Interview with Tushar Kant Tiwari: Aligning India’s regulatory path with clean energy investment

Tushar Kant Tiwari is General Manager, Corporate Strategy and Business Development at Wind World Group of Companies. With over 15 years of experience across PwC, Indian Oil Corporation, and the Petroleum Conservation Research Association, he has worked on strategy and policy issues across oil, gas, and renewable energy. In this conversation with Power Peak Digest, he shares insights on the evolving regulatory environment, harmonisation challenges between central and state commissions, and the design priorities for flexibility and ancillary markets in India’s energy transition.

Transmission and renewable project developers increasingly face disputes over “change in law” versus “foreseeable risk.” From a policy standpoint, do you think India needs a unified principle or taxonomy for risk allocation across CERC and state commissions?

India’s renewable energy sector faces frequent disputes over “change in law” vs. “foreseeable risk,” impacting revenue and investment certainty due to varying policies at the central (CERC) and state commission levels. Given issues like varying RE policies of central and state, REC mechanism implementation, inconsistent DSM charges across states, shifting regulatory frameworks for power sales, curtailment by DISCOMs due to transmission constraints, and policy volatility, a unified risk allocation principle or taxonomy across CERC and state commissions is critically needed from a policy standpoint.

Such a unified framework would:

• Provide transparent and consistent risk-sharing rules to RE developers and off-takers, reducing litigation and financial uncertainty.
• Harmonize treatment of change in law events, RE policies, tariff regulations, DSM charges, and curtailment compensations to stabilize revenue streams.
• Account for evolving carbon attribute policies and REC market dynamics, facilitating reliable valuation of such credits.
• Encourage investment by delineating foreseeable risks clearly separate from compensable regulatory changes, promoting trust and smoother project financing.

Examples underscore disparities: Diverse RE policies and regulations, REC policy changes affect RE revenues differently across states; varied DSM mechanisms penalize intermittent RE generators unevenly; curtailments occur without standardized compensation; and transmission delays exacerbate risks unequally. Without a common taxonomy, these risks remain fragmented, hampering effective market growth and India’s RE targets.

I would suggest that a unified national-level principle for risk allocation endorsed by CERC and concurrently by SERCs would institutionalise predictability, equitable treatment, and balanced risk sharing, catalysing investment and addressing the nested complexities hindering India’s renewable transition effectively. This principle should codify clear definitions of changes in law & policies, foreseeability of risks, curtailment compensation, DSM charge treatment, and REC regulatory impacts for uniform application across jurisdictions.

State commissions are under pressure to adopt uniform tariff and deviation settlement mechanisms in line with national rules. What practical and institutional barriers do you see in harmonising state regulations with central directives?

I categorise the main barriers for harmonising state regulations with central (CERC) directives in tariff-setting and deviation settlement for renewable energy into two categories, i.e. first one is practical barriers and the other one is institutional barriers. Barriers are as follows:

Practical barriers

• Grid diversity and infrastructure gaps: States have different levels of renewable penetration, technical grid constraints, and progress in transmission upgrades, making uniform mechanisms difficult to implement without disrupting local grid operations or increasing costs.
• Financial health of DISCOMs: Many state DISCOMs resist uniform tariffs or stricter deviation penalties due to their weak finances and political mandate to keep power affordable, leading to reluctance in adopting measures that may raise procurement or DSM costs.
• Local market realities: States have varying renewable resource profiles, evacuation infrastructure, and demand-supply patterns, necessitating region-specific regulatory flexibility rather than one-size-fits-all central solutions.

Institutional barriers

• Jurisdictional autonomy: Electricity is a concurrent subject in India’s constitution, granting states significant regulatory autonomy. State commissions often prioritize local interests over central harmonization, especially in politically sensitive tariff matters.
• Regulatory capacity and will: Smaller SERCs may lack the technical expertise or resources to interpret and integrate new central regulations swiftly, leading to delays or inconsistent rule adoption.
• Political Interference: State governments sometimes intervene in regulatory decisions for populist reasons, complicating or stalling the adoption of national frameworks on tariffs and deviation settlement.

India’s power sector reform thus requires both carrots (capacity building, financial incentives) and sticks (mandated compliance, performance-linked incentives) to genuinely harmonize state regulations with central norms.

There is increasing tension between renewable procurement mandates and grid reliability requirements. From a regulatory design perspective, how can frameworks evolve to price flexibility and ancillary services without undermining renewable targets?

One of the major hurdles that the National Load Dispatch Centre (NLDC) and State Load Dispatch Centres (SLDCs) face today is ensuring reliability amid the growing share of renewable energy in the transmission system. To balance renewable procurement mandates with grid stability, India’s regulatory frameworks must evolve to explicitly price flexibility and ancillary services—leveraging grid-scale Battery Energy Storage Systems (BESS) as key enablers.

While regulatory bodies in India have initiated steps in this direction, significant progress is still required to reach the maturity levels of countries that have effectively integrated ancillary services with renewables to manage reliability concerns.

I would suggest some frameworks for consideration:

• Introducing Resource Adequacy (RA) and long-term integrated resource planning (IRP) frameworks: RA and integrated IRP frameworks signal the need for adequate flexible capacity alongside renewables without compromising renewable targets. This ensures Discoms plan and procure a balanced generation mix for peak demand and grid stability while adhering to RE capacity goals.
• Reforming the electricity market: Reforming electricity markets to co-optimize energy and ancillary services procurement through flexible resource participation like battery storage and fast-ramping thermal plants. Co-optimized markets with proper pricing incentives that encourage investments in flexible resources essential for accommodating higher renewables.
• Introducing market-based ancillary services: Transition from administered charges to market-based mechanisms for procuring ancillary services. This will allow dynamic pricing that reflects real-time grid requirements and incentivizes flexible resources.
• Recognize BESS as a market participant: Officially include BESS in ancillary service markets (frequency control, voltage drop, spinning reserves, reactive power) under CERC and respective state regulations, enabling them to participate competitively alongside conventional generators.
• Multiple service provision by BESS: Enable BESS to provide stacked services—such as frequency regulation, ramping support, peak shaving, and backup—thereby maximizing both revenue potential and grid benefits.
• Transparent valuation of flexibility: Establish transparent and standardized methodologies to value flexibility services. This will ensure fair compensation for BESS developers, commensurate with their role in enhancing grid stability and renewable integration.
• Regulatory coordination: Promote close coordination between CERC and SERCs to harmonize ancillary service rules, market design, and tariff structures across states. This alignment will be critical for nationwide grid stability and uniform progress toward renewable energy targets.

Such a comprehensive framework would enhance investor confidence by aligning price signals with reliability needs. By valuing and rewarding flexibility, India can ensure that its renewable energy ambitions are not constrained by intermittency challenges. BESS, with its rapid response capability and multi-service functionality, stands as a cornerstone technology to deliver both grid resilience and economic efficiency, advancing India’s clean energy transition sustainably.