Renewable Energy and Energy Efficiency

Green Power can be purchased by the consumers thorough open access or group captive mode. Open Access implies purchasing power directly from a renewable energy generator and not from the local distribution licensee . Open Access purchases can be through short term contracts (less than one year), medium term (anywhere between one and 5 years) and long term contracts (greater than five years).

Group captive power plant, unlike an individual captive power plant, is a unique structure where a developer sets up a power plant for collective use of many consumers. In this structure the consumers procuring power should have 26% equity in the plant and must consume 51% of the power generated.

In general, they are transmission charges, wheeling charges, cross subsidy. In addition to this, transmission and distribution losses are also applicable. The costs of buying green power for any consumer through open access – is to pay some charges(Cross-subsidy charges, Surcharge etc.) additional to the cost paid to the generator. These charges depend on many factors. Open access charges differ from state to state and, regulations can change from time to time. The final incidence of charges depends on the location of the generator and consumer (whether they lie in the same distribution area), the voltage at which the power is evacuated and consumed and even the type of power.

Apart from meeting RPO obligations, there have been several examples of companies who are purchasing green power for there captive consumption. This is particularly true in Southern India and for consumers in Tamil Nadu, Andhra Pradesh and (to some extent) Maharashtra. In these states, the costs of electricity have risen dramatically. The open access charges in these states (along with losses) for electricity supply typically add Rs. 1 - Rs. 1.30 to the costs of wind, waste-to-energy, micro hydro and bio mass power produced in these states. Given the current costs of power in these states, buying green power often makes business sense. The situation may change with additional capacity coming on stream.

There are multiple risk areas. Apart from regulatory risks, the risks are on the generation side (the ability of the producer to meet the contractual obligations), the transmission and distribution side (the ability of the state infrastructure to evacuate and deliver the power) and the demand side (changes in the power requirement due to technological and business conditions).

Consumers who opt to purchase green power are recommended to enter into these transactions with the advice of specialized consultants. These consultants perform the following set of services: assessment of power requirements, brokering of deals, contracting and negotiation, analysis of economics and scenario analysis of current and future transmission- distribution conditions.

This can be assured by the ability of green (for example) wind power producers to be able to bank their power. In simple terms, banking allows the producer to bank the excess power produced during high season and to be consumed (withdrawn) during low season. This is governed by various state regulations. This is also a cause of significant risk. Banking regulations differ from state to state and have also been changing from time to time. Currently, Tamil Nadu has developed clear banking guidelines as per its recent Tariff Order.