Govt notifies Electricity (Amendment) Rules, 2024 to exempt captive projects from transmission license

Power Minister RK Singh said investments worth at least Rs 17,00,000 crore are in the pipeline in India's power and renewable energy sectors.

Government has notified the Electricity (Amendment) Rules, 2024 to provide ease of doing business to entities commissioning captive power, energy storage and green hydrogen projects.

As per the new rules, consumers having more than a specified quantum of load and energy storage systems (ESS) will be allowed to establish, operate and maintain dedicated transmission lines themselves without the requirement of a licence.

"By allowing such a provision,  a new category of bulk consumers would emerge in the country, benefiting from more affordable electricity and enhanced grid reliability. This facility was already available to generating companies and captive generating stations," Union minister for power and new and renewable energy RK Singh told reporters in an interaction on January 15.

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To rationalise the open access charges, new rules have been prescribed with methodologies for determining various open access charges like wheeling charges, state transmission charges and additional surcharge, he added.

The new rule prescribes that a generating company or a person setting up a captive generating plant or an energy storage system or a consumer having load of not less than 25 megawatt (MW) in case of Inter State Transmission System (ISTS) and 10 MW in case of Intra-State Transmission System shall not be required to obtain licence for establishing, operating or maintaining a dedicated transmission line to connect to the grid. However, this is subject to the consumer or company complying with the regulations, technical standards, guidelines and procedures issued under the provisions of the Act.

The rule inter-alia prescribes that for a person availing General Network Access or Open Access, the additional surcharge shall be linearly reduced and get eliminated within four years from the date of grant of General Network Access or Open Access. A person who has never been a consumer of a distribution licensee would not have to pay additional surcharge.

"The rule mandates that the tariff shall be cost reflective and there shall not be any gap between approved Annual Revenue Requirement (ARR) and estimated annual revenue from approved tariff except under natural calamity conditions. Such gap, created if any, shall not be more than three percent of the approved Annual Revenue Requirement," read the new rules.

The rule also provides that such gap along with the carrying costs at the base rate of Late Payment Surcharge as specified in the Electricity (Late Payment Surcharge and Related Matters) Rules, 2022, as amended from time to time shall be liquidated in maximum three numbers of equal yearly instalments from the next financial year.

At least Rs 17,00,000 crore investments in the pipeline

The Union minister said investments worth at least Rs 17,00,000 crore are in the pipeline in India's power and renewable energy sectors.

"A whopping investment of Rs 17.05 lakh crore is in the pipeline in the power and renewable energy sectors. If we see from 2014 till now, these sectors have attracted around Rs 16.93 lakh crore of investments," Singh said.

The Rs 16.93 lakh crore investment since 2014 includes Rs 11.2 lakh crore in sectors like generation, distribution and transmission while Rs 5.73 lakh crore in the renewable energy sector, the minister said.

Of the Rs 17.05 lakh crore worth investments that are under pipeline, Rs 7.4 lakh crore would be invested in the power sector while Rs 9.65 lakh crore in the renewable energy sector.

Since 2014, 90 GW thermal power projects, 6.3 GW of hydro projects, 0.4 lakh ckm transmission lines and 8.7 lakh ckm distribution lines have been commissioned, he said.

The minister said India’s power generation capacity will increase to over 800 GW from about 428 GW at present. India has planned to bid out 50GW of renewable energy projects every year.

"Despite India's plans to add 80 GW of thermal capacity until 2030, our share of coal-fired capacity will still reduce from the current 56 percent to about 35 percent by that time," Singh said.