India has put forward a proposal to implement a cap on transmission charges imposed by states on industrial and commercial consumers who purchase power generated through renewable energy sources, as per a government order obtained by Reuters.
The primary objective of this move is to stimulate the growth of renewable energy consumption and attract investments. However, it is anticipated that several states, which stand to lose significant revenue, will strongly oppose the proposal, according to industry sources.
Numerous industrial and commercial consumers throughout the country have raised concerns regarding the various transmission charges imposed by states on power purchases, which ultimately result in higher costs.
As an illustration, the city of Delhi currently imposes surcharges and levies amounting to 4.5 rupees per unit of electricity purchased by industries from a central Indian plant, while the actual cost stands at 3 rupees per unit.
India's power tariffs for industrial consumers rank among the highest in the world due to cross-subsidization of farm and retail tariffs. Moreover, additional costs arise from state levies such as network access charges, wheeling charges, state transmission network usage fees, additional surcharges, and cross-subsidy charges aimed at protecting agricultural consumers.
States impose these charges on industrial and commercial consumers who pay their bills promptly, discouraging them from procuring power from sources other than authorized retail companies.
The power ministry of India has circulated the order among stakeholders for feedback. It outlines a proposed limit on network access charges and charges levied on industries for utilizing the state network. Furthermore, it suggests eliminating the requirement for large renewable energy plants to obtain a transmission license for dedicated transmission lines.
This proposal aims to streamline the transmission charges levied on renewable energy consumers, facilitating the growth of the sector and paving the way for a more sustainable energy future in India. However, the resistance from states underscores the challenges in implementing such reforms.
