Does Open Access Power Require Installation for Industries? No — And Here’s Why

Today, various industries are seeking ways to reduce electricity bills and consume cleaner forms of electricity. One of the most promising ways of achieving this is through open access electricity. Nevertheless, many industrial consumers are of the perception that in order to consume open access electricity, they are required to install their own electricity generation plant or renewable sources of electricity. In this context, it is important to state that open access electricity does not require any of the industrial consumers to install any electricity generation plant or renewable sources of electricity.

Such perceptions are a major hindrance to many industrial consumers. Therefore, it is important to discuss this issue in a detailed manner to help businesses and industries take informed decisions regarding electricity consumption. Open access electricity is a concept that permits an industrial consumer to purchase electricity directly from a power generator or renewable sources of electricity instead of solely procuring it from a local distribution company (DISCOM). The electricity generated is then sent to the industrial facility of the buyer through the existing electricity grid. As the electricity is being sent through a national or state-level electricity transmission grid, it is not required of any of the industrial consumers to install any electricity generation plant or renewable sources of electricity.

The most important aspect of this concept is that it permits any of the industrial consumers to purchase electricity from any of the electricity suppliers. Such a concept of electricity purchase is similar to that of internet or telecommunication suppliers. Such a concept of electricity purchase was introduced in India in accordance with the Electricity Act of 2003.

This is because open access makes use of the existing transmission and distribution networks. Therefore, it does not include the physical installation of solar panels, wind turbines, and other equipment at the industry’s premises. Instead, it works in such a way that the power generator supplies electricity into the grid and the consumer draws that electricity through the same grid used for his or her regular power supply.

There is also another model of open access power procurement. Industries can use either short-term open access power supply, medium-term open access power supply, or long-term open access power supply depending on their needs. In most cases, industries use long-term power purchase agreements with renewable energy generators for electricity supply.