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RE - Win-Win - Consumer and DISCOMs
RE - Win-Win - Consumer and DISCOMs
RE - Win-Win - Consumer and DISCOMs
ENERGY SOURCES
Win-Win for RE Investments and DISCOMs in India
Himanshu Mishra
Contents
Executive Summary......................................................................................................................................... 2
1. Background.............................................................................................................................................. 4
2. What is Renewable Wheeling and Banking arrangement ....................................................................... 5
3. Why RE banking?.................................................................................................................................... 6
3.1. RE banking: Technical Need ........................................................................................................... 6
3.2. RE banking: Apposite for NET ZERO Ambitions .......................................................................... 7
3.3. RE Banking: Pre-requisite for Captive Eligibility Requirements .................................................... 7
3.4. RE banking: Ensures Financial Viability ........................................................................................ 9
4. RE Banking in States ............................................................................................................................. 10
5. Renewable Banking: Beneficial for DISCOM ...................................................................................... 12
6. Statutory and Legal backing for RE banking ........................................................................................ 14
7. RE Banking priorities ............................................................................................................................ 17
8. RE Banking methodologies ................................................................................................................... 18
9. Conclusion & Remarks.......................................................................................................................... 21
This note is an attempt to bring to surface the need of wheeling and banking as ‘existential
requirement’ rather just a ‘policy benefit’.
‘Wheeling’ electricity means process of transmitting electricity from producer to user and ‘Banking’
of electricity simply means virtually bank the electricity for consumption by end consumer at a later
time. Wheeling by law has been safeguarded in electricity statute under open access, however,
banking for renewable has not been so explicit and thus requires judgment pronounced by judicial
bodies specialised in electricity viz., APTEL and/or SERCs.
RE banking is not a policy benefit but the basic support mechanism for RE projects to survive if not
thrive, section 3 explains the analysis towards the same.
Chapter 4 compiles the RE banking provisions across different states and practical ground challenges
in states w.r.t. RE banking facility required by the beneficiaries.
Contrary to the narrative of renewable creating tariff impact on end consumers, detailed analysis in
section 5 for illustrative purposes. Unfortunately there is no scientific study justifying or denying
banking, therefore to arrive impact on DISCOM, the detailed exercise need to be taken.
Chapter 6 discusses and debates on legal and statutory backing for RE banking and stand taken by
Hon’ble APTEL. Hon’ble APTEL in its various judgment has categorically stated that ‘Banking’ have
statutory basis from National Electricity Policy and Tariff Policy, and stated that to support the object
of the statute and considering the intrinsic characteristics of wind energy, banking is inevitable
requirement and must be adhered as physical requirement than commercial requirement.
Chapter 8 speaks about RE banking methodologies chosen by states. It also discusses few RE banking
methodologies and approach to understand its impact to create a win-win for both DISCOM and
Imagine a situation where the banker have to pay from their own share of revenue to
consumer knowing the fact they don’t need such surplus and not obligated to do so, whether
this would make them better off?
On the other hand, imagine a scenario where the consumer has banked its surplus but is not
allowed to draw when it actually needs and banking is allowed on a condition that either you
draw with pre-determined interest (i.e., banking charge) within a month or it will be gone.
Or a scenario where the consumer is told to bank the surplus only during specific hours and
draw during those specific hours, irrespective of their banked energy needs.
Various RE banking methodologies may be adopted while evaluating the cost impact of RE banking
balancing the same with physical support need objective for RE sources, the chapter debates few
approaches for consideration.
Wait, by stating aforementioned, there is no saying that there is no threat or integration challenges
posed by renewable to power system. Surely there are challenges and this strives to find solution,
provided we move forward with growth mindset rather than fixed mindset.
Law of conservation states that ‘Energy can’t be stored or destroyed’, yet to see some mechanism that
denial of this statement. It’s ironical that even literal meaning on Google for ‘energy’1 doesn’t consider
energy generated from renewable sources. It further adds to plight of renewable that even Electricity
Act 2003 in spite of using references of ‘renewable’ at multiple places do not defines what does it
mean by ‘renewable’ and thus it opens up for varying interpretation of renewable by states within
their jurisdictional rights of concurrent subject. In order to create harmony on the subject Ministry
of New and Renewable Energy (MNRE) defines ‘Renewable Energy’ which is considered by states as
one such definition, however, few still differ, even MNRE equivocate recognising various sources and
means as part of renewable energy/green energy projects. This reflect the fixed mindset approach
dealing with renewable since ages, fortunately this has started seeing a change in recent past and
India as nation leading from the front has aggressively adopted a growth mindset promoting RE.
George Bernard Shaw said “It is mark of a truly intelligent person to be moved by Statistics”, however,
Benjamin Disraeli warned as “There are three types of lies – lies, damn lies and Statistics”. Aren’t these
dichotomous to each other? Prima facie it reflects for sure, but whose wisdom we can afford to ignore
among these two celebrities. To me both are correct statements, it all depends upon the choice of
statistical tool and data you deploy to derive understanding. Statistics misleads if it is prejudiced to
benefit one at disadvantage of other.
Wheeling and Banking of Renewable Energy falling prey to anti-renewable discourses these days.
This note is a small effort to dismiss the narratives against renewable energy through open access
being major reason for DISCOM falling financial stabilities.
1
http://surl.li/ctlwh
RE banking = Supporting Nature (Solar, Wind and other RE sources)
2. What is Renewable Wheeling and Banking arrangement
Every article has some objective, this article too has one as to advocate the pertinent policy measures
viz., Wheeling and Banking, to promote RE. Now for the benefit of many, let me define what is
Wheeling and Banking and what importance it holds for renewable promotion.
Wheeling electricity means process of transmitting electricity from producer to user(s) in same
balancing area or from one DISCOM to other DISCOM within the state or sometime even inter-state,
traditionally it has been used for conventional generation sources. On the other hand the ‘Banking’
of electricity simply means virtually bank the electricity for consumption by end consumer at a later
time. The bank is not a physical energy storage facility but rather, energy is virtually banked through
accounting methods.
The charges that are levied upon the energy generator for utilising the energy banking mechanism
are called banking charges and are paid to respective DISCOM in either in form of cash or kind as
specified by respective SERC in their orders and/or regulations.
Renewables do require attention for banking facility as it have an added characteristic of ‘variability’
and ‘intermittency’. In other words, it is periodical in nature. Its generation is not constant even
during a period of 24 hours of a day because of many extrinsic and uncontrollable parameters. There
is need to disassociate considering RE Banking, as one concessional incentive similar to waiver of
transmission and wheeling charges but as the need to counter the intermittency and variability risk
for renewable energy sources. The basic premise of the RE banking is to bank the same during its
surplus generation and utilise the same during lean RE period to meet up the need. The following
represents the hourly and monthly energy profile variations of the renewable projects
Intermittency in renewable energy generation does not match the open-access consumer demand,
resulting in mismatch of demand and supply. Under the banking mechanism, regulations allow the
facility of notionally parking unused power generated with the DISCOM and using it later. Banking
facility is one of the life saver mechanisms which makes open access projects for C&I segment
economically viable, without proper supporting provisions for banking of renewable energy it’s
unlikely we will be able to meet the net-zero emission target in the desired timeline.
Annual banking not only proposes suitable option for industrial/commercial establishments to get
into green agreements by purchasing renewable energy and ultimately replacing their energy
requirements for a greater number of hours i.e., for hours in which wind are unavailable but also
supports developers in terms of better project financing, intact cash flow and suitable debt service
coverage ratio for their renewable projects.
The key reason why an industry and commercial consumer wishes to have banking is to
accommodate the variable and intermittent renewable energy profile with their consumption pattern
throughout the year. Except for process industries, almost each business follows a cyclical business
yield curve varying their electricity consumption accordingly. Even evolving businesses like data
centre are rapidly finding their base in the country and these international organisations has globally
committed to achieve net zero to improve their ESG indices.
As part of NET ZERO, Scope 1 and Scope 2 GHG emissions offsets are easy target to move forward on
NET ZERO path for any organisation. As the financial institutions across the world are paying greater
attention towards ESG (Environment, Social and Governance) indices and renewable is one such way
to strive on such ESG compliance path and without RE banking meeting such goals are not possible.
It is not hidden fact that RE companies have greater access to the sustainability debt available at
cheaper interest rate compared to their other fossil fuel based generation sources. Access to
sustainability financing is pertinent upon higher ESG compliance by the beneficiaries. Meaning
thereby the developers also have to ensure higher ESG ratings and thus invest in ESG compliances
and initiatives. By procuring from such RE generators, the NET ZERO buyer entity not only moves
forward on Scope 2 emissions but also controls Scope 3 emissions and achieves higher ESG ratings.
In wake of above, it is to be noted that in case the banking provision, altered midway of the project
life or the banked energy withdrawal conditions are modified subsequently, it will modify the equity
to consumption ratio for such captive generating plant and thus violate the rule of proportionality
and will risk the entire captive structure. For the purpose of illustration, we wish to submit for PPAs
of 25 years and the capacity of the captive users from the captive generating unit.
Illustration
Particulars UoM Amount
Assumptions
RE Capacity under Captive MW 50
Capacity offtake under PSOA
Offtaker 1 MW 20
Offtaker 2 MW 20
Offtaker 3 MW 10
Approx. Solar Yield kWh/MW/Year 1500000
Base Scenario
Rule 1: Equity invested by Offtaker @ 30 Rs lakh/MW (i.e. 26% of equity capital
of project)
Equity - Offtaker 1 Rs Cr 6.00
Equity - Offtaker 2 Rs Cr 6.00
Equity - Offtaker 3 Rs Cr 3.00
Total solar units to be generated kWh 75000
Rule 2: Minimum generation for captive compliance (i.e. 51% of aggregate
kWh 38250
generation of project)
Energy - Offtaker 1 kWh 15300
Energy - Offtaker 2 kWh 15300
Energy - Offtaker 3 kWh 7650
Scenario 1: Assuming the Offtaker's consumption includes 15% energy to be utilised under banking
provisions
Minimum offtake for captive compliance incl banking charges @ 2% kWh 39015
Min Energy - Offtaker 1 kWh 15606
Min Energy - Offtaker 2 kWh 15606
Min Energy - Offtaker 3 kWh 7803
Rule 3: Equity to Consumption Ratio in Scenario 1
Offtaker 1 0.04%
Offtaker 2 0.04%
Offtaker 3 0.04%
Scenario 2: Assuming there is no banking facility and banked energy considered will be lapsed
Offtake by existing offtakers adjusted with reduced 20% banking capacity not
kWh 31212
available for adjustment
Min Energy - Offtaker 1 kWh 12485
Min Energy - Offtaker 2 kWh 12485
Min Energy - Offtaker 3 kWh 6242
Rule 3: Equity to Consumption Ratio in Scenario 2
Offtaker 1 0.05%
Offtaker 2 0.05%
As we are aware that the rule of proportionality as per Electricity Rules 2005 allows deviation
maximum upto +/- 10%. However, as per aforementioned illustration, the change in RE banking
condition will not only breach the rule of proportionality but also will risk the financial viability of
the captive generating station. Our request to allow RE banking for captive solar project is in
accordance with the same apprehension as explained above.
This is to be noted that most of the RE projects utilizing the Banking Facility are operating the project
for Captive Use. As per Rule 3 (1)(a)(ii) of the Electricity Rules, 2005 the captive status is to be
determined on an ‘Annual Basis’, whereas, in case the banking of power will be permitted on 6
months or monthly basis, this will lead the Generating Unit to lose its Captive Status. In addition to
Section 86(1) (e) it is also mandated under the Act to promote Captive Generation.
We wish to highlight that the financial institution across country pays special attention to such
provisions and their longevity during project life while considering to finance the project, so in such
terms such regulatory uncertainty causes project financing risk as well.
Long term open access agreements are signed with co-terminus expectations of the RE wheeling and
banking agreement. Once the banking is withdrawn, the LTOA relinquishment liabilities may
jeopardise the financial stability of the generating company.
RE banking is the stimulus incentive with least cost burden on state exchequer apart from posing
state image as environmental benign government and renewable friendly investment may trigger in
state pulling up tax revenues and increasing employment.
Since the load curve of each states vary differently compared to each other primarily on account of
wide climatic variations on Indian subcontinent, so the capacity and ease to absorb the intermittent
and variable RE sources by the states and so the concern of each state hardly finds uniformity w.r.t.
RE banking. Unfortunately, we are yet to see a scientific methodology for determination of energy
accounting-settlement and banking charges computation of states and every state follow levy of
banking charges based on their enigmatic framework to promote or discourage RE banking
depending upon their state objectives. Following illustrates the brief summary of banking provisions
in different states:
To add to irony and confusion, even though states have RE banking provisions, effective
implementation is actual Greenwashing action by states. For instance, the states and nodal agencies
play with varying degree of uncertainty in allowing banking provisions, few of the challenges in RE
banking observed are as enumerated herein below, which is a very limited list:
UP Solar Policy 2017 allowed 100% RE banking for project during policy period but this wasn’t
incorporated in the respective regulations. Once the developers reached state government to
issue directive under section 108 for implementation, the same yet to see implementation to
ensure 100% banking for useful life of the project with fixed banking charges
In Andhra Pradesh and Telangana, even though the RE banking is part of regulations, the
prolonged delay in allowing connectivity and signing of the wheeling and banking agreement
has actually discouraged developers to consider RE investment in the state
In Haryana and Rajasthan, RE banking was the key agenda and agreed in policy and
regulations, however, respective DISCOM tweaked the regulations by orders to deny benefit
of RE Captive Open Access and banking facilities
Except in Chhattisgarh, none of the SERC has followed promoting RE in true spirit by fixing
the incentives & waivers for entire useful life even though for limited capacities. This is very
important for any RE investment to be made as it ensures constant cash flow and Debt service
coverage ratio profile as agreed with the lenders.
Karnataka has attempted to revise the RE banking on retrospective basis, though the same
was denied by both Hon’ble APTEL and High Court, however, the matter still under judicial
debate at High Court and Supreme Court. Ongoing projects are being signed wheeling and
banking agreement with an affidavit of complying to revised RE banking norm subject to
judicial outcome
West Bengal inspite of open access regulations with all lucrativeness of encouraging open
access and RE investment, actually don’t even consider expeditious disposal of any open
access applications
UP inspite of solar policy allowing 100% RE banking now plays with a definition of ‘upto 100%’
RE banking and has attempted denying RE banking adjustment in specific TOD slot of off-
peak hours but subverted by Hon’ble UPERC.
MP discourages RE banking with ambiguous provision of banking not allowed for DISCOM
registered projects and do not specifies who will be the Party to such wheeling and banking
facilities
From the aforementioned it is clear that allowing RE banking not only helps the end consumers but
also helps DISCOM mitigating the power purchase cost impact and also helps meeting RPO
compliance without engaging into long term contract.
Contrary to the narrative being built as renewable creating tariff impact on end consumers, the
working herein below based on actual details of KPTCL, ESCOM and assumption of Open Access are
presented as herein below:
Even with consideration of increased transmission charge as 50% of actual, the retail tariff impact on
DISCOMs are way less and if the Electricity imposed on the OA consumers (i.e. INR/kWh 0.69 for
Captive OA and 0.20 INR/kWh for 3rd party OA) are considered, it yields net benefit to the DISCOM.
Notwithstanding anything as stated in aforementioned paragraph, this can’t be overruled 100% that
there is no financial dent being caused by RE investment by captive users or through open access.
Yes there will be a revenue gap arising out of tariff inbuilt with Cross-subsidy surcharges with
reduced energy purchase, however, the truth lies in details and the real reason for the same is
distortion of tariff structure, its framework and scientific methodology for determination of charges
that can be levied to allow such RE investments to flourish.
Any consumer opts open access primarily for two specific reason 1) Cheaper and reliable power
supply and 2) their organisation commitments to procure Renewable as part of Net ZERO ambitions.
Any open access may distort the revenue profile of distribution company w.r.t. energy charge
recoveries, however, highly skewed allocation of expenditure among fixed and energy charges in
different states troubles DISCOM in under-recovery and is key reason why DISCOM inspite of
acknowledging the RE importance for Net Zero committed organisations ends up discouraging them
to avail open access and RE banking.
Further, Hon’ble APTEL in its judgment in Appeal No 53, 94 & 95 of 2010 dated 21.09.2011, necessity
of banking for wind energy has been emphasised as herein below:
“27 (d) The concept of “banking” was evolved by the State Commission which is
in line with the provisions of the Act, 2003, National Electricity Policy and the
National Tariff Policy. Therefore, the impugned order promotes the object of
the Act/Rules and the purpose it serves. It would be impossible to set-up the
Wind Energy Units without the banking facilities due to the very
characteristics of wind power generation. It was only because of the promises
made by the Government and the Appellant in respect of Wind Power
Generation which included the concept of banking, the wind generators set-
up their facilities by incurring heavy expenditure. Therefore, the Appellant is
estopped from making claims contrary thereto.”
‘Banking’ founds it statutory basis from National Electricity Policy and Tariff Policy,
it supports the object of the statute and considering the intrinsic characteristics of wind
energy, banking is inevitable requirement, and
promises based on which investment has been made can’t be withdrawn
2
shorturl.at/FLNTX
RE banking = Supporting Nature (Solar, Wind and other RE sources)
Further Hon’ble APTEL in its judgment in 2014 SCC OnLine APTEL 1663 has stated as below to
support the RE banking:
In the aforementioned judgment, Hon’ble APTEL has categorically expressed the need of banking
for commercial viability of wind project supplying power to a consumer, captive or otherwise
through open access.
Further Hon’ble APTEL in its judgment in Appeal No 191/2018 dated 28.01.2021 has opined as herein
below:
Hon’ble APTEL in its aforementioned judgment has re-emphasised and reiterated its previous stand
of allowing RE banking and stated the same as mandated under the law and stated that power
banking can’t be wished away.
Further, Hon’ble Supreme Court in its judgment in Civil Appeal Nos.5399-5400 of 20164 dated has
given the statutory status to the provisions of the policies as herein below:
“26. Another important facet of dealing with this argument is that the tariff policy
dated 6th June, 2006 is the statutory policy which is enunciated under Section 3 of the
Electricity Act”
3
https://aptel.gov.in/sites/default/files/Jud2021/A.Nos.%20191,%20195,%20265%20of%202018%20&%20406%20of
%2019_28.01.21.pdf
4
https://main.sci.gov.in/jonew/judis/44760.pdf
RE banking = Supporting Nature (Solar, Wind and other RE sources)
Aforementioned mandates the policy notifications under the statute provisions are mandatory to
be complied with. Therefore the banking provisions promoted by Appropriate Government under
respective provisions of Section 107 or 108 have statutory backing and must be adhered.
Need for banking for RE projects for Captive User has been well reasoned by the Hon’ble APTEL in
its Judgment in Appeal No 42/2018 dated 29.03.2019 as herein below:
“The State Commission, being the sector regulator in the State has a mandate to strike
judicious balance among all the stakeholders as required under various provisions of
the Act. The small RE plants cannot be compared with major/mega RE plants which
are generally supplying power to inter-state and are taken care of, for their balancing
on the regional / all India basis. The banking is not a sole commercial transaction
but is a physical support to RE generation on account of their generation
being infirm and periodical in nature. Moreover, any amendment has to take place
for future projects and not for the already commissioned projects for which wheeling
and banking agreements have been executed and valid for a period of 10 years from the
date of execution.”
In the aforementioned judgment as well, Hon’ble APTEL has duly acknowledged the importance of
RE banking as support system for infirm and periodical renewable generation.
Taking into cognizance of the physical support needed for renewable in terms of RE banking, Hon’ble
APTEL in its judgment in Appeal Nos. 191, 195 & 265 of 2018 and Appeal No. 406 of 2019 has entrusted
the responsibility to Central Electricity Authority (CEA) to contribute to the ‘cause’ of RE banking
need for renewables and insisted for uniform policy on the subject which may have pan-India
application and also suggested the matter to be considered as part of National Electricity Policy and
Plan.
While specifying RE banking priorities, it can further be investigated to understand whether the
forecasting of such intermittency and variability is possible.
There would be combination of reasons for such aforementioned priority ranking and audience may
feel different, depending upon their access to information, tools and creativity in evaluating the
renewable resources for assigning RE banking.
On the other hand, impact on distribution companies may also need to be understand along with
state RE policy objective to arrive at evaluating RE banking priority ranking for different renewable
sources.
The decision to prioritise ranking for RE banking among different RE sources shall be based on
evaluation of the actual banking need based on degree of variability and intermittency in generation
profile and also considering the least cost impact with an objective of state policy measures to
promote renewables. For instance, Wind among all renewable sources is highly variable and
intermittent and its profile changes across months as well and is practically more difficult to predict
than solar, which in turn is more susceptible than biomass, bagasse and hydro so the aforementioned
RE banking priorities may be evaluated.
RE banking do creates impact on DISCOM operations and cost impact, even though it is marginal so
unless there is compensation for the same, there will always be challenges and protest by the
DISCOMs. Few of the concerns raised by DISCOM from time to time can be encapsulated as herein
below:
Banking charges inadequate to compensate for their cost incurrence allowing the RE banking
drawl
DISCOMs across country do have varying load curve not only on daily but on monthly and yearly
basis and this combined with intermittent and variable generation curve of RE poses power
purchase planning aspects of DISCOMs
Tariff matrix of DISCOMs are skewed towards energy charges meaning thereby there is no back-
to back fixed cost and energy cost mapping of DISCOM tariff for any consumer with their
respective cost, this entails DISCOM to have under-recovery of the cost and thus creates
grievance while allowing open access. Though Wheeling, Cross-subsidy and/or additional
surcharges are supposed to bridge the differential, however, such impacts are inevitable. Primary
reason for the same is the tariff design principles of being based on average cost of supply rather
cost to serve basis.
This leads to a situation where RE banking methodologies need to create a win-win for both banker
(i.e. DISCOM) and the consumer (i.e. beneficiary). Following are few scenarios which need to be
deliberated to understand the rational of RE banking both from the perspective of DISCOM and
beneficiary:
Imagine a situation where the banker have to pay from their own share of revenue to
consumer knowing the fact they don’t need such surplus and not obligated to do so, whether
this would make them better off?
On the other hand, imagine a scenario where the consumer has banked its surplus but is not
allowed to draw when it actually needs and banking is allowed on a condition that either you
draw with pre-determined interest (i.e., banking charge) within a month or it will be gone.
Or a scenario where the consumer is told to bank the surplus only during specific hours and
draw during those specific hours, irrespective of their banked energy needs.
Which scenario or combination do you feel creates a win-win for both DISCOM and beneficiary w.r.t.
RE banking? According to me irrespective of skewedness of risk and benefit structure, the contract
which cannot create win-win to both parties achieve success and do not allow operating contract in
harmony in long run. Unfortunately most of the prevailing RE banking methodologies are yet to be
seen creating win-win for DISCOMs and beneficiaries so the disputes, which benefits none.
Now coming over to a moot point whether there could be a uniform RE banking methodology? And
what RE banking methodologies may be evaluated to create a win-win. Answer to former question is
remote possibilities in wake of the fact that Distribution being a state subject and power being
concurrent subject under constitution, any encroachment in terms of pushing a national policy
Pondering over to the later question of what RE banking methodologies may create win-win, the
important tenets of RE banking methodologies would be as herein below:
RE banking charges should be adequately compensating for the cost incurred by the
DISCOM
RE banking should be allowed to cater the seasonal energy need variation of the beneficiaries
over annual basis considering cyclical nature of businesses as part of economy
RE banking charges (i.e., energy in kind) should be allowed to be considered to offset their
respective RPO need of the DISCOMs
RE banking should be allowed on scheduled basis on daily, monthly basis to allow DISCOM
plan their power purchase profile
RE banking once allowed should be for long term matching either the debt serviceability
period or useful life of the project, this will help DISCOMs and Consumer both
Though it requires correcting tariff structural framework to understand the true impact of RE
banking, however, within prevailing framework, there could be few approaches to determine the RE
banking impact and charges associated
Approach 1: Evaluate the cost differential impact of RE banking by evaluating the aggregate
impact of cost impact of RE injection during hours of injection and possible sale of such
surplus power if not needed to meet demand and the cost incurred while allowing the RE
banking drawl.
For instance, a DISCOM could experience two situations, one being they don’t have
demand to absorb the RE generation and other they could use the RE generation to
offset their higher short term peak demand need and/or optimise the free RE injection
to optimise the higher power purchase cost sources. In addition while allowing
banking drawl, they can be exposed to situation to two such situations, where they
have to either let their lowest cost generation to run more than their otherwise actual
requirements and this may help them avoid compensation for running at PLF less
than 85% or technical minimum whichever applicable and to a situation where the
DISCOM may have to purchase electricity under RTM or DAM to allow banking drawl
if they do not have any low cost generation source available.
Approach 2: Evaluate the cost impact of loss of revenue from exit of any such consumer
availing RE banking and cost impact for allowing RE banking drawl by sourcing either from
their own generation portfolio or from external sources.
Approach 3: Evaluate the cost differential impact arising due to revenue realised from pre-
known scheduled energy banked during the day/week or month and agreeing contract with
other DISCOMs in reverse banking to meet such RE drawl requirements.
It is likely that the RE banking impact on the DISCOM may vary from month to month basis, the
same could be mitigated by adopting either a weighted average impact based charges or average
charges whichever makes DISCOM cost neutral or positive.
There could be few more RE banking methodologies however, the same need to be scientifically
evaluated and prognosis should be done before blaming RE banking as one of the reason for the
DISCOM dismal performances and not allowing RE banking as saviour approach to save DISCOMs.
RE banking = Supporting Nature (Solar, Wind and other RE sources)
The adopting of RE banking methodologies could lead to varying result to different states as their
load and generation cannot be assumed congruent to each other.
A word of caution while adopting the RE banking methodology and its adequate cost impact for
recovery from the consumer is that such impact should be treated independent of transmission and
wheeling charges impact, which are mere policy incentives contrary to RE banking which is pertinent
for survival for renewable sources based generation.
RE banking is not the comfort but a PHYSICAL NEED and MUST HAVE technical requirements for
renewable, more than its promotional policy measures and its replacement is yet to come so there is
no point of even debate of withdrawal of such support to renewable. Few of the key reasons why RE
banking is MUST are as follows:
Hon’ble APTEL in its numerous judgments has duly acknowledged the importance of RE banking as
support system for infirm and periodical renewable generation and upheld in favour to allow RE
banking however, also cautioned to adopt a scientific approach while allowing RE banking to address
the concern of DISCOMs.
RE banking should follow ranking priority. Impact on distribution companies may also need to be
understand along with state RE policy objective to arrive at evaluating RE banking priority ranking
for different renewable sources. The decision to prioritise ranking for RE banking among different
RE sources shall be based on evaluation of the actual banking need based on degree of variability and
intermittency in generation profile.
Because of the need of structural changes and constitutional demarcation of responsibilities for
distribution and renewable promotion, a suitable balance is needed to adopt a suited RE banking
methodologies. There could be multiple RE banking methodology approaches and the adoption of
the same may be dependent on detailed understanding of the load curve, generation portfolio, the
breakeven RE capacities for RE banking and their cost impact on DISCOM and benefits to the
Consumer so that a win-win may be achieved while allowing RE banking.
HIMANSHU MISHRA
Himanshu is power sector professional with more than 16 years of experience in
commercial, regulatory and strategic aspects of entire power sector value chain
including renewables.
His profile may be accessed on https://www.linkedin.com/in/himanshu-mishra-
ba2b52a/. The views in this article is purely personal and shall not be treated as
views of the organisation he works or worked in past.