Viability of Open access/ third party sale solar projects in India
In last one year, various states including Andhra Pradesh, Haryana, Karnataka, Rajasthan, Tamil Nadu and Maharashtra have either withdrawn their Open access (OA) benefits for renewable projects or have not extended their OA benefits beyond March 2019.
In Andhra Pradesh, wheeling and transmission charges are exempted only for inter-state supply of power. For intra-state supply no exemptions are applicable. Purchase of unutilized banked energy is also capped at 10% of total banked energy during the year whereas earlier it was capped at 50%.
In Haryana, wheeling and transmission charge exemptions for 10 years are now only for captive solar projects which have acquired land and incurred capital expenditure of at least INR 1 crore/ MW before February 13, 2019.
Karnataka has not extended their OA benefits (exemptions in transmission and wheeling charges, CSS charges) beyond March 31, 2018. Rajasthan too has given complete exemption on CSS charges for solar projects till March 31, 2019 only.
Tamil Nadu too has reduced its OA waivers in its recent tariff order for FY2019-20. In this order, transmission, wheeling charges, scheduling and system operation charges are increased from 30% to 50% of conventional power. CSS waiver has also been decreased from 40% to 30%.
Maharashtra has also come up with its first Amendment to Distribution Open Access (DOA) Regulations and Transmission Open Access Regulations (TOA) in June 2019. Under this, the banking period is reduced from 1 year to 1 month. Further for RE projects based on Medium term open access (MTOA) and long term open access (LTOA), transmission charges will be twice the short term open access (STOA) transmission charges. For STOA, the applicable STOA transmission charges will be increased by a multiplication factor of 1.25, 1.5 and 2.0 respectively for every 2nd, 3rd and 4th & beyond during a financial year.
Therefore going forward we expect that most commercial and industrial buyers will increasingly start exploring other alternate options like group captive model wherein power consumer holds at least 26% of the equity ownership. Under this the projects are completely exempted from CSS charges- the biggest component of grid charges for OA power. CleanMax and Amplus are two key players who have recently announced to set up about 150 MW each in Haryana under group captive model.
Table1.1: OA waivers for solar projects across states, as of June 30, 2019
|States||OA waivers applicable for solar till FY2018-19||Update on OA waivers/ charges for solar for FY2019-20|
|Andhra Pradesh||CSS waived for five years from COD.Transmission and wheeling charges waived for captive model/third-party sale within the state.Distribution losses exempted for projects injecting at 33kV or below.The exemptions are available for projects built by March 2020.||Wheeling and transmission charges exempted only for inter-state supply of power. For intra state no exemptions are applicable.Purchase of unutilized banked energy capped at 10% of total banked energy during the year.|
|Haryana||Wheeling, transmission and distribution, CSS, reactive power charges, electricity duty, tax and cess are waived for 25 years from COD for projects commissioned during the policy period.The policy will remain in force until a new policy is notified.||Reactive power charges, electricity duty, tax and cess are waived for 25 years from COD. Wheeling and transmission charges exempted for 10 years only for captive solar projects which have acquired land and incurred capital expenditure of at least INR 10 million/MW before February 13, 2019. As per HERC Tariff Order for FY 2019-20, overall open access charges reduced by INR 0.81 paisa/unit from the previous year.|
|Karnataka||Wheeling charges and CSS waived for 10 years. Transmission charges and losses, and banking charges waived. Reduced charges apply to plants built by March 31, 2018||No OA waivers after March 31, 2018. As per KERC tariff order FY19-20, there is an increase of 15-20 paisa per unit in energy charges.|
|Maharashtra||No exemptions||No exemptions|
|Odisha||No waivers||CSS exempted for renewable projects. 20% wheeling charge is payable by the consumer drawing power from renewable source (excluding Co-generation and bio mass power plant)|
|Punjab||Transmission and wheeling charges for RE plants shall be levied @2% of energy injected for FY 2018-19.||Transmission and wheeling charges for RE plants shall be levied @2% of energy injected for FY 2019-20 also.|
|Rajasthan||CSS is waived for all solar plants commissioned between April 2014 and March 2019.||Exemptions not available beyond March 31, 2019|
|Tamil Nadu||Transmission and wheeling charges, Scheduling and System operation charges at 30% of conventional power. 40% of CSS waived.The waivers are available for FY 2018-19||As per TNERC Order on generic tariff for solar power and related issues, issued in March 2019, following waivers are proposed. Transmission, wheeling charges, scheduling and system operation charges at 50% of conventional power. 30% of CSS waived.|
|Madhya Pradesh||Wheeling charge of only 2%. CSS and AS waived until November 2017. Revision of policy has resulted in CSS and AS being applicable from December 2017 onward.|
|Gujarat||Electricity duty, 50% of CSS waived. No additional surcharge. Incentives apply for 25 years from COD for projects built by March 2020.|
|Telangana||CSS waived for five years from date of commissioning. Transmission and wheeling charges waived for 10 years for captive consumption within the state. Exemptions are applicable only for projects built by March 31, 2020.|
|Uttar Pradesh||The state exempts 50% of wheeling and transmission charges for plants commissioned between April 2017 and March 2022. Unless the policy and regulation are extended, the exemptions shall not be available beyond March 2022.|
Source: SERC tariff orders, WBCSD, JMK Research
Basis above exemptions and charges, the final landed cost for OA solar power for industrial consumers for some of the key states is shown below.
Figure1.1: Approximate landed cost of open access solar power for Industrial Consumers, INR/ unit (as of June 30, 2019)
Source: WBSCD, JMK Research