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After restrictive net metering regulations and withdrawal of waivers for open access renewable projects, regulators are now restricting banking facilities. Banking is important as it provides renewable developers a mechanism to utilise their excess generation and avail financial benefits in some cases, states an analyst by JMK Research.
In the last year, some renewable energy-rich states have moved from annual to monthly banking period while some have completely withdrawn the banking facility for renewable projects.
- Gujarat and Maharashtra have moved from the annual banking period to the monthly banking facility.
- In Andhra Pradesh, the banking facility is completely withdrawn. The Andhra Pradesh Government in November 2019 amended its key renewable policies to pull back the incentives given to RE developers. With this amendment, banking of 100% of energy, which was earlier allowed throughout the year for solar, wind, and hybrid projects, is removed.
- Following Andhra Pradesh’s footsteps, Karnataka Electricity Regulatory Commission in August 2020 has also proposed to discontinue the banking facility extended to renewable projects.
State Name | Original regulations | Recent Amendments |
Karnataka | Banking period of one year |
However, KERC has issued a proposal in August 2020 to discontinue the banking facility extended to Solar, Mini-hydel and wind power projects. |
Gujarat | Banking of energy shall be allowed within one billing cycle of the consumer |
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Maharashtra | Banking is allowed for 12 months |
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Andhra Pradesh | Banking is allowed for all renewable sources | Government of Andhra Pradesh in Nov 2019 amended its solar, wind, and Hybrid policies-
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Source:JMK
As per the analysis, these restrictive banking provisions are a huge setback to renewable project developers. Banking provision is important for solar and wind projects as in case of peak summer or high windy season, mostly there is an excess generation that can be utilised later on using a banking facility. However, in the absence of a banking facility or only a monthly banking facility, most of this excess generation will be lost. These conditions will set a wrong precedent and the herd behaviour might lead to similar restrictive orders/ notifications in near future by some other states.