Delicensing Power Distribution Can Boost RE Adoption: ORF Report

Delicensing Power Distribution Can Boost RE Adoption: ORF Report

A recent report by the Observer and Research Foundation (ORF) said that the delicensing of power distribution could boost the adoption of renewable energy. The report widely analyzed the implications of adoption of delicensing of power distribution in the country. 

The researched argued that with more private sector entry with their green pricing models are likely to be utilized for the same. “With the delicensing of distribution, there is an expectation that innovative green pricing models deployed by new private sector entrants could act as a means for the greater adoption of renewable energy by consumers. This program may be initiated by new entrants to differentiate their service offering for a commodity such as electricity,” the ORF report said.

It also added that the green tariff is expected to remain the most straightforward method for power consumers to access renewable power without the need for significant upfront cost in rooftop solar systems. The report said that the deployment of green tariffs however might be conditional on the ability of new entrants to source green electricity. 

“For certain private sector entities which have their own generation capabilities, this may be easier since they will be able to purchase electricity for their own facilities. In other cases, the provision of green pricing programs will depend upon the ability to manage green power procurement with long-term PPA commitments. In particular, the creation of real-time wholesale markets will be important for new entrants to be able to manage the demand and supply of green energy in a cost-effective manner,” the ORF report relating to delicensing of power distribution said. 

The report also batted for making the Renewable Purchase Obligations (RPOs) flexible. “Poor RPO compliance and enforcement remain key challenges for RE adoption by DISCOMs. The introduction of retail competition could possibly lead to improved RPO compliance, particularly by the private DISCOMs. However, the RPO targets need to be flexible to allow DISCOMs to choose RE sources that best suit their own particular load profile in the most cost-effective manner,” the report said. 

The report advocated for ensuring price flexibility by introducing retail competition which can incentive price flexibility. It also talked about preventing cherry-picking and ensuring energy access, enabling benefits to reach smaller consumers and creating a level playing field for new entrants. 

“The state DISCOM cannot both be the unaccountable manager of wires and compete with a private entity that uses those wires. That is a recipe for constant conflict and one that will strongly disincentivize private sector investment. In other jurisdictions, former state distribution companies have been completely converted to managers of the infrastructure. At the very least, separating these roles between two different entities may be required,” the report said.