Red light to open access consumers of green power

Move to levy transmission charge to impact DMRC and discourage SAIL, CIL

A notification making green power more expensive for customers who are not power distribution companies (discoms) has dampened the move towards open access in renewable energy.

The Delhi Metro Rail Corporation (DMRC) will be at the receiving end of this notification. Industry players also pointed out to the signals the notification has sent to other big consumers who want to move towards green options voluntarily.

A case in point is that of the Madhya Pradesh government, which has been in discussions with Coal India, Steel Authority of India, Rashtriya Ispat Nigam and the Railways for supplying power directly from solar parks. The Centre’s move to levy inter-state transmission (ISTS) charge, which has the backing of Power and Renewable Energy Minister Piyush Goyal, has upset the plans of such bulk power procurers looking to turn green.

The move also runs contrary to the government’s stated position of encouraging open access. “While the amendment to the Electricity Act for promoting open access has been kept in abeyance for some time, this move creates a distinction between discoms and open access customers. This further shows that the government is not serious about open access,” said an industry analyst who did not want to be quoted. 

An open access regime allows power purchasers to buy electricity directly from the generators, instead of going through discoms. This impacts profitability of discoms, especially of the inefficient ones, since their big and more profitable and reliable customers go away.

The DMRC is now pleading with the Centre it be allowed the status of “deemed licensee” under the Electricity Act, on a par with the Railways. “In a Bill for amendment of the Electricity Act, the ministry of power had recommended that government-owned Metro systems be given deemed licensee status. But the ministry is now telling us that we are like any other customer,” Anoop Kumar Gupta, director (electrical), DMRC, told Business Standard.

The government-owned Metro had in April signed a power purchase agreement (PPA) with the Madhya Pradesh government-promoted Rewa Ultra Mega Solar Ltd (RUMSL) to buy 121 million units (kilowatt per hour) from each of its three units.

Power Grid Corporation of India (PGCIL) is developing a 220/400-kilovolt substation at the Rewa project site. As the power ministry had granted the status of regional generating station to the project, it was allowed exemption from ISTS charge which would have enabled Rewa power to reach up to the periphery of Delhi at the same rate at which it is injected at the site. But now, the situation has changed, putting the relevant PPA clause under cloud. 

When asked about the impact of the ISTS charge on Rewa solar park, Manu Srivastava, principal secretary, renewable energy, Madhya Pradesh, said the matter has been taken up with the Centre. He did not elaborate on what impact it would have on future projects but said the scheduling of power supply from the 750-Mw Rewa project was designed to maximise energy supply to the DMRC. 

“Using optimum scheduling approach at the central transmission utility (CTU) interface, and with the support from MP Power Management Company Ltd, the project has been designed to use higher transmission line utilisation of up to 40 per cent,” he said. 

Without such scheduling, the impact of point of change (POC) charge would have been higher at Rs 1.47 a unit. Srivastava said due to better utilisation of transmission line, it would come to about 91 paise.

The ISTS charge is levied to fund inter-state transmission networks that involve huge investment. POC is one way in which PGCIL funds ISTS. Discoms are exempted as they are bound by renewable purchase obligations, said a person close to the change in policy. “Open access customers require POC and to provide that, transmission networks need investment. The regulator socialise this cost across customers. If open access customers are exempted, other customers would have to pay,” he said. More renewable energy, coupled with the intermittency of supply, would require greater investment for balancing power.

Gupta, however, said if this was the reason, then even RPO obligations should not subsidised by the Centre. 

The increase in power cost would translate to an additional burden of around Rs 31 crore annually for the DMRC. Power constitutes 35-40 per cent of its operational cost. “When we signed the PPA, the aim was to bring green energy to Delhi. Cost economics worked in favour of us by default,” said Gupta. It was envisaged that DMRC would save around Rs 1,220 crore over a 25-year contract if the current average cost of Rs 6 a unit is taken as the base. This saving would now be around Rs 775 crore less. 

Gupta said the ISTS charge should not be uniform since unlike conventional power, the transmission line is not utilised for a full day in case of solar where generation is only during the day.

The DMRC director said the government should not keep changing the goalpost.