Loading...

Open access renewables suffering at the hands of DISCOMs


19 October 2020 | Dhruv Tyagi

Open access renewables suffering at the hands of DISCOMs

BRIDGE TO INDIA hosted a webinar on 29 September 2020 to discuss India’s open access (OA) renewables market. Participants included Mr. Dinesh Jagdale (Joint Secretary, MNRE), Ms. Bhavna Prasad (Director – Sustainable Business, WWF India) and a spectrum of private sector stakeholders comprising  Mr. Arvind Bansal (CEO, Continuum Wind Energy), Mr. S Manikkan (CEO, Radiance Renewables) and Mr. Tejus Arsikere (Chief – Solar farms, CleanMax) as the three developers; Mr. Arijit Mitra (Head of Distributed Generation, LONGi) and Mr. Vivek Bhardwaj (Head of Sales – India, GoodWe) representing the equipment suppliers and Mr. Amar Narula (Partner, Trilegal) bringing in the legal perspective. We also had two C&I consumer representatives on the panel – Mr. Debasish Ghosh (AVP, Hindalco Industries) and Mr. Ashwin Kak (Associate Director, AB InBev).

C&I consumers currently source only about 5% of their power requirement directly from renewables. The consumers are under growing pressure from their investors and customers to scale up renewable procurement and reduce carbon emission. Renewable power also has the benefit of being cheaper than grid power in most states. Despite strong interest from consumers and developers, OA renewable capacity addition has slowed down in the past two years due to hurdles posed by DISCOMs and state regulators. As a result, the industry is facing a number of distressing policy and regulatory issues.

Figure: Estimated C&I power consumption sources

Source: BRIDGE TO INDIA research

Both Hindalco and AB InBev mentioned that they want to scale up their renewable power programme and have been examining different procurement options. Hindalco currently has an installed capacity of 45 MW open access solar, with another 60 MW in pipeline. They also have plans to foray into pumped hydro and energy storage in the future. AB InBev has made a commitment to achieve net zero carbon emissions globally by 2025. Interestingly, they mentioned that while they have already achieved more than 50% renewable penetration in many countries, they are struggling to go beyond 10% in India. Both consumers also talked about various challenges on regulatory and policy fronts as well as land acquisition and transmission connectivity. A growing challenge in recent times is ad hoc cutback in banking provision whereby many states are either removing banking provision altogether (Andhra Pradesh and Madhya Pradesh) or restricting it to 15 minutes only (Karnataka). Inconsistent interpretation of ‘group captive’ policy with different shareholding and power consumption norms by different states is also a major concern. For example, Maharashtra has been levying additional surcharge even on captive projects.

The project developers, on their part, believe that the OA market has very attractive growth prospects and could grow by 30-40% per year. Among states, Karnataka is deemed attractive due to stable policy landscape and banking provision. Gujarat, Maharashtra and Odisha are also deemed favourable with increasing demand. Continuum mentioned that they are hybridising their 800 MW of wind projects with addition of solar and storage capacity over the next 2 years. The move allows them to use existing connectivity infrastructure and provide greater quantum as well as more reliable power to customers with a much higher savings potential in comparison to standalone solar or wind projects. However, hybridisation is only possible where the developer has 100% ownership of assets and dedicated evacuation infrastructure.

On countering DISCOM resistance to OA power, most panellists agreed that unless DISCOMs earn similar margin from OA power as grid power supply business, their resistance would continue to grow. Some states (Gujarat, Tamil Nadu and Odisha) have already achieved this equilibrium through increase in OA charges. Other interesting discussion points in the webinar were related to need for bilateral RECs and innovative business models like Contract for Differences (CFD) or virtual PPAs for the market to grow. One of the panellists mentioned that some large-scale consumers are seriously exploring the virtual PPA option.

To address the policy and regulatory concerns of the panel, Mr. Dinesh Jagdale added that MNRE along with the Ministry of Power (MOP) has been making constant efforts to make policy and regulatory framework more stable. He mentioned that MOP is expected to shortly release directives to ease regulatory procedure for OA connectivity and reducing minimum capacity threshold from the current 1 MW.


Recent reports

India Solar Map | December 2023

India Solar Map | December 2023

India Solar Map 2023 is an info-graphic report covering growth of utility scale solar sector – national and state-wise commissioned and pipeline capacity, leading market players and portfolio details of top 16 project developers. Capacity addition in 2023 fell 51% YOY to 5,924 MW taking total utility scale solar capacity to 59,840 MW. Total project pipeline stands at a record 74,161 MW.

India Corporate Renewable Brief | Q4 2023

India Corporate Renewable Brief | Q4 2023

This report provides an update on key trends and developments in the corporate renewable market including capacity addition, key players, policy & regulatory issuance, financing, PPA tariffs and other market trends.

India PV Module Intelligence Brief | Q4 2023

India PV Module Intelligence Brief | Q4 2023

This report captures quarterly trends in module demand and supply, import and domestic production volumes, supplier market shares, break-up by technology and rating, global market scenario, pricing trends across the value chain, key policy developments and market outlook.

India Solar Compass | Q4 2023

India Solar Compass | Q4 2023

This report provides a detailed update of all key sector developments and trends in the quarter – capacity addition, leading players, tenders and policy announcements, equipment prices, financial deals and other market developments. It also provides market outlook for the next two quarters.

Inter-state OA — opportunities and challenges

Inter-state OA — opportunities and challenges

Inter-state transmission system (ISTS) open access (OA) renewable market is growing strongly on the back of multiple drivers including a waiver from ISTS charges together with decarbonisation pressure on corporates and streamlined transmission connectivity approval process. However, the ISTS route savings are viable only for projects commissioned by June 2026 (at least 75% ISTS charge waiver).

India Corporate Renewable Brief | Q3 2023

India Corporate Renewable Brief | Q3 2023

This report provides an update on key trends and developments in the corporate renewable market including capacity addition, key players, policy & regulatory issuance, financing, PPA tariffs and other market trends.

To top