Blog: Favorable Banking Policies Driving Growth of Open Access Solar in Many States – Mercom India

Energy banking is an essential aspect of any open access project. The states with favorable energy banking policies are leading the way in open access installations.

Banking of energy or power is when the generator supplies power to the grid, not to sell to either the third party or a licensee but to withdraw it from the grid for its use later when needed.

Through banking, generators inject surplus energy into the grid, which can be withdrawn as and when needed. This helps the renewable energy developer avail surplus energy per requirement while the DISCOMs can generate additional revenue through banking charges.

Karnataka was the top state in terms of solar open access installations in Q1 2022, followed closely by Maharashtra, Gujarat, Chhattisgarh, and Tamil Nadu. The top five states accounted for 86% of the total installations during the quarter, according to Mercom India Solar Open Access Market Report Q1 2022.

Uttar Pradesh, Maharashtra, Madhya Pradesh, Rajasthan, Karnataka, Haryana, and Chhattisgarh have well-defined energy banking policies which have provided open access customers with a sense of energy security.

Haryana

Haryana Electricity Regulatory Commission allowed energy settlement on an annual basis with a banking charge of ₹1.5 (~$0.019)/kWh for 100% of the energy to be banked by captive customers. The time-of-day tariff approved by the Commission also mentions that the drawal of banked power will not be allowed during the peak months (May to September) and also during peak load hours.

Uttar Pradesh

The Uttar Pradesh Electricity Regulatory Commission, in its open access banking regulation for captive and renewable energy generation projects, implemented energy settlement on an annual basis with a banking charge of 6%. It also allowed 100% of the energy to be banked for captive customers.

Last December, UPERC declared that peak hours for banking and withdrawal of energy would be from 18:00 to 24:00 and off-peak hours from 00:00 to 18:00. The Commission determined the peak and off-peak hours while disposing of a petition filed by an open access solar project developer.

Karnataka

The Karnataka Electricity Regulatory Commission (KERC) enacted an annual (April – March) energy settlement with a banking charge of 2%, allowing 100% of the energy to be banked for captive customers and third-party sales.

In March this year, KERC ruled that the energy banked and unutilized as of March 31, 2021, including the carried forward banked energy for the financial year 2020 from all renewable sources, both the REC (renewable energy certificate) and non-REC route, should be utilized on or before August 31, 2022, by the companies wheeling energy under the wheeling and banking agreement.

Chhattisgarh

 The Chhattisgarh State Electricity Regulatory Commission’s (CSERC) Decentralized Renewable Energy Regulations in 2019 implemented energy settlement on an annual (April – March) basis with a banking charge of 2%. It also allowed 100% of the energy to be banked for captive customers and third-party sale. The Commission does not let banked energy be redeemed during peak months, i.e., June 25 to July 25, September 10 to October 10, March 15 to April 15, and peak hours (6 pm to 11 pm).

The CSERC has clarified the wheeling and banking regulations for independent distributed renewable energy systems. The settlement of energy at the consumer end should be in the following priority:

  • Solar energy injection after adjustment of transmission and wheeling losses
  • Captive energy from the captive generating projects located at a distant location after adjustment of transmission and wheeling charges and losses as applicable
  • Open access energy through exchange or any other source
  • Banked solar energy redemption, and after that, any excess consumption should be considered as energy of distribution licensee

Gujarat

 The Gujarat Electricity Regulatory Commission has allowed daily energy settlement for solar open access projects from 7 am to 6 pm. Captive and third-party generators can bank up to 100% of the energy. The banking charge is ₹1.5 (~$0.019)/kWh for HT consumers and ₹1.10 (~$0.014)/kWh for LT consumers.

Maharashtra

 The Maharashtra Electricity Regulatory Commission introduced regulations for distribution open access in 2019. It implemented energy settlement on a monthly basis with a banking charge of 2%, allowing 100% of the energy to be banked for captive customers and third-party sales.

Telangana

 The Solar Power Policy Framework for Telangana enforces energy settlement on an annual (April – March) basis with a banking charge of 2%, allowing 100% of the energy to be banked for all captive and open access customers. The Commission mandates that banked units cannot be consumed or redeemed in the peak months (Feb to June) and the peak hours (6 pm to 10 pm).

Rajasthan

 The Rajasthan Solar Policy 2019 allowed annual energy settlements for captive and third-party open access projects. The drawal of banked energy will not be permitted during peak hours as determined by DISCOMs. The banking charge for energy settlement is 10% of the overall banked energy.

Recently, the Ministry of Power issued the Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules, 2022.’ Banking will now be permitted at least every month on payment of charges to compensate additional costs to the distribution licensee. The allowed quantity of banked energy by the green energy open access consumers will be at least 30% of the total monthly electricity consumption from the distribution licensee.

‘Mercom India Solar Open Access Market Report Q1 2022’ is 116 pages and covers a detailed analysis and data on the market. For the complete report, please  visit:  https://mercomindia.com/product/india-solar-open-access-market-report-q1-2022

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s