UP Regulator Eases Power Procurement From Exchanges For Industry

Highlights :

  • The move by the UP regulator is a positive step for lowering power costs for industry.
  • Cross subsidy charges need to go, as they distort market economics by consuming higher consumption, without considering the impact.

The Uttar Pradesh Electricity Regulatory Commission, in its recent tariff order dated 29th July 21 for the financial year 2022 has made some key changes that could have a positive impact on the industry as well as renewable energy projects in the state. The regulator announced a reduction of up to 64 paise per unit in the cross-subsidy charges procuring power through Power Exchanges. That makes power procurement from exchanges that much more effective as compared to captive or other options.

India Energy Exchange (IEX), the premier power exchange in the country, claims that today, over 75 consumers in Uttar Pradesh source electricity leveraging the Exchange platform. The competitive power prices have been helping industries optimize their electricity procurement costs, thereby, leading to increased operational and financial efficiency since electricity contributes a major share of input costs for the industries.

According to Rohit Bajaj, Head-Business Development & Senior Vice President at IEX, “IEX has been seeing significant participation from the open access consumers from the State of Uttar Pradesh. The reduction in cross-subsidy surcharge by the Uttar Pradesh Electricity Regulatory Commission (UPERC) for the open access consumers is a welcome and definitely a progressive step in ensuring industrial and economic growth in the State. All 1 MW and above industrial / commercial consumers can save almost upto Rs 1 per unit. This development enables the State industry to significantly lower their operational costs and accelerate the overall economic growth of the State which is so critical in the COVID pandemic induced economic slowdown”.

Introduction of GTAM (Green Term Ahead Market) has opened avenues for the development of the organized renewable energy market to provide an alternate market-based route to the RE generators to sell their green power and to the buyers to fulfil their RPO at competitive price with flexibility of entry and exit in the market. As states  adopt policies to enable easier power trading, it is bound to support many renewable projects, including those that have been unable to tie-up power purchase agreements for their full capacity. Or those with surplus production during certain periods. Add large battery storage into the mix in a few years, and we could be seeing a thriving market for green energy trading.

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