Uttar Pradesh has begun to witness an increased interest from solar open access developers and consumers due to the wide-ranging and attractive concessions proposed for the sector in the solar energy policy released earlier this year.

To revamp the open access market, the state issued a slew of aggressive exemptions including a 50% waiver on wheeling and transmission charges for captive and third-party consumers. The exemptions are applicable for open access projects above 1 MW.

Further, the state has also exempted consumers from paying electricity duty for 10 years while allowing 100% energy banking annually. Stamp duty on land leases or purchases for such projects is also waived off.

Uttar Pradesh installed 41 MW of open access solar in Q3 2022, an increase of 7% year-on-year, according to Mercom India Solar Open Access Market Report Q3 2022.

The state has a cumulative solar open access capacity of ~600 MW as of September 2022. It is ranked fourth among states for cumulative open access installations.

“Developers and customers were hesitant when it came to setting up open access projects in Uttar Pradesh. However, with the new solar policy, the state has seen an increase in interest, and we have been receiving more and more inquiries,” said an industry source.

Another developer said solar open access installations are likely to increase significantly in the next year due to favorable policies which make it easier for consumers to adopt an alternative energy source.

“As Uttar Pradesh is a power-importing state, the exemption on cross-subsidy surcharge and wheeling/transmission charges for intrastate transmission systems on interstate sale of solar power will also boost open access solar,” the developer added.

Further, the state has allowed the banking of energy in every financial year, subject to verification by the power distribution company (DISCOM). The banking facility will be available to projects for the entire useful life of the project or 25 years, whichever is less.

DISCOMs Positive

As with most state-owned power distribution companies, Uttar Pradesh’s DISCOMs have also been reluctant to grant solar open access permissions in the past but the industry experts said that it is changing for the better of late.

“Previously, the Noida Power Company was not in favor of granting no objection certificates (NOCs) because they claimed their system was insufficient to provide open access. However, DISCOMs are now providing NOCs in a timely manner,” another developer said.

He added that the number of open access installations could easily double in the next year due to the favorable policies.

The industries in the state are paying exorbitant tariffs for power provided by the DISCOMs. The prevalent retail electricity tariff (FY23) in the state ranges between ₹6.1 (~$0.074)/kWh and ₹8.68 (~$0.10)/kWh for the commercial and industrial (C&I) segment.

As per the state’s new solar policy, the tariff includes open access charges ranging from ₹1.25 ($0.015)/kWh to ₹2.7 ($0.033)/kWh, which would not be applicable for consumers opting for solar open access. Under the captive and group captive mode of solar open access, the energy cost could be reduced by over 25% compared to the retail tariff.

The tariff differential, along with more responsive DISCOMs, could make the state a fertile ground for solar open access installations.

The Mercom India Solar Open Access Market Report Q3 2022 covers a detailed analysis of state policies and regulations related to solar open access and covers vital information and data on the market.