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Business News/ Industry / Energy/  Draft rules allow green hydrogen purchase in lieu of RPOs
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Draft rules allow green hydrogen purchase in lieu of RPOs

The obligated entity including the industries can meet their Renewable Purchase Obligation by purchasing green hydrogen, said power ministry

Green hydrogen is produced by splitting water into hydrogen and oxygen using an electrolyzer powered by electricity from renewable energy sources such as wind and solar can be a game changer for India, which imports 85% of its oil and 53% of gas demand.Premium
Green hydrogen is produced by splitting water into hydrogen and oxygen using an electrolyzer powered by electricity from renewable energy sources such as wind and solar can be a game changer for India, which imports 85% of its oil and 53% of gas demand.

As part of India’s green hydrogen push, the draft Electricity Rules, 2021 floated by union power ministry for comments have allowed the new age emission free fuel’s purchase to help meet renewable purchase obligations (RPO). 

This comes in the backdrop of Prime Minister Narendra Modi in his Independence Day speech on Sunday announcing National Hydrogen Mission. Green hydrogen is produced by splitting water into hydrogen and oxygen using an electrolyzer powered by electricity from renewable energy sources such as wind and solar can be a game changer for India, which imports 85% of its oil and 53% of gas demand.

 “The obligated entity including the Industries can also meet their Renewable Purchase Obligation by purchasing green hydrogen.The quantum of green hydrogen would be computed by considering the equivalence to the Green hydrogen produced from one MWh of electricity from the renewable sources or its multiple. The norms shall be notified by the Central Commission," union power ministry said in a statement on the Draft Electricity (promoting renewable energy through Green Energy Open Access) Rules, 2021.

The discoms currently purchase renewable energy as part their RPOs. Union power and new and renewable energy minister Raj Kumar Singh had earlier announced about India working on a so-called ‘green tariff’ policy that will let power distribution companies (discoms) supply electricity generated from clean energy projects at comparatively lower tariffs than that from coal and other conventional fuel sources.

 “These rules are proposed for purchase and consumption of green energy including the energy from Waste-to-Energy plants. The draft rules have the following subheads within which details are provided:Renewable Purchase Obligation (RPO); Green energy open access; Nodal Agencies; Procedure for grant of green energy open access; banking; and cross subsidy surcharge," the statement said.

Once the rule is implemented, a discom can exclusively purchase green electricity and supply it at a ‘green tariff’, which will be the weighted average tariff of green energy that the consumer will pay. The plans come in the backdrop of India’s solar and wind power tariffs hitting an all-time low of  1.99 per unit and  2.43 per unit, respectively. They have firmed up since then.

 “These draft rules with regard to tariff propose that “The Tariff for the Green Energy shall be determined by the Appropriate Commission, which may comprise of the average pooled power purchase cost of the renewable energy, cross-subsidy charges (if any) and service charges covering all prudent cost of the distribution licensee for providing the green energy," the statement said.

Currently, the sole option for a large corporate wanting to procure only green power is to contract it from a clean energy developer as has been the case in the commercial and industrial (C&I) segment.

 “These draft rules also propose guidelines for green energy open access and state that “ The Appropriate Commission shall put in place regulations in accordance with this Rule to provide Green Energy Open Access to consumers who are willing to consume the Green energy," the statement said. 

Open access allows large users of energy to buy power from the open market, instead of depending on a more expensive grid. However, state discoms have not been allowing clean energy developers to use their power transmission and distribution networks to supply electricity to third-party and captive users. Ensuring open access will also likely attract large green electricity consumers to set up captive green energy plants.

 “All applications for open access of Green Energy shall be granted within a maximum of 15 days. Provided that only Consumers who have contracted demand/sanctioned load of hundred kW and above shall be eligible to take power through green energy open access. There shall be no limit of supply of power for the captive consumers taking power under green energy open access," the statement added.

According to the Central Electricity Authority, by 2030, India’s power requirement would touch 817GW, more than half of which would be clean energy.

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Published: 16 Aug 2021, 07:08 PM IST
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