As India is witnessing a huge policy shift towards Renewable Energy (especially Solar & Wind), we see a lot of interesting markets developing within the power sector. These markets are typically driven by favorable end user economics and require less government support.
Depending on the quality of the local grid, states’ policy and availability of on-site space, the end consumer can either opt for Open Access or for a rooftop Solar PV solution. Though the Open Access market is still evolving, buying Solar or Wind power through such a mechanism is emerging as an attractive option. Today in India, procuring power through the Open Access mechanism has become a scalable and cheaper option for many energy intensive consumers.
What is Open Access ?
The ELECTRICITY Act, 2003 is a landmark legislation, as it opens the power sector to several players by laying down provisions for the power market and enabling competition among them.
As defined in the Electricity Act, 2003 :-
(47) “Open access” means the non-discriminatory provision for the use of transmission lines or distribution system or associated facilities with such lines or system by any licensee or consumer or a person engaged in generation in accordance with the regulations specified by the appropriate Commission.
Open access allows a buyer with a Connected Load (Contract Demand) of more than or equal to 1 MW to procure power directly from the open market using the grid. For using the grid, the power producer (and ultimately, the power consumer) must bear the costs of transmission and distribution losses, as well as wheeling and banking charges as may be applicable in their respective states’.
Basically, it is the facility whereby any consumer (subject to certain qualifications imposed) can choose among the power company/ies from open market to buy and likewise for the power company/ies to sell power to such consumer by utilization of the infrastructure of the distribution system of the state utility.
The rationale behind Open Access being allowed in most of the states in India, is to encourage competition in the power market and to allow consumers to choose among several power suppliers rather than just from the local utility.
Based on the location of the buying and selling entity, Open Access is categorized as:
Inter State Open Access : When buying and selling entity belongs to different states.
Intra State Open Access : When buying and selling entity belongs to same state.
In Inter State Open Access, CERC regulations are followed. It is further categorized as:
1] Short Term Open Access (STOA): Open Access allowed for the period of not more than one month.
2] Medium Term Open Access (MTOA): Open Access allowed for a period of 3 months to 3 years.
3] Long Term Open Access (LTOA): Open Access allowed for a period of 12 years to 25 years.
Intra State Open Access is where buying and selling entity belongs to same state.
In this case the respective states’ (SERC) regulations are followed. It is further categorized as;
1] Short Term Open Access (STOA)
2] Medium Term Open Access (MTOA)
3] Long Term Open Access (LTOA)
The duration of which depends on the respective states’ Open Access regulations.
Types of Transactions:
In general, the buyer and seller of electricity can go either for a Bilateral Transaction or a Collective Transaction. In Bilateral Transactions a Power Purchase Agreement (PPA) is signed between the buyer and seller, which is generally facilitated by a trader or a consultant for a little margin.
Whereas in case of Collective Transactions, the electricity is traded through exchanges, by exchange members for a very small margin fixed by commission. Currently India has two exchanges PXIL and IEX.
Do you qualify for Open Access ?
Our team will conduct a detailed analysis of your consumption pattern by assessing your current electricity infrastructure, consumption pattern and billing structure to ensure whether your company is suitable for procuring power through the Open Access mechanism.
Help us with some details from your latest electricity bill and find out whether your company is eligible for Open Access.