Understanding Green Energy Open Access in Maharashtra

Introduction to the concept of Green Energy open access

• In exercise of the powers conferred by section 176 of the Electricity Act, 2003, the Central Government made “Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules, 2022” published on  6th of June, 2022 with the objective of ensuring access to affordable, reliable, sustainable and green energy for all. 

• The salient features of the said Green Energy Open Access Rules are including the energy from Waste-to-Energy plant included as part of RE in addition to reducing  the minimum contracted demand or sanctioned load requirement to be a 100 kW. Further clarity was provided in terms of a swift application approval (within 15 days), visibility on CSS and AS charges. This is a huge win-win situation for both RE developers as well as C&I players who are desperate to shift their power consumption from ‘Brown’ to ‘Green’ for more than one reason. 

• Forum of Regulators (FOR) framed model Green Energy Open Access Regulations and various States have also already adopted or are in the process of adopting the said Green Energy Open Access Rules by promulgating their own regulations to be in sync with the said Green Energy Open Access Rules. 

Key amendments by Maharashtra Electricity Regulatory Commission (MERC)

• MoP sent a letter dated 13th September, 2022 to all Electricity Regulatory Commissions (ERCs), advising the ERCs to make their Regulations consistent and in alignment with the ‘The Electricity (Promoting Renewable Energy through Green Energy Open Access) Rules, 2023’ and its amendments.  

• MERC for the first time in this subject, gave an in principal approval to align with Green Energy open access on 28th July 2023 while giving order on the Petition of Pimpri Chinchwad Municipal Corporation and Antony Lara Renewable Energy Pvt. Ltd. Who sought for adoption of the Electricity (Promoting Renewable Energy through Green Energy Open Access) Rules, 2022. 

• Commission mentioned in the order that Green Energy Open Access Rules, 2022 framed under the Electricity Act, 2003, are subordinate legislation which have been notified after consultation with all Stakeholders and also as per procedure these rules have been laid before both the Houses of the Parliament. As such, all concerned are duty bound to comply with the provisions of the Act and the Rules. Hence MERC mentioned that if there is an inconsistency in MERC’s Regulations and Rules, then provisions of GEOA Rules will prevail. 

2.1 Open Access regulations in MH:

• Commission notified the MERC (Distribution Open Access) Regulations, 2016 on 30th March 2016 (Principle regulation) and amended it in 2019(First Amendment), for facilitating Open Access on the distribution system of the Distribution Licensees. 

• In the Draft version of MERC (Distribution Open Access Regulations) (Second amendment), 2023 which was published in August 2023, the MERC aligned the MoP’s GOAR with the existing regulations. 

• Later the Commission incorporated certain relevant amendment clauses from GOAR at the appropriate places to the existing regulation and notified the MERC (Distribution Open Access Regulations) (Second amendment) during November 2023. 

• The notified regulations will come into force from the date of their publication in the Official Gazette 

2.2 Major Highlights from the amended MERC (Distribution Open Access Regulations):

• Minimum capacity restriction revised from 1000 to 100 kW of Contract Demand or Sanctioned Load. 

• At least 100 kW under Third Party Open Access either through one meter or aggregated.  

• In case of captive consumers, there will not be any load limitation 

• Consumer having Root Top Renewable Energy Generating Systems can simultaneously avail Open Access under this Regulation. This is a most positive outlook from MERC, consumer was eagerly waiting for this change in Regulation. 

• Additional Surcharge benefits. (Additional surcharge not to be applicable for Green Energy Open Access consumers, if fixed charges are being paid by such consumer) 

• Banking charges from currently 2% to 8%, any surplus un-utilized banked energy will lapse at the end of each banking cycle and generators will be entitled to get RECs to the extent of the lapsed banked energy. 

Benefits for Commercial and Industrial Consumers

• Savings: The landed Discom tariff in MH for C&I Consumers falls anywhere between INR 8.50 / Unit (Industry) to INR 13.00 / Unit (Commercial) and there is a straigh tforward savings to the tune of ~ 40% to 50% on energy costs by opting for RE open access. 

• Stable costs : Renewable energy provides more predictable pricing (PPA is being signed for 25 years) compared to C&I’s traditional Discom sourcing, which can be subject to price fluctuations due to geopolitical factors and supply constraints. This stability can help C&I consumers better forecast and manage their energy budgets. 

• Energy independence: Green energy open access sourcing reduces reliance on centralized power grids, mitigating the risk of disruptions due to MH Discom grid outages or fuel supply interruptions. 

• ESG Compliances: Aligns with corporate sustainability goals in reducing the carbon emissions, enhances brand reputation, and may attract environmentally conscious customers. 

Understanding the Process and Requirements

• Applicants for GEOA can be a Generating Company which owns or operates, or intends to own or operate a Generating Station in the State, a Consumer eligible for Open Access, a Distribution Licensee or even a Trading Licensee. 

• In case of Short-Term Green Energy Open Access, Maharashtra State Load Despatch Centre is the nodal agency and in case of Medium / Long Term Green Energy Open Access, the State Transmission Utility will perform duties of Nodal Agency. 

 4.1 Connectivity agreement (Primary agreement to be signed):  

• An application for Connectivity to the Distribution System of a Distribution Licensee to be made to the Nodal Agency with the required particulars, documents and fees. 

• The application for Connectivity to be accompanied by a Demand Draft or proof of payment by electronic mode for a non-refundable fee of the following amount (Application fee: INR 1 Lakh for RE). 

• The Distribution Licensee in consultation with the State Transmission Utility (STU) if required, carry out the inter-connection study as specified in the relevant Regulations of the CEA governing technical standards for Connectivity to the Grid. 

• While granting Connectivity, the Distribution Licensee will indicate the name of the sub-station or switchyard where Connectivity is to be granted. 

• The cost of creation or augmentation of the required facilities (if any) will have to be borne by the Generating station / applicant. 

• The Applicant and the Distribution Licensee will enter into a connection Agreement upon grant of Connectivity 

• The Distribution Licensee will convey its decision on grant of Connectivity within thirty days from the receipt of an application complete in all respect. 

4.2 Open access agreement (Secondary agreement to be signed)

• An Open Access Agreement to be entered upon grant of Medium or Long Term Open Access. 

• The open access will be categorized on the basis of its duration.

• The application should contain details of PPA’s / contracts and MOU regarding power to be injected, power to be drawn, requisites for balancing and mismatch power requirement etc. 

• On receipt of the application for Open Access, the Nodal Agency will obtain all the permissions and clearances from the Distribution Licensees, MSLDC, STU and other agencies, as may be required, for the Open Access transaction.  

• The Nodal Agency will convey its decision on the grant of Long-term Open Access within 120 days if system augmentation is not required, or within 180 days otherwise. 

The Future of Green Energy in Maharashtra

• Maharashtra is one of the highly industrialized states in the country. 

• 10% of overall factories across India is based out of Maharashtra.  

• Around 28.5% of the overall FDI inflows in the country is invested in Maharashtra. 

• There are extensive bulk energy consumers in MH under the ambits of sectors like IT, Automobile, food processing, Gems & Jewellery, chemicals and pharmaceuticals who are very much pumped up in terms of transitioning to RE under open access for more than one reason. 

• The government subsidies in certain sectors (E.g.: Textile) on the electricity bills are also expected to be capped at a certain level and in some cases will eventually be even phased out. 

• Maharashtra benefits from supportive state government policies on renewable energy, coupled with progressive regulations. As a result, the future of green energy appears highly promising in the state. 

FAQ's

What is Green Energy open access and how does it work?

• Open access refers to the provision for consumers to procure green power directly from a source other than the local distribution company (DISCOM), often through private generators or renewable energy producers. 

• There will be a non-discriminatory provision for the use of Transmission lines or Distribution system or associated facilities helping in transfer of Green power under green energy open access. 

• Open access in Maharashtra is governed by regulations set forth by the Maharashtra Electricity Regulatory Commission (MERC). These regulations outline the terms and conditions under which consumers can avail themselves of open access, including eligibility criteria, charges, and other relevant aspects. 

What are the changes made to the Green Open Access policy according to the new regulations?

• Approval for Green Open Access is to be granted in 15 days or else it will be deemed to have been granted. 

• Limit of Open Access Transaction has been reduced from 1 MW to 100 kW for green energy (No cap for captive) 

• Provide certainty on OA charges to be levied on Green Energy OA Consumers which includes transmission charges, wheeling charges, cross-subsidy surcharge and standby charges. 

• Energy banking regulations would be standardized to monthly providing more flexibility to the power generators. 

• AS not to be applicable for Green Energy Open Access Consumers, if fixed charges are being paid by such a consumer 

• CSS not to be increased, during twelve years from the date of operating of the generating plant using renewable energy sources, by more than 50% of the surcharge fixed for the year in which OA is granted.