Free access to energy gets the green light

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JIn order to further accelerate India’s mission to achieve half of its installed electricity capacity from non-fossil fuels by 2030, the Ministry of Energy (MoP), by its notification dated June 6, 2022, introduced the Electricity (Promotion of Renewable Energy through Open Access to Green Energy) Rules, 2021 (Rules) which promote renewable energy through open access to green energy for generation, l purchase and consumption of green energy. This includes energy from waste-to-energy plants.

Green power is broadly defined in the rules as meaning electrical energy produced from renewable sources, including any mechanism that uses green power to replace fossil fuels, such as the production of green hydrogen or ammonia green. Indeed, the MoP has identified green hydrogen or green ammonia as new areas of interest and introduced rebates on charges payable by open access consumers.

Abishek Tripathi
Managing Partner
Sarthak Lawyers and Advocates

Consumers have been given the freedom to produce, consume and purchase green energy according to their needs. They can produce it themselves, obtain it in free access from any developer or requisition it from distribution companies (discoms) from captive power plants or through the purchase of renewable energy certificates or green hydrogen or green ammonia.

The rules reduce the limit of the minimum contractual demand or sanctioned load required to obtain open-access green power from 1 MW to 100 kW. This reduced limit will allow even small businesses to buy free access green energy. However, there is no minimum demand or load required for captive consumers. The renewable energy consumed for the production of green hydrogen or green ammonia will be accounted for in the renewable purchase and compliance obligations of the consuming entity. This resulted from the introduction of the Green Hydrogen Policy earlier this year, whereby producers of green hydrogen or green ammonia became eligible for open access through renewables.

To ensure access to affordable, reliable, sustainable and green energy for all, the rules have significantly simplified the process of applying open access to green energy. The relevant nodal agency must approve the request within 15 days, failing which it will be deemed approved. To persuade consumers to use renewable energy, the rules provide that free access to non-fossil fuel sources must take priority over free access to fossil fuels.

Shivika Agarwal, Sarthak Advocates & Solicitors, Energy open access gets green light
Shivika Agarwal
Associated
Sarthak Lawyers and Advocates

The rules have provided much-needed clarity and certainty regarding charges to be levied on open-access green energy consumers, including the non-applicability to open-access consumers of cross-subsidy surcharges and additional surcharges on the supply of electricity produced from waste. to power plants. In addition, green energy consumers are now allowed to bank their excess green energy with discoms if it represents at least 30% of their total monthly energy consumption against payment of charges, to be determined by the competent committee.

While simplifying the open access process, the rules also sought to address the concerns of nightclubs. The rules impose a minimum one-year commitment on open access consumers if they intend to consume green power from the discoms. This was done to avoid the operational difficulties experienced by nightclubs as free access consumers continually switch from free access. This creates challenges for discoms in forecasting demand. The rules also require that the minimum number of time blocks not exceed 12 to avoid large variations in the demands to be met by nightclubs.

While the intentions behind the rules are laudable, some provisions, such as the blanket removal of additional surcharges for open-access green power consumers, may fall outside the MoP’s regulatory authority and usurp the powers of state commissions. To this extent, they can cause conflicts between the central government and the state governments.

The rules boost the green energy market and pave the way for India to meet its commitment to embrace renewable energy. They represent the biggest step taken by the government to advance open access to renewable energy. If implemented, they can make electricity more affordable for small consumers. However, getting cooperation from state governments and discoms will be the biggest challenge to implementing them.

Abhishek Tripathi is Managing Partner and Shivika Agarwal is Partner at Sarthak Advocates & Solicitors.

Sarthak Lawyers and Advocates

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