Development of Renewable Energy in India I. Introduction Given concerns related to chronic shortage of elec- tricity (the peak deficit between April–December in 2010 was 10 % 1 ), energy security (total extract- able coal reserves in India will be exhausted within 45 years 2 ) and the environment (electricity generation accounted for 38 % of India’s green- house gas (GHG) emissions in 2007 3 ), India has set out on the path of harnessing renewable energy (RE) sources. However, the development and deployment of RE is impeded by the critical prob- lem of market distortions, addressing which requires a consistent long-term policy focus and regulatory framework. RE technologies are being promoted through various policies and program- mes by the Government in India (GoI). In addition to these policies and programmes, electricity regu- lators have been given the responsibility, enshrin- ed in legislation, for the development and promo- tion of RE. The regulatory framework for the promotion and development of RE has been in place in India for the past seven years, pursuant to the enactment of the Electricity Act 2003 (Act). It is useful to point out here that as electricity appears in the Concurrent List of the Constitution of India, the development of the sector is the responsibility of both the federal and provincial or state-level governments. Consequently, there is an electricity regulatory agency at the federal level and in every state. With this backdrop, the following paper evalu- ates: the effectiveness of electricity regulatory agencies in India in the development and deploy- ment of RE; how to overcome barriers to invest- ments in RE; and, most importantly, how to create a market for RE-based electricity generation in India. The resources categorized as RE in India are wind, small hydro power (SHP) with installed capacity of up to 25 MW, biomass and bagasse- based power, waste to power, and solar. As a start- ing point the paper presents the institutional structure of electricity sector in India of which RE is a part. The current and potential development and deployment of RE is an outcome of these RELP 2|2011 107 * IDFC, Naman Chambers, C-32, G Block, Bandra-Kurla Complex, Bandra (E), Mumbai 400 051 (India); E-mail: <manishagulati@gmail.com>. 1 Central Electricity Authority, “Power Scenario at a Glance”, January 2011, available on the Internet at <http://www.cea.nic.in/ planning/POWER%20SCENARIO%20AT%20A%20GLANCE/PSG. pdf> (last accessed on 10 February 2011), at p. 7. 2 Planning Commission (2006), Integrated Energy Policy Report of the Expert Committee, Government of India, Planning Commis- sion, New Delhi. 3 Indian Network for Climate Change Assessment, Ministry of Environment and Forests (2010), India: Greenhouse Gas Emissions 2007, Government of India, Ministry of Environment and Forests, New Delhi. Development of Renewable Energy in India: Role and Effectiveness of Electricity Regulators Manisha Gulati and Piyush Tiwari* India has been making efforts to harness renewable energy to meet concerns related to energy security, energy access and climate change. However, these national level objectives can only be met if the regulatory framework for RE and the institutional environment in the electricity sector are conducive. Electricity regulators, who are responsible for catalyzing the development and deployment of RE, have taken several measures, but they have not yet been effective in achieving the desired outcome. They have also not been successful in addressing some of the larger issues pertaining to the electricity sector as a whole that have an important bearing on the development of RE. The fact that regulators operate in an institutional setting that provides few incentives to effectively develop RE has further weakened their efforts.