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Centre Introduces New Rules To Boost Ease Of Business In Green Energy Sector


In a pivotal move for industry, especially in green energy, the government has introduced rules to expedite energy storage establishment and enhance energy security. Notably, specific consumers can now operate dedicated transmission lines without a license, a privilege previously reserved for generating companies and captive stations. This shift promotes accessibility and accelerates business processes in the green energy sector.

Empowering Bulk Consumers

  • The new rules specifically state that generating companies, those setting up captive generating plants, or consumers with a load exceeding a specified quantum can now establish dedicated transmission lines without obtaining a license.
  • This quantum is set at not less than twenty-five Megawatts for Inter-State Transmission System and ten Megawatts for Intra-State Transmission System.
  • Compliance with regulations, technical standards, guidelines, and procedures issued under the provisions of the Act is mandatory for such entities.

Open Access Rationalization

  • Open Access, a key feature of the Electricity Act, 2003, has often faced challenges due to high charges imposed by some State Regulators.
  • To address this issue, the new rules prescribe methodologies for determining various open access charges, including wheeling charges, state transmission charges, and additional surcharge.
  • The rules ensure that the additional surcharge for Open Access Consumers is progressively reduced and eliminated within four years, promoting affordability and uniformity in charges throughout the country.

Cost Reflective Tariffs and Financial Sustainability

  • New Rules mandate cost-reflective tariffs, barring gaps between approved Annual Revenue Requirement and revenue, except under natural calamities, ensuring financial stability.
  • Any revenue gap, along with carrying costs, is required to be liquidated in a time-bound manner.
  • For gaps existing at the time of rule promulgation, a maximum of seven yearly instalments are allowed, while for new gaps, a maximum of three yearly instalments is stipulated from the next financial year.

Minister’s Perspective

  • Mr. R. K. Singh, the Minister for Power, emphasized that these rules mark another milestone in the series of power sector reforms undertaken by the Modi Government.
  • He highlighted the success of previous measures, which had already reduced distribution company losses from 27% in 2014 to 15.41% in 2022-23.
  • These new rules, according to the Minister, will further diminish losses, enhance viability, and enable distribution companies to provide improved services to consumers.
  • He also stressed that waiving the license requirement for dedicated transmission lines for industries would facilitate ease of doing business, spur industrial growth, and create more job opportunities.
  • Furthermore, the rationalization of open access charges is expected to accelerate the adoption of renewable energy by industries, contributing to reduced emissions.

Important Questions Related to Exams

1. What is the primary goal of the government’s new rules in the realm of green energy?
A) Reducing energy consumption
B) Expediting energy storage establishment
C) Enhancing traditional energy sources

2. What is the specified quantum of load for consumers allowed to establish dedicated transmission lines?
A) 25 Megawatts
B) 30 Megawatts
C) 35 Megawatts

3. How long does the rule prescribe for eliminating the additional surcharge for Open Access Consumers?
A) Two years
B) Four years
C) Six years

Kindly share your responses in the comment section.

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