green energy: View: The 2022 green energy open access rules are a good start

On 6 June 2022, the Ministry of Energy (MoP) of the Government of India (GoI) notified the Electricity (Promotion of Renewable Energy through Open Access to Green Energy) Rules 2022 (here- hereafter referred to as “green open access rules”). After almost 20 years since the enactment of the Electricity Act 2003. These rules realize important objectives of the legislation.

To put it mildly, this could be a watershed moment in India’s journey towards a clean energy future. So what do the open access green rules say? First, it reduces the limit on the minimum contracted demand or load allowed to access green power through the open access process. The previous limit was 1 MW. This has been reduced to 100 kW, allowing thousands of potential consumers to access the open path to obtain renewable energy. For captive consumers of green energy, even the 100 kW limit has been removed.

This is indeed a defining moment, as the 1 MW limit had limited and deterred many consumers, especially MSMEs, from accessing and procuring green energy. Reducing this limit to 100 kW creates new opportunities for small electricity consumers, especially small businesses, looking to purchase renewable energy. Consumers are turning to clean energy for a variety of reasons – whether they want to practice sustainability, reduce their electricity costs, or respond to their investors and buyers who are increasingly demanding greening of the supply chain, especially for export markets.

At the same time, the operational interest of the power company (Discom) was kept in mind. Green Access Rules require those seeking green power from Discom to commit for a minimum period of one year. This will prevent the system game where Discom is seen as a fallback option, thus affecting its ability to plan an efficient power purchase. Equally relevant is the requirement for a minimum of 12 time slots (3 hours) during which the amount of free access provided by a consumer is not modified. This measure aims to avoid a strong variation in the demand to be satisfied by the Discom.

The second is the definition of green energy. The Green Open Access Rules adopt a broad and inclusive definition of green energy: “…electrical energy from renewable energy sources, including hydroelectricity and storage (if the storage uses renewable energies renewables) or any other technology notified by the Government of India from time to time and shall also include any mechanism that uses green energy to displace fossil fuels, including the generation of green hydrogen or green ammonia…”.

This is a welcome step as India’s goal of net zero in 2070 will require multiple strategies, fuel shifts and approaches. Hard-to-reduce sectors such as industry, transport, shipping and aviation will need to switch to cleaner fuels. Recognizing the purchase of green hydrogen/green ammonia by obligated entities to meet their renewable energy purchase obligation (RPO) is a good step. However, green hydrogen should receive all possible incubation support, and we must look to other technologies as well. Solar thermal, for example, lends itself well to the Indian context, while aligning well with the “Make in India” mantra as most of the supply chain is localized. The GoI should perhaps explore a Renewable Heat Obligation (RHO) alongside existing Storage Purchase Obligation (SPO) applications to accelerate growth in these sectors.

Third, the green open access rules include the provision for consumers to request green power directly from their respective Discoms. This tariff should be determined by the relevant National Electricity Regulatory Commissions (SERCs) and should also ensure that these special demands do not burden other (subsidized) consumers in the system. There are opportunities for demand aggregation and economies of scale, and Discoms could leverage its experience in energy contracts to enable access to green energy for aggregate demand by MSMEs and small businesses. companies. There’s more analysis required by SERCs and Discoms before this becomes more mainstream, but there are plenty of interesting lessons from utilities elsewhere on this.

A few additional features of open access green rules are worth mentioning. It lays down milestones on possible “fees” that may be levied for open access transactions involving green energy. He seeks certainty in cross-subsidy surcharges (CSS) [a long-standing request from consumers] and suppresses the imposition of additional charges (AS) if the consumer in any case pays a fixed charge to Discom. This forward-looking indexation of cross-subsidies and additional surcharges with specific ceilings helps to bring more stability and certainty to the system. And they also incentivize consumers to switch to renewable energy by prioritizing open access transactions involving non-fossil fuel sources over fossil fuel transactions.

A central nodal agency to operate a one-stop-shop system for all green energy open access requests is also proposed. Let’s hope that this centralized register does not become a bottleneck and that it operates in full transparency. And finally, on the issue of banking, the open access green rules allow banking at least monthly (which brings it down to 12 months) upon payment of appropriate fees. The world is witnessing a move towards a 24/7 hourly match of renewable energy with the corresponding load. Such timestamping of the exact nature of the energy consumed can prevent greenwashing and enable true decarbonization. Therefore, while monthly banking is a starting point, India should move towards 24/7 correspondence.

Overall, the open access green rules are bringing a much-needed shake-up in the Indian energy space. The baton now passes to regulators, implementing agencies and consumers to reap the benefits and accelerate India’s clean energy transition.

(Deepak Sriram Krishnan, Associate Director, WRI India and Bharath Jairaj, Director, Energy, WRI India)

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