BRIDGE TO INDIA hosted a webinar on 29 September 2020 to discuss India’s open access (OA) renewables market. Participants included Mr. Dinesh Jagdale (Joint Secretary, MNRE), Ms. Bhavna Prasad (Director - Sustainable Business, WWF India) and a spectrum of private sector stakeholders comprising Mr. Arvind Bansal (CEO, Continuum Wind Energy), Mr. S Manikkan (CEO, Radiance Renewables) and Mr. Tejus Arsikere (Chief - Solar farms, CleanMax) as the three developers; Mr. Arijit Mitra (Head of Distributed Generation, LONGi) and Mr. Vivek Bhardwaj (Head of Sales - India, GoodWe) representing the equipment suppliers and Mr. Amar Narula (Partner, Trilegal) bringing in the legal perspective. We also had two C&I consumer representatives on the panel – Mr. Debasish Ghosh (AVP, Hindalco Industries) and Mr. Ashwin Kak (Associate Director, AB InBev).
C&I consumers currently source only about 5% of their power requirement directly from renewables. The consumers are under growing pressure from their investors and customers to scale up renewable procurement and reduce carbon emission. Renewable power also has the benefit of being cheaper than grid power in most states. Despite strong interest from consumers and developers, OA renewable capacity addition has slowed down in the past two years due to hurdles posed by DISCOMs and state regulators. As a result, the industry is facing a number of distressing policy and regulatory issues.
Figure: Estimated C&I power consumption sources
Source: BRIDGE TO INDIA research
Both Hindalco and AB InBev mentioned that they want to scale up their renewable power programme and have been examining different procurement options. Hindalco currently has an installed capacity of 45 MW open access solar, with another 60 MW in pipeline. They also have plans to foray into pumped hydro and energy storage in the future. AB InBev has made a commitment to achieve net zero carbon emissions globally by 2025. Interestingly, they mentioned that while they have already achieved more than 50% renewable penetration in many countries, they are struggling to go beyond 10% in India. Both consumers also talked about various challenges on regulatory and policy fronts as well as land acquisition and transmission connectivity. A growing challenge in recent times is ad hoc cutback in banking provision whereby many states are either removing banking provision altogether (Andhra Pradesh and Madhya Pradesh) or restricting it to 15 minutes only (Karnataka). Inconsistent interpretation of ‘group captive’ policy with different shareholding and power consumption norms by different states is also a major concern. For example, Maharashtra has been levying additional surcharge even on captive projects.
The project developers, on their part, believe that the OA market has very attractive growth prospects and could grow by 30-40% per year. Among states, Karnataka is deemed attractive due to stable policy landscape and banking provision. Gujarat, Maharashtra and Odisha are also deemed favourable with increasing demand. Continuum mentioned that they are hybridising their 800 MW of wind projects with addition of solar and storage capacity over the next 2 years. The move allows them to use existing connectivity infrastructure and provide greater quantum as well as more reliable power to customers with a much higher savings potential in comparison to standalone solar or wind projects. However, hybridisation is only possible where the developer has 100% ownership of assets and dedicated evacuation infrastructure.
On countering DISCOM resistance to OA power, most panellists agreed that unless DISCOMs earn similar margin from OA power as grid power supply business, their resistance would continue to grow. Some states (Gujarat, Tamil Nadu and Odisha) have already achieved this equilibrium through increase in OA charges. Other interesting discussion points in the webinar were related to need for bilateral RECs and innovative business models like Contract for Differences (CFD) or virtual PPAs for the market to grow. One of the panellists mentioned that some large-scale consumers are seriously exploring the virtual PPA option.
To address the policy and regulatory concerns of the panel, Mr. Dinesh Jagdale added that MNRE along with the Ministry of Power (MOP) has been making constant efforts to make policy and regulatory framework more stable. He mentioned that MOP is expected to shortly release directives to ease regulatory procedure for OA connectivity and reducing minimum capacity threshold from the current 1 MW.