Regulatory Moves

Providing an effective framework to scale up smart grid development

In May 2015, the government launched the National Smart Grid Mission (NSGM) with the purpose of digitally enabling the power sector through the development of smart grids. While the NSGM has set the policy stage for scaling up the ongoing smart grid efforts, its success will depend on the development of an effective regulatory framework, that upholds the interests of all stakeholders.

Power Line takes a look at the regulatory moves pertaining to smart grid development in the recent past…

Model smart grid regulations

The model smart grid regulations, approved by the Forum of Regulators (FoR) on June 11, 2015, are expected to accelerate smart grid development in the country. The regulations aim to integrate various smart grid technologies and measures to bring about efficiency improvement in generation, and transmission and distribution (T&D) licensee operations; manage T&D networks effectively; enhance network security; and integrate renewable and clean energy into the grid.  Moreover, through greater technology adoption across the value chain in the electricity sector, particularly in the T&D segment, the regulations  aim to enhance network visibility and access, promote optimal asset utilisation, and improve consumer service levels.

As per the model regulations, T&D utilities will have to form a “smart grid” cell within three months of notification of the regulations. In addition, they will have to undertake baseline studies to “identify the targets and final outcomes for smart grid project programmes and build the necessary database”.

A smart grid cell will be responsible for the formulation of smart grid plans, programmes and projects, design and development of smart grid projects including cost-benefit analysis, and plans for implementation, monitoring and reporting, and measurement and verification. In addition, it will have to seek the necessary approvals for smart grid plans, programmes and projects, and will be responsible for their implementation.

Further, T&D licensees will have to submit an integrated multi-year smart grid plan for their respective licence areas along with a multi-year tariff petition or annual revenue requirement (ARR) petition, for approval of the state electricity regulatory commission (SERC). Smart grid projects requiring investments of more than Rs 100 million, or a sum specified by the SERC, will have to get prior approval of the SERC, while those entailing investments of less than Rs 100 million (or a sum specified by the SERC) will not require prior approval given that it is part of the utility’s multi-year smart grid plan approved by the commission.

The model regulations have been drawn up to complement the national and state smart grid roadmaps. These will guide the review and approval of investments in smart grids, and ensure cost recovery and alignment with the multi-year tariff cycle.

During 2015, the states of Tripura, Assam, Madhya Pradesh and Karnataka notified the draft smart grid regulations for their respective states.

Net metering

Of the government’s ambitious target of installing 175 GW of renewable energy generation capacity by 2022, 100 GW is expected to come from solar power generation. In this segment, 40 GW will be contributed by rooftop plants, which are attracting interest due to their competitive costs. To accommodate the growing interest in rooftop solar, an effective regulatory mechanism has gradually been developed across the country.

While globally solar rooftop projects have been operating both under gross and net metering arrangements, the latter has gained prominence in India. This mechanism allows consumers to generate and consume solar power within their premises and feed the excess generation into the grid. Consumers then pay only for the net imported energy. Tamil Nadu and Andhra Pradesh were the first states to notify draft net metering regulations in 2012 and early 2013 respectively. Other states have since followed suit. In August 2013, the concept of net metering for small-scale and solar rooftop projects was also discussed by the FoR, following which the draft model regulations were issued in November 2013. These regulations were aimed at facilitating and expediting the formulation of state-level regulations.

At present, 21 states and union territories – Andhra Pradesh, Assam, Bihar, Chhattisgarh, Delhi, Gujarat, Goa, Haryana, Himachal Pradesh, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Meghalaya, Odisha, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh, Uttarakhand and West Bengal – have issued net metering regulations.

Framework for forecasting, scheduling and imbalance handling of renewable energy

Given their intermittent nature and distributed generation, the integration of renewable energy sources into a traditional grid causes problems. The deployment of a smart grid and smart grid technologies addresses the twin challenges and allows for better renewable energy integration.

The ongoing measures aimed at increasing the share of renewables in the country’s total electricity generation need to be supplemented by appropriate regulations that aim to resolve grid integration issues.

In this regard, in August 2015, the Central Electricity Regulatory Commission (CERC) amended the Indian Electricity Grid Code and the deviation settlement mechanism regulations to establish a framework on forecasting, scheduling and imbalance handling of various renewable energy sources including wind and solar. With the new amendments, the scheduling of wind and solar generators has been incorporated into the grid code. The amended code provides the methodology for rescheduling wind and solar generators, which are regional entities, and handling deviations of such generators. Moreover, rescheduling has now been allowed on a one-and-a-half-hourly basis, instead of three hours earlier. Further, appropriate meters will be provided for the calculation of deviation charges under the deviation settlement mechanism regulations. In addition, a telemetry or communication system and data acquisition system will be provided for the transfer of information to the concerned state load desptach centre and regional load despatch centre.

Taking a cue from the central regulator, states like Gujarat, Tamil Nadu, Madhya Pradesh and Karnataka have also notified draft regulations in this regard.

Smart meter standards

During 2015, the Bureau of Indian Standards published a standard for smart meters – IS 1644:2015, “alternating current (AC) static direct connected watt-hour smart meter class 1 and 2”. The first of its kind, the standard specifies static watt-hour smart meters of accuracy Classes 1 and 2 for the measurement of AC electrical active energy of frequency 50 Hz for single-phase and three-phase balanced and unbalanced loads.

It applies to static watt-hour direct connected meters consisting of measuring element(s), time-of-use register(s), display, load switch and built-in or plug-in type of bi-directional communication modules. However, the standard will not apply to watt-hour meters where the voltage across the connection terminal exceeds 600 V, meters that are operated with external current transformers, portable meters, and meters without an internal load switch.

DSM regulations

The evolution and development of smart grid technologies will enable electricity consumers to make more informed choices about their energy consumption, adjusting both the timing as well as quantity of electricity usage. This ability to control usage is referred to as demand-side management (DSM). As such, the development of regulations for enabling effective DSM by discoms becomes imperative for maintaining grid stability.

In this regard, the FoR issued the model DSM regulations in May 2010 with the aim of assisting the states in preparing their respective DSM regulations. The model regulations outline the DSM objectives and targets to be set by the SERCs for the distribution licensees. As per these regulations, the SERCs are required to issue guidelines on load and market research; and undertake implementation, cost-effective assessment, monitoring and reporting of DSM programmes as well as the evaluation, measurement and verification of the savings achieved. The regulations require the distribution licensee to constitute a DSM cell with a team of dedicated officials who have the authority to undertake the responsibilities envisaged under these regulations.

While Delhi and states like Gujarat, Maharashtra and Haryana had earlier issued DSM regulations, Chhattisgarh and Madhya Pradesh are among the states to recently notify draft DSM regulations in November 2015 and September 2015 respectively. Further, in December 2015, the Jammu and Kashmir State Electricity Regulatory Commission (JKSERC) issued draft objectives and guiding principles under the JKSERC (Demand Side Management) Regulations, 2011. As per the proposed guiding principles, the distribution licensee is required to design, develop and implement DSM programmes that supplement the efforts at the national and state levels, especially those promoted by the Bureau of Energy Efficiency.

Summing up

Apart from facilitating the development of smart grids in the country, a favourable regulatory environment, which is both flexible and dynamic, is critical to attract investments in developing smart grid infrastructure and protecting the interests of consumers. In this context, the formulation of various model regulations by the FoR and the amendments introduced by the CERC to facilitate renewable integration are a welcome step. However, they need to be adopted and implemented by all the states in the country.

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