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Box 1.1: Policy Instruments
Market-based policy instruments
Feed-in-tariffs (FITs): FITs are minimum prices at which renewable energy power
(REP) must be purchased from the generating companies or private producers through
contracts (power purchase agreements) with transmission or distribution utilities or
with trading licensees.
Renewable Energy Certificate (REC) mechanism pooled with an Average Power Purchase
agreement (APP) is also available. Developers can opt for it if they are not interested in
the feed-in-tariff (or preferential tariff) scheme.
Policy and fiscal incentives: Incentives to attract private sector investment in REP
development include, among others tax holiday for REP generation; other financial
incentives like accelerated depreciation for wind energy and capital subsidies for
devices with high initial cost. In addition, administrative procedures are facilitated for
projects promoting REP.
Command and control policy instruments
Renewable purchase obligations (RPOs): The RPO makes it necessary for each
distribution licensee to include REP as a certain percentage in its resource portfolio.
Percentages and timetables of implementation vary across states, across renewable
energy sources and across distributors. Distribution licensees can satisfy this
obligation by either owning a renewable energy facility and producing their own power,
or purchasing it from other utilities producing it more cheaply.
Renewable Generation Obligations (RGOs): The RGO is an obligation on
a conventional power producer to produce a certain proportion of power through
renewable resources.(Currently under consideration)
Source: Adapted from Schmid (2012)
1.4.2 Non-renewables
Innovation and R&D
The technical challenges of the electricity sector in India include
low efficiencies of thermal power plants, continued reliance on coal
plants, and inadequate transmission and distribution networks. The
Ministry of Power (MoP), Government of India, has set up ambitious
plans for the power sector during the Twelfth Five Year Plan to ensure
sustainable development of the power sector. It has estimated a capacity
addition of about 88,537 MW during the Twelfth Five-Year Plan
(MoP 2015).TEDDY 2014–15 informs that reliance on coal will be as high
as 50 per cent in 2031 therefore, improving the efficiency of electricity
generation from coal is needed to exploit the extensive domestic coal
resources and reduce air pollution. Integrated gasification combined‐
192 Low Carbon Development in China and India
Market-based policy instruments
Feed-in-tariffs (FITs): FITs are minimum prices at which renewable energy power
(REP) must be purchased from the generating companies or private producers through
contracts (power purchase agreements) with transmission or distribution utilities or
with trading licensees.
Renewable Energy Certificate (REC) mechanism pooled with an Average Power Purchase
agreement (APP) is also available. Developers can opt for it if they are not interested in
the feed-in-tariff (or preferential tariff) scheme.
Policy and fiscal incentives: Incentives to attract private sector investment in REP
development include, among others tax holiday for REP generation; other financial
incentives like accelerated depreciation for wind energy and capital subsidies for
devices with high initial cost. In addition, administrative procedures are facilitated for
projects promoting REP.
Command and control policy instruments
Renewable purchase obligations (RPOs): The RPO makes it necessary for each
distribution licensee to include REP as a certain percentage in its resource portfolio.
Percentages and timetables of implementation vary across states, across renewable
energy sources and across distributors. Distribution licensees can satisfy this
obligation by either owning a renewable energy facility and producing their own power,
or purchasing it from other utilities producing it more cheaply.
Renewable Generation Obligations (RGOs): The RGO is an obligation on
a conventional power producer to produce a certain proportion of power through
renewable resources.(Currently under consideration)
Source: Adapted from Schmid (2012)
1.4.2 Non-renewables
Innovation and R&D
The technical challenges of the electricity sector in India include
low efficiencies of thermal power plants, continued reliance on coal
plants, and inadequate transmission and distribution networks. The
Ministry of Power (MoP), Government of India, has set up ambitious
plans for the power sector during the Twelfth Five Year Plan to ensure
sustainable development of the power sector. It has estimated a capacity
addition of about 88,537 MW during the Twelfth Five-Year Plan
(MoP 2015).TEDDY 2014–15 informs that reliance on coal will be as high
as 50 per cent in 2031 therefore, improving the efficiency of electricity
generation from coal is needed to exploit the extensive domestic coal
resources and reduce air pollution. Integrated gasification combined‐
192 Low Carbon Development in China and India
