IESA Rallies for Inclusion of Energy Storage Policy Framework in Electricity Act

The India Energy Storage Alliance (IESA) has submitted comments and recommendations to the Ministry of Power (MoP) on the proposed draft for Electricity (Amendment) Bill, 2020. It has proposed a policy framework for energy storage in the Electricity Act.

After consulting over 100 energy storage players, IESA submitted a letter to the Ministry in response to the notification it had issued in April 2020. The Ministry had issued a draft proposal for the amendment of the Electricity Act 2003, to address issues such as contract enforcement, national renewable energy policy, renewable and hydropower purchase obligation, open access, adoption tariff, and payment security mechanism, among others as previously reported by Mercom.

IESA added that the proposed amendment has tried to address a series of challenges faced by the sector and provided measures to improve regulatory discipline, private sector participation, next-generation reforms, and financial health of the distribution companies (DISCOMs).

Debi Prasad Dash, the executive director, IESA, said, “We have proposed the Ministry to have a clear policy framework regarding energy storage in the Act. India has emerged as one of the fastest-growing markets for renewable energy and energy storage technologies could be the key enabler for renewable energy integration and grid stability.”


He added that defining energy storage under the Electricity Act could be helpful to start ancillary services and frequency regulation through energy storage as a flexible asset.

“It will also help to enable electric vehicles (EVs) charging infrastructure, V2G (vehicle to grid) concepts, and microgrid integration with expanded grid connectivity in the long run,” Dash said.

IESA also pointed out that several current issues and technological developments in recent years were missing from the amendment.

Recommendations

IESA has suggested that the Electricity Act should define terms that are used widely but currently remain undefined, such as renewable energy, net metering, cogeneration, storage, energy banking, must-run status, renewable energy certificate (REC), reliability, flexibility, grid balancing.

It has also requested the Ministry to define energy storage appropriately in the Electricity Act.

“With the Ministry of New and Renewable Energy (MNRE) releasing multiple tenders that include storage and with the National Mission on Transformative Mobility and Battery Storage looking to set up 50 GW advanced energy storage manufacturing, it is highly recommended to

include direction from the Electricity Act to frame policy framework required for adopting storage technologies in suitable areas,” IESA suggested.

Further, it has recommended that instead of a hydro purchase obligation, storage purchase obligation (SPO) should be included. It added that SPO could comprise various existing and emerging, cost-effective solutions that provide appropriate flexibility.

“DISCOMs should be free to choose a specific form of procurement, either hybrid renewable energy and storage or renewable energy and storage, independently,” stated the letter.

On the quality of power, IESA has suggested that it should be the duty of every supply licensee to ensure power quality as per the norms laid out by the relevant authority.

IESA recommended the creation of new services and markets, such as ancillary services, which need to be enabled by the relevant authorities within two years.

Referring to the National Smart Grid, IESA has suggested that all states should produce roadmaps to enable consumer production participation, renewable energy integration, future grid connectivity with microgrids, guaranteed supply, power quality, and dynamic load management.

However, IESA has demanded that Section 42 of the Electricity Act, which provides a minimum threshold on contract demand, should be removed, especially for EV charging when the aggregated contract demand is more than 1 MW.

“Currently, the policy allows for open access to avail renewable energy within the state only after paying the cost component to DISCOMs as fixed by the state electricity regulatory commission (SERC). This clause should be relaxed as market forces would then ensure competition and drive in systemic efficiency,” it added.

A previous report published by the International Renewable Energy Agency (IRENA), showed how electricity storage technologies could be used for several applications in the power sector ranging from e-mobility and behind-the-meter applications to utility-scale

In January 2020, the M&A report by Mercom Capital revealed that in the year 2019, global venture capital funding for battery storage, smart grid, and efficiency companies totaled to totaled $2.3 billion compared to $2.8 billion raised in 2018.

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