Mint Explainer | How new land compensation rules could speed up India's clean energy transition

Summary

The revised guidelines set out land valuation methods and compensation rates for transmission lines and towers, seeking to ease right-of-way disputes that threaten renewable energy expansion.

Delays in securing land and right of way for transmission lines are threatening India's renewable energy expansion. The Union ministry of power on 6 October issued revised guidelines for compensating landowners, setting out a framework to determine market value where circle rates fall short.

States that have yet to specify how land value should be assessed can adopt the guidelines in full or issue modified policies.

Mint examines the key provisions and their implications for transmission expansion, energy security and India's clean energy ambitions.

What are the key features of the revised guidelines?

The guidelines apply to inter-state transmission projects where compensation disputes arise because circle rates are lower than prevailing market rates. In such cases, a Market Rate Committee (MRC) will determine the land's market value.

The committee will be chaired by the district magistrate, district collector or deputy commissioner and include a district-level registration department officer, the sub-divisional magistrate concerned and an administrative representative of the local civic body.

The MRC will base its assessment on valuations by three valuers selected from the Insolvency and Bankruptcy Board of India's list. Compensation will be paid as a one-time, upfront amount for the stretch covered by the detailed on-site work plan submitted by the transmission service provider (TSP) to the district authority.

How will land value be assessed, and how much compensation will landowners receive?

The three valuers must submit their individual assessments to the district administration within 21 days. Where necessary, the highest and lowest valuations will be normalized to within 20% of the median. The final market rate will be the average of the three valuations after normalization.

Compensation for the tower-base area will be 200% of market value. This area comprises the land enclosed by the tower's four legs at ground level, plus a one-metre extension on each side.

For the right-of-way (RoW) corridor, compensation will be 30% of market value in rural areas, 45% in municipalities, nagar panchayats and other notified urban planning areas, and 60% in municipal corporations and notified metropolitan areas.

The guidelines also allow alternative compensation where landowners have been offered or accepted compensation under a state or Union territory's Transfer of Development Rights (TDR) policy.

How can landowners challenge the compensation decision?

Any party aggrieved by an MRC decision may appeal to an authority notified by the state government within 30 days of the rate being notified. The appeal will be admitted only if the aggrieved party agrees to the commencement of work at the site while the compensation claim is adjudicated.

The appellate authority's decision will be final and binding, with no further appeal permitted under the guidelines.

Why do the guidelines matter?

Right-of-way clearances and land acquisition have been key obstacles to expanding transmission capacity. The resulting constraints have contributed to the curtailment of solar generation, raising concerns about India's ability to integrate renewable energy and meet its target of installing 500 GW of non-fossil-fuel-based capacity by 2030.

According to Ember, a Norway-based think tank focused on the energy transition, transmission constraints led to the loss of 300 GWh of clean electricity in India in the first quarter of 2026 (January-March), particularly at grid pooling stations in the northern and western regions.

India lost 34 GWh of clean generation on 30 March alone, equivalent to the daily electricity use of about five million urban middle-class households, Ember said in a report in May.

The revised compensation framework seeks to address one of the obstacles to building transmission infrastructure.

During April-August of fiscal year 2027 (FY27), India installed 4,301 circuit kilometres (ckm) of transmission lines, against a target of 7,403 ckm, according to Central Electricity Authority data. Separately, a report released by the Institute for Energy Economics and Financial Analysis (IEEFA) in October 2025 estimated that around 50 GW of renewable energy capacity remained stranded across India because of transmission bottlenecks.

What other measures are being taken to expand transmission capacity?

Last month, the Union cabinet approved the third phase of the Green Energy Corridor (GEC-III) scheme to strengthen intra-state transmission systems and enable the evacuation of up to 135 GW of renewable energy across states and Union territories.

The scheme also provides for 50 GWh of battery energy storage systems at renewable energy developers' or generators' facilities, or other locations important for grid flexibility. The storage capacity is intended to address intermittency, congestion, peak-hour curtailment and demand during non-solar hours.

The scheme will run until FY33, with a total project outlay of ₹1.86 trillion, including central financial support of ₹54,082 crore.