India working on a ‘green tariff’ policy

NEW DELHI: In what will reinforce India’s green energy credentials, the union government is working on a 'green tariff' policy that will help electricity distribution companies (discoms) supply electricity generated from clean energy projects at a cheaper rate as compared to power from conventional fuel sources such as coal.

This was announced by power and new and renewable energy minister Raj Kumar Singh on Tuesday who said the government was in the process of formulating a set of rules and guidelines to enable such a mechanism.

In the event of a large corporate looking to procure only green power, the available option is to contract such power from a clean energy developer as has been the case in the commercial and industrial (C&I) segment, with distributed renewable energy generation attracting strong investor interest. Presently, discoms purchase renewable energy as part the renewable purchase obligations (RPO).

Once the mechanism is in place, discoms can exclusively buy green electricity and supply it at ‘green tariff’, which will be the weighted average tariff of green energy that the consumer will pay, Singh said.

This comes 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. India is running the world’s largest clean energy programme to achieve 175 gigawatt (GW) of renewable capacity, including 100GW of solar power by 2022.

Singh said this ‘green tariff’ will be slightly lower than the tariff from conventional fuel sources and added that the new regulations will help ensure that if an industry wants only green power from a developer, the open access applications will have to be approved within a fortnight.

Open access allows large users of energy, typically those who consume over 1 megawatt of power, to buy it 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 consumers.

Ensuring open access will also attract large green electricity consumers setting up their own captive green energy plants.

“The rules are coming out,” Singh said at a curtain raiser press conference on ‘India's role as global champion for the Energy Transition theme of the UN High Level Dialogue on Energy 2021.’

The union government is also working on a raft of measures, including ethanol blending with fossil fuels, green mobility, battery storage and green hydrogen, to help reduce pollution and facilitate commitments made at COP-21, the UN Climate Change Conference held in France in 2015.

According to the government, “India is the only major economy with actions in line to keep global warming below 2°C of pre-industrial levels.”

Singh said India’s per capita emission is well below the world average, with 67-75% of carbon space occupied by developed nations.

However, the Green Climate Fund (GCF) set up to provide developing nations $100 billion annually by 2020 to counter climate change has seen lukewarm response.

“The Minister called on all other countries, especially those in positions of privilege to work ambitiously to support a global energy transition that is just, inclusive, and equitable,” the government said in a statement.

As part of its energy transition efforts, India is working towards electrification of economy by developing action plans for greening of electricity. According to the Central Electricity Authority, by 2030, the country’s power requirement would be 817GW, more than half of which would be clean energy.

Singh also said the union power ministry will soon come out with a policy to promote hydro pump storage schemes with around 96 GW identified as a potential capacity for the same.

The idea is to use cheap green power during off-peak hours to raise water to a height and then release it into a lower reservoir to generate electricity. Pump storage helps the national power grid withstand fluctuations caused by intermittent supplies from solar and wind.

Also, in such a scenario, storage holds the key to providing on-demand electricity from wind and solar projects, with India increasingly looking at hydro pump storage schemes for utility-scale projects to solve its energy storage problems.

Indian green energy projects have been facing myriad problems. The latest case in point being the concern about the impact caused by electricity transmission lines that are being laid down for green energy projects, which happen to bypass the habitat of the endangered Great Indian Bustard. With the Supreme Court mandating that overhead power transmission links be brought underground to to help prevent the heavy bird, which lacks frontal vision, from colliding with the cables, developers in Rajasthan and Gujarat have flagged concerns about the impact on financial viability of their projects.

Singh said the government is studying the apex court’s order, which is not a “peremptory order,” with the court saying that it has to be examined whether a particular transmission line poses danger.

Singh added that it has already been made clear that very high-tension power transmission lines can’ t be brought underground, and only 33 kV and below can be brought underground.