To increase the use of renewable energy, the Union power ministry has circulated the draft electricity open access rules, which propose to ease the way for industries and large power consumers to set up solar power generation units for self-consumption. Pinaki Bhattacharyya, MD and CEO of Amp Energy India, a renewable energy power producer providing clean energy to industrial and utility customers, tells FE’s Anupam Chatterjee how allowing commercial and industrial consumers open access to solar power will help the country achieve its green energy targets. The company has made equity commitments of $300 million towards in 1.5 GW of renewable energy assets in India. Excerpts:
Since open access power supply to consumers is mainly the concern of the state, how can the proposed rules help?
If it becomes the part of the Electricity Act, and if any state power regulator does not do the right thing, one can always approach the Aptel, the apex regulator. Many states have also opened up when it comes to allowing more green energy to be procured by commercial and industrial consumers through the open access route. For example, the situation has definitely improved in Uttar Pradesh, Maharashtra, Gujarat, Tamil Nadu, Chhattisgarh and Karnataka.
Can’t the supply come from utility-scale projects?
We are also in the utility-scale segment of the solar business, and there we have noticed that it usually takes more time to execute the projects won under the auctions. For building capacities faster, especially when the commercial and industrial users are ready to buy solar power through open access, it makes sense to allow more captive projects for supplying to these users. The market is so big, that all these modes of capacity addition can co-exist.
How much renewable capacity can the open access segment help set up?
Currently, out of the 100 GW of installed renewable capacity, a very small portion is being set up for commercial and industrial open access users. Whereas across the country, around 50% of the power is currently used by these consumers. So the potential is huge. The size of this market can be easily more than 10-15 GW. There are many industries which are obligated to buy certain portion of power from renewable energy projects. Now these industries do not get the benefits of ISTS-charge waivers when they buy from green projects. If they are allowed such benefits, uptake will automatically increase.
What else can be done to encourage the uptake?
To reach the 175 GW renewable energy target, roughly 25 GW capacity needs to be set up every year. In order to reach the target, you cannot have only the discoms buy power from green units. On the other side, the industry is in need of this power. With a number of coal power plants set to retire, these capacities will also be freed up. In order to meet the 450 GW target, let us set a sub-target for the commercial and industrial open access sector, which can be further divided among various industrial sectors and the different states. If such steps are taken, it assures industrial consumers that they can put up a solar plant in these states for self-consumption.
What challenges are you facing as a developer of utility-scale projects?
On the utility-scale developer side, the main issue is the frequent changes in the cost of raw material. On top of that, there are pressures of import duties. We have been vehemently opposing the BCD that is coming up next year. The Indian manufacturers had got four to five years in the past from the safeguard duty, but no one came up with any major plan to set up larger manufacturing capacities. We are supportive of make in India, but the government can support them by providing low-cost power and other benefits to ensure the final prices of their products remain low. The safeguard duty has been collected for years, and that capital could have been used to promote domestic solar manufacturing. CPSEs like BHEL and BEL could have been used to set up large manufacturing capacities. If the government-owned companies supply power at attractive rates, then automatically the private players will have to lower their rates.
Have some of the winning companies, which have already won roughly 18 GW of solar projects but are yet to find buyers, started investing in the assets?
We also have some similar untied capacity for which we have started buying land and making arrangements for connectivity. When state-run entities like SECI and NTPC call for bids, the foreign investors backing the winning developers assume that these projects are going to be built. Based on the letters of award, you get the transmission connectivity. And like us, many firms have bought land and some of them have even started constructing transmission infrastructure. The government can help by exempting such players from paying the BCD. The outlook for these projects to find buyers is very positive. We are absolutely ready to build them.