A key initiative is the Development of Pipeline Infrastructure (DPI) scheme, which aims to overcome financial barriers in transporting compressed biogas (CBG) by offering a 50% subsidy on pipeline infrastructure.
Energy transition has been one of the key focus areas of the Narendra Modi 3.0 regime. As the world economies are striving to meet their net-zero targets, India has also laid a detailed road map of capacity additions and investments required to achieve its goal to be net zero emitter by 2070. The focus of the government’s policies is on building investor confidence, encouraging more investments in the green energy segment, and expediting growth of renewable energy (RE) capacity.
To be sure, compared to other segments of the infrastructure sector, green energy is witnessing active private-sector participation and keen investor interest. Assorted government initiatives, including viability gap funding for battery storage units seem to cataylse investment flows into the sector.
In its first 100 days, the government approved hydroelectric projects in the northeast with an investment of Rs 4,100 crore and additional projects worth Rs 12,400 crore under the Viability Gap Funding Scheme. Offshore wind energy projects valued at Rs 7,450 crore were also sanctioned.
The National Green Hydrogen Mission also received more funding to increase domestic electrolyzer capacity to 1.5 GW per year. Additionally, the PM Solar Rooftop Scheme saw significant progress, with 1.3 million families registered and 3.75 lakh installations completed.
“These initiatives are anticipated to have a significant impact on the renewable energy sector by attracting investment, generating employment, and promoting India’s transition to sustainable energy,” said Ashish Agarwal, Head of Solar and Storage Business at BluPine Energy. “With increasing its own production of electrolyzers, India will be less dependent on imports and become self-sufficient in green hydrogen.”
The industry believes that renewable energy projects have become more feasible with financial support from the VGF program, which draws private investment.
The government has also come out with draft regulations to include solar cells under the Approved List of Models and Manufacturers. “Including solar cells in the ALMM will help boost local manufacturing. This will lead to better-quality solar products and make Indian manufacturers more competitive globally,” said Amit Paithankar, CEO, Waaree Energies. By speeding up approvals and solving grid connection issues, the government is also helping to reduce delays in renewable energy projects, he noted.
Alongside this, the government has prioritized grid modernization and streamlined the approval process for projects, helping accelerate implementation. Amit Jain, CEO & Country Manager ENGIE, India said that these steps are expected to have a significant impact on the industry by promoting local manufacturing, creating jobs, and lowering the cost of production.
These steps directly contribute to achieving the target of 280 GW of solar capacity by 2030, as per Prashant Mathur, CEO, Saatvik Solar. While focusing on RE capacity addition, the government has also been actively working in the transmission and distribution sector so as to integrate the developed RE into the grid while resolving intermittency issues.
“In the first 100 days, the government has notified the “Guidelines for payment of compensation in regard to Right of Way (RoW) for transmission lines” which was a much-needed boost to the transmission sector and such a step is expected to de-risk the transmission projects,” said Pratik Agarwal, MD, Sterlite Power. However, he highlighted that it is essential that these guidelines are adopted by all the states to avoid any ambiguities while deciding the compensation.
Landowners remain key stakeholders for a transmission project as the project is dependent on their co-operation for obtaining Right of Way timely. “We believe that these guidelines shall address long standing concerns of adequacy of compensation as landowners are to be compensated @ 200% of the market value for the land below the tower areas and @ 30% of the market value for the land below the corridor.”
However, the short-term impact of these guidelines also requires to be factored since these guidelines will affect the viability of under construction transmission projects. In this regard, the government should declare the impact on account of notification of these guidelines as deemed Change in Law event to alleviate any concerns on account of regulatory uncertainty, Agarwal said.
On their part to encourage green energy, the petroleum ministry too has come out with measures promoting compressed biogas and green hydrogen while focusing on increasing the output of domestic crude oil and natural gas in order to meet the country’s growing energy demands.
A key initiative is the Development of Pipeline Infrastructure (DPI) scheme, which aims to overcome financial barriers in transporting compressed biogas (CBG) by offering a 50% subsidy on pipeline infrastructure.
“The initiative will enable establishment of a robust supply network across CBG-producing areas, allowing for a maximum pipeline length of 75 km, constructed through steel. The DPI scheme addresses a critical bottleneck in the CBG sector by offering financial support for pipeline infrastructure,” said Mahesh Girdhar, MD & CEO, EverEnviro Resource Management.
The main policy measures of note from the petroleum ministry consist of the Oilfields (Regulation and Development) Amendment Bill, 2024, introduced in the Rajya Sabha, the passing and implementation of which continues to be awaited, and the move to establish a Joint Working Group, consisting of stakeholders from private companies, PSUs and govt officials, to deliberate on reforms in the E&P sector.
“The Oilfield Amendment Bill, if implemented, will amend the Oilfield (Regulation and Development) Act of 1948, will be a much-needed policy measure to improve ease of doing business in the Indian upstream petroleum sector,” said Kapil Garg, Chairman & Managing Director of Oilmax Energy Private Ltd.
Currently, a lot of different clearances are sought across various ministries like the Ministry of Mines due to statutory ambiguity over classification of petroleum blocks, creating regulatory hurdles over clearances, which has been subduing investments into production, particularly greenfield blocks.
Garg said the amendments would streamline most clearances to be under the Petroleum Ministry, including unconventional sources such as coalbed methane. It also decriminalizes certain breaches, and replaces them with financial penalties instead.
According to Sanjay Sah, partner, Deloitte India, the amendments aim to enhance dispute resolution efficiency by decriminalizing certain provisions of the Act. “Furthermore, the bill supports energy transition by promoting the development of comprehensive projects that harness wind and solar energy alongside mineral oil extraction at oilfields.”
The Petroleum and Natural Gas Regulatory Board (PNGRB) also notified new tariff regulations for petroleum product pipelines in India effective from August 1, 2024. The Board delinked pipeline tariffs from railway tariffs, establishing independent criteria for determining these rates.
“The new tariff structure is expected to enhance the financial stability and attractiveness of pipeline infrastructure, encouraging further growth and investment in this sector. By offering a more economical alternative to road transportation, these revised tariffs will benefit consumers and contribute to a greener, safer, and more efficient future for petroleum transportation in India,” Sah said.