At the 15th Annual Solar Power in India conference organised by Renewable Watch, a developer in the commercial and industrial (C&I) solar segment with experience in both captive and open access projects remarked that their portfolio may most likely double if the government avoids placing too many regulations in the segment. This has been a persistent concern in the segment. In fact, the stakeholders had lost hope that a positive change would happen. But on June 6, 2022, the Ministry of Power (MoP) resolved the woes of developers by notifying the Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules, 2022. These rules are notified for promoting generation, purchase and consumption of green energy including energy from waste-to-energy plants.
A key highlight of the rules has been the reduction of capacity limit for taking the open access route. In addition, the capacity limit has been removed for captive consumers. This seems to be the primary policy change that has been received well by the industry. Furthermore, the notified rules enable a simplified procedure to take the open access route for procuring renewable energy. The industry expects that the rules will enable faster approval of green open access, uniform banking, voluntary purchase of renewable power by C&I consumers, etc.
Key features of the rules
- Green open access is allowed to any consumer and the limit of an open access transaction has been reduced from 1 MW to 100 kW for green energy to enable small consumers to purchase renewable power through open access.
- Certainty of open access charges to be levied on green energy open access consumers. These include transmission charges, wheeling charges, cross-subsidy surcharge and standby charges. There is a cap on the increase of cross-subsidy surcharge as well as the removal of additional surcharge, which will not only incentivise consumers to go green but also address the issues that have hindered the growth of open access in India.
- Transparency in the approval process of the open access application has been provided for. Under these rules, approval is to be granted within 15 days or else it will be deemed to have been approved subject to the fulfilment of technical requirements. Also, approvals will be through a national portal. The rules are expected to streamline the overall process for granting open access by ensuring timely approval and improving predictability of cash flows for renewable power producers. It will also bring uniformity in the application procedure.
- The tariff for green energy will be determined separately by the appropriate commission. The tariff will comprise the average pooled power purchase cost of renewable energy, cross-subsidy charges if any, and service charges covering the prudent cost of the distribution licensee for providing the green energy to consumers.
- Banking of surplus green energy with the distribution licensee has been mandated.
- There will be a uniform renewable purchase obligation (RPO) applicable on all obligated entities in the area of the distribution licensee. The rules also include green hydrogen/green ammonia for fulfilment of RPOs.
- Consumers will be given green certificates if they consume green power.
- Cross-subsidy surcharge and additional surcharge will not be applicable if green energy is utilised for the production of green hydrogen and green ammonia.
The industry response has been positive to these new rules as their long-standing concerns seem to have been addressed. “We welcome the Electricity (Promoting Renewable Energy Through Green Open Access) Rules, 2022, notified by the Government of India, and feel that they are a shot in the arm for the green power demand in the C&I segment. The C&I segment accounts for about 50 per cent of electricity consumption in India and the demand for green energy from this segment, especially from open access projects, has been growing rapidly in the last few years. By lowering the threshold for open access from the existing 1 MW to 100 kW, the government has opened the door for this market to grow multifold in the coming few years,” says Kushagra Nandan, co-founder and managing director, SunSource Energy.
According to Nandan, the notification of a central nodal agency for setting up and operating a single-window green energy open access system for renewable energy is likely to lead to a simplified and smooth centralised approval process for developers. It is also likely to open up the market in many more states. The rules will benefit the renewable energy business in the country. There will be better tariff visibility that will reduce regulatory uncertainty. Now, the focus should be on actual implementation and acceptance by the states.