In a bid to boost the green energy sector, the Ministry of Power in August, 2021 had sought comments and observations from the relevant stakeholders on the Draft Electricity (Promoting renewable energy through Green Energy Open Access) Rules, 2021. In furtherance to the same, the Ministry of Power, on June 6,, 2022 has notified the Electricity (Promoting renewable energy through Green Energy Open Access) Rules, 2022 (“Rules”), applicable for generation, purchase and consumption of green energy including the energy from waste to energy plant. The Rules, define the term “Green Energy” to mean electrical energy from renewable sources including hydro and storage, provided the storage is from renewable sources. It also includes any mechanism that uses green energy to replace fossil fuels including use of green hydrogen or green ammonia. A brief summary of these Rules are mentioned below:

1. Renewable Purchase Obligation (“RPO”) - The Rules stipulate that there will be a uniform RPO on all obligated entities, in area of a distribution licensee. Further, an entity can elect to generate, purchase and consume renewable energy namely, by one of the following methods:

a) Own generation from renewable energy sources: The Rules provide that there is no capacity limit for installation of renewable energy stations for captive consumption. It can be installed anywhere in India and the power can be transmitted through open access;

b) Procuring renewable energy through open access from any Developer either directly or indirectly through a trading license or through power markets; 

c) By requisition from distribution licensee: Entities are allowed to purchase their entire or a part of energy requirement from green energy sources by placing a requisition with the distribution licensee, subject to the following conditions:

i) The distribution licensee in turn will procure green energy and supply it to the consumer;

ii) The consumer has the flexibility to raise separate requisitions for solar and non-solar;

iii) Further if a consumer chooses to purchase more renewable energy, than it is obligated to do, for convenience, this may be undertaken in steps of 25% going up to 100%;

iv) The tariff for such purchase shall be determined by the appropriate commission basis the average pooled power purchase cost of renewable energy, cross-subsidy charge, and services charges;

v) The accounting of renewable energy supplied at the distribution licensee will be done on a monthly basis; and

vi) The requestion for green energy purchase should be pre-specified for at least 1 year and shall also be for a minimum period of 1 year.

d) By consuming green energy from captive power plant;

e) By purchasing Renewable Energy Certificates;

f) Purchase of green hydrogen or green ammonia: obligated entities can also meet their RPO obligations by purchasing green hydrogen or green ammonia; or

g) By any other sources, as may be determined by the central government.

Additionally, a green certificate will be issued by the distribution licensee on a yearly basis to the consumers, in cases wherein the energy supplied is beyond the RPO of the consumers. The state commission may introduce the concept of rating of the consumer of the distribution licensee, based on the percentage of green energy purchased by such consumer.

2. Grant of green energy open access - The Central Nodal Agency is required to prepare a common application format for applying for green energy open access, within 60 days of commencement of the Rules. Further, to provide open access to the green energy consumers, the appropriate commission, if necessary, will amend the necessary regulations and ensure the same are compliant with the Rules hereunder. If the commission does not grant open access to all applicants within 15 days from date of such application, such applications would be deemed as approved, subject to fulfilment of technical requirements.

As per the new Rules consumers who have contracted demand or sanctioned load of 100 KW and above are eligible for green energy open access. However, this limit is not applicable to captive consumers. The Rules also provide certain safeguards, to avoid high variation in demand to be met by the distribution licensee, such as, minimum number of time blocks, which shall be not more than 12-blocks and unaltered quantum of energy being consumed through open access. The Rules clarify that short-term and medium-term open access will be permitted subject to spare transmission capacity without any augmentation. For long term open access, the transmission system may be augmented, if required. Further priority is given to long-term open access consumers if there is spare capacity and energy from non-fossil fuel is also prioritized over fossil fuel.

3. Nodal Agency - A central nodal agency as notified by the central government, will set up and operate a single window green energy open access system for renewable energy. A central registry will be set up and all the applications related to green energy open access shall be submitted on the single window portal. The appropriate commission will further notify the appropriate load dispatch center for grant of short-term open access and the central or state transmission utility for all medium- and long-term open access for green energy.

4. Banking - The Rules permits banking of the power, at least on a monthly basis, on payment of banking charges to compensate the additional cost. Further, the permitted quantum of banked energy by the green energy open access consumers is mandated to be a minimum of 30% of total monthly consumption of electricity from the distribution licensee by the consumers.

5. Open Access Charges - The Rules prescribe a set of charges payable by each green energy open access consumer, namely, transmission charges, wheeling charges, cross-subsidy charges, standby charges. In relation to the additional surcharge and the cross-subsidy surcharge payable, the Rules further provide the following conditions:

a) Cross subsidy surcharge for procuring green energy from a renewable generating plant will not be increased during 12 years from the date of operating of renewable generating plant, by more than 50% of the surcharge fixed in the year, when the open access is granted;

b) Additional surcharge will not be applicable for any green energy open access consumers, if fixed charges are being paid by such a consumer;

c) Additional surcharge and cross subsidy surcharge are not payable if: the power is being procured from waste-to-energy sources, or if the green energy is used to produce green ammonia or green hydrogen.

The Rules further clarify that in situations where the open access consumer has to offtake power from alternate sources like the distribution licensee, the charges for maintaining standby arrangements for such consumers should be reflective of the costs incurred by distribution licensee for providing such support services.

6. Model regulation on methodology - The Rules stipulate for preparation of model regulations to develop a common methodology to calculate open access charges including banking charges. The forum of regulators is required to draft the model regulations within 4 months from the date of notification of these Rules. Further, the forum of regulators will need to ensure that various permissible charges are not onerous and at the same time also ensure it meets the prudent cost of the distribution licensee, to fulfil the objective of promoting the procurement of green energy by green energy open access consumers.

Please find attached a copy of the Rules.

This update has been contributed by Siddhant Satapathy and Ramya P (Associates).

Argus Knowledge Centre is now on WhatsApp! Send us a message on +91 8433523504 to receive updates from our Knowledge Centre.