of the penalty for a shortfall in generation.

The renewable energy sector has experienced exponential growth in the past few years and various government incentives (both fiscal and non-fiscal) have played critical roles in this. However, as the renewable energy sector has come of age and achieved grid parity, the government aims to gradually roll back the incentives. For instance, until now renewable energy project developers (along with other power project developers) had the benefit of a 10-year corporate tax holiday that has expired. Even so, the rolling back of incentives by the government has not deterred private-sector developers from developing renewable energy projects in the country. The solar sector in particular has led the way in India’s clean-energy growth transition. Solar plants can be set up under state policies or the government-of-India-launched National Solar Mission (NSM), which has been at the forefront of the government’s renewable energy policy. Solar projects, under either the NSM or state-specific policies, are envisaged to be developed in a phased manner with a target of achieving 100 gigawatts (increased from the original target of 20 gigawatts) of installed solar capacity by 2022 (out of which a capacity of 40.1 gigawatts has already been installed as on March 2021). The government of India intends to develop 40 gigawatts (of the 100 gigawatts) through rooftop solar projects and the remainder through ground-mounted solar projects. To achieve these targets the government of India is developing large solar parks in collaboration with the state governments and has also issued detailed guidelines for their development. MNRE has modified its guidelines for the development of solar parks and ultra-mega solar power projects to introduce another model called Ultra-Mega Renewable Energy Power Parks. The intention is to provide ring-fenced, shovel-ready land to the power developer along with providing the associated power evacuation facilities. The government of India has doubled the capacity target from 20 gigawatts to 40 gigawatts for solar projects to be set up in a solar park, to be achieved by 2021–22.

In May 2021, the Solar Energy Corporation of India (SECI) floated a tender for the procurement of 1,200 megawatts of power from wind-based sources. While onshore wind power projects account for a substantial portion of the installed renewable capacity in India, the government of India issued the National Offshore Wind Energy Policy in September 2015 intending to promote the country’s offshore wind energy potential and had invited expressions of interest in 2018 from suitable and experienced bidders for the development of 1 gigawatt of offshore wind energy anywhere within India’s exclusive economic zone. Gujarat and the state of Tamil Nadu are estimated to have the potential to generate 106 gigawatts and 60 gigawatts of offshore wind energy respectively. The principal agency charged with the development of the sector is the National Institute of Wind Energy (NIWE). Under this policy, blocks are to be allocated through a competitive bidding route and developers are required to enter into seabed lease agreements with NIWE. As a part of the planned off-take arrangement, NIWE or the respective state distribution utilities will sign power purchase agreements. Transmission utilities owned by the government will provide the onshore infrastructure required to evacuate power generated from these projects. Offshore power evacuation infrastructure up to the first onshore substation will have to be constructed by developers at their own cost. While the government has put in place a policy and institutional framework to support the development of offshore wind energy in the country, there has not been any project development activity yet.

In May 2020, Oil and Natural Gas Corporation Ltd and NTPC Ltd entered into a memorandum of understanding to set up a joint venture to explore and set up renewable power assets, which includes offshore wind projects, in India. The government of India plans to develop 5 gigawatts and 30 gigawatts of offshore wind energy by 2022 and 2030, respectively.

Additionally, in May 2018, the MNRE issued a National Wind-Solar Hybrid Policy that seeks to optimise the utilisation of infrastructures such as land and the transmission system, as there are regions in India where wind and solar energy have moderate to high potential. A wind-solar plant will be considered hybrid if the rated power capacity of either source is at least 25 per cent of the rated power capacity of the other source. The policy not only aims at the development of new wind-solar hybrid plants but at the hybridisation of existing wind and solar plants. In facilitating this, in May 2018, the MNRE issued a scheme for setting up 2,500 megawatts of interstate transmission connected wind-solar hybrid power projects that initially provided only for battery storage but was later expanded to include all forms of storage, such as, pumped hydro, compressed air and flywheel, etc. In December 2020, SECI issued a tender for the development of a 1.2 gigawatts solar-wind hybrid power project under Tranche III of the interstate transmission programme at a tariff of 2.41 Indian rupees per kilowatt hour, which, apparently, is the lowest tariff yet for solar-wind hybrid projects.

In the context of municipal waste-to-energy projects, while Indian cities present significant scope for growth, the industry has faced intense opposition on account of environmental and health concerns. The government of India is undertaking measures to promote waste-to-energy projects. In this context, the National Biofuels Policy was approved by the Union Cabinet in May 2018, which, among other things, promotes research and development into technology using biofuels for the generation of power.

The government of India also recently issued Electricity (Rights of Consumers) Rules, notified on 31 December 2020, that allow prosumers (according to the rules, these are consumers that while consuming electricity from the grid can also inject electricity into the grid using the same point of supply), to set up net metering for rooftop solar projects of capacity 500 kilowatts or the sanctioned limit (whichever is lower) and gross metering for rooftop project with capacity above 500 kilowatts.

Climate change

What impact will government policy on climate change have on the types of resources that are used to meet electricity demand and on the cost and amount of power that is consumed?

India has ratified the United Nations Framework Convention on Climate Change and the Kyoto Protocol (but with no binding obligations) to reduce its greenhouse gas emissions. Consequently, the government of India launched the National Action Plan on Climate Change (NAPCC), under which major initiatives such as the NSM have been introduced, and the Wind Energy Mission and Waste to Energy Mission are proposed. Additionally, sharing of Clean Development Mechanism benefits (between the developer and the consumer, usually a state-owned distribution utility) is present across most states. India has also ratified the Paris agreement. The Paris agreement requires its signatories to devise a national plan to limit global temperature rise, and as part of its plan, India has set a goal of producing 40 per cent of its electricity with non-fossil fuel sources by 2030.

The government of India, under the NAPCC, formulated a National Mission for Enhanced Energy Efficiency (NMEEE), among other such policy measures. The NMEE comprises four initiatives, namely:

  • Perform Achieve Trade (PAT);
  • the Energy Efficiency Financing Platform (EEFP);
  • Market Transformation for Energy Efficiency (MTEE); and
  • the Framework for Energy Efficient Economic Development (FEEED).

 

PAT aims to reduce energy consumption in specific energy intensive industries with the issuance of tradable energy savings certificates (ESC) to those participants who achieved their saving targets. In PAT cycle I, which ended in 2015, 38,50,000 ESCs were issued. PAT cycle VI commenced on 1 April 2020, under which 135 designated consumers from six sectors are participating.

Another measure taken by the government of India was the Street Lighting National Programme, which started in 2015 and is aimed at replacing India’s 14 million conventional streetlamps with smart light-emitting diode (LED) variants by 2019. By January 2020, the programme installed 10.3 million smart LED streetlights. The government of India also launched the Unnat Jyoti by Affordable LEDs for All scheme, intending to distribute 770 million LEDs across India by March 2019. To date, roughly 360 million such LEDs have been distributed. Both these policies are examples of the government of India’s initiatives to make India energy efficient.

To reduce the carbon footprint of thermal power generation, the Power Ministry has recently decided to set up a National Mission on the use of Biomass in coal-based thermal power plants. One of the objectives of the mission is to increase the level of co-firing from the present 5 per cent to higher levels to have a larger share of carbon-neutral power generation from thermal power plants.

However, owing to the effects of the covid-19 pandemic, and to mitigate it, the government has leaned towards supporting economic development. The Ministry of Environment has allowed companies operating in several industries (other than renewable energy generation projects that are categorised as white category and do not require the prior consent of the pollution board), to expand capacities based on a self-certification that such an expansion will not ‘increase the pollution load’. However, this may result in wrongful declarations being made by companies.

While the government of India has been promoting the development of India’s renewable energy capacity and capability through various policy measures, the decision by the Directorate General of Trade Remedies in July 2018 to impose a safeguard duty on the importation of solar cells and modules from Malaysia and China and the MNRE’s decision to increase the basic customs duty on imported solar modules or cells is likely to adversely impact solar tariffs. A recent review investigation has extended the safeguard duty. A 14.90 per cent duty will be imposed from 30 July 2020 to 29 January 2021, followed by a 14.50 per cent duty from 30 January 2021 to 29 July 2021. The imposition of the safeguard duty has, however, been met with a legal challenge. In 2018, the Supreme Court stayed the ban on the imposition of the safeguard duty on solar panels (in the context of proceedings where high courts had stayed the implementation of the safeguard duty). Recently, the MNRE announced the imposition of a basic customs duty on imported solar modules and cells at a rate of 40 per cent and 25 per cent respectively, with effect from April 2022.

Storage

Does the regulatory framework support electricity storage including research and development of storage solutions?

Currently, there is no regulatory framework governing electricity storage in India. The MNRE constituted an expert committee to propose a draft policy to establish a National Energy Storage Mission (NESM) for India and the committee submitted the draft policy to the MNRE. The NESM aims to establish a regulatory framework that promotes the manufacturing and deployment of battery storage systems. Before this, in January 2017, CERC issued a consultation paper setting out a broad framework for the introduction of battery energy storage systems (BESS). The consultation paper discusses models of tariff determination for multiple users of BESS, the commercial viability of BESS and policy changes that may be required to deploy bulk storage facilities in the country. Further, media reports mention that the government is also working on a policy framework to introduce on-site storage integration for wind and solar power projects, but the same is yet to be announced.

While the government of India has previously floated tenders for renewable energy capacity with storage systems, most of these systems have been suspended or withdrawn for various reasons. There have been several tenders for storage-linked renewable generation capacity in various parts of the country, such as Andhra Pradesh and Karnataka, which are currently underway. Media reports mention that SECI is planning a 2,000 megawatt-hours standalone energy storage system to be set up and the tender will be floated in late 2021. The MNRE has also recently announced that 1,000 megawatt hours tenders for energy storage will be floated across each of the four RLDCs. The government had also launched the National Smart Grid Mission, through which it introduced incentives such as a 30 per cent capital grant towards a project’s cost, and a 100 per cent grant for select components such as training and capacity building.

The government of India gives many incentives for electricity storage. Interstate transmission charges have been waived for BESS projects that would be commissioned before 30 June 2025. Energy storage also plays an important part in combating one of the biggest concerns with renewable energy, which is the lack of round-the-clock supply. In May 2020, India issued its first round-the-clock supply contract aimed at supplying power with a combination of solar, wind power and energy storage systems. Later in 2020, the Power Ministry introduced the guidelines for a tariff-based competitive bidding process for the procurement of round-the-clock power from grid-connected renewable energy power projects, complemented with power from coal-based thermal power projects to enable such procurement.

The regulatory framework also aims to support the research and development of storage solutions. On 12 May 2021, the proposal for a Production Linked Incentive Scheme ‘National Programme on Advanced Chemistry Cell (ACC) Battery Storage’ was approved by the cabinet. ACCs are the new generation of advanced storage technologies that can store electric energy either as electrochemical or as chemical energy and convert it back to electric energy as and when required.

Government policy

Does government policy encourage or discourage development of new nuclear power plants? How?

While the government is positive about setting up power stations based on nuclear energy (it has already installed 6,780 megawatts of capacity from 22 operational nuclear reactors and projects with an aggregate capacity of approximately 15,700 megawatts are currently under construction), currently only a government of India entity or a government company can own and operate a nuclear power plant. Private ownership of nuclear power generation assets is not allowed.

A major issue that hampered private investment in other areas of nuclear power generation was the interpretation of a provision of the Civil Liability for Nuclear Damage Act 2010 (CLND Act) as mandating a civil nuclear liability clause in supply contracts, therefore dissuading foreign equipment suppliers from supplying Indian nuclear power projects. However, the government of India has clarified that while the legislation would not be amended, it is not mandatory to include a civil liability clause in the contractual arrangements between the foreign supplier and the Indian operator. This clarification has been provided as a part of responses to certain ‘frequently asked questions’ issued by the government of India and has therefore led to concerns that such a stance may not be legally binding. While it is highly unlikely, it remains to be seen whether the Nuclear Power Corporation of India (a government company and operator of nuclear power plants) will agree to undertake such liability. India has also ratified the Convention on Supplementary Compensation for Nuclear Damage (CSC) that has been hailed as an important step towards creating a global nuclear liability regime. It is important to note that ratification of the treaty requires national law to comply with article 10 of the CSC, which states that national law may provide that an operator may have a right of recourse to the supplier only if this is expressly provided for in writing or if the nuclear incident results from an act or incident done with an intent to cause damage. However, section 17(b) of the CLND Act in India adds another instance where an operator may have recourse to the supplier and that is if the nuclear incident occurred owing to an act of the supplier, which includes supplying parts with a latent or patent defect. The government of India has also issued a clarificatory response concerning section 17 (b) of the CLND Act stating that while the language of section 17(b) is in addition to the provisions of article 10 of the CSC, it relates to actions and matters such as conditions of service and contract. The government of India is of the view that these are in any case ordinarily a part of the contract and are not a new method of tracing liability back to the supplier. India is also a part of the limited group of countries with a Nuclear Insurance Pool, which provides insurance cover to operators of nuclear power plants and suppliers. India’s nuclear insurance pool has a corpus of 15 billion Indian rupees.

Regulation of electricity utilities – transmission

Authorisations to construct and operate transmission networks

What authorisations are required to construct and operate transmission networks?

Owning and operating transmission assets requires a licence from the Central Electricity Regulatory Commission (CERC) for interstate transmission facilities and the relevant state electricity regulatory commissions (SERCs) for intra-state transmission facilities. The Electricity Act 2003 (the Electricity Act) allows the appropriate electricity regulatory commission to specify any general or specific conditions that a licensee must comply with. The appropriate electricity regulatory commission may, on the recommendation of the government and in the public interest, even permit any local authority, cooperative society, government institution, etc to transmit (and distribute) electricity, subject to certain terms and conditions, without a licence.

Transmission licensees also require right of way from landowners for construction of transmission lines, approvals under the Electricity Act for installation of overhead lines and installation of transmission towers, apart from other applicable clearances such as those from the Environment Ministry. Alternatively, the Electricity Act also enables a transmission licensee to place and maintain a transmission line on any immovable property, upon being authorised by the government. The government authorisation entitles the transmission licensee to enter any privately owned or occupied land without the notice or consent of the owner or occupier to carry out the works required for setting up the transmission project. The central government on 16 July 2020 issued ‘Guidelines for Payment of Compensation concerning Right of Way for Transmission Lines in Urban Areas’. The guidelines provide for compensation to landowners for obtaining the right of way for the construction of transmission lines of a voltage of 66 kilovolts and above. The guidelines state that compensation of an amount equal to 85 per cent of the market value of the land should be paid to landowners for the land required for the construction of the tower base area. Further, these guidelines also state that compensation of up to 15 per cent of the land value should be paid to landowners for the diminution in the width of a right of way corridor owing to the construction of transmission lines. In addition to the above, the licensee also needs to comply with regulations issued by the Central Electricity Authority and CERC concerning grid and technical standards upon grant of the transmission licence.

Eligibility to obtain transmission services

Who is eligible to obtain transmission services and what requirements must be met to obtain access?

The open-access regulations issued by the relevant electricity regulatory commissions permit usage of transmission lines by any generating company, distribution licensee, any consumer with a requirement of over 1 megawatt of electricity and electricity traders, provided they comply with the requirements of obtaining connectivity and open access to the transmission system. The regulations also cast an obligation on the transmission licensees to provide non-discriminatory access to their transmission lines upon application for such access. The applicant is required to pay transmission charges and other charges as applicable, which may include a cross-subsidy surcharge, wheeling charges and open-access charges.

Government transmission policy

Are there any government measures to encourage or otherwise require the expansion of the transmission grid?

The government is looking to increase private participation to strengthen transmission networks and has introduced a string of measures such as the introduction of electronic competitive bidding for transmission projects and a viability gap funding model on a public-private partnership (PPP) structure for setting up intra-state transmission networks. The interstate transmission system is mainly owned and operated by Power Grid Corporation of India Ltd (PGCIL), a state-owned company, which has become the first public sector company in the country to launch its infrastructure investment trust. PGCIL is monetising transmission assets such as high voltage transmission lines and substations to utilise the funds for new and under-construction projects. The intra-state transmission system is owned and maintained by state transmission utilities. The government is increasingly preferring the PPP structure for setting up the interstate and intra-state transmission networks.

Additionally, major steps are being taken to strengthen the transmission network such as the commissioning of India’s first ultra-mega transmission project, the setting up of a green energy corridor project (facilitating the transmission of electricity produced through renewable energy sources) and the connection of the southern grid to the national grid, leading to synchronisation of all regional grids.

It is generally seen that impetus is specifically being given to the transmission sector through various measures including:

  • the introduction of the National Smart Grid Mission to implement a smart electrical grid based on technology for automation, communication and IT systems, to monitor and control power flows from points of generation to points of consumption;
  • the setting up of a National Transmission Asset Management Centre;
  • the creation of the Power System Development Fund drawing from congestion charges, deviation settlement charges and reactive energy charges, for primarily relieving congestion in government transmission systems of strategic importance; and
  • the renovation and modernisation of government transmission systems for relieving congestion.

 

The various state governments have begun to implement feeder separation systems to augment power supply to rural areas and for strengthening sub-transmission and distribution systems.

Rates and terms for transmission services

Who determines the rates and terms for the provision of transmission services and what legal standard does that entity apply?

The rates and terms for the provision of transmission services are determined by the appropriate electricity regulatory commission (CERC in the case of interstate transmission and the relevant SERC in the case of intra-state transmission). For transmission schemes implemented through the negotiated route, transmission charges are determined by the relevant electricity regulatory commission in line with tariff regulations issued by it, which consider factors such as return on equity, interest on loan capital and working capital, depreciation, operation and maintenance expenses and allowance for any renovation and modernisation. Under the competitive bidding route, transmission charges discovered through a competitive bidding process are required to be adopted by the relevant electricity regulatory commission.

Once the charges for a transmission network are determined or discovered, CERC adopts a point-of-connection method for calculating charges payable by each user in the transmission system based on its actual usage and develops a transmission charge-sharing mechanism among grid constituents. The point-of-connection method is, however, not adopted for intra-state transmission for entities not connected to the interstate transmission system. The CERC has amended its regulations governing sharing of transmission charges and losses, making them applicable to intra-state entities with medium-term open access or long-term access to the interstate transmission network and introducing a reliability service charge, charge for using high-voltage direct current transmission lines and provisions for misdeclaration. Further, through another amendment, CERC has waived the payment of transmission charges and transmission losses for incremental gas-based generation from the re-gasified liquefied natural gas e-bid auctions.

Entities responsible for grid reliability

Which entities are responsible for the reliability of the transmission grid and what are their powers and responsibilities?

The CERC (Indian Electricity Grid Code) Regulations 2010 (Grid Code) brings together a single set of technical and commercial rules that facilitate planning and development of reliable national and state grids, encompassing all the utilities connected to or using the interstate transmission system. One of the key aspects of the Grid Code is to facilitate the planning and development of economic and reliable national and regional grids. Further, states have also issued their respective grid code regulations, for regulating the intra-state transmission grid network.

The key entities responsible for ensuring the reliability of the transmission grid include the National Load Despatch Centre (NLDC), the Regional Load Despatch Centre (RLDC) (established for five regions in India), and State Load Despatch Centres (SLDC) (established for each state). They ensure optimum scheduling and despatch and integrated operation of the power system in their respective jurisdiction. Additionally, the central transmission utility (CTU) and various state transmission utilities are responsible for planning and coordination of interstate and intra-state transmission systems respectively. Under the Proposed Electricity Act Amendments, the functions of the NLDCs and SLDCs have been proposed to be included in the Electricity Act instead of being prescribed by the governments. Directions issued by the NLDC would have to necessarily be followed by every RLDC, SLDC, licensee, generating company, generating station, sub-station and any other person connected with the operation of the power system.

On 9 March 2021, the government of India notified the establishment of an independent CTU called the Central Transmission Utility of India Ltd, to undertake and discharge all functions of CTU. The PGCIL that was declared as the CTU in 2003, shall continue to be a deemed transmission licensee and discharge functions incidental and connected therewith.

The CERC has recently issued a draft (CERC (Ancillary Services) Regulations, 2021) to be provided by power generators to improve the reliability of the grid. Ancillary services are the services that are necessary to support the grid operation in maintaining power quality, reliability and security of the grid. These regulations aim to provide mechanisms for procurement, through administered as well as market-based mechanisms, deployment and payment of ancillary services for maintaining the grid frequency close to 50 hertz and restoring the grid frequency within the allowable band as specified in the Grid Code. The provisions of the regulations would also be useful in relieving congestion in the transmission network, to ensure smooth operation of the power system, and safety and security of the grid.

Additionally, CERC amended the Grid Code in December 2019, to provide a procedure and mechanism for declaration of commercial operation of interstate generating stations. Under this procedure, generators are required to make such a declaration after demonstrating the unit capacity after a trial run and after obtaining the relevant clearance from NLDC, RLDC or SLDC. Through the amendment, CERC has clarified the procedure for such declaration of the commercial operations date for thermal and hydro-generating stations and interstate transmission systems. The procedure involves successful completion of all tests that are required under the Grid Code, issuing notice to power procurers, if any, and successful completion of trial runs for the equipment or generating units to be commissioned.

Concerning renewable sources of energy, several states in India have, over the years, adopted norms for computation of deviations in actual injections of power as against scheduled injections to the state and national grids. These regulations also set out the charges payable towards deviations in quantum and frequency of power injected.

Law stated date

Correct on

Give the date on which the information above is accurate.

15 August 2020.