Abstract
This article explains why there has been a significant move in favor of India realizing its ambition of having Net Zero carbon emission by 2070 with the help of the Draft Electricity (Amendment) Bill, 2025. This law provides the necessary legislation on the green transition as it has provided a more structured regime of energy storage and aims at moving towards the elimination of the fossil fuel needs to non-fossil fuel needs but not isolated to renewable energy. It looks into how all these reforms that include harsh sanctions imposed on new governance councils seek to establish a solid and healthy power sector that can support Viksit Bharat.
The day the Stockholm Declaration of 1972 was adopted, the world’s focus shifted towards environmental governance and catalysed a global awakening to the “Only One Earth” philosophy. As the world surged ahead, how could India remain behind? Acting as a champion of environmental protection, India became the first nation to grant constitutional status to ecological protection, inserting Articles 48A and 51A(g) into the Constitution of India through the 42nd Constitutional Amendment Act, and gave it a green blend.
This global realisation was further strengthened and given concrete direction by the Rio Declaration of 1992, followed by COP21 (Paris Agreement), which deepened the commitment to sustainable development, and India emerged as a leader in climate diplomacy. The position was further solidified at COP26 with the “Panchamrit” pledge, headlined by a definitive Net Zero target by 2070[i]. To keep this in mind, India amended its Nationally Determined Contribution (NDC) in 2022 and established a goal of achieving half of its energy capacity from non-fossil fuels by 2030[ii].
The Draft Electricity (Amendment) Bill, 2025, proposes to amend the Electricity Act 2003, representing the culmination of this futuristic intent. The Bill explains the amendment as “India’s journey toward Viksit Bharat @ 2047 calls for a power sector that is financially resilient, environmentally sustainable, and capable of supporting globally competitive industries. The proposed amendments to the Electricity Act, 2003 seek to strengthen this foundation by ensuring affordable, reliable, and clean electricity for all while enabling a seamless and equitable energy transition”.[iii] In this article, we will delve into the changes brought through the Bill to transform the framework for “non-fossil fuel” generation, and the legal “teeth” to ensure that India’s commitment towards sustainability is more than just a moral goal.
I. Proposed Bill: Key Changes
1. Energy Storage System
The storage of renewable energies, such as solar and wind, is necessary because they are not available throughout the day, and it is essential to maintain a balance between electricity demand and supply to avoid grid failure. The earlier Act of 2003 demarcates the electricity sector into generation, distribution, and transmission only. It does not address energy storage, creating a regulatory gap in which storage neither fits within the definition of generation nor that of transmission.
To address this, the Bill proposes two amendments: firstly, the insertion of a new subsection (26a) to Section 2 of the Act of 2003, which defines an Energy Storage System as “a system to store electrical energy in any form for a period of time and delivering it as electrical energy when required.[iv]” Secondly, the inclusion of the term “Energy Storage System” under the definition of “Power system” through subclause (k) to Section 2(50)[v].
Thus, assignment of a distinct identity to the Storage system not only enhances the grid stability by reducing peak deficits through peak shifting, capacity to store green energy, thereby solving the technical problem of solar and wind energy intermittency, but also allows for a new class of licenses and enables storage utilities to enhance their operations by taking advantage of variations in electricity prices. This will result in lower electricity expenses, reduced carbon emissions, and a significant contribution to achieving energy transition objectives.
2. The Consumption Obligation
Under section 86(1)(e) of the 2003 Act[vi], the state commission has given the power to promote cogeneration and the generation of electricity from renewable sources. Moreover, as mentioned in Section 14(x) of the Energy Conservation Act 2001, the central government is empowered to mandate designated consumers to source a minimum portion of their energy from non-fossil fuels. As a result, the Central Government can now implement requirements for non-fossil energy use under the Energy Conservation Act of 2001, even though comparable provisions do not exist in the Electricity Act of 2003. The Bill has addressed this issue.
The 2025 amendment bill proposes to change the term “renewable sources” to “non-fossil” and to add a mandate that the percentage of electricity purchased specified by State Electricity Regulatory Commissions (SERCs) shall not be less than the percentage prescribed by the Central Government under 86(1)(e) of the Electricity Act.[vii]
Through this, the 2025 Bill ensures that a state commission cannot set a lower percentage than the “consumption” percentage fixed by the central Government under section 86(1)(e) of the 2003 Act, thereby making the Consumption Obligation the “ceiling” that everyone must reach. Previously, the Renewable Purchase Obligation was a standalone mandate under Section 86(1)(e) of the Electricity Act 2003; however, the uniform national mandate of consumption obligation will ensure that “Purchase” is no longer a mere paper-compliance exercise. This alignment will avoid legal inconsistencies on the one hand, while on the other, it will guide all entities toward reliable, affordable, and clean energy.
3. Giving “Teeth” to the Law
A mandate without enforceability is nothing more than a statement of intent. Keeping this in mind, the Bill has wisely introduced the penalty regime to ensure the meaningful implementation.
The Bill proposes to insert a new subclause (2) into section 142 of the Act of 2003. There will now be a fixed penalty at a rate of not less than 35 paisa and not more than 45 paisa per kilowatt-hour for failing to meet the consumption obligation target under Section 86(e), upon the satisfaction of the Appropriate Commission.[viii] Here, it is essential to note that the penalty proposed under Section 142(2) exceeds the prevailing rate for Renewable Energy Certificates (RECs), which range from 30 to 40 paisa per kilowatt-hour. The higher threshold is intended to ensure that obligated entities remain encouraged to meet their purchase obligation by purchasing RECs rather than paying a lower penalty.[ix]
4. The Electricity Council
The Bill proposes the creation of an Electricity Council, headed by the Union Power Minister, with the Secretary of the Ministry of Power as convener, and representatives from the states. A new subclause (1A) will be added to the existing Section 166 of the 2003 Act, entrusting the body with an advisory and facilitatory role in the reform and implementation of such reform.[x]. This will ensure that the conventional centre-state tug-of-war does not derail India’s commitment to 500 GW of non-fossil capacity by 2030.
5. Captive generation
Section 9 of the current Act talks about captive generation. The Bill proposes to insert a proviso to section 9 as “Provided also that the eligibility criteria for captive generating plant and its users shall be as may be prescribed by the Appropriate Government”[xi]. Along with this, inserting a sub clause (aa) to Section 176 (2), which reads as “the eligibility criteria for captive generating plant and its users under sub-section (1) of Section 9.[xii]” (Power given to central government) and sub clause (aa) to Section 180(2), which reads as “the eligibility criteria for captive generating plant and its users under subsection (1) of Section 9.[xiii]” (Power given to state government).
Thus, the Draft Bill permits both the central and state authorities to establish criteria for eligibility for captive generation. This will ensure clarity and regulatory uniformity, establishing a clear and consistent structure for industries to invest in self-generation and pursue cleaner, more efficient energy alternatives.[xiv]
6. Lighting the existing provisions.
With the proposed changes, the Bill not only directly addresses crucial issues but also ensures that existing provisions operate in full rigour. Notably, Section 2(47) of the 2003 Act provides for open access, granting consumers the right to choose their electricity supplier. The Green Energy Open Access Rules 2022[xv] Lower the limit for open-access transactions from 1MW to 100 kW, promote generation, purchase, and consumption, and ensure that small consumers can purchase green electricity through open access. Section 2(76) of the 2003 Act provides for wheeling, which means using the transmission licensee’s cables by another person for the supply of electricity, subject to payment of charges. It promotes a person who generates electricity using renewable sources through a Captive Generating plant, but does not have transmission lines or faces financial constraints, to supply electricity by paying wheeling charges.
II. Conclusion
India has consistently been a frontrunner in the environmental battlefield, and the Draft Electricity (Amendment) Bill, 2025, marks a significant step forward in this regard. The Bill aims to establish an enforceable legal structure, not merely superfluous commitments, thereby bridging the gap between international commitments and domestic reality. The Bill, by aligning and redesigning the authorities’ powers, has ensured effective implementation and rigour to achieve the NET ZERO 2070 vision.
The most notable feature of the Bill, for the first time, pivoted to “Non-Fossil Sources” from “Renewable Energy”. This had widened the scope of the Act by including nuclear and hydro projects within its purview, particularly regarding the mandatory consumption obligation. Additionally, incorporating the Energy Storage Systems definition, granting powers to the appropriate Government, binding entities to purchase and consume a certain percentage of electricity produced from non-fossil sources, providing for cost-effective tariffs, eliminating cross-subsidies, and regulating wheeling charges are of great importance.
However, the Bill fails to address some of the potential problems that might arise. For instance, possible issues that could emerge after customers migrate due to network sharing include how the switching process will be handled, what consequences will occur during the transition, and how Aggregate Technical and Commercial (AT&C) losses will be accounted for within the shared distribution system. These should be addressed in line with the ambitious goal of 500 GW of non-fossil capacity by 2030 for a “Sustainable, Viksit, and Green Bharat.”
[i] World Economic Forum, Mission 2070: A Green New Deal for A Net Zero India (2021).
[ii] Government of India, India’s Updated First Nationally Determined Contribution Under Paris Agreement (2021-2030) (2022).
[iii] Ministry of Power, Explanatory Note on the Draft Electricity (Amendment) Bill 2025 (No 42/6/2011-R&R (Vol-IX), 2025)
[iv] Electricity (Amendment) Bill 2025, cl 3(ii). https://powermin.gov.in/sites/default/files/webform/notices/Seeking_comments_on_Draft_Electricity_Amendment_Bill_2025.pdf
[v] ibid cl 3(v).
[vi] Electricity Act 2003, s 86(1)(e).
[vii] Electricity (Amendment) Bill 2025, cl 17. https://powermin.gov.in/sites/default/files/webform/notices/Seeking_comments_on_Draft_Electricity_Amendment_Bill_2025.pdf
[viii] ibid cl 23.
[ix] Ministry of Power, Justification to the Draft Electricity (Amendment) Bill 2025 (No 42/6/2011-R&R (Vol-IX), 2025).
[x] Electricity (Amendment) Bill 2025, cl 25.
[xi] ibid cl 4.
[xii] ibid cl 26.
[xiii] ibid cl 28.
[xiv] Ministry of Power, Justification to the Draft Electricity (Amendment) Bill 2025 (No 42/6/2011-R&R (Vol-IX), 2025).
[xv] Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules 2022, GSR 418(E), r 2(b).
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