The Ministry of Power (MoP) has released the draft National Electricity Policy (NEP) 2021 and invited suggestions from all stakeholders.

The MoP has created an expert committee that includes members from state governments, the Ministry of New and Renewable Energy (MNRE), NITI Aayog, and Central Electricity Authority (CEA). The committee is expected to submit its suggestions to the draft NEP 2021 within two months.

Suggestions for framing the draft NEP 2021 should come in 21 days, starting April 27, 2021.

Stakeholders such as Central Public Sector Undertakings, Solar Energy Corporation of India, power transmission companies, financial institutions like Reserve Bank of India, Indian Renewable Energy Development Agency, HDFC Bank, ICICI Bank, industrial, solar, and wind associations, and state governments, have to present their suggestions to the expert committee between May 11 and May 15, 2021.

The NEP 2021 covers multiple areas, including optimal generation mix, transmission, distribution, grid operation, power markets, regulatory process, energy efficiency, among others.

Here are some areas related to clean energy

Optimal Generation Mix-Renewable Energy Source and Cogeneration

According to the draft, as of March 31, 2020, the total installed capacity through renewable energy sources was about 87 GW, while the government has set a target of 175 GW generation capacity from renewables by 2022.

The long-term requirement of balancing capacity needs to be reassessed by the CEA in consultation with various stakeholders to meet the variable generation by renewable sources.

The draft NEP encourages electricity generation from renewable sources due to its environmental benefits that couple with energy security. The MoP also wants to encourage hybrid renewable energy like wind-solar, solar-biomass, solar mini-hydel, etc., with or without energy storage systems.

According to attorney Aditya K. Singh, an Associate Partner at Link Legal, “NEP is emphasizing on the growth of renewables as well as reliability of generation. Keeping these objectives in mind, the policy is proposing promotional measures for hybrid renewable energy generation and energy storage systems.”

The draft further states that barring waste to energy generation, all future procurement of power from renewable sources must be through tariff-based competitive bidding.

The draft states that the tariff of the renewable energy generators must cover the risk of curtailment of power by DISCOMs for reasons other than grid security or transmission constraints.

Singh said, “The NEP has also realized the pain of the developer that mere giving a must-run status to renewable energy generating station is not solving the problem and generators are witnessing curtailment in generation due to economic reasons in various states.”

The draft further recommends swift implementation of differential tariffs between peak and off-peak hours for consumers and generating stations, to appreciate the peaking power value.

According to Singh, a two-part tariff will be a game-changer, “There will be certain practical challenges like determination of the variable cost for wind and solar assets. I believe, once DISCOMs will see that even if they are issuing curtailment instructions and they are liable to make payment for 90%-95% of the agreed tariff (this will be estimated fixed cost for solar and wind), then they will be discouraged to issue frivolous curtailment notices.”

The draft has noted that renewable purchase obligations (RPOs) supported by renewable energy certificates (RECs) have not functioned satisfactorily. The draft suggests market-based options while removing shortcomings of the existing RPO-REC-based system.

The draft also talks about an intra-state level cost-sharing mechanism to address issues concerning the flow of power from states where intermittent renewable sources of energy are concentrated. Power from these states is transmitted to other states, and the former is left to bear the variability of generation.

Aditya said, “NEP also appears to suggest that regulator should move towards implementing light-touch regulation mechanism. This is a welcome step, and regulator should follow it in its letter and spirit.”

The draft also encourages solar rooftop installations and states that one way to promote solar PV systems, particularly in household applications and small industries, is through net metering. Singh added, “NEP also appears to encourage rooftop solar. NEP should also suggest that there should not be any cap on net metering.”

Creation of Electric Vehicle Charging Stations

According to the draft, certain tariff-based measures are needed for electric vehicle (EV) public charging stations and a separate consumer category based on a specific charging load. ‘Time of the Day Tariff’ can be employed to avoid charging load during peak demand hours.

The draft suggests provisions for injecting power back into the grid whenever an EV is parked and connected to chargers. Aggregators may be allowed to aggregate the demand of multiple public charging stations to purchase renewable energy using open access.

In an attempt to bring the hydrogen fuel-based vehicles and infrastructure under the ambit of the Faster Adoption and Manufacturing of Electric Vehicles (FAME-II) program, public interest litigation has been filed before the Delhi High Court by a practicing advocate, Ashwini Kumar.

Smart Meters

According to the draft, automation and smart metering can play a pivotal role in bringing positive transformation in the distribution sector. The draft suggests that all new electricity connections come with smart prepaid meters or simple prepaid meters. It further says that existing meters should be replaced with smart meters in the next three years from the date of the issuance of the NEP 2021.

In a recent notification, the CEA said that in the case of open access consumers connected to a distribution system, smart meters could be used as interface meters, provided they comply with the recommended regulations.

Grid Operation

According to the draft, grid reliability has become an issue because of rapid grid expansion and integration of renewable sources of energy. Forecasting and scheduling renewable sources should be mandatory, and a margin of error should be specified, beyond which deviation charges would become applicable.

Regulatory Process

According to the draft, wherever power or transmission service is procured based on guidelines issued by the Central Government under section 63 of the Electricity Act, 2003, the role of the appropriate commission is primarily to ensure compliance with the process. Section 63 of the Electricity Act refers to regulations of adopting tariffs discovered in the competitive bidding process.

According to Singh, “NEP’s statement about the limited role of the regulator while adopting section 63 tariff is also encouraging, and it is reiterating specific provisions of the Act. This statement can be an aid for interpreting Section 63 of the Act in future tariff disputes to argue that if bidding guidelines procedure has been followed then, the Commission will have no option except to adopt it.”

He further added, “Other considerations like prevailing market price are giving weapons to regulatory commissions for delaying/non-adoption of the tariff. NEP has a very clear role of the regulator to ensure compliance to the process, not start sitting on the wisdom of the bid evaluation committee.”

Power Markets

According to the draft, a new entity called aggregators may be created to aggregate demand, renewable power generation, demand response, micro-storage, and others, to help small consumers, prosumers, and producers reach the market. This would help promote open access, which is presently allowed for consumers with loads of 1 MW and above.

Environment

The draft states that solar PV plans must consider robotic dry cleaning instead of water cleaning, based on cost-benefit analysis.

While manual cleaning is one of the options, several robotic technologies have entered the market, providing a cost-effective method to clean solar panels compared to manual cleaning. The Ministry of New and Renewable Energy (MNRE) also has recommended the efficient utilization of water for cleaning utility-scale solar projects. The ministry said that project developers should try and minimize wastage and use robotic cleaning technology.