Final tariff orders issued by state regulators for FY 2024 show an upward trend in transmission and wheeling charges. Transmission charges increased by 20%, 14% and 14% in Maharashtra, Rajasthan and Haryana respectively. Transmission loss increased by 18% in Rajasthan, while wheeling charge increased by more than 50% in Andhra Pradesh. In some states including Madhya Pradesh, Karnataka and Uttar Pradesh, wheeling losses reduced by 18%, 10% and 9% respectively. As a result of all these changes, total open access (OA) charges payable by captive solar projects in Rajasthan, Andhra Pradesh and Maharashtra increased annually by 11%, 10% and 9% respectively.
A look at five-year trend in individual components of OA charges shows that transmission charges and losses have been mostly stable across states. There is relatively more volatility in wheeling charges. As expected, Additional Surcharge (AS) and Cross Subsidy Surcharge (CSS) are the most volatile components, but these charges are waived for captive projects.
Figure 1: Trends in individual OA charges in select states, INR/ kWh
Source: Tariff orders, BRIDGE TO INDIA research
Note: Charges are shown for industrial consumers connected at 33 kV.
As Figure 2 shows, total OA charges have increased appreciably across most key states over the last five years. The biggest increase has been seen in Gujarat, Maharashtra, Tamil Nadu and Andhra Pradesh. OA charges in Maharashtra, Tamil Nadu and Gujarat (INR 2.10-2.82/ kWh) are the highest in the country. The bulk of the increase in Gujarat has come from levy of a flat banking charge of INR 1.50/ kWh on entire power output. The increase in charges, combined with unfavourable changes in grid tariff structure, dilutes financial attractiveness of solar OA projects particularly in Gujarat, Tamil Nadu, Andhra Pradesh and Maharashtra, where OA savings have been reduced to less than 25% of variable grid tariff. Mandated introduction of TOD tariffs from April 2024 with day-time discount of 20% for corporate consumers, would almost completely wipe out all savings.
Figure 2: Long-term intra-state OA charges for captive solar projects for industrial consumers, INR/ kWh
Source: Tariff orders, BRIDGE TO INDIA research
Note: OA charges are shown for industrial consumers connected at 33 kV. Charges exclude CSS, AS, electricity duty, short-term exemptions and any proposals in draft stages. 15% of total power output is assumed to be banked.
There is more financial burden coming for OA consumers. Telangana and Karnataka have proposed additional grid support charges of INR 0.13-3.01/ kWh, while Madhya Pradesh wants to levy an energy development fee of INR 0.10/ kWh on captive projects. Rajasthan and Karnataka have introduced a captive power generation tax of INR 0.20-0.40/ kWh. Rajasthan DISCOMs have even proposed taking 10% of power output free of cost from ISTS OA projects.
The Green OA Rules issued by the Ministry of Power aim to provide visibility on OA charges and put an end to imposition of arbitrary charges. States have been required to use a common methodology for determination of charges and levy only transmission charge, wheeling charge, CSS and standby charge on OA projects. States are beginning to adopt the Green OA Rules but deviations persist. As an example, Telangana has omitted the AS exemption. Lack of visibility in OA charges continues to be a major risk for the OA market.
The post Low visibility in OA charges still a major risk appeared first on BRIDGE TO INDIA.