MNRE Directs Three States to Allow Rollover of Banked Energy Amid COVID-19 Lockdown

The three states are Andhra Pradesh, Karnataka, and Tamil Nadu


The Ministry of New and Renewable Energy (MNRE) has issued an advisory saying that the power energy departments and distribution companies (DISCOMs) in three states should consider permitting rollover of banked electricity as the power demand has plummeted in recent weeks.

The Ministry had received representations requesting to issue an advisory to the states of Andhra Pradesh, Karnataka, and Tamil Nadu, to allow the rollover of banked electricity from solar PV rooftop projects and open access renewable energy generating stations under captive and third-party sale.

The MNRE has advised the rollover of banked electricity for the financial year 2019-20 and 2020-21, to the next FY 2021-22. Banked energy is settled each year, but given the unprecedented situation caused by the pandemic, the Ministry has now said that it can be carried forward to the next financial year.

After the COVID-19 outbreak hit India, the Government of India (GoI) called for a 21-day country-wide lockdown, which has now been extended to May 3, 2020.

The Ministry of Home Affairs (MHA) recently issued its revised guidelines allowing selected additional activities to keep the wheels of the economy turning. The announcement has come as a big respite to the renewable industry as the construction of renewable energy projects will now be allowed from April 20, 2020.

Due to the nationwide lockdown in the wake of COVID-19, industries and commercial establishments using electricity generated directly as well as through banking from solar rooftops and open access under captive and third-party sale, are running their operations at their lowest capacity and consequently, their demand of electricity has reduced to a minimum.

The Ministry observed that due to the dip in demand for power, the generated and banked units in previous months could not be utilized by the consumers.

According to the Ministry, the lapse of such banked units or purchase at the average pooled purchase cost (as is typically done) would severely affect the profitability of both the developers and consumers of solar PV rooftop projects and open access renewable energy generating stations.

The MNRE also warned that the situation might continue for another two months until the pandemic is controlled, and the industrial production and commercial activities return to normalcy.

The MNRE earlier reiterated that the ‘must-run’ status of renewable energy projects would remain unchanged during the COVID-19 lockdown period and curtailment or renewables other than for grid safety reasons would amount to deemed generation. The Ministry had also noted that some of the distribution companies are still resorting to the curtailment of renewable energy without any valid reasons.

The Ministry of Power (MoP) had also issued instructions providing a moratorium period for distribution companies for making payments to electricity generating companies due to the Coronavirus (COVID-19) outbreak.

In the wake of COVId-19, government services, industrial and business sectors have been severely affected, and the power industry is facing the problem of subdued demand, low collections, and difficulty in operationalizing assets. You can track the latest updates related to the impact of COVID-19 on renewable and power industries here.