New restrictions on the power sector’s banking will inhibit the growth of the rooftop solar and open-access solar market and potentially slow the progress of India’s renewable energy target, according to an analysis of Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research.
“New restrictions on banking of power will inhibit the growth of the rooftop and open-access solar market, and potentially slow progress towards India’s national target of 450 gigawatts (GW) of installed renewable capacity by 2030, according to a new briefing note by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research,” according to a statement. Banking allows renewable energy generators to deposit surplus power into the grid and withdraw it later when needed — much like putting money into a savings account at a bank.
“Solar and wind projects are likely to produce excess energy during peak summer or windy seasons,” said the report’s co-author Jyoti Gulia, founder of JMK Research, in the statement.Gulia added that without a banking facility or with banking restricted to monthly rather than annual periods that excess generation is lost.The authors analyse banking provisions across key states, noting that some states, for example, Gujarat and Maharashtra, have moved from annual to monthly banking.
And, those banking provisions are likely to be restricted further to the time of day or day-long across most states.In some states such as Andhra Pradesh and Tamil Nadu, banking facilities have been withdrawn altogether, it stated.Without the banking provisions for excess energy, the business model for open-access renewable energy projects, which sell electricity direct to commercial and industrial (C&I) consumers, will become unviable, Gulia said in the statement.”This will be a major setback for renewable project developers at such an early stage in India’s renewable growth trajectory. The C&I (commercial and industrial) segment’s renewable energy share is less than one per cent of the overall electricity generation portfolio across most key renewable-rich states,” Gulia added.
The banking restrictions follow the introduction of net metering limits and the withdrawal of waivers for open-access renewable energy projects, it stated.Co-author Vibhuti Garg, energy economist (lead India) at IEEFA, explained that power distribution companies (discoms) are concerned about the impact on their revenues of high-paying C&I consumers moving from conventional to alternative power procurement through the rooftop and open-access solar model.
“While imposing restrictions on banking will do little to help the discoms’ finances, it may have a significant impact on India’s renewable energy roll-out that now needs to accelerate dramatically to reach the target of 450 GW (gigawatts) by 2030,” she said.
The authors suggested procuring banked energy by discoms themselves.Instead of returning power back to the end consumer/developer, discoms can simply pay for the quantum of banked energy after each month at their lowest cost of procurement, they suggested.
About making banking attractive for discoms, they suggested that regulators could allow banked energy to contribute to the discoms’ renewable purchase obligation (RPO).On removing bottlenecks to renewable energy, they suggested that restrictions on banking should not be considered until statewide rooftop and open-access targets have been achieved.
About making regulations uniform across states, they stated that the project developers face confusion and uncertainty because banking provisions and banking charges vary from state to state.
Source: financialexpress.com
