Bhavana Alexander and Gargi Chatterjee compare India’s state solar power policies and consider the burning issues facing domestic and foreign investors in the sector

India is suffering from an acute energy shortage. Rolling blackouts, which plague large parts of the country on a daily basis, affect all levels of Indian society, from the pantries of modest homes to major domestic and international businesses and even the country’s parliament. Yet as state and national policymakers grapple with the problem, their efforts to find a solution are frustrated by inconvenient realities such as declining coal reserves and severe water depletion. As a result, renewable energy technologies, including solar power, are taking on greater significance in energy planning.

Solar energy law

The Constitution of India, 1950, gives the central and state governments the power to legislate on electricity. However, in the event of a conflict, central law prevails. The Electricity Act, 2003, remains the significant piece of legislation regulating the generation, transmission and distribution of electricity in India. A host of policies, codes, rules and guidelines encompassing all areas of the energy sector along with the act form the comprehensive law on the sector.

The Ministry of New and Renewable Energy (MNRE) is responsible for all matters relating to new and renewable energy. Each state has its own renewable energy development agency. In an attempt to harness the potential of solar energy, the central government launched the Jawaharlal Nehru National Solar Mission (NSM) in 2010, setting a target to deploy a 20,000MW solar power grid by 2022 through private participation. Among other aims, the NSM seeks to reduce the cost of solar power generation to ₹4-5/Kwh by 2017-2020 to achieve grid parity by 2022.

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Bhavana Alexander is a senior associate and Gargi Chatterjee is an associate at Universal Legal in Chennai.