Open Access Renewables for Hospitals and Industries in Need of Low-Cost Power
Green tariffs range between ₹3/kWh to ₹4/kWh, saving at least ₹5/kWh for consumers
Initially launched as a non-discriminatory provision to promote other businesses to enter the power sector other than distribution companies (DISCOMs), open access is now seen as the key contributor to India’s renewable energy target for 2030.
According to the Mercom India Solar Open Access Market Report Q1 2022, India added 513 MW of new open access solar capacity during the first quarter, recording a 22% year-over-year growth.
There is considerable demand for open access solar from the commercial and industrial (C&I) segment, considering the options available for power procurement.
It has helped generators and consumers to negotiate power purchase agreements depending on the requirements rather than agreeing to a fixed tariff.
Mercom India recently hosted the C&I Clean Energy Meet 2022 in Bengaluru, bringing together open access solar experts and C&I end-users to discuss the benefits and challenges in the segment.
The panel of experts included Rakesh Garg, Co-founder of O2 Power; Prashant Choubey, Senior Executive Vice President for Business Development and Human Resources at Avaada; Ramakrishnan Subramanian, Head of Business Development at Vibrant Energy; Ashok Kumar, Manager – ESG at Narayana Health and Arijit Mitra, Deputy General Manager at LONGi Solar.
Priya Sanjay, Managing Director of Mercom India, moderated the session.
Advantages of Open Access Solar
Elaborating on the benefits of open access solar for businesses, Garg said, “Open access provides consumers the flexibility of purchasing power at much better prices from within the state and outside. We have seen a trend with the DISCOMs where they have been increasing the energy prices over the years, especially in the C&I sector. Consumers choose open access as it helps cut down the energy cost by more than half and contribute to the environment by reducing emissions. The energy tariffs for industries are about ₹8 to ₹9 (~$0.10 to $0.11)/kWh. For commercial establishments, it is ₹10 to ₹12 (~$0.13 to $0.15)/kWh. In contrast, the green power tariffs range between ₹3 and ₹4 (~$0.04 to $0.05)/kWh, ensuring maximum savings.”
Choubey said, “Open access was introduced in 2003, as non-discriminatory access to power, removing the complete reliance on DISCOMs for the energy requirements. As the country and the world transition to renewables for energy needs, it won’t stay a choice anymore. With module prices increasing every day, consumers who opted for it earlier are happier as they aren’t paying the high price as the consumers joining the bandwagon now or the ones who plan to join later. And if the population like ours in India commits to net zero, the contribution towards saving the environment will be much bigger. With more new businesses moving into the country, it is even more vital to make energy consumption green and efficient.”
Subramanian believes that open access is the most viable option for any business which consumes power of 1 MW. and above. “Open access is an easier method for consumers to get green attributes and energy savings. Consumers who understand the rooftop limitations and have higher energy demands opt for open access. Now that industries are trying to deal with the energy shortage caused by geopolitical turmoil, most industries are opting for open access as the most viable option for energy supply. Corporates wanting to cut down on energy costs and deal with the power outages are switching to renewables and steadily making the shift. Open access also provides the ease in negotiating the contracts, as there is no site study required. Consumers must identify their power requirements and can manage the contracts online. Using offsite renewable energy solutions helps reduce carbon emissions considerably.”
Kumar spoke of his organization’s huge savings by switching to open access for their energy needs. He said, “At Narayana Health, we provide affordable health care services to our patients. We can do that by ensuring optimal operational cost – our main motivation to go renewable. The other reason was the Green Energy promotions done by our Prime Minister Narendra Modi, ensuring all businesses contribute towards the environment by following the ESG guidelines. We have a total of 18 hospitals across the country, five of which are in Karnataka; we are working towards consuming 95% of our energy through the captive solar option. We also have heat pumps that run on green energy and reduce diesel consumption. Hospitals need uninterrupted power; renewable energy options are the way to go. With the renewable shift, we are saving up to ₹40 million (~$510,545) every year with the help of captive solar. Energy consumption has a lot of scope to help reduce the operational cost-efficiently with no negative impact on the business.”
Criteria to choose Open Access & the way forward
Choubey explains the factors consumers should consider before making the switch. It is important that consumers understand how conducive the DISCOMs in their respective states are when it comes to open access and what the ISTS and intra-state transmission policies are in the state. “For example, Uttar Pradesh is known for opening this power procurement option and has rolled out supporting policies. In most states, the policies keep changing. Some states levy additional surcharges, while others provide a waiver. So, it is important to be updated. Consumers must also identify their energy requirements and then opt for appropriate open access options, either the third party or group captive, where they need to own 26% equity and consume a minimum of 51% of the energy produced.”
About the way forward for open access, Garg said, “Open access has developed considerably over the years, and most of these developments have mostly been within the state and intra-transmission based. With the ISTS waiver coming into the picture, we can expect the sector to scale up even more. Policies related to the open access have also matured over the years as the open access contribution to the overall renewable energy target continues to rise.”
Subramanian added: “Developers are now ensuring uninterrupted power supply to their consumers by developing solar-wind hybrid projects which deliver round-the-clock (RTC) power. With very few states offering energy banking options, RTC is what most consumers are looking for, to help save more.”
Talking about the challenges in procuring power through open access, Kumar said, “While most states do have policies supporting the renewable transition for businesses, some states are still enforcing the dependency on their DISCOMs for this switch. For our hospital in Haryana, switching to renewable energy has been difficult because of the state’s non-supportive policies regarding group captive open access. We hope the states align themselves with the country’s renewable energy target for 2030 and help push the transition with the supportive policies.”
Sharing his insights on the modules used for such projects, Mitra said, “Being a module manufacturer, we help maintain the project’s sustainability, as it is a degrading asset. While most manufacturers aim for just higher watts, we limit the module sizes to ensure efficiencies and longevity. Better performing modules contribute to projects with a long lifespan. As the sector grows, the country is also adopting new technologies such as bifacial.”
Open access is slowly gaining ground in the C&I segment. It is considered the most viable option because consumers are also not required to operate and maintain the projects.
The event organized by Mercom brought industry stakeholders and end consumers face to face to discuss how this transition could be made with ease. Mercom India plans to host more industry-focused C&I events in Pune, Chennai, Coimbatore, Ahmedabad, and Noida.