The Ministry of Power has instructed state electricity regulatory commissions (SERCs) to comply with the Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules and align their states’ Open Access Regulations with the notified rules.

The ministry’s directive comes in the wake of piecemeal implementation of the green tariff rules only by a few states. In states where they have been implemented, the tariffs are significantly higher than the procurement cost of renewable energy, which violates the rules.

The SERCs must report their compliance by May 28, 2023.

The ministry had notified the green energy open access rules in June last year.

Under the rules, SERCs are responsible for determining the tariff for the supply of green energy based on the average pooled power purchase cost of renewable energy, cross-subsidy charges, and service charges.

The rules prescribe that a cross-subsidy surcharge should not exceed 20% of the average cost of supply (ACS).

To incentivize the use of renewable energy, the green tariff should not exceed the average power purchase cost of renewable energy plus 20% of ACS plus a reasonable margin of ₹0.25 (~$)/ kWh.

While Karnataka, Maharashtra, and Tamil Nadu emerged as the top states for solar open access installations in 2022, according to the 2022 Q4 & Annual Mercom India Solar Open Access Market Report, the growth was mainly driven by captive and group captive models.

The third-party open access model has failed to take off in these states because of the high open access charges, which include cross-subsidy surcharge and additional surcharge.

High landed costs in these states have been detrimental to the growth of third-party open access projects, adversely affecting smaller entities that need more cash reserves to opt for captive or group captive methods.

The ministry had amended the open access rules, adding provisions for the banking settlement cycle, introducing new charges, and exempting offshore wind projects from paying additional surcharges. It also allowed consumers to purchase green energy based on their consumption.

Most of the changes are intended to align the existing rules with newly approved regulations and provide flexibility to the consumer to promote renewable energy open access.