Jaipur: In what has the potential to eclipse the prospects of solar energy in Rajasthan, the state energy regulator Rajasthan Electricity Regulatory Commission (RERC) has proposed to levy cross-subsidy charges on solar plants put up by developers for their industrial or commercial clients (third party).

Cross-subsidy charges, which go up to Rs 2.16 per unit, are collected from general consumers to compensate for the power subsidies given to farmers, a major reason for high electricity tariffs in Rajasthan.

“In the existing regulations, the open access (third party) transaction based on renewable energy projects were exempted from levy of cross-subsidy surcharge. However, as the technology is matured over a period of time, there is no need to provide any such exemption,” said the draft proposal of RERC (Terms and Conditions for Tariff determination from Renewable Energy Sources) Regulations, 2020.

Imposition of cross-subsidy is expected to raise the cost of solar power closer to conventional energy and shut the door for investors. But RERC chairman Shreemat Pandey said that they have sought suggestions from the industry and other stakeholders and based on their feedback, a right decision will be taken by the regulator.

“This is a draft. We have sought suggestions and views from the industry and other stakeholders. We will hear their points-of-view before taking a final call on the cross subsidy surcharge,” Pandey told TOI.

However, other officials in the commission said that discoms are wary of losing high-profit generating customers like commercial establishments to the third party solar power producers. “Yes, the regulator and the discoms are on the same page when it comes to discouraging the third party solar projects. But nobody can wall off the inevitable, the market forces, which are squarely behind solar energy,” he said.

Even the solar industry in Rajasthan is vocal against the move, is determined to stall any attempt to levy cross-subsidy charges.

Sunil Bansal, general secretary of Rajasthan Solar Association, said, “People are already working and developing strategies for the open access market in Rajasthan. If the cross-subsidy surcharge is imposed, it will deal a heavy blow to the industry. This would be serious miscalculation of the investors’ mood and the state will fall from the radar of the solar power developers. The proposals are against the positive vibe Rajasthan solar policy created.”

The draft has also proposed that the banking facility will be allowed for the consumers consuming up to 20 per cent energy from the captive power plant. “No banking facility shall be allowed for the consumers, whose captive consumption is more than 20 per cent of total consumption on annual basis,” the regulator said in the draft.

Similarly, banking charges currently attract 2 per cent of banked energy in each month. But the new proposal, to 10 per cent. Justifying the move, RERC said had the owner of renewable energy plant opted for battery systems, he would have incurred capital cost and the banking facility saves it.

Captive power plant owners find the restrictions strangulating. “By restricting the capacity to 80 per cent of our contracted demand is retrograde. They should allow capacity to fulfil our requirements from green sources of energy. Similarly, why small businesses consuming less than 1 MW power should not have captive plants. There should be no restrictions,” said a senior official of a mining company.

India has made an international commitment for 40 per cent electric power installed capacity from non-fossil fuel-based energy resources by 2030. Solar needs to play a key role if the country wants to achieve the target.