Open Access Power allows customers who are using more than 1MW connected load, to purchase cheap power from the open market. It helps them to choose from similar power companies, rather than forcing them to purchase power from local utilities that have a monopoly in the market.
This concept not only benefits industrial and commercial customers by providing a regular supply of electricity at lower rates but also eases businesses in power markets. Open access helps consumers meet their Renewable Purchase Obligations (RPOs) as well. In this post, we will cover all the aspects of open access power.
Open Access Power: Types and Charges
This concept refers to a setup where a solar energy producer establishes a power plant in a location and enters into a medium to long-term agreement with a consumer to purchase the power. The main contract governing access power is known as the Solar Power Purchase Agreement (PPA), signed between the consumer and the producer. In this agreement, the producer commits to supply an agreed number of units at a certain tariff, for the duration of the PPA term.
Types of Open Access
1. Inter-State Open Access: In this scenario, the entities involved must adhere to the regulations set by the Central Electricity Regulatory Commission (CERC). The rights to purchase through state open access can be classified into Short Term (less than a month), Medium Term (3 months to 3 years), and Long Term (12 to 25 years) periods.
2. Intra-State Open Access: Similarly both the buying and selling parties, from the same state must abide by the regulations set forth by the State Electricity Regulatory Commission (SERC). Additionally, it can be categorized into Short Term, Medium Term, and Long -Term contracts with varying durations based on the state regulations.
Also See: What is Virtual Power Plant (VPP)?
Open Access Charges
These charges are fees supposed to be paid by the operators for using the grid depending on the suitable regulatory systems. The charges also vary from place to place and are incurred by entities that use the grid for transmitting power.
Examples are Supply charges, Balancing market charges, Open access application charges, and state load dispatch charges.
Also See: 10kW Solar System Cost: Off-Grid, On-Grid with Battery Price
How Open Access Power Works?
It works by allowing a large number of users to access power of their own choice thus promoting competition and simplifying power shortage. It allows power producers, such as solar energy companies to transmit power from the solar parks to different load centers, leading to competitive electricity pricing and reduction in electricity costs.
Open Access Solar Power Advantages and Disadvantages
These are some pros of open access solar power:
1. Economic Brilliance: Businesses can now benefit from open access solar power, which saves costs and also eliminates the need for on-site installations.
2. Green Efficiency: Industries can opt for open access power to lower their carbon footprints which will help the earth towards sustainable development. This also provides them with affordable electricity.
3. Flexibility: Open access solar power offers businesses a flexible and scalable energy solution that breaks free from spatial limitations. With this option, they can meet their energy requirements efficiently.
4. Price Wars: By unlocking open access power, it will create a competitive pricing arena for consumers by lowering the cost of electricity.
These are some of its cons:
1. Cost: The expense of accessing energy has risen considerably primarily due to charges such as cross-subsidy surcharge. Moreover, the fees for accessing energy vary from state to state which can have an impact on the cost-effectiveness of using power.
2. Challenges: There are obstacles related to the implementation of access including limitations on transactions and conflicts of interest within the business networks.
3. Concerns: Issues often arise with the power grid when using access energy potentially affecting its reliability and stability.
4. Impact: Consumers frequently switching between access and regulated tariffs can cause fluctuations in the load served by distribution companies. This poses challenges for power procurement planning.
Despite all its disadvantages, this open access approach is supposed to control and end the problem of power shortage, and electricity prices are also expected to drop due to the open market competition. Ultimately, as we move towards the end of this journey we encounter many agreements, decisions, and obstacles that offer glimpses into a future where sustainability and wise financial choices go hand in hand.
Also See: What is Greenwashing?
