Major Reforms Unveiled to Boost Energy Transition and Ease of Doing Business in India

Ministry of Power, to enhance ease of doing business and facilitate the energy transition, has introduced new rules for industries, especially Green Hydrogen manufacturers, to expedite the establishment of energy storage capacity. 

Under these rules, consumers with a specified quantum of load and Energy Storage Systems (ESS) are now allowed to establish, operate, and maintain dedicated transmission lines without the need for a license. 

This provision, previously available to generating companies and captive generating stations, will create a new category of Bulk Consumers, promoting more affordable electricity and improved grid reliability.

The rules specify that generating companies, those setting up captive generating plants, Energy Storage Systems, or consumers with a load of at least 25 MW (for Inter-State Transmission System) and 10 MW (for Intra-State Transmission System) are exempt from obtaining a license for dedicated transmission lines, provided they comply with regulations, technical standards, guidelines, and procedures issued under the Electricity Act.

To address challenges in Open Access utilization due to high charges imposed by some State Regulators, the new rules prescribe methodologies for determining various open access charges like wheeling charges, state transmission charges, and additional surcharge. The additional surcharge for Open Access Consumers will be linearly reduced and eliminated within four years from the date of grant.

Financial sustainability in the power sector is emphasized in the rules, ensuring cost-reflective tariffs and prohibiting gaps between approved Annual Revenue Requirement and estimated annual revenue, except under natural calamity conditions. 

Any existing revenue gap is to be liquidated in a time-bound manner, with a maximum three percent gap allowed and liquidation over a specified number of equal yearly installments.

Minister for Power, R.K. Singh, highlighted that these reforms aim to further reduce losses of distribution companies and increase their viability. 

The removal of the license requirement for dedicated transmission lines is expected to boost industrial growth, job creation, and the adoption of renewable energy, aligning with the government's commitment to power sector reforms.