Rules for off-grid renewable energy projects in October

Development of off-grid renewable energy (OGRE) projects with capacity up to 300 Mw would get a major boost after the Forum of Regulators (FoR) issues guidelines in October.

The guidelines would also come in handy for electricity regulatory commissions to determine tariff in such projects. Off-grid renewable energy projects are standalone systems generating electricity from renewable energy sources. These are not connected to the grid. A network, including associated appliances, is used for distributing the electricity. These projects are expected to cover un-electrified census village or clusters of villages, or padas, bastis, hamlets of electrified census villages or clusters of padas, bastis, hamlets.

Pramod Deo, chairman of Central Electricity Regulatory Commission and chief of FoR, told Business Standard: “There is no need for separate regulations under the Electricity Act, 2003, for the development of ORES projects in the country. FoR has formulated comprehensive guidelines, which will be released in October. Based on these, states are expected to act for the promotion of ORES.”

FoR official explained that eighth provision under Section 14 of Electricity Act provides the framework for generation and distribution of electricity in rural areas. ABPS Infrastructure Advisory Private Limited, whose report on the development and operation of ORES projects has been accepted by FoR, notes the rural system operator would develop projects within the period specified in power purchase agreements with the distribution company concerned. There could also be a mutually agreed timeline.

Rural system operators would develop distribution infrastructure and generate bills for electricity. The pricing would be based on meter readings at tariff rates not exceeding rates applicable for other consumers of the distribution company concerned.

It is envisaged that the rural system operator would raise an invoice for electricity generated within seven days of the end of month for generation during the month and would be entitled to receive payment from distribution company within seven working days after submission of the invoice.

Balawant Joshi, director, ABPS Infrastructure Advisory Private Limited, said: “The issue of guidelines by FoR will pave the way for private sector participation in rural electrification. The off-grid generation and distribution models provide certainty of revenue to the private operator that doesn’t exist in the current subsidy-based models. Further, these models ensure that electricity is supplied to the consumers at the rate approved by the regulator, thereby ensuring demand for electricity by the consumers.” Consumers in the project area would regularly pay the charges within 15 working days of receipt of bills to the rural system operator. In case of delay in payment beyond due date of payment, delayed payment charges at rate of 1.25 per cent per month or part thereof would be applicable.