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FAQS

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Open Access Power refers to a regulatory mechanism that enables grid-connected bulk consumers with a contract demand of 1000 kVA or above to fulfil a part or all of their electricity requirements through alternative energy sources.

There are two primary power procurement models used in Open Access:

a) Third-Party PPAs: In this model, a third-party investor or solar developer invests in an Open Access project and sells the power to corporates through a Power Purchase Agreement (PPA). The corporate buyer pays Open Access charges incurred from the wheeling of power to their location.

b) Captive/Group Captive Model: In the captive model, the corporate buyer makes an upfront capital investment in the Open Access project and owns, operates, and maintains the power-generating asset. Open Access charges, such as cross-subsidy surcharge and additional surcharge, are waived off. The group captive model involves multiple corporate buyers collectively utilizing an Open Access project.
Open Access charges in utility-scale renewable projects vary depending on location and procurement models. The charges include:

  • • Transmission charges: Payable to the transmission company for using the transmission infrastructure.
  • • Wheeling charges: Payable to the distribution company for using the distribution network.
  • • Transmission losses: Electricity losses in the transmission line between generation and consumption points.
  • • Wheeling losses: Electricity losses incurred by the distribution network.
  • • Cross-subsidy surcharge (CSS): Payable by commercial and industrial buyers to fund tariff subsidies for agricultural and residential consumers.
  • • Additional surcharge (AS): Imposed to recover the cost of standard assets when buyers leave the distribution company and procure power through Open Access.
  • • Banking charges: Charges for banking power generated but not immediately consumed, subject to state-specific regulations.
  • • Conduct due diligence based on company locations to assess grid power tariffs, state-level regulations, Open Access charges, and renewable resources.
  • • Understand Open Access risks, evaluate access to the grid and favourable Open Access charges, and assess potential regulatory changes.
  • • Perform due diligence on the developer’s experience, long-term interest, and financial strength.
  • • Negotiate the PPA by leveraging the buyers’ market, consider competitive tenders, and balance risk mitigation with cost optimization.
  • • Contractual Challenges: Tenor mismatch between PPA and loan, contract enforcement, and lack of standardized contracts.
  • • Operational Challenges: Grid curtailment risk, performance risk due to inexperienced developers, and ensuring power generation as per contracted terms.
  • • Regulatory Challenges: Uncertainty around Open Access regulations and charges, inconsistency in eligibility and operating criteria, exclusion of small consumers, and delays or refusals in obtaining Open Access permissions.
  1. Yes, the current paper-based approval process can be improved by implementing a digital process that enhances transparency and efficiency. Online approval processes across multiple states, utilities, system operators, and regulators can expedite decision-making and reduce process time.

We hope these FAQs provide a better understanding of Open Access Power. For further information or clarification, please feel free to contact our support team.