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Comments on India's draft electricity rules for promoting
renewable energy through green energy open access, 2021
Background
On 16th August 2021, India's Ministry of Power published draft
electricity rules for promoting renewable energy through open
access. The draft rules apply to renewable generators and consumers
selling and buying electricity though open access including
self-generation, electricity exchange, and bi-lateral
contracts.
Key features of green energy open access rules are as below:
Eligibility criteria - The draft rules include
consumers with a load of 100 kW or more to be eligible for buying
renewable power through open access. Most states at present have
the minimum eligibility criteria for sanctioned load set at 1 MW or
above. Bringing down the load requirement will help in increasing
the renewable demand while giving additional options to smaller
consumers to buy green power.
Modes to meet the renewable purchase obligation (RPO)
- The draft rules stipulate having uniform RPO for all
obligated consumers including distribution utilities, open access
consumers and captive consumers. The obligated entities have the
following options to meet RPO:
Self-generation from renewables in behind-the-meter
applications
Entering into a PPA with a renewable developer
Green power procurement through distribution utility at a
regulated green tariff
Purchase renewable energy certificates (RECs)
Purchase green hydrogen, etc.
Approvals and nodal agency - A single window
clearance mechanism with a central nodal agency is proposed. All
applications for green open access to be approved within 15 days.
Currently the approval process and timelines vary by state and
contract duration.
Banking - Banking of unutilized electricity up
to 10% of total consumption from renewable projects to be allowed
and settlement to happen monthly. At present, banking regulations
vary by state with some states moving to not allow banking facility
for open access projects.
Regulatory charges - The draft rules stipulate
limiting the cross-subsidy surcharge (CSS) and removing the
additional surcharge (AS) for renewable open access. Forum of
regulators to decide a common methodology for calculation of open
access charges.
IHS Markit comments and feedback
Following are a few comments, suggestions, and questions
submitted by IHS Markit for the consideration of the ministry of
power:
1. Eligibility for Green open access
The draft rules define 'entity' as a consumer with a 100 kW or
above load. It is not clear from the rules, however, whether these
entities will have a mandatory renewable purchase obligation, or
they will be allowed open access from green sources on a voluntary
basis? If a mandatory RPO is going to be applied to all OA
consumers above 100kW load, the change of eligibility criteria from
1 MW at present to 100 kW will require an amendment of the
Electricity Act. Is it proposed to the cabinet for approval as
well?
The rule on green energy open access states that 'that only
Consumers who have contracted demand/sanctioned load of hundred kW
and above shall be eligible to take power through green energy open
access. There shall be no limit of supply of power for the captive
consumers taking power under green energy open access.' Will
sanctioned load limit apply to captive consumers as well?
2. RPO target and compliance
The draft rules say that the RPO target is proposed to be
uniform for all obligated consumers. Does this mean a uniform RPO
as defined at the national level?
For meeting RPO through own generation from renewables, no
capacity limit is mentioned for behind-the-meter applications. This
will require amendment to the state-level policies for
net-metering/behind-the-meter rooftop PV projects.
The rules do not mention net-metering and on-site captive
projects for meeting RPO as one of the options for procuring
renewable power.
The draft rules say that in case consumer buys green power from
distribution utility, it will count for the RPO compliance of the
distribution utility. It is not clear, whether in that case
the consumer buys additional renewable through other modes to
meet RPO, or
RPO for the open access/captive consumer can be settled through
purchase from distribution utility till the RPO target limit and
any additional procurement will be settled as the RPO compliance of
distribution utility
In case of purchase of green hydrogen to meet RPO, how will the
monitoring, compliance and verification of green hydrogen supplied
and consumed happen? Currently, there is no target for green
hydrogen RPO, will a separate green hydrogen target be
announced?
3. Application process and requirements
The rules propose a central nodal agency for the open access
applications for renewable energy procurement. We suggest that all
procurement including of conventional power through open access
should be provided the single window clearance facility through a
central nodal agency facilitating administrative approvals to relax
the administrative requirements of all open access consumers.
4. Banking
The draft rules state "The quantum of banked energy by the
green open access consumers shall not be more than ten percentage
of the total annual consumption of electricity from the
Distribution licensee by the consumers." What happens in case the
consumer is procuring its 100% electricity requirement through open
access and how will banking work in such a case? Also, should the
limit of 10% of total demand or generation of the
consumer/renewable project instead of "total consumption from
distribution licensee"?
Will all the state regulations pertaining to banking,
commercial settlement rules regarding time-block, duration and
deemed purchase price, stand void when these rules come into
effect?
5. Cross subsidy surcharge
The draft rules mention that cross subsidy surcharge shall not
be increased, more than 50% of the surcharge at the time of
approval, for 12 years from date of commissioning of the renewable
plant. What methodology has been used to arrive at this limit? Why
not provide 25 years limit as based on the lifetime of the
projects?
Ankita Chauhan is a senior renewable analyst on the
Climate and Sustainability team at IHS Markit, covering research
and analysis for Indian and South Asian markets.