Time-of-day (ToD) tariff: Amendments to the Electricity (Rights of Consumers) Rules 2020

What’s in today’s article?

• Why in News?
• The Electricity (Rights of Consumers) Rules 2020
• About the Time-of-day Tariff Norms
• Potential Benefits of ToD Power Tariffs
• How do DSM tools help in Integrating RE Generation?
• Challenges towards Implementing ToD tariff Structure

 

Why in News?

• The Union Power Ministry announced amendments to the Electricity (Rights of Consumers) Rules 2020, and the changes included the introduction of time-of-day (ToD) tariff provisions.
• As per the notification, ToD tariffs in India will be static (not dynamic - determined on a real-time basis in accordance with the actual demand conditions), which means they will be decided in advance for different blocks of the day.

 

The Electricity (Rights of Consumers) Rules 2020:

• The Ministry of Power has promulgated the Electricity (Rights of Consumers) Rules 2020 under the Electricity Act 2003.
• These rules empower the consumers of electricity as the consumers have rights to get reliable services and quality electricity.

 

About the Time-of-day Tariff Norms:

• The TOD tariffs are separate tariffs for peak hours, solar hours and normal hours.
• The power tariff during “solar hours” - the duration of 8 hours a day as specified by the respective State Electricity Regulatory Commission (SERC) - of the day shall be at least 20% lower than the normal tariff.
• Tariffs during peak hours will be at least 20% higher than the normal tariff for commercial and industrial consumers, and at least 10% higher for other consumers.
• It would be applicable for Commercial and Industrial consumers having Maximum demand of 10 KW and above (from 1st April 2024), and for all other consumers (except agricultural consumers) from 1st April 2025.
• Smart metres are a prerequisite for ToD tariff systems and most SERCs have already implemented ToD tariffs for large commercial and industrial categories of consumers.

 

Potential Benefits of ToD Power Tariffs:

• A “win-win” proposition for consumers as well as the country’s power system.
• For consumers:
  • Separate tariffs will send price signals to consumers to manage their load according to the tariff - offer a nudge to consumers to optimise their electricity consumption, especially during peak hours
  • With awareness and effective utilisation of the ToD tariff mechanism, consumers can reduce their electricity bills.
• For the power system:
  • If the load on the grid during peak consumption hours goes down, the requirement for additional investments in grid infrastructure for maintenance and upgradation also declines over the medium to long term.
  • This is also a major demand side management (DSM) tool that is expected to result in better grid integration of the increasing share of renewable power in India, expediting its energy transition.

 

How do DSM tools help in Integrating RE Generation?

• The country’s current installed generation capacity is around 410 GW (1 gigawatt is 1,000 megawatts) while the maximum demand is around 229 GW.
• Of the installed capacity, the total electric power installed capacity from non-fossil fuel-based energy resources was 179 GW, which is over 40% of the total electric power installed capacity, primarily solar and wind.
• Energy storage is needed alongside green energy sources to primarily balance out the variability in a renewable generation - electricity is generated only when the sun shines or when the wind blows
• To compensate for the intermittency, there are two alternatives being considered by the government now: hydrogen and hybrid generation models blended with off-stream pumped storage.
• In essence, DSM tools aid grid managers and policy planners in managing these RE integration difficulties until these storage challenges are resolved.

 

Challenges towards Implementing ToD tariff Structure:

• Around 20 countries, including at least 17 European nations and the United States, have time-based power tariff structures in one form or another.
• But the success of ToD tariffs, especially at the consumer level, is contingent on smart metering being implemented at the unit level.
• Users need to be made aware of how to optimise their consumption patterns to take advantage of the scheme.

 

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Q1) What is the National Green Hydrogen Mission of India?

The mission was approved by the Union Cabinet on 4 January 2022, with the intended objectives of: Making India a leading producer and supplier of Green Hydrogen in the world, creation of export opportunities for Green Hydrogen and its derivatives, etc.

 

Q2) What is green hydrogen?

Green hydrogen is hydrogen generated by renewable energy or from low-carbon power. Green hydrogen has significantly lower carbon emissions than grey hydrogen, which is primarily produced by steam reforming of natural gas. It accounts for less than 0.04% of total hydrogen production globally.

 

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Source: Move towards differential timeof-day power tariffs: How would it impact consumers?