The Ministry of Power (MoP) has issued the Draft Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules, 2021. The last date for submission of feedback is September 15, 2021.
The rules are applicable for the purchase and consumption of green energy, including the energy from waste-to-energy projects. 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.
As per the draft rules, a uniform Renewable Purchase Obligation (RPO) would apply to all obligated entities – distribution licensees (DISCOMs), open access consumers, and captive power consumers. Whether obligated or not, any entity may choose to purchase and consume renewable energy based on their requirements through one or more avenues.
Self-Generation from Renewable Energy Sources
There is no capacity capping on ‘behind the meter’ renewable energy power projects according to the draft rules. ‘Behind the meter’ refers to electricity generated for self-use and not meant for injecting into the electricity grid. DISCOMs are not liable to purchase such energy.
Meanwhile, the power generating unit may be set up by the commercial and industrial (C&I) consumer or by a developer. The consumer and the developer can enter into a medium or long-term power purchase agreement (PPA).
Renewable Energy Certificates can be purchased after following the applicable regulations to meet the RPOs. RPOs can also be through other sources, as prescribed by the Union Government.
Requisition from DISCOMs
The obligated entities can also procure renewable energy through open access from any developer by entering into an agreement.
The entity may decide to purchase green energy up to a certain percentage or for its entire consumption. The entity may also place a requisition with their DISCOM to procure green energy for consumption.
Similarly, green energy can be purchased against RPO on consumption from the captive power project or energy availed through open access from sources other than renewable energy sources.
The consumer may voluntarily purchase a larger share of renewable energy than obligated. For ease of implementation, this may be a minimum of 50% of consumption from green energy, which can go up to 100% through 25% increments (i.e., 50%, 75%, 100%).
The appropriate commission would determine the green energy tariff, including the average pooled power purchase cost of the renewable energy, cross-subsidy charges (if any), and service charges covering all prudent costs of the distribution licensee for providing the green energy.
Any requisition for green energy from a DISCOM would be for a minimum of one year, and the capacity of green energy would be pre-specified for at least a year.
Green energy purchased from DISCOMs would be counted towards their RPO compliance. Accounting for renewable energy supplied at DISCOMs level would be done every month.
Purchase of Green Hydrogen
The obligated entity, including industries, can meet their RPO by purchasing green hydrogen. The quantity of green hydrogen would be computed by considering the equivalence to the green hydrogen produced from 1 MWh of electricity from the renewable sources or its multiple. The Central Commission would notify the norms.
Green Energy Open Access
The appropriate commission would formulate the regulations by following the draft rules to provide ‘green energy open access’ to consumers willing to consume the green energy. All applications for open access green energy would be approved within a maximum of 15 days.
Consumers who have contracted demand or sanctioned load of 100 kW and above can procure power through green energy open access. There is no limit on the power supply for the captive consumers buying power under green energy open access.
To avoid high variation in demand to be met by the DISCOMs, reasonable conditions are imposed – such as the minimum number of time blocks for which the consumer will not change the capacity of power consumed through open access.
The Union Government would notify the central nodal agency, which would operate a single-window green energy open access system for renewable energy. The agency would set up a ‘centralized registry’ for all green energy open access consumers.
All the green energy open access applications would be submitted on the portal set up by the agency. The application will then get routed to the nodal agency notified by the appropriate commission for green energy open access approval.
The commission would notify the load despatch center as the nodal agency to authorize the green energy open access for a short term. Meanwhile, the state or Central Transmission Utility (CTU) would be notified as the nodal agency to approve green energy open access for the medium and long term. The commission would define the terms.
Procedure for Grant of Green Energy Open Access
The ‘forum of regulators’ would prepare a common application format for green energy open access in 60 days, which would be adopted by the appropriate commission.
The application would be approved within 15 days, failing which it will be deemed approved subject to the fulfillment of the technical requirement specified by the appropriate commission. Short-term and medium-term open access will be allowed if there is sufficient spare capacity in the transmission system without any augmentation.
For long-term open access, the transmission system may be augmented. Priority will be given to the long-term applications in the existing system if spare capacity is available.
Further, open access for non-fossil fuel sources would be given priority over open access from fossil fuel. No application for open access would be denied without a written order after giving the applicant an opportunity of being heard.
Appeals against a nodal agency order remain with the appropriate commission.
Banking may be permitted every month on payment of charges to compensate the DISCOMs for any additional costs; the appropriate commission would determine these charges. The quantity of banked energy by the green energy open access consumers would not be more than 10% of the consumers’ total annual consumption of electricity from the DISCOMs.
Cross Subsidy Surcharge
Cross subsidy surcharge will be levied on open access consumers as per the provisions of the tariff policy under the Electricity Act 2003.
The surcharge for open access consumers purchasing energy from renewable energy projects would not be increased during the 12 years from the date of commissioning of the project. The surcharge will not be increased by more than 50% of the surcharge set for the year in which open access is granted.
The additional surcharge is not applicable for green open access consumers. Cross subsidy surcharge and an additional surcharge are not applicable if the energy generated from a waste-to-energy project is supplied to the open access consumer.
Cross subsidy surcharge payable by a consumer would meet the current level of cross-subsidy within the DISCOMs supply area. The state commission would specify standby charges if required.
The DISCOM would issue green certificates every year to consumers for the green energy supplied by the DISCOM on the consumer’s request beyond its RPO.
State Commission may rate the DISCOMs’ consumers based on the percentage of green energy purchased. The forum of regulators would prepare a model regulation on methodology for calculating open access charges for open access consumers in four months from the date of notification of the draft rule.
In June this year, the MoP had released a discussion paper on redesigning the renewable energy certificate (REC) mechanism for stakeholder comments.
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Rahul is a staff reporter at Mercom India. Before entering the world of renewables, Rahul was head of the Gujarat bureau for The Quint. He has also worked for DNA Ahmedabad and Ahmedabad Mirror. Hailing from a banking and finance background, Rahul has also worked for JP Morgan Chase and State Bank of India. More articles from Rahul Nair.