Draft Electricity Rules Released: Here's How They Can Make Industries’ Transition To Green Energy Easier

The Ministry of Power recently released the Draft Electricity (promoting renewable energy through green energy open access) Rules, 2021 for eliciting public comments which can be submitted within 15 September.

The rules define ‘green energy’ as electrical energy generated from renewable sources of energy and sourced from waste-to-energy plants. They will be applicable for purchase and consumption of renewable energy by entities having a minimum demand of 100 kilo watts (kW).

Purchase Of Renewable Energy

The draft rules bring about a uniform renewable purchase obligation (RPO) in the country through which renewable energy can be bought and distributed by distribution companies (DISCOMS). Under the Electricity Act of 2003, RPO is the minimum amount of renewable energy that DISCOMS must buy, failing which they would be heavily penalised.

The rules define the ways and means by which entities can buy or consume renewable energy. Consumers can fulfil their RPOs by installing their own renewable energy generation plant, through open access (buying from the open market other than DISCOMS), from their DISCOMS, by purchasing renewable energy certificates or by purchasing green hydrogen. ‘Green hydrogen’ has been defined as hydrogen generated from renewable energy sources.

Various DISCOMS have been failing in their obligations with regards to RPO. As per the new draft rules, RPOs can be fulfilled by buying green hydrogen.

When sourcing renewable energy from DISCOMS, a consumer has the option of purchasing only a percentage or total of its energy requirements. It can also voluntarily purchase more percentage than mandated. Such agreement between the consumer and the DISCOM shall be for a minimum of one year. The distribution of renewable energy by such companies will be counted towards the DISCOM’s RPO.

The tariffs of renewable energy sourced from DISCOMS shall be determined by the appropriate commission which may comprise of the average pooled power purchase cost of the renewable energy, cross-subsidy charges (if any) and service charges covering all prudent cost of the distribution licensee for providing the green energy.

These rules allow consumers willing to consume green energy to purchase it through open access. Such applications for purchase of renewable energy must be approved within a period of 15 days. If approval has not been granted within the stipulated time period, then the approval will be deemed to have been granted.

A common central portal would be developed for processing applications for open purchase of green energy. Additionally, short and medium term open access would be allowed only if there is sufficient spare capacity without the need for augmenting the transmission system and priority would be given for long-term agreements.

Moreover, open access for renewable energy would be given preference over open access for non-renewable energy.

Will Promote Accessibility Of Green Energy

According to a study by the forum of regulators, nodal agencies reject applications for open access due to denial by DISCOMS. One major reason could be because DISCOMS fear losing profitable consumers who also cross-subsidise electricity charges for poorer consumers. Open access is normally used by large companies wanting to transition to green energy.

With the new rules, green energy can be availed through DISCOMS at a special tariff.

The new rules also lower the threshold of minimum energy requirement to 100kW. Most states currently have a minimum requirement of 1 mega watt (MW). This would ensure that more companies have better and quicker means to shift to green energy.