Revolutionizing India’s Energy Landscape: New Rules to Boost Green Hydrogen and Energy Transition

The Minister for Power, Mr. R. K. Singh, has unveiled a series of new regulations designed to foster a more conducive environment for industries such as Green Hydrogen manufacturers. These rules are poised to expedite the establishment of energy storage capacity and play a pivotal role in advancing the energy transition while simultaneously securing the nation’s energy needs. The following is an in-depth overview of the key provisions and objectives inherent in these new rules:

1. Dedicated Transmission Lines for Bulk Consumers: These novel regulations grant consumers the authority to construct, operate, and maintain dedicated transmission lines without the obligatory need for obtaining a license. This privilege was already accessible to generating companies and captive generating stations. The primary objective is to cultivate a fresh category of Bulk Consumers who can enjoy the advantages of cost-effective electricity and an augmented grid reliability.
2. Load Thresholds: To be eligible for this licensing exemption, entities such as generating companies, individuals establishing captive generating plants, or consumers must have a minimum load of twenty-five Megawatts for Inter State Transmission System and ten Megawatts for Intra-State Transmission System. Furthermore, strict adherence to the Regulations, technical standards, guidelines, and procedures outlined in the Electricity Act is mandatory.
3. Rationalization of Open Access Charges: Open Access, a pivotal feature of the Electricity Act, 2003, has remained underutilized owing to the exorbitant charges imposed by certain State Regulators. The freshly introduced rules prescribe meticulous methodologies for determining a gamut of open access charges, encompassing wheeling charges, state transmission charges, and an additional surcharge. The cardinal goal is to establish uniform and equitable charges throughout the nation, thus encouraging commercial establishments and industries to access electricity via Open Access at competitive and equitable rates.
4. Reduction and Elimination of Additional Surcharge: The rules stipulate a gradual reduction and eventual elimination of the additional surcharge applicable to Open Access Consumers. Over a span of four years from the date of General Network Access or Open Access approval, this surcharge will steadily decrease, ultimately being phased out. Importantly, this surcharge will exclusively apply to consumers who are, or have been, customers of the relevant Distribution licensee, thereby exempting those who have never engaged in such a customer relationship.
5. Cost Reflective Tariffs: The paramount objective is to ensure that tariffs genuinely reflect the costs incurred. Consequently, the rules mandate that tariffs align precisely with the approved Annual Revenue Requirement and estimated annual revenue from the approved tariff. Exceptions to this rule are reserved for extraordinary circumstances, such as natural calamities, where a revenue gap not exceeding three percent of the approved Annual Revenue Requirement is permissible.
6. Liquidation of Revenue Gap: In instances where a revenue gap is identified, the rules provide a clearly defined, time-bound procedure for its resolution. Such gaps, in conjunction with carrying costs calculated at the base rate of Late Payment Surcharge, are to be amortized within a maximum of three equal yearly installments commencing from the subsequent financial year. For revenue gaps pre-existing at the time of the rule’s enactment, a maximum of seven equal yearly installments, also starting from the ensuing financial year, are mandated for liquidation.
7. Impact on Distribution Companies: Mr. R. K. Singh underscored the government’s successful efforts in reducing distribution companies’ losses from 27% in 2014 to 15.41% in 2022-23. These newly introduced regulations are anticipated to further curtail losses and bolster the viability of distribution companies. Ultimately, this will empower them to deliver improved services to consumers, solidifying the power sector’s foundation.

In summation, these fresh regulations are poised to simplify regulatory processes, diminish costs, and promote the efficient utilization of electricity resources. They will play a pivotal role in supporting industries such as Green Hydrogen manufacturing, ensuring energy security, and reinforcing the financial sustainability of the power sector.