A robust regulatory framework is critical to the development of the renewable energy sector. This will be increasingly important going ahead, as India begins to integrate a significantly larger amount of renewable energy into its energy mix. Understanding the development of regulations, RE specific regulatory matters and litigation in the sector helps one understand trends and periodic issues that stakeholders in the sector face. Further, the intersection with the national and state level RE policies create peculiarities that could either serve as bottlenecks or aid the growth of the sector.
Gujarat being one of the states in India with a high RE energy mix, is a natural case study for such an exercise. This study aims at understanding the development of RE specific regulatory issues over the last decade (2010-2021) in Gujarat. It highlights important issues that have led to petitions at the state regulator. This report can serve as a useful aid to researchers, analysts, potential investors and to regulatory officials in the sector. The report is the second in a series of such reports (the first being the state of Maharashtra).
The Central Electricity Regulatory Commission (CERC) issued draft (Deviation Settlement Mechanism and Related Matters) Regulations, 2021 regulations on 7th September, 2021 along with an Explanatory Memorandum and invited public comments on the same.
These draft DSM regulations mandate an important element of the framework which ensures reliability, security and stability of the grid in the country. The important points in our submission are
Prayas (Energy Group)’s comments and suggestions are detailed in this submission.
The rapidly evolving energy sector needs a feature-rich, publicly accessible and usable analytical framework to examine and understand the sector to inform policy, investments etc. Prayas (Energy Group) has built an open-source, generic, customisable, free-to-use demand-oriented energy systems modelling platform called Rumi with this motivation, and built the PIER (Perspectives on Indian Energy based on Rumi) energy model of India through the decade of the 2020s.
The PIER modelling exercise identifies some interesting trends and policy insights for the Indian energy sector. There is a need for urgent policy attention to increase usage of modern cooking fuels, particularly in some states and regions. Systemic improvements in energy efficiency can help do ‘more-with-less’ in the form of providing better energy services with lesser energy. Consumer behaviour is identified as a key lever, since small changes in behavioural choices can significantly impact the country’s energy demand and supply mix. Regarding electricity supply, the study suggests caution in future coal capacity addition beyond what is in the pipeline as it could lead to undesirable lock-ins if India achieves its renewables targets. The PIER exercise also suggests that it may be desirable to revisit the relative shares of solar and wind in its planned renewables portfolio.
In addition to the above insights, the report presents various other results that may be of interest, such as the share of space cooling in residential demand and peak demand, the electricity generation mix in future years and India’s import dependence for various energy sources.
Rumi can be downloaded and used from https://github.com/prayas-energy/Rumi, and PIER can be downloaded and used from https://github.com/prayas-energy/PIER. In addition, the set of key outputs from PIER are available for download as a spreadsheet from this page.
We hope that the energy modelling community finds Rumi and PIER useful and will enrich them further using their own assumptions, data and methodology.
The Ministry of Power has proposed amendments to the Late Payment Surcharge Rules, 2021. One of the proposed amendments (Para 6) proposes that:
It is our suggestion that the proposed Rule 6 be deleted from the final rules. This is because it is unfair to the procurers and infringes upon the sanctity of the contract signed between the two parties. Further, a similar clause to ensure continued payment of fixed charges already exists in case LC is not maintained.
Implementation of Rule 6 could reduce faith that DISCOMs have in the processes for power contracting. This could lead to increased litigation, place undue burden on DISCOM finances, increase consumer tariffs, raise risk of load shedding and contribute to increase in state-owned capacity addition which could affect private investment in the sector. Some of the issues with implementation of Rule 6 are detailed in our submission
The Ministry of Power released its ‘Draft Electricity (Promoting renewable energy through Green Energy Open Access) Rules 2021’ on 16th August, 2021 inviting comments and suggestions on the same. The draft rules include many provisions intended towards the development of open access RE. Some of these key provisions include reduction in the minimum limit of contracted demand to 100 kW, uniform Renewable Purchase Obligation (RPO) for DISCOMs, OA and Captive consumers, a central nodal agency with a centralised registry for all green OA consumers, no Additional Surcharge on green OA, etc. Although the objective of promoting green energy open access is welcome, many crucial concerns remain.
To truly develop efficient and competitive options for supply, a balanced and sustainable policy framework is needed that boosts investor confidence, protects consumer interests, enhances competition, and compensates utilities adequately for the risk they undertake and the services that they provide. The draft rules need to ensure clarity and certainty in processes, compensation at cost to utilities for services provided, and should provide flexibility and choice to consumers to meet their demand. Our comments focus on –
Need for harmonious changes across legal, policy and regulatory instruments: It is unclear whether the Central Govt rules are the right way to achieve changes as these matters are under the ambit of State ERCs under the Electricity Act, 2003. This risks a long, litigious process impeding decision making.
Extending applicability to all open access and captive, not just RE: Any enabling provision, including centralised registry, reduction of eligibility limit to 100 kW etc should not be restricted to RE alone, but extended to all forms of open access and captive, to provide flexibility and choice for consumers.
Size-based differentiation in processes: There should be separate treatment in regulations for consumers with connected load between 0.1 to 0.5 MW, 0.5 to 1 MW and those with load greater than 1 MW.
Replacement of CSS and AS with a single charge: We propose levy of a single surcharge (in place of CSS and AS) which is delinked from cross-subsidy and backing down, with a ceiling for Rs. 2.5/unit for a period of 5 years.
For more specific comments and detailed suggestions, please read our submission below.
The draft rules were also deliberated in a round table hosted by Prayas (Energy Group), details of which are available here.
A virtual roundtable on ‘Renewables, Open Access and the future of Retail Competition in India’ was organised by Prayas (Energy Group) on September 7, 2021. The landscape of the Indian power sector has undergone a drastic change, driven by a shift towards RE as well as consumers migrating away from the DISCOMs. Presently, the share of sales migration stands at close to one-fifth of the total DISCOM sales in India. This increasing migration is a consequence of rapidly falling RE prices as well as increasing corporate commitments towards RE. While the economics does favour RE and subsequent migration via open access and captive routes; the policy environment in the country is yet not conducive towards an accelerated development of these competitive options. The sector remains mired with administrative hurdles, uncertainty regarding open access charges as well as unclear policy provisions. The participants deliberated upon structural issues of the power sector, the challenges faced in implementation and operationalisation of OA as well as the provisions of the recently released Draft Electricity (Promoting renewable energy through Green Energy Open Access) Rules 2021 by the Ministry of Power. The roundtable had twenty discussants, which included representatives from Distribution Companies (DISCOMs), Regulatory Commissions, Sector Experts, Lawyers, Renewable Energy (RE) project developers and Open Access (OA) consumers.
A summary of the key points raised during the discussion and the context-setting presentation given by PEG at the start of the roundtable can be found below.
The Haryana Electricity Regulatory Commission invited comments for finalization of the Draft Haryana Electricity Regulatory Commission (Prepaid Smart Metering) Regulations, 2021. A few key recommendations provided by Prayas include foremostly the need to consolidate all metering related provisions and regulations in one metering regulations or the SoP. Our submission has also highlighted the need for addressing consumer concerns for application process, grievance redressal and data privacy. We have also suggested finer changes to the draft regulations in order to facilitate easier transition to smart meters for all consumers.
Ministry of Power (MoP) constituted an Expert Committee to prepare and recommend National Electricity Policy 2021. In letter dated 27th April 2021, MoP solicited suggestions and comments on draft National Electricity Policy. Prayas (Energy Group)’s comments and suggestions on NEP 2021, focus on multiple aspects including the need to:
The draft shared by the Ministry and our detailed suggestions are below.
On 25th May, Prayas made an additional submission to the committee highlighting the need to further retail competition and review need for RE concessions. The submission also provided more details on the idea of group metering pilots for agricultural consumers as well as virtual net metering for public bodies.
This short article, which appeared in the e-edition of The Indian Express newspaper on 15 June 2021, captures the key points in the Prayas submission to the Ministry of Power on the draft National Electriciy Policy.
The Chhattisgarh Electricity Regulatory Commission (CSERC) issued draft RPO-REC regulations on 26th February, 2021 along with an Explanatory Memorandum and invited public comments on the same. Firstly, we welcome the publication of these draft RPO regulations which remain the bedrock of RE growth in the country.
The important points in our submission are:
Prayas (Energy Group)’s detailed comments and suggestions are detailed in the submission.
The Rajasthan Electricity Regulatory Commission (RERC) issued a discussion paper on ‘Framework for Large Scale Integration of Renewable Energy using Energy Storage Systems and its impact on Tariffs’ in March 2021, and invited public comments on the same to facilitate the requisite regulatory intervention.
Firstly, we welcome this pro-active and timely initiative from RERC given that this topic is extremely critical for the future growth of the RE sector. Further, we fully acknowledge the need for further flexibility in the system as a means of reliably integrating cost-effective renewables and the important role that energy storage can play in this regard. Increasing Battery Storage Systems is a key way of increasing flexibility and in line with the ‘National Mission on Transformative Mobility and Battery Storage’ approved by the Cabinet in March, 2019. Additionally, the price of batteries has fallen sharply, by 87% in real terms in the last decade from $1,100/kWh in 2010 to $137/kWh in 2020. By 2023, prices are predicted to be $100/kWh and $ 61/kWh by 2030. To take advantage of these global developments, it is important to kick start the deployment of large scale batteries and other economic storage solutions and gain valuable experience and reap its multiple reliability and economic benefits.
As noted in the paper, energy storage systems can be located with generation assets or be deployed as Transmission / Distribution elements or even be deployed at the consumer location behind the meter. In all the cases, storage systems can provide a variety of services like energy shifting / peak load management, a host of ancillary services like frequency and reactive power control, black start etc., increase system flexibility to absorb more variable RE and reduce curtailment, improve reliability & resiliency and even defer capital expenditures in certain cases. To further add to the regulatory complexity, storage systems can be set up in a manner that they can provide such multiple services through a single project/asset. Our suggestions to accelerate the deployment of cost-effective storage as detailed in the submission.