Maharashtra’s green drive yet to benefit power consumers

Ksenia Kondratieva Mumbai | Updated on January 08, 2018

Industry players consider decentralised power, be it rooftop solar installations or captive wind or solar plants, a way forward for industries in the State to work around the energy costs   -  Andrew Caballero-Reynolds

Push for renewable energy sources unlikely to result in lower tariff for industries

Adoption of renewables in Maharashtra is yet to benefit industries and commercial power consumers that continue to pay some of the highest rates in the country, experts say.

The State governemnt is setting up a renewable energy centre in collaboration with the Power Grid Corporation of India. The centre will be set up within a year and it will help better forecasting and scheduling, Arvind Singh, Principal Secretary (Energy), told BusinessLine on the sidelines of CII Renew India event.

Green corridor

The State is also negotiating a €12-million loan from Germany’s KfW Development Bank for building a green corridor to transport renewable energy to other States, Singh said.

The Maharashtra government is also planning to set up a utility scale solar park in Dhule district with initial capacity of 250 MW. It will conduct its first wind auction by the end of this fiscal, Singh said.

According to him, the total installed renewable capacity in Maharashtra today is around 10,000 MW which accounts for 20-25 per cent of total power capacity of the State. However, when it comes to generation mix, renewable sources account for less than 10 per cent.

Lost benefits

Industry players, however, are sceptical of the benefits that the government’s green initiatives could fetch the commercial consumers. Though the cost of renewable energy has lately achieved grid parity, the additional charges levied by distribution companies (Discoms) are likely to neutralise any possible gains.

Sushant Arora, Co-founder, CleanMax Solar, said the average pooled purchase cost (APPC) of Maharashtra Discom is ₹3.28 per kWh, while most industrial customers are charged ₹7–9 per kwh.

“Most of their tariff goes towards cross subsidisation of rural customers as well as covering the transmission and distribution losses of discoms,” he said. “Till these two aspects are addressed, industrial and commercial customers are unlikely to see any significant reduction in tariff, irrespective of the introduction of solar in the grid’s buying mix.”

Asked whether the State efforts in the renewable space will in any way help in reducing tariffs for industries, Singh said the tariffs would go down only if the tariffs for agriculture consumers, accounting for around 30 per cent of the power demand in the State, are increased or if agriculture is taken off the grid.

“We are moving in both directions,” Singh added. While the State government is considering removing subsidies for some categories of agriculture consumers, it has also embarked on a pilot project to provide 12-hour power supply to agriculture pumps from small-scale solar power feeders.

Decentralised options

Industry players consider decentralised power, be it rooftop solar installations or captive wind or solar plants, a way forward for industries in the State to work around the energy costs. According to Arora, commercial consumers can save 20 to 40 per cent by purchasing power from decentralised renewable generation sources instead of the grid.

Animesh Damani, Managing Partner, Artha Energy Resources, added that there is a definite cost reduction achieved by going for a wind mill or solar plant, although many companies complain of the red tape and bureaucracy in daily management of the captive unit.

Experts point out that industries trying to save on power costs by going for onsite or rooftop solar installations or by purchasing solar power through so-called open access (sourcing it from solar farms), face many limitations.

In case of rooftop solutions, the State net metering policy places an arbitrary cap on solar plant capacity, allowing no more than 1 MW per customer, which means large customers can use only a tiny portion of their roof for rooftop solar, with the remaining lying vacant. Getting net metering approvals, too, becomes a difficult task due to weak on-ground implementation of the policy.

Open access

Open access, according to industry players, becomes uneconomic for most of the customer as various charges, including cross subsidy surcharge (CSS) and additional surcharge (AS) add up to at least ₹4 per unit of electricity, wiping out any savings that solar power costs offer.

“While Maharashtra policy on solar open access is very encouraging, the regime of charges and losses levied ensure that this option is nonviable for most customers,” Aurora added.

Published on October 05, 2017

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