The Energy Regulation and Markets Review - Stikeman Elliott

India
hacking and security breaches of information technology infrastructure. While a
comprehensive cyber-security law and policy is yet to be formulated, the government has
formulated a crisis management plan for countering cyber attacks and cyber terrorism
for implementation by government entities and critical sectors. Recently, the government
announced that measures are being taken to formulate a legal framework to address cyber
crimes, cyber attacks and security breaches of information technology infrastructure.
In relation to the electricity sector, the Indian Electricity Grid Code 2010 requires
all utilities to have in place a cyber-security framework to identify the critical cyber assets
and protect them so as to support reliable operation of the grid.
Technology transfer
Technology transfers into India are permitted in all sectors, including energy. All
payments made for technology transfers into India are subject to Indian exchange control
regulations. Export of technology transfers for specific sectors requires a licence under
India’s Foreign Trade Policy. In the context of the energy sector, export of technology in
relation to nuclear-related equipment and information technology requires obtaining a
licence by the Director General of Foreign Trade. Such licence is awarded on a case-bycase
basis.
V
ENERGY MARKETS
The National Electricity Policy 2005 envisions 85 per cent of power from new capacities
being contracted through long-term PPAs and the remaining 15 per cent power capacity
through market mechanisms. It is also expected that more merchant capacity will be
available in the next few years as the power sector begins to successfully attract equity
investors.
The power market is dominated by long-term contracted power. For thermal
power projects (coal and gas) and hydro projects, long-term power is procured through a
negotiated route or pursuant to a competitive bidding route. Power procurement in the
Indian market is increasingly being done through the competitive bidding route. The
Ministry of Power, by a notification in January 2011, has informed state governments
and distribution companies to procure power under the competitive bidding route
(except mandatory competitive bidding for hydro-power projects has been postponed)
using either of two prescribed modes: Case 1 or Case 2. Under Case 1 bidding, a
distribution licensee invites bids to procure a specified quantum of power (without
specifying the location, technology or fuel of the source of supply). In Case 2 bidding, the
distribution licensee invites bids for setting up projects on the basis of the lowest tariff,
and also specifies the fuel and location of the project (which is typically arranged by the
distribution licensees or state governments). For renewable energy projects, long-term
contracts are entered into with state utilities under specific state policies at preferential
tariff or through competitive bidding depending on the state or central policy.
Other than long-term PPAs, there has been a gradual build up in the volume
of short-term transactions. The CERC, through its Power Market Regulations 2010,
seeks to promote and regulate interstate electricity transactions in various contracts,
including bilateral contracts and those transacted through traders and exchanges. The
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