Home / Industry / Energy /  Will 50% discount on electricity transmission charges hook solar investors to Rajasthan?

New Delhi: In an interesting development, Rajasthan Electricity Regulatory Commission (RERC) has passed an order to reduce electricity transmission charges by half for companies that sell solar power outside the state.

Many believe that such a move will help Rajasthan, which is well-suited for solar energy generation, attract investment in the sector. Such a move comes in the backdrop of the National Democratic Alliance (NDA) government pushing renewable energy to the top of its energy security agenda. India needs as much as $200 billion to meet its target of installing 100 gigawatts (GW) of solar power and 60,000 megawatts (MW) of wind power by 2022.

“In a response to the petition filed by Rajasthan Solar Association (RSA), Rajasthan Electricity Regulatory Commission (RERC) has issued an order directing implementation of Rajasthan Government order to reduce transmission charges for inter-state open access Solar Projects in Rajasthan by 50%.This by far is one of the key enablers implemented by Government of Rajasthan to achieve the target of 25000 MW of solar capacity," RSA said in a statement on Monday.

This comes at a time when the Rajasthan state electricity board has placed its bets on more private sector participation, cutting the cost of power purchase and finance, and providing 3 million new electricity connections. The state government plans to implement the distribution franchisee model in Ajmer, Kota and Bharatpur this year. While a private firm will take over the operation and maintenance of a distribution area, the ownership will remain with the government.

However, the task seems easier said than done.

While the Electricity Act of 2003 allows open access, its implementation has been an uphill task. Open access means access to use the wire by paying a transmission or wheeling charge to the owner of the network. Network business being a natural monopoly, the regulator must ensure that there is non-discriminatory open access, that is, if the network has capacity, the utility cannot decline its use by anyone.

“It is observed that Commission, while issuing its order in the matter of determination of Transmission Tariff and SLDC (state load dispatch centre) charges for RVPN (Rajasthan Rajya Vidyut Prasaran Nigam Ltd) for FY 2015-16 on 14.08.2015, has directed RVPN to charge the transmission tariff at the rate equal to 50% of the rate specified in the order for such power projects which are covered under the policy directive dt. 13.01.2015 issued by Govt. of Rajasthan," the 14 August RERC order stated.

The industry is aware of the challenges.

“The way around is allowing open access, enforcement of renewable purchase obligations and long-term policies. If the policies don’t change, the position will remain the same," Ramesh Kymal, chairman and managing director, Gamesa India, a wind turbine manufacturing firm, told Mint earlier.

Experts expect more investments in the space, as the cost of renewable energy falls. Solar and wind energy are nearing grid parity—a point in time at which they will cost the same as power produced from traditional sources and available on the nation’s transmission and distribution grid.

Rajasthan has a power generation capacity of 16,235.50 megawatts (MW), with 3,539.65MW capacity under construction and an additional 34,243MW sanctioned for the 13th Plan (2017-22). Of these, the Rajasthan Rajya Vidyut Utpadan Nigam Ltd, the state government-owned generation arm, has an installed capacity of 5,357.35MW.

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