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Green Energy Open Access With Reference To Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules, 2022

The Central Government have notified Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules, 2022 for purchase and consumption of green energy including the energy from Waste-to-Energy plants.

Open access means non-discriminatory access to the electricity transmission and distribution system provided to eligible consumers, generators and state distribution companies (DISCOMS).

So far, DISCOMs have imposed heavy non-tariff barriers in the form of operational constraints and state Electricity Regulatory Commissions (ERCs) have approved tariff barriers in the form of cross-subsidy surcharge, additional surcharge, wheeling charge, standby charge, etc. on consumers seeking to avail open access. This makes availing open access uneconomical.
National Electricity Policy, 2005 (NEP) states that state ERCs need to provide a facilitative framework for non-discriminatory open access as this would provide efficient choices in locating generation capacity and encourage trading of electricity for optimum utilization of generation resources, thus reducing the cost of electricity supply.

Key features of green energy open access rules are:
  • Eligibility criteria:
    The 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 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:
    1. Self-generation from renewables in behind-the-meter applications
    2. Entering into a PPA with a renewable developer
    3. Green power procurement through distribution utility at a regulated green tariff
    4. Purchase renewable energy certificates (RECs)
    5. 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 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.

Positive points of the rules
The Rules, will allow consumers with a sanctioned load of 100 kW or above to purchase electricity directly from the renewable power producers (RPPs) without having to rely on power distribution companies (DISCOMs). Open access as introduced by the Electricity Act, 2003 to promote competition in the market by providing a choice of suppliers to the consumers.

But owing to the various charges imposed for sourcing electricity through this route, the open access system could not establish itself as an economically viable option for the consumers. By introducing provisions to limit the increase of cross-subsidy surcharge as well as the removal of additional surcharge, the Rules not only incentivise the consumers to go green but also seek to address the issues that have hindered the growth of open access in India.

When open access consumers keep switching on and off from open access, DISCOMs face challenges in estimating demand forecast thus leading to potential security challenges for the electricity grid. To ensure that there is no high variation of demand in the energy to be purchased by the DISCOM, the Draft Open Access Rules state that reasonable conditions such as requirement of a minimum number of time blocks during which the open access consumer will not change the quantum of power consumed can be imposed.

Challenges
The enactment of the rules will now result in a jurisdictional tussle between the Centre and the state governments as the responsibility of formulating rules relating to open access in states have been vested with the respective state electricity regulatory commission (SERC). Each state has its own open access regulations and any conflict between the provisions of the Rules (when enacted) and the state-specific open access regulations may eventually lead to implementation issues for the Rules. Owing to the concurrent jurisdiction of the Centre and the state governments, there is, therefore, a need for consistent policies to achieve the intended goal of promoting open access in the RE sector.

Conclusion
The Rules represent an attempt to bring uniformity in the open access regulations. Given the instrumentality of state-level actors in determining success of open access system, it is imperative that the state governments, SERCs and DISCOMs are taken on board to ensure that the Rules are implemented in both letter and spirit. Notwithstanding the earnestness of the Rules, legislators still have a tough balancing act ahead of them to ensure that the implementation of the Rules to promote open access system in the RE sector does not come at the cost of jeopardizing the fiscal viability of the DISCOMs.

Link to the Rules:
  • https://static.pib.gov.in/WriteReadData/specificdocs/documents/2021/aug/doc202181611.pdf
Resources used:
  1. https://mercomindia.com/no-load-limit-energy-open-access-captive-consumers/#:~:text=As%20per%20the%20new%20regulations,nodal%20agency%20within%20fifteen%20days
  2. https://www.mondaq.com/india/renewables/1137854/powering-indias-green-energy-revolution-through-open-access-reform
  3. https://energy.economictimes.indiatimes.com/news/renewable/renewable-energy-open-access-rules-a-step-in-the-right-direction/89411511
  4. https://www.scconline.com/blog/post/2022/06/07/ministry-of-power-notifies-electricity-promoting-renewable-energy-through-green-energy-open-access-rules-2022/
  5. https://pib.gov.in/PressReleseDetailm.aspx?PRID=1831832

Notes
What is RPO?
Under Section 86(1) (e) of the Electricity Act 2003 ("EA 2003") and the National Tariff Policy 2006, Renewable purchase obligation (RPO), is a mechanism by which the obligated entities are obliged to purchase certain percentage of electricity from Renewable Energy sources, as a percentage of the total consumption of electricity

Note on Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules, 2022

Background:
In August 2021, India's Ministry of Power had published draft electricity rules for promoting renewable energy through open access and asked for comments and suggestions from all the stakeholders in the energy field. Much recently, the Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules, 2022 or the #GOAR, as it is popularly called were notified with an aim to accelerate our country's ambitious renewable energy programmes, with the end goal of ensuring access to affordable, reliable, sustainable and green energy for all.

The GOAR is a notable piece of law and has been made with a hope to make the energy market in India both green and sustainable. It is quite well known that Open access was introduced by the Electricity Act, 2003 to encourage competition in the energy market by providing a choice of suppliers to the consumers. However, the heavy non-tariff barriers by the distributors and SERCs had made this uneconomical and not reliable.

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