India installed 307 MW of open access solar capacity in the third quarter (Q3) of the calendar year (CY) 2021, registering a 47% increase compared to 209 MW installed in Q2 2021, according to Mercom’s India Solar Open Access Market Report Q3 2021.

There has been a consistent growth in solar open access capacity additions in most states. Uttar Pradesh led the way in capacity additions in Q3 2021 with 109 MW, accounting for 35% of the total capacity additions in the quarter. Tamil Nadu and Maharashtra rounded off the top three with 96 MW and 35 MW, respectively.

According to the report, Karnataka continued to be the leading state in terms of cumulative installations, accounting for 39% of the total solar open access installation as of September 2021. Tamil Nadu and Uttar Pradesh were the other states in the top three in terms of cumulative installations.

Developers believe that uniform regulations across the states and long-term policies without retroactive changes are necessary for the growth of open access in the country.

The growth of open access in Uttar Pradesh can be mainly attributed to the availability of land and proper infrastructure for the evacuation of power.

In Tamil Nadu and Maharashtra, large industries like manufacturing, textiles, cement plants, food processing units, and chemical industries contribute to the high demand for power. Electricity is a major contributor to operating costs, and industries find solar open access an ideal solution to reduce costs.

Last month, the Tamil Nadu Electricity Regulatory Commission issued draft amendments to the Tamil Nadu Electricity (Grid Connectivity and Intrastate Open Access) Regulations 2014. The amendments have been introduced to determine the order of priority for purchasing power from various sources under open access.

The report points out that stakeholders have proposed a multi-year tariff with a minimum control period of five years for the segment’s growth. `

Maharashtra has a multi-year tariff structure that favors the developers and consumers by providing a long-term perspective.

Currently, there is an annual tariff structure in most states, including open access charges, i.e., cross-subsidy surcharges, wheeling charges, scheduling, and system operation charges that change every year, making long-term contracting and feasibility of projects in doubt.

Speaking to Mercom, a top executive from a leading open access developer, said, “In Tamil Nadu and Maharashtra, the HT industrial tariff is very high, and open access provides consumers benefit of lower rates and clean energy benefits. So, the high tariff is one of the main factors driving the growth of open access in these two states. In Tamil Nadu, grid availability was very low in the past, so the consumers moved from DISCOMs to group captive.”

“In Maharashtra, the multi-year tariff has also been responsible for the growth of the open access market, but not to a great extent. It is beneficial for long-term open access, as it gives the consumers a long-term perspective of the energy charges and fixed charges. Also, policies by the state governments in these states have been responsible for the growth. The presence of industrial consumers in Tamil Nadu and Maharashtra is also one of the factors. If we take the case of Maharashtra, it’s not that MSEDCL cannot provide power to industrial consumers. The fact remains that the cost of procuring power from the DISCOMs is high, and it is the main reason for consumers shifting to open access,” he added.

One of the driving factors for the growth of open access is that the commercial and industrial (C&I) segment is looking towards it as a viable alternative source for procuring power. This has led to the steady growth of open access installations in these states.

Another open access developer said, “Maharashtra is an old market, and all the policies are in place. Another factor is that the HT industrial charges are high, which has led to the growth of open access in the state. The multi-year tariff has also been responsible for the growth, but not greatly. It gives long-term visibility to assess the project’s viability. In Tamil Nadu, regulations related to energy banking and other aspects are clear. Earlier, in Tamil Nadu, the DISCOMs were not approving open access projects. But things have changed now, and projects are getting approvals, driving the growth. In Uttar Pradesh, the case is different, as old projects have been installed now, which has led to the rise in installations. But this trend will not continue as the market for open access in Uttar Pradesh is not that great. We will witness growth in Maharashtra and Tamil Nadu in the near future.”

Last August, the Ministry of Power issued the Draft Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules, 2021. The rules are applicable for the purchase and consumption of green energy. The entities covered under the rule are all consumers who have contracted demand or sanctioned load of 100 kW or more, except for captive consumption.

Mercom’s Solar Open Access Report also gives insights into the short-term transactions, such as the day-ahead market, bilateral contracts, real-time market, and the green-term ahead market within the open access space. As per the report, Uttar Pradesh sold the highest amount of power in the day-ahead market in Q2 2021, accounting for 13.9% of all power sold in the quarter.

Considering long-term open access, the report found Chhattisgarh, Odisha, and Gujarat, states with the lowest landed cost and attractive for long-term open access growth.

For the complete report, visit: https://mercomindia.com/product/india-solar-open-access-market-report-q3-2021