The Union Ministry of Power announced new rules to maintain the economic feasibility of the power sector, ease the financial distress that burden various stakeholders and ensure punctual recovery of costs incurred on electricity generation on Saturday, October 23.
The rules announced by the power ministry will regulate the sustainability of the electricity sector and promote the transition to renewable energy to meet India’s target to curb climate change and the concerns arising from it.
A statement issued by the ministry assured that the rules notified by the union ministry under the Electricity Act 2003 are in the interest of the electricity consumers and investors and will put to rest the concern of stakeholders in the sector regarding timely recovery of costs due to change in law and curtailment of renewable energy, among others.
The new regulations introduced by the ministry under the Electricity Act 2003 include the Electricity (Timely recovery of costs due to Change in Law) Rules, 2021 and Electricity (Promotion of generation from renewable sources of energy by addressing Must Run and other matters) Rules, 2021.
The ministry stated that timely recovery of costs due to change in the law is an important factor as the investment in the power sector depends majorly on punctual returns.
The delay in cost recovery affects the viability of the sector and puts financial stress on the developers, said the ministry, adding that the rules will now assist in fostering “investment-friendly” conditions in the country. As part of the rules, a formula has been revealed to calculate adjustments in monthly tariffs due to the impact of a change in the law.
Meanwhile, the transition to clean energy is being given a priority through the new regulations. The Indian government has disclosed its target to set up 175 GW of renewable energy capacity by 2022 and 450 GW by 2030 as it endeavours to battle the ongoing climate crisis.
The new regulations are expected to help India achieve its set target of renewable energy generation, the ministry stated. The transition to green energy will ensure healthier environmental conditions for future generations.