Uttar Pradesh shows open access promise, finds Bridge to India

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The Uttar Pradesh (UP) state agencies have been reluctant to provide open access (OA) approvals in the past. There is virtually no OA solar capacity in the state. But this amendment, in line with the state solar policy, indicates the state government’s intent to finally open doors to the OA market, finds Bridge to India, a renewable analyst firm based in Gurugram, Haryana.

The state commission has amended the following provision to the the Captive and Renewable Energy Regulations (CRE), 2014:

Provided for large scale stand-alone solar projects set up for sale of power to Electricity distribution Company or Third party or Captive use, there shall be exemption of 50 % on wheeling charges/transmission charges on Intrastate Sale of Power and 100 % exemption for Intrastate Transmission system on Interstate sale of solar power. This exemption will be applicable as per technical feasibility and U.P. Electricity Regulatory Commission (UPERC) regulations, as amended from time to time.

According to the All India Electricity Statistics, General Review 2017, Central Electricity Authority of India (CEA), the industrial sector accounts for 34% of total power consumed in the state although almost 38% of their requirement is met from captive sources. The UP state has a relatively low cross-subsidy surcharge (CSS) of INR 0.60/kWh for industrial consumers which makes OA solar about 25% cheaper than grid power. Commercial consumers are also eligible for OA power but CSS for them is prohibitively high at INR 4.52/kWh.

The analysts states that the project developers could avoid CSS by opting for the group captive route but regulators are increasingly challenging this approach.

Moreover, according to Bridge to India, a comparison of OA solar cost under multiple scenarios (before exemptions, after exemptions and for captive sources) with other sources of power can be a very attractive route for industrial and commercial consumers.

Bridge to India has assumed base cost of solar power and conventional power at INR 4.50/ kWh and INR 3.50/ kWh respectively to calculate total landed cost of OA power.

Source: Bridge to India analysis

OA market in other states such as Karnataka and Madhya Pradesh has attracted large IPPs such as ReNew Power, Avaada Power, Shapoorji Pallonji, Aditya Birla, Hero Future Energies, and AMP Solar Group Inc. As these states shut down following withdrawal of incentives, UP could be the next hope for OA market, the analyst firm concluded.