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Amendments have been made to two laws governing the electricity industry in India to allow private companies to distribute power under license, or to become power generators. The amendments -- to the Indian Electricity Act 1910 and the Electricity Supply Act 1948 -- are intended to encourage private sector participation in an increasingly liberalised Indian electricity industry. The private sector may now also set up renewables projects of any size. Head of the Ministry of Non Conventional Energy Sources, Ajit Gupta, says: "As well as being able to generate power from decentralised sources, they should be allowed to freely distribute it, either by using the existing network or by expanding the network on their own, for sale either to a state electricity board (SEB), third party bulk consumers or to a local community." A further legislative proposal suggests making it obligatory for SEBs to buy power from renewables generators, using rates based on the costs avoided by the utility if it had to buy the power elsewhere. Such rates should also reflect the capital intensive, low operating costs of renewables projects. Wheeling and allowing generators to "bank" power with a utility for use at a later date must also be made mandatory, states the proposal.

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