The issue of the Green Energy Open Access (GEOA) rules by the central government in fiscal 2022 marked a watershed moment from a policy perspective for open access (OA) consumers. However, as of June 2024, only 13 states have fully adopted the rules, two states have partially adopted the rules, and one state has issued draft regulations. A key aspect of the policy, the banking provision, has seen the most deviation at the state level when compared with the central policy.
The policy mandated distribution companies (DISCOMs) to provide banking services on a monthly basis, subject to appropriate charges. [NG1] The Forum of Regulators (FoR) was mandated to determine an appropriate banking charge while ensuring that the interests of both open access consumers and DISCOMs were protected. FoR proposed an in-kind charge of 8% but without a quantitative methodology. Though several states have aligned to the proposed charge, the state regulators have not provided any methodology or rationale. As a result, it remains unclear whether the proposed 8% charge accurately reflects the actual cost of banking with DISCOMs. Karnataka, based on its own study from 2022, has found that the cost of banking, on a monthly basis, ranges from 16.1% to 19.3% of the wheeled energy, equivalent to Rs 0.51–0.61 per unit for the state. The Gujarat regulator is also conducting a study to devise a proper methodology, and charges (currently Rs 1.50/ kWh) will be revised accordingly from October 1, 2024.
Source: Source: BRIDGE TO INDIA- CRISIL research
A similar dissonance can be seen in the threshold defined for the quantum of power that can be banked and the use of banked power depending on the time of day. The rules state that the permitted quantum of banked energy by the OA consumer shall be at least 30% of the total monthly electricity consumption from the DISCOMs. However, the lack of an upper limit creates planning challenges for DISCOMs, as the quantum of banked energy remains uncertain, potentially leading to disputes if DISCOMs restrict banked energy above certain thresholds. Delhi, Gujarat, Jharkhand, Madhya Pradesh, Telangana, and Uttarakhand require at least 30% of power consumption from the DISCOM. In contrast, Andhra Pradesh, Haryana, and Punjab allow up to 30% of consumption from the DISCOMs. On the other hand, Karnataka, Uttar Pradesh, Maharashtra and Tamil Nadu permit banking of up to 100% of generation.
While the GEOA does not impose any restriction on the use of banked power, most states have only allowed settlement of banked power in off-peak hours in the same slot.
Table: Permissible drawl of banked energy with respect to the time of surplus injection
*Allowed upon payment of additional charge over and above the usual banking charges
Source: BRIDGE TO INDIA- CRISIL research
Despite significant advancements in the energy banking framework, further refinement is needed to ensure the objective of eliminating disparities in state policies is achieved. Developing a methodology that accurately captures the cost of banking and takes into account the intermittent nature of renewable energy generation and time-of-day consumption is crucial. This approach will promote the adoption of renewable energy and ensure the financial viability of DISCOMs. However, in the long run, consumers would need to increase the adoption of round-the-clock RE solutions coupled with energy storage to reduce the dependency on DISCOMs for banking services.
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