Explained: Open Access Solar In India For Businesses

In India, open access in the power sector allows large consumers to buy electricity directly from the open market instead of being limited to their local distribution company (Discom). This system helps consumers benefit from competitive pricing and various power sources, including solar energy. The Electricity Act of 2003 introduced open access to encourage competition and efficiency in the power market. Solar power enables businesses to procure energy at competitive rates, reducing electricity costs and supporting sustainability goals.

Open-access solar projects come in various forms, each with specific regulations. They allow large consumers to buy electricity directly from the solar power market, bypassing local Discoms. One type is intra-state open access, which involves using the transmission and distribution network within the same state. Typically, consumers with a contracted demand of 1 MW and above are eligible. They must pay charges like wheeling, cross-subsidy surcharges, and additional surcharges, which vary by state. Approvals from the state regulatory commission and the state transmission utility are required, and solar power generators must accurately schedule and forecast their power generation to ensure grid stability.

Inter-state open access lets consumers purchase solar power from producers in different states, using the national transmission network. A minimum contracted demand of 1 MW is usually required. Consumers must pay transmission charges for both central and state utilities and get approvals from the Central Electricity Regulatory Commission (CERC) and relevant state commissions. They also bear the cost of transmission losses and must ensure accurate scheduling and forecasting to avoid penalties.

In the Day-Ahead Market, consumers can buy solar power through power exchanges for delivery the next day. The Real-Time Market allows for power purchase within a short period, usually within an hour. Both generators and consumers must be registered participants in the power exchanges, with prices determined through competitive bidding. Real-time scheduling and adjustments are necessary to match demand and supply.

Bilateral agreements involve direct contracts between solar power producers and consumers. These long-term agreements provide stability, with terms like price, duration, and quantity negotiated directly. Necessary regulatory approvals must be obtained, and applicable wheeling and transmission charges, as well as surcharges, must be paid.

Group captive projects involve multiple consumers investing in a solar power project and sharing the electricity generated. Consumers must collectively hold at least 26% equity in the project and consume at least 51% of the power generated. These projects often enjoy exemptions from cross-subsidy and additional surcharges.

Captive open access involves a single consumer setting up a solar power project primarily for its own use. The consumer must own at least 26% of the project and consume at least 51% of the electricity generated. Captive projects are often exempt from certain surcharges.

Key regulatory bodies include the Central Electricity Regulatory Commission (CERC), governing inter-state transmission, and State Electricity Regulatory Commissions (SERCs), governing intra-state transmission. The Electricity Act of 2003 provides the legal framework for open access in India. Renewable Purchase Obligations (RPOs) mandate certain consumers to buy a specified percentage of their power from renewable sources, including solar.

Third-party sale in solar energy involves selling electricity generated by a solar power plant to a third party, not necessarily the end consumer. This is often facilitated through power purchase agreements (PPAs). Captive and group captive projects provide companies with control over their energy supply, potentially reducing costs and improving reliability. These arrangements are financially attractive due to exemptions from certain charges.

India’s government has implemented various policies and incentives, such as subsidies and tax benefits, to encourage solar energy development. These mechanisms help increase solar power deployment, contributing to India’s renewable energy targets and reducing dependence on fossil fuels.