Power Ministry Proposes Renewable Energy Central Pool with Uniform Tariffs

The government has also proposed making standalone energy storage systems a delicensed activity


The Ministry of Power (MoP) has suggested creating a central pool of interstate transmission systems (ISTS)-connected renewable energy sources from which an intermediary company will procure power to be supplied to an entity that will undertake distribution and retail supply to more than one state.

The ministry has also proposed to make standalone energy storage systems (ESS) a delicensed activity at par with a generating company.

The proposals are part of the draft Electricity (Amendment) Rules, 2022, on which the ministry has invited stakeholders to share comments by September 11, 2022.

Central pool

The ministry has proposed that there will be a different central pool for each sector like solar, wind, hybrid, hydro, small hydropower, and power from any other renewable energy resource, including storage or their combination. The central pool will be constituted for five years.

There will be an intermediary procurer, a company that will purchase electricity from power generators and resell it to an end procurer. This licensed entity will undertake the distribution and retail supply of electricity.

Uniform tariffs will be computed monthly by an implementing agency for each category in the central pool. The intermediary procurer will sell power from renewable energy sources to all end procurers at pre-decided tariffs. The implementing agency will be a central agency, notified by the center from time to time to implement a uniform renewable energy tariff for the central pool.

The monthly tariff payable to power producers will be the total amount paid under the power sale agreement (PSA) multiplied by the total power scheduled in a month.

Energy storage system

Another proposal under the draft rules is the delicensing of standalone ESS, which will be considered part of the power system. The ESS will be accorded status based on its application area, i.e., generation, transmission, and distribution. The ESS can be developed, owned, leased, and/ or operated by a generation company, transmission licensee, distribution company, system operator, or a standalone ESS provider.

When an ESS is owned and operated by and co-located with a generating station, a transmission licensee, or a distribution licensee, it will have the same legal status as the owner. The developer of the ESS will have the option to sell or lease or rent out the storage space in whole or in part to any utility engaged in generation or transmission or distribution or to a Load Despatch Centre.

Timely recovery of power purchase costs

The draft rules propose that the appropriate commission specify a price adjustment formula for recovery of costs arising from the variation in the price of fuel or power purchase costs within 90 days of publication of these rules. The impact in the cost due to such variation will be automatically passed through in the consumer tariff every month. The automatic adjustments will be trued up on an annual basis by the appropriate commission.

Resource adequacy

The National Load Dispatch Centre (NLDC) and Regional Load Dispatch Centres (RLDCs) will carry out assessments of resource adequacy, for operational planning, at the national and regional levels, respectively, on an annual basis, per guidelines issued by the central government.

In December last year, MoP approved 23 new ISTS projects to augment the seamless transfer of power from power surplus regions to power-deficit regions.

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