In 2011, the Alternative and Renewable Energy Policy (2006) was updated by the Medium Term Policy. The Alternative and Renewable Energy (ARE) Policy 2011 aims to: harmonize ARE-related efforts of various Government bodies; increase ARE deployment; introduce incentives to attract investment; optimize the impact of ARE deployment in underdeveloped areas through income generation and other socio-economic benefits; increase ARE relevant institutional and technical capacities; promote R&D and develop local ARE manufacturing base.
The ARE Policy 2011 builds on the Short Term policy by: i. Resolving policy conflicts and addressing stakeholder concerns. ii. Developing the concept that ARE projects actually cost the nation less and thus deserve and require better rate of return than fossil fuels. iii. Developing the policy of non-electric RE and a policy for Biofuels. iv. Expanding incentives for ARE such as: the Alternative Energy Development Fund, partial resource risk coverage, tariffs on the basis of a premium rate of return for developers, mandatory grid connection, mandatory purchase requirements, small business programmes for ARE (<10 MW), Asian Development Bank (ADB) loan guarantee facility, credit market facility and 100% carbon credits to Independent Power Producers.