States put open access renewable projects at risk by reducing incentives: ICRA

Mumbai: With state governments increasing standard charges on open access renewable energy projects or cutting back on incentives, the financial future of many projects are in jeopardy. In a note, credit ratings agency ICRA said that with the changes in policy, the viability of open access – against grid-connected energy – is no longer as attractive.

Open access allows large users of power – typically those who consume more than 1 MW – to buy power from the open market, instead of depending on a more expensive grid. These non-grid avenues of power purchase have been encouraged in renewable energy projects over the past few years through state government incentives.

However, the power policies in many states have been amended over a period and the states have either completely withdrawn or reduced incentives given to open access customers for power procurement from renewable energy projects, as tariff competitiveness of wind and solar power has shown a significant improvement