Large industries in Odisha have the mandate of fulfilling Renewable Purchase Obligations (RPO) owing to the captive thermal plants used to run their facilities. This regulatory necessity positions Odisha as a promising market for solar open access.

However, to realize the potential of solar open access, Odisha will have to overcome the challenges arising from policy ambiguity relating to energy banking provisions, land availability, and limited transmission infrastructure.

Odisha’s total installed power capacity was 7.9 GW at the end of the third quarter (Q3) of 2023, according to Mercom India Research. The state predominantly relies on thermal power, which accounts for ~64% of the state’s power mix. Renewable energy sources account for around 36%, with large hydro contributing around 76% to the state’s renewable capacity.

Solar power accounted for slightly more than 6% of the state’s power mix and around 18% of renewable energy sources.

With the obligation to procure a certain percentage of their energy from renewable sources, large industries in the state are compelled to explore alternative energy options. Solar open access emerges as a viable solution, offering these industries the opportunity to meet their RPO targets while diversifying their energy sources.

According to Rahul Mishra, Senior Vice President & Head C&I at BluPine Energy, the potential for green energy open access use in Odisha’s energy-intensive industries stems from a commitment to sustainable practices and the financial gains that come with green energy solutions.

“Large industries in Odisha are required to meet RPO due to captive thermal requirements. In addition to complying with regulations, the ongoing energy transition is driving demand for green power and highlighting the need for sustainable energy sources,” Mishra said.

Tanuj Mohanty, Owner of MGM Green Energy, an Odisha-based solar project developer, echoed Mishra’s view. “Sectors like steel and cement have an RPO mandate. However, the state grid lacks surplus green power, necessitating industries to seek alternative sources such as open access solar.”

Policy Landscape

According to Mercom India’s Q3 2023 Solar Open Access Market Report, Odisha added 50 MW of open access solar power capacity in Q3 2023. The state had a cumulative open access solar capacity of ~100 MW as of September 2023, accounting for less than 1% of the country’s total open access installations.

Odisha’s entire large-scale solar capacity additions in Q3 2023 were under the open access model. Open access solar accounts for ~17% of the state’s total large-scale solar capacity.

Mercom had previously reported that the region under TP Western Odisha Distribution (TPWODL) would be ideal for developing open access projects as western Odisha is an industrial hub with industries such as steel, agrotech, and mining.

Odisha had a pipeline of 665.2 MW of open access solar projects at the end of Q3 2023.

The state’s renewable energy policy includes favorable provisions for developing open access solar projects. It provides a 50% exemption on the cross-subsidy surcharge for 15 years from project commissioning dates and a ₹0.20 (~$0.002)/kWh exemption on State Transmission Utility (STU) charges for 15 years.

If a project is completed by March 31, 2026, the exemption on STU charges will be extended for five more years, i.e., 20 years.

The policy also provides for a 25% reduction in wheeling charges for captive and open access consumers that consume energy from renewable sources.

The government has said land earmarked for the industry under the ‘Land Bank’ program will be allotted for renewable energy projects.

According to Mishra, a favorable policy environment and the unpredictability of coal prices could propel the shift away from coal and towards clean energy.

Challenges

While stakeholders are unanimous about the potential of open access in Odisha, solar open access can thrive only in an enabling environment. The state has a slew of challenges it must overcome.

Mishra noted that Odisha has established policies pertaining to green open access, but the ambiguity of banking provisions makes their implementation difficult.

He said land availability is another issue that limits the potential for these open access businesses to grow in the state.

Mohanty said banking regulations, which facilitate the storage of excess energy for future use, are still in the drafting stage. “The availability of land for setting up renewable energy projects is also a challenge due to issues like land conversion and forest cover.”

Another developer Mercom spoke to drew attention to the difficulty of developers having to compete for land with larger players. “Large industries have significant captive energy requirements and often opt to develop renewable energy projects in-house. The prevalence of such projects reduces the demand for third-party developers.

The developer also spoke of limited transmission capacity and connectivity hindering the development of renewable energy projects, particularly in remote or less developed regions. “While government policies and incentives aim to promote renewable energy adoption, their effectiveness depends on practical implementation and alignment with market realities.”

The developer spoke of difficulties in finding suitable land for solar projects due to various factors, including scarcity of land in areas with good solar radiation. Some regions already have solar projects with a cumulative capacity of 50 to 100 MW, leading to challenges in transmission infrastructure. Smaller players face hurdles in securing grid connectivity and land for their projects, especially for capacities below 10-20 MW.

Last August, the Odisha Electricity Regulatory Commission released the draft Green Energy Open Access Regulations, 2023, allowing consumers with 100 kW contracted/sanctioned load to purchase power through green energy open access. These rules aim to provide consumers with a streamlined process to develop open-access projects, allowing them to reduce operational costs and boost installations in the state.

Odisha offers significant potential for solar open-access projects, yet challenges such as land acquisition, transmission infrastructure, and power banking rules threaten to impede progress. Policymakers need to prioritize addressing these issues to discourage developers from pursuing inter-state projects as a means to sustain their businesses.