India has exceeded 10 GW of global installed renewable energy capacity for offtake via open access.
From pv magazine india
India’s installed base of “open-access” renewable energy capacity grew to 10 GW at the end of FY 2021-22, from around 300 MW in 2009. Two-thirds of the 10 GW capacity have been commissioned in the last five years (fiscal 2018–22), with nearly 1.9 GW added in fiscal 2022 alone, according to a new report by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research and Analytics.
Open access is a mechanism whereby consumers can purchase electricity directly from electricity producers, rather than from electricity distribution companies (discoms). The report indicates that the The open-access renewables market has grown in almost all key renewable-rich states. And it will continue to overcome political hurdles to grow organically in the years to come, according to the report.
“The growth of the open access market in India depends on the policies and regulatory environment at both central and state levels. The last year has seen some positive developments in terms of regulation although some hurdles remain,” said report co-author Vibhuti Garg, Energy Economist at IEEFA.
“The Green OA Policy, released in June 2022, has the potential to completely reform the renewable energy OA market landscape,” Garg added, noting his rapid and effective implementation by States.
The report attributes the growth of the open access market to growing awareness and growing demand from commercial and industrial (C&I) customers.
“Dropping clean energy costs and C&I consumer decarbonization goals have helped increase adoption of OA renewable energy,” said co-author Jyoti Gulia, founder of JMK Research and Analytics. “Lately, several independent power producers (IPPs) active in the large-scale renewable energy market are vying to enter the market. [open-access] market. The main reasons for their emergence include the maturity of [open-access] funding and slowdown in central and state level bidding activity.
The report shows that several regulatory challenges continue to impede the growth of open access to renewable energy at the state level.
“Obstacles such as delays in the group captive project approval process are hampering the growth of renewable energy [open-access] market. Other hurdles include unfavorable provisions on power banks and increased penalties for deviation from the feeding schedule,” said co-author Prabhakar Sharma, senior research associate at JMK Research.
The report says states should not impose further restrictive measures on power banks until they meet the central government’s renewables target. It also urges states to implement a multi-year fee structure to provide better long-term clarity for developers and investors.
In addition to regulatory challenges, recent supply-side constraints pose significant headwinds for the open-access renewable energy market. For example, solar module prices have increased over the past 18 to 20 months due to supply chain constraints and increased prices of raw materials such as polysilicon, thus affecting the viability of the project.
“India-specific challenges, such as the imposition of a basic 40% tariff on imported modules and the scarcity of domestic manufacturing capacity for high-power modules, exacerbate an already worrying situation. An additional risk is the upcoming introduction of the Approved List of Models and Manufacturers (ALMM) for [open-access] developers from October 2022,” said co-author Akhil Thayillam, senior research associate at JMK Research.
The report calls for postponing the implementation of ALMM on open access projects until the country develops a significant domestic manufacturing base.
Author: Uma Gupta
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