Restrictive Banking Provisions aren’t Helping Renewable Adoption in India

After restrictive net metering regulations and withdrawal of waivers for open access renewable projects, regulators are now restricting banking facilities.

28 Sep 2020 09:21 IST

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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.

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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year, some renewable energy-rich states have moved from annual to monthly banking period while some have completely withdrawn the banking facility for renewable projects.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In Andhra Pradesh, the banking facility is completely withdrawn.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	Banking period is *6 months. Any unutilized banked energy remaining at the end of six months will be considered to have been purchased by the DISCOM in that area. For this, the DISCOM will pay at the rate of 85 percent of the applicable generic tariff during the period. 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	Banking facility of one *month*. Excess generation shall be set off in one billing cycle in proportion to generation in peak and normal hours.
Maharashtra	Banking is allowed for 12 months	Banking- permitted on *monthly* basis. Banking charges for HT Consumers will be 7% and for LT consumers to be 12%
Andhra Pradesh	Banking is allowed for all renewable sources	Government of Andhra Pradesh in Nov 2019 amended its solar, wind, and Hybrid policies- The amendments state that the facility of energy banking and drawal of power given to generators *will be withdrawn* for solar, wind, and hybrid projects. Any injection of energy between synchronization and declaration of the commercial operation date (COD) will be treated as inadvertent power, and no cost will be paid for it by the state DISCOMS.

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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.

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