The Energy Regulation and Markets Review - Stikeman Elliott

India
and financial incentives. Capital subsidies are available under the Renewable Energy
Ministry’s central financial assistance scheme for biomass power and bagasse cogeneration
projects. Further, an accelerated depreciation of 80 per cent is also available on relevant
capital goods.
In the context of municipal waste-to-energy projects specifically, there is significant
scope in Indian cities for business; however, several challenges are being faced by ongoing
projects. There is opposition on account of environment and health hazards for the
communities living in proximity to these projects. As a protective measure, stringent
regulations allow use of only those technologies that are duly approved by the Central
Pollution Control Board. Another significant concern for waste to energy projects is the
general unwillingness of banks to advance more than 55 to 60 per cent of debt toward
the overall project cost requiring a higher proportion of equity infusion. Under existing
Renewable Energy Tariff Regulations, equity infusion in excess of 30 per cent is treated
as normative loan, which in turn limits the return on equity on only 30 per cent of the
equity.
ii Energy efficiency and conservation
To institutionalise energy conservation efforts, the Energy Conservation Act 2001 was
enacted and the Bureau of Energy Efficiency (‘the BEE’) was established under the
Ministry of Power in 2002. Periodic energy audits have been made compulsory for
power-intensive industries under the Energy Conservation Act. The BEE has initiated
numerous energy efficiency initiatives including the launch of Energy Conservation
Building Code for large new commercial buildings; an energy-labelling scheme for
appliances; the initiation of process for the development of energy consumption norms
for industrial sub-sectors; and an annual examination to certify energy auditors and
energy managers.
The National Electricity Policy affords high priority to energy conservation and
demand-side management through the BEE. In order to reduce the requirements for
capacity addition, the National Electricity Policy promotes the reduction of the difference
between electrical power demand during peak periods and off-peak periods with suitable
load management techniques that are conducive to load management objectives.
To further enhance efficiency in thermal power projects, CERC tariff regulations
provide for operational norms such as reduction in heat rate for existing bigger units,
linking of allowable heat rate to design heat rate, tightening of working capital norms,
and norms on reduction in secondary fuel oil consumption.
iii Technological developments
The National Electricity Policy envisages special efforts being made for research,
development demonstration and commercialisation of non-conventional energy
systems. Further, it envisages the gradual introduction of efficient technologies (such as
super-critical technology and integrated gasification combustion cycle) for generation
of electricity. It also requires cost-effective technologies to be developed for high-voltage
power flows over long distances with minimum possible transmission losses.
In 2010, the Ministry of Power established the Smart Grid Task Force to
coordinate smartgrid activities in India and it also created the India Smart Grid Forum
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