Green Open Access Rules: A Game Changer For The C&I Sector?

The Ministry of Power (MoP) initially introduced green open access rules in the form of a draft, back in August 2021. After receiving public comments to the draft, the green OA rules was finalized and published as “Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules, 2022” on June 6, 2022. The new policy received very positive feedback from the whole OA industry. The salient features of this policy have been summarized in the table below.

Table 1: Summary of “Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules, 2022”

Attribute

details

OA Eligibility
  • Any Consumer having Contract Demand/Sanctioned Load ≥ 100 kW
  • No capacity limit for Captive Consumers

Nodal Agency
  • A central nodal agency to be set up to maintain a centralised public registry/portal for all Green OA consumers.
  • All OA applications after getting registered in the centralised registry will get routed to concerned nodal agency.
  • Concerned Nodal Agency:
    • Short-Term OA: Load Dispatch Centre (LDC)
    • Medium-Term OA: State Transmission Utility (STU)
    • Long-Term OA: Central Transmission Utility (CTU)

OA Charges
  • Only six kinds of OA charges have been specified:

a)       Transmission Charges

d)  Standby Charges

b)       Wheeling Charges

e)  Additional Surcharge (AS)

c)       Cross Subsidy Surcharge (CSS)

f)   Banking Charge
  • AS not applicable on Green OA, if consumer already pay fixed charges
  • CSS & AS not applicable to Waste-to-Energy plants
  • CSS increase in 12 years from grant of OA ≤ 50%

OA Grant Procedure
  • All OA applications to be submitted on centralised OA portal.
  • Approval Window of OA applications by Concerned Nodal Agency: 15 days
  • OA applications priority: Long-Term > Medium-Term > Short-Term

Banking
  • Minimum Banking Settlement Period: Monthly
  • Minimum Banking Allowed (as % of energy consumption): 30%

Green Energy Tariff
  • DISCOM obliged to supply green energy upon request by a consumer on payment of additional charge (Green Energy Tariff).
  • Any such requisition from the consumer shall be for a minimum period of one year.
  • Green Energy Consumed by a consumer in excess of its RPO obligation is counted towards RPO compliance of DISCOM.

Green Energy Rating
  • C&I Consumers will be rated, based on percent of Green Energy Consumed.

Green Hydrogen/Ammonia
  • Green Hydrogen/Ammonia purchase to be counted towards RPO fulfilment.
  • CSS & AS not applicable on Green Energy utilized for production of Green Hydrogen/Ammonia.

Source: Ministry of Power, JMK Research

Green open access rules aims to provide a standardized framework for OA deployment across India. Some positive steps for RE OA development outlined in policy are:

  • The green open access rules specifies that a Forum of Regulators (FOR) will be appointed to determine a common methodology for determination of all OA Charges. This determination will be done within a period of 4 months from the date of implementation of green open access rules.
  • Banking of unused power is a critical provision for the green OA market. But, there are several states (Haryana, West Bengal, Telangana, etc.) which have been restricting renewable energy (RE) banking. Few states like Tamil Nadu do not even allow banking. So, MoP clarifying (through green open access rules) that banking will be provided at least on a monthly basis is all-in-all a major positive leap.
  • Exemption of Additional Surcharge (AS) for green OA consumers (provided the consumers already pay fixed charges) is a highly encouraging step.
  • The policy appoints Load Dispatch Center (LDC)/ State Transmission Utility (STU)/ Central Transmission Utility (CTU) as the nodal agencies for green OA. This has been done to reduce the influence of DISCOM in the OA approval process. Thus, there is high expectation that the OA application clearance window of 15 days (as specified in the policy) can be implemented.

On the other hand, there are some other policy provisions that need further clarification:

  • Green open access rules mention a clause disallowing carry forward of banked energy from one month to another. This is a discouraging step considering the states that already provide annual banking of RE. This clause may prompt them to switch to monthly banking system.
  • In relation to the new policy abolishing AS if the C&I consumer pay fixed charges, it may be inaccurate to assume that the liability towards stranded assets is subsumed in fixed charges. AS & fixed charges have different computation methodologies and have generally served different purpose in tariff structure.
  • The policy reduced the eligibility for green OA to any consumer having a sanctioned load of 100kW. This might create an implementation tussle between the centre and the states, as most of the states currently set their OA eligibility limit at 1MW.

Policy certainty and consistency across the country have been strongly demanded by OA players for many years. The green open access rules, if implemented correctly and timely, has the potential to spur the OA market. Indeed, the clarity with respect to OA charges, offered by the new policy could enhance the viability of OA projects and long-term visibility of the market.

However, India is a huge and diverse country. A “One-size-fits-all” policy has the potential to create several implementation challenges. Section 42 of the Electricity Act, 2003, grant State Electricity Regulatory Commissions (SERCs) the jurisdictional powers to determine OA charges and OA eligibility capacity limits for their respective states. Hence, the actual implementation of green open access rules rests with the states. Thus, all stakeholders now keenly await responses from state commissions, to understand to what degree the states will be aligned with the with the green open access rules.