The government has intensified its efforts and has implemented mea-sures to ensure that state-level bottlenecks do not hinder the growth of green open access markets. The Ministry of Power (MoP) has issued a directive to all state electricity regulatory commissions (SERCs) to promptly take appropriate action for the determination of green tariffs. Additionally, they have been instructed to implement the green open access rules notified by the central government and align the state open access regulations accordingly.
During a recent meeting chaired by the union power minister on the green energy open access rules, industry stakeholders received assurance of comprehensive support, including resolution of regulatory and policy issues, evacuation infrastructure, connectivity, general network access, and other requirements necessary for the adoption of green energy open access rules.
Furthermore, industry stakeholders were urged to report any instances of non-compliance with the green energy open access rules. This would enable the government to address the issues with relevant agencies and, if necessary, take penal actions. The MoP has also introduced significant amendments to the green energy open access rules to enhance the regulatory framework.
Power Line takes a look at recent policy developments related to green energy open access…
Recent developments
In June 2022, the MoP notified the Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules, 2022, to expedite the country’s ambitious renewable energy programmes, with the objective of ensuring access to affordable, reliable, sustainable and green energy for all. It reduced the open access transaction limit from 1 MW to 100 kW and introduced appropriate provisions for a cross-subsidy surcharge (CSS), additional surcharge (AS) and standby charge. These provisions were designed to incentivise regular consumers to procure green power at reasonable rates. These rules garnered a positive response from the industry as they efficiently addressed long-standing concerns, especially for consumers in the commercial and industrial segment.
Subsequently, Grid Controller of India Limited was designated as the central nodal agency responsible for operating the green open access registry portal. This single-window portal facilitates the registration and application of green energy open access, ensuring a streamlined and centralised approval process for developers.
In 2023, two amendments were introduced to these rules. The first amendment, notified in January 2023, allows any consumer to purchase green energy by placing a requisition with their distribution licensee. The distribution licensee is then responsible for procuring the requested quantity of green energy and supplying it to the consumer. Consumers have the flexibility to submit separate requisitions for solar and non-solar power.
Furthermore, the amendment clarified that in terms of the banking settlement cycle, the credit for banked energy will not be allowed to be carried forward to subsequent banking cycles. Instead, it will be adjusted in the same banking cycle. At the end of each banking cycle, any unutilised surplus banked energy will lapse, and the renewable energy generating station will be entitled to receive renewable energy certificates corresponding to the lapsed amount.
Additionally, the amendment revised the charges applicable to green energy open access consumers to include transmission charges, wheeling charges, CSS, standby charges and banking charges. It also includes other relevant fees and charges such as load despatch centre fees and scheduling charges, and deviation settlement charges as per the regulations set by the commission, wherever applicable. The standby charges will not exceed 25 per cent of the energy charges applicable to the consumer tariff category.
Additionally, the amendment introduced exemptions for non-fossil-fuel-based waste-to-energy plants from paying CSS and AS. It also granted AS exemptions for offshore wind projects commissioned up to December 2025 that supply electricity to open access consumers.
The second amendment, notified in May 2023, introduced increased flexibility for green energy open access, especially for consumers with multiple connections that have an aggregate demand of 100 kW. As per this amendment, the MoP clarified that consumers who have a contracted demand or sanctioned load of 100 kW or more, either through a single connection or multiple connections that aggregate to 100 kW or more within the same electricity division of a distribution licensee, will be eligible to access power through green energy open access. The earlier June 2022 notification stated that consumers with a load of 100 kW were eligible for open access but did not specify whether this included single or aggregated multiple connections.
Further, it introduced an unlimited power supply for captive consumers procuring power under green energy open access. Moreover, it extended the AS waiver for electricity generated through offshore wind projects commissioned till 2025, to projects commissioned till 2032.
Green tariffs
In October 2022, the MoP directed SERCs to take necessary measures for the determination of green tariffs based on factors such as the average pooled power purchase cost of renewable energy, cross-subsidy charges, and service charges that cover the costs incurred by the distribution licensee for supplying green energy. Currently, only a few states have taken the necessary steps to comply with these directives.
The MoP stated, “Only a few states have determined the green tariffs, and such tariffs have been set at a rate higher than the average power purchase cost of renewable energy procured by the discoms.”
In a letter dated May 13, 2023, the MoP urged compliance and directed SERCs to adhere to the established rules regarding tariff regulations. It clarified that the green tariff should not exceed the average power purchase cost of renewable energy, including a surcharge equivalent to 20 per cent of the average cost of supply, along with a reasonable margin of 25 paise.
Further, the MoP has issued a reminder to SERCs regarding the provisions of Section 181 of the Electricity Act, which mandates that regulations formulated by SERCs should align with the Act and Rules. The ministry has observed that certain SERCs, which have notified the green energy open access regulations, have not fully aligned these regulations in accordance with the rules set by the ministry.
It has also directed those SERCs that have not notified green energy open access regulations to promptly do so, and failure to comply will result in them being held liable for inaction under the provisions of the law.
Conclusion
According to the Institute for Energy Economics and Financial Analysis, although the green open access market in India is experiencing growth, several state-level bottlenecks hinder its progress. Discoms remain reluctant to encourage direct power procurement by corporate entities, primarily because they want to retain their most profitable consumers. Furthermore, several states are seeking ways to exploit loopholes in laws and regulations to discourage the uptake of open access projects. As a result, states are either delaying approvals (Rajasthan or Haryana), removing or restricting power banking facilities (Andhra Pradesh and Gujarat), increasing transmission and wheeling charges (Andhra Pradesh) or introducing new charges (the additional surcharge in Maharashtra or reliability charge in Haryana). The uncertainty surrounding policies and delays in approvals further complicate the execution of green corporate power purchase agreements. The changes and amendments made by the MoP are aimed to address these issues and foster uniformity in the process.
Net, net, fully harnessing the potential of a green open access market will help achieve energy transition goals.
The union minister pointed out that these rules are a major step towards India going green and cutting emissions by 45 per cent, aligning with the country’s updated nationally determined contribution target for 2030. Going ahead, regulators and policymakers must remain vigilant and strive to create a stable regulatory and policy environment to support these efforts.
Nikita Gupta
