Open Access Standards projects can be a positive wind for new renewable projects, Auto News, ET Auto

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In India, electricity distribution takes place through three modes: state-owned distribution companies, captive sources and open access.

Mumbai: Draft Electricity Rules (Promote Renewable Energy Through Open Access to Green Energy), 2021, announced by the Energy Ministry, if implemented as ‘It is, could improve the certainty of cash flow for new renewable energy projects coming through this route, the rating agency Crisil said in a report.

In India, electricity distribution takes place through three modes: state-owned distribution companies, captive sources and open access. As part of the open access road, which had a total installed capacity of 11 GW as of March 31, 2021, renewable energy producers sell electricity directly to commercial and industrial consumers (C&I). These consumers pay open access fees to state-owned distribution companies (discoms). Such open access projects are hampered by policy changes at the state level that make returns uncertain.

The draft rules aim to clarify these open access fees – including, among other things, a cross-subsidy surcharge (to compensate for disruption caused by the loss of paying C&I consumers), an additional surcharge (to recover the cost of fixed electricity purchase for stranded assets), and bank charges (for energy consumption at a later date) – and will help streamline the overall approval process to improve predictability of cash flows for renewable energy producers, according to the report released last week.

The ministry sought comments on the rules from stakeholders, including state regulators and discoms. State regulators have not fully supported open access plans, fearing their discos may lose C&I customers paying high rates.

IOC President Shrikant Madhav Vaidya shared his vision for transforming India’s largest state-run petroleum refiner and fuel retailer into a major new era energy company.

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