India has implemented a new energy rule that allows its distributors to include imported hydropower energy within the renewable energy quota allocated to them.

In a notification published in the Gazette on Oct 20, India’s Ministry of Power established a revised quota for renewable energy that distribution companies must adhere to, starting from the fiscal year 2024/25. This new quota comprises separate shares for wind, hydropower, distributed renewable energy, and other renewable sources.

As per the new rule, Indian energy distributors are required to source 29.91 percent of their total energy demand from renewable sources in 2024/25. The share will increase to 43.33 percent by 2029/30. The specific quota for hydropower has been set at 0.38 percent for 2024/25, with an increment to 1.33 percent by 2029/30.

“The hydropower renewable energy component may also be met from hydropower projects located outside India, as approved by the Central Government on a case-to-case basis,” the notification states. Previously, Indian energy distributors were allowed to count hydropower produced domestically to meet their hydropower purchase obligations (HPOs). Distributors who fail to meet the new HPOs may face penalties imposed by the government.

Kul Man Ghising, executive director of Nepal Electricity Authority (NEA), welcomed the new rule and said that it would benefit Nepal and Bhutan as well as India. “We had long been requesting Indian officials to recognize imported energy within the HPO, and it has finally been implemented,” Ghising said. “This new rule, if effectively enforced, will create a promising market for our energy in India.”

NEA has been exporting surplus energy to India during the wet season. It has received permission to sell 522 MW in the Day-Ahead market of the Indian Energy Exchange (IEX). Furthermore, it has been selling 110 MW to NTPC Vidyut Vyapar Nigam Ltd after reaching a five-year agreement with the Indian energy distribution company. NVVN is distributing energy imported from Nepal in the Haryana state. NEA has also received permission to export 44 MW, out of the 522 MW permitted for sale in the competitive market, in the Real TIme market of IEX.

Meanwhile, NEA exported electricity worth Rs 11.8bn to India from the second week of June to mid-October. NEA began its energy exports on June 11 this year. It sold electricity worth Rs 4.02bn in the month of mid-Sept to mid-Oct alone. Likewise, it sold energy worth Rs 1.75bn in mid-June to mid-July, Rs 2.14bn in mid-July to mid-Aug and Rs 3.47bn in mid-Aug to mid-Sept. 

The average unit price for the energy sold stood at Rs 10.27. Kul Man Ghising, Executive Director of NEA, projects that NEA could earn Rs 16bn by selling energy to India during the current fiscal year. The Indian cabinet has already decided to import 10,000 MW electricity from Nepal in the next 10 years.