Documente Academic
Documente Profesional
Documente Cultură
Rakesh Shah
29th April 2010-Chennai
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Legal Framework : Policy & Regulatory Set-up
Created a centralised nature of the electricity business, with a fair amount of control
given to state governments
Pushed for unbundling of electricity markets into generation, transmission, distribution to push
efficiency in operations and onward private sector participation
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Regulatory Impacts : Renewable Energy
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EA 2003 : The New Avtaar..
• Electricity Act, 2003 (EA 2003) : Highlights
Abolished all earlier acts
De-licensing of generation of electricity
Erstwhile Sec 44 of the E(S) Act, 1948
Allowance of OA transaction
Sec 28 of 1910 Act, replaced with Sec 42(2)
Transmission activity to be separated (unbundling)
Only transmit electricity and cannot trade (OA principles without any conflicts)
Various states have different model for unbundling
– Only Transmission separated (viz. TNEB)
– All functions separated, i.e. genco, transco, disco, trading (viz. Gujarat)
– Hybrid models (viz. Karnataka, Maharashtra, Rajasthan etc.)
Special mentioning of RE
Sec 86(i)e of EA 2003
– RPS mechanism & fixed tariff regime
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RE & the Electricity Act 2003
• Section 3 of EA 2003:
National Electricity Policy, Tariff policy and National Electricity Plan including optimal
utilization resources including renewable sources of energy
• Section 4 of EA 2003:
National policy permitting stand alone system (including those based on RE sources of
energy ) for rural area.
• Section 61 of EA 2003:
The appropriate commission while determination of tariff shall be guided by promotion
of co-generation and generation of electricity from RE
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Tariff Policy (2/1/2006)
Section 6.4:
• Appropriate Commission shall fix RPO and SERCs shall fix its tariff latest by
1/4/2006
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Implementation of EA 2003
STATES MINIMUM PERCENTAGE OF RENEWABLE POWER IN FOLLOWING YEARS
ORDER 04-05 05-06 06-07 07-08 08-09 09-10 10-11
ANDHRA 27/9/05 5% 5% 5% 5% - - -
CHHATISGARH REG. BIOMASS - - 5% 5% 5% -
14/7/08 SHP 3% 3% 3%
OTHERS 2% 2% 2%
DELHI 23/2/08 NDPL - - 1% 1% 1% 1%
23/2/05 BYPL - - 1% 1% 1% 1%
25/2/06 BRPL - - 1% 1% 1% 1%
7/3/09 NDMC - - 1% 1% 1% 1%
ASSAM DRAFT 5% in FY09-10, 10% in FY12-13 and 15% IN FY15-16
ORISSA DRAFT 5% for FY11-12 and 0.5% increase every year upto FY 15-16
GUJARAT 29/10/05 17/4/10 - - 1% 1% 2% 2% 09-10, 5% 10-11,
6% 11-12, 7% 12-13
HARYANA 31/01/07 - 2% 2% 3% 10% 10% 10%
KARNATAKA 25/1/08 BESCOM CESC MESCOM 10% 10% 10%
Max. 20% HESCOM GESCOM 7% 7% 7%
Hukeri Soc - - 7% 7% 7%
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Implementation of EA 2003
STATES MINIMUM PERCENTAGE OF RENEWABLE POWER IN FOLLOWING YEARS
DATE OF RPO 05-06 06-07 07-08 08-09 09-10 10-11
ORDER
KERALA REG 24/06/06 2% Wind, 2% SHP, 5% 5% 5% - -
MADHYA REG. 7/11/08 6% Wind , 2% Biomass , 2% Cogen and 10% 10% 10%
PRADESH other Total 10%, FY 11-12: 12%
MAHARSHTRA 30/08/06 3% 4% 5% 5% - -
Draft Regulation From FY 10-11 to FY 15-16: 6% to 10%, separate for solar/ non solar
PUNJAB 13/12/07 - 1% 1% 2% 3% 4%
WEST BENGAL NOTIFICATION WBSEB 1.0% 3.8% 4.8% 6.8% 8.8% 10%
25/03/05 CESC 1.02% 2.03% 4% 6% 8% 10%
DVL 0.72% 1.2% 2.5% 4% 7% 10%
DPSC 0.45% 0.95% 2% 4% | 97% 10%
RPOs already established – Key features
• 19 states have specified the Quota for power purchase from renewable
energy sources.
large variation from 1% to 20% among different states
RPO fixed based on RE Potential available in States and its impacts on retail tariff
Renewable sources unevenly spread
TN & Gujarat can meet more than 20% through renewable alone
Some states like Delhi does not have any renewable power generation potential
• Single target for overall renewable energy purchase and usually close to
existing purchase levels
• In some cases Y-o-Y targets
• Few states have technology specific targets
• Period is upto five years
• Purchase of RE from outside the State has not been permitted
• Weak on enforcement methodology
Implementation mechanisms need further refinement
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Preferential Wind Energy Tariff
States Wind Energy Tariff Rs. Per Unit
Rs 4.03 in first year, gradually reduced to 3.36 in 5th
Madhya Pradesh (Order dtd. 21/11/07)
years and thereafter upto 20 years (to be revised)
AndhraPradesh (Order dtd. 1/5/2009) Rs 3.50 for 10 years
Gujarat (Order dated 30/1/2010) Rs.3.56 fixed for 25 years
Karnataka (Order dated 11/12/2009) Rs. 3.70 fixed for 10 year
Rs. 3.83 : Jaisalmer, Jodhpur, Barmer Distric
Rajasthan (Order dated 16/7/2009)
Rs. 4.03 : Rest of 3 Districts : fixed for 20 years
Rs. 3.50 for the first year and thereafter 15 paise
Maharashtra (Order dated 24/11/2003)
escalation every year: for 13 years (to be revised)
Kerala (Order dated 27/02/2008) Rs 3.14 for 20 years
Tamil Nadu (Order dated 20/03/2009) Rs 3.39 for 20 years
Rs 4.08 applicable for 5 years
Haryana (Order dated 15/05/2007)
with annual escalation of 1.5% from 2008-09
Rs. 3.49 (Base Year 2006-07) with annual escalations
Punjab (Order dated 13/12/2007)
@ 5% upto 2011-2012
West Bengal (Notification dtd. 25/3/08) Rs. 4.00 fixed for 5 years and as cap
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Tariff parameters comparison
Tamilnadu Karnataka Gujarat Madhya Rajasthan Andhra Maha Kerala CERC
Pradesh Pradesh
Capital cost 5.35 * 4.70 5.0 4.60 5.25 4.70 4.00 4.40 5.15* 09/10
Rs. Cr/MW 4.67 10/11
CUF 27.15% 26.5% 23% 22.5% 21% 24.5% 20% 22%
Interest Rate 12% 11.75% 10.75% 11% SBI PLR 12% 12.5% 9% SBI PLR +150
+100 BP BP
Depreciation 4.5% 7% 6% for 7% for 5.28% for 4.5% 4.5% 6% for 12 years
10 years 10 years 12 years
ROE 19.85% pre 16% 14% 16% Pre 18% :10 Y 15.5% 16% 14% 19%: 10Y
tax tax 24%: Rest 24%: Rest
O &M Cost 1.10% of 1.25% of 6.5 1% of CC 1.25% of 1.25% of 1.5%/ 1% of CC 6.5 Lacs/ MW
0.85CC 5% CC 5% esc Lacs/MW CC 5.28% CC 5% 2% of 4% esc 09-10 , 5% esc
5% esc
esc YoY YoY 5% Esc esc YoY esc YoY CC 5% YoY YoY
after 5
YoY esc YoY
years
Insurence Tamilnadu: 0.75% of 85% of capital cost with reduction of 0.50% after 1 year
Project Life/tariff 20 years 20 years 25 year 20 years 20 years 20 years 13year 20 Years 25 years
period: yerars
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…CERC Tariff Regulations
Parameter FY 2009-10 FY 2010-11
WPD Levelised tariff Levelised tariff Depreciation benefits Net levelised tariff
(Watts/ m2) Rs/kWh [1] Rs./kWh Rs./kWh Rs./kWh
WIND
200-250 5.63 5.07 0.78 4.29
250-300 4.90 4.41 0.68 3.73
300-400 4.17 3.75 0.58 3.18
>400 3.75 3.38 0.52 2.86
SHP Himachal/ Uttranchal/ North eastern States
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Rising procurement tariffs : Different states
State Procurement Tariff : %tage Remarks
Rs/kWh increase
FY 2009-10 FY 2010-11
Rajasthan 4.28 3.83 -10% Indexing would lead to reduction of tariff for one-year
Gujarat 3.37 3.56 6% Increased the procurement tariff
M.P. 4.00 Adopting CERC regulations
Maharashtra 3.50 + 0.15 Adopting CERC regulations
(escalation)
Karnataka 3.40 3.70 9% Increased the procurement tariff
AP 3.00 3.50 17% Increased the procurement tariff
Tamil Nadu 2.90 3.39 17% Increased the procurement tariff
Kerala 3.14
• It is expected in the next one year all states would have adopted CERC RE
Tariff Regulations
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Feed-in Tariff: Key program elements
• Priority access to the grid for all
• Priority purchase
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Fiscal and other support incentives
• Investment subsidies
• Low-interest loans
• Loan guarantees
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Other Central Government measures
Tax Holiday: Under section 80 IA of the Income Tax Act, the Central
Government offers a 10 year tax holiday for all infrastructure projects.
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Central Government Initiatives
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Cumulative achievements:
Grid-interactive RE power as on 31.12.2009
Achievements during Cumulative
2009-10 (upto Achievements
Sources Potential 31.12.2009) (upto 31.12.2009)
MW MW MW
Biomass Power 16881 131.50 834.50
Wind Power 45195 683.00 10925.00
Small Hydro Power (up to
25 MW) 15000 129.15 2558.92
Cogeneration-bagasse 5000 253.00 1302.00
Waste to Energy 2700 4.72 65.01
Solar Power 3.10 6.00
Total (in MW) 1204.47 15691.43
Source: MNRE
Source : MNRE
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Wind Energy Development in India
14 0 0 of
Kyoto Protocol
13 0 0
National guidelines for tariff and
12 0 0 Interconnection for captive &
110 0 third party sales
% fixation and fixed
10 0 0
tariff regime
900 National wind resource monitoring
Mandated by ERCs
& demonstration programme
800
700
Emergence of EA 2003, *
600
500
400
300
200
10 0
0
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
19
19
19
19
19
19
19
19
19
19
20
20
20
20
20
20
20
20
20
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Is the growth slowing down
• Sections 61(h) and 86(1)(e) of the EA 2003 are the only real renewable
electricity-related developmental provisions
• Growth is limited to states with wind resource and capacity of these states to
absorb wind power without affecting the consumer tariffs
• Particular issues with renewable energy
Relatively high start-up costs
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Ambiguity in application of S 86(1)(e)
• Currently regulators have used either total energy input or energy sales as
criteria while determining the percentage.
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RPOs – what further is required?
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National Action Plan for Climate Change
(June 2008)
• SERCs may set higher target than this minimum at any point in time.
• Central & State Govts may set up a verification mechanism to ensure that
renewable power is actually procured.
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Target/Market size under NAPCC
MU Needed RE MU Derived
(as per CEA (15% as per RE Capacity
Year Survey) NAPCC Target) (@33% PLF)
2011-12 969659 145449 50314
2016-17 1392066 208810 72233
2021-22 1914508 287176 99341
Wind@50% 50000
• To meet NAPCC target of 15%, installed capacity of renewables will need to reach
100,000MW (at 33% PLF)
• Even if contribution from Wind is considered @50%, the year wise capacity addition in the
Wind sector ranges from 2500 to 4500 MW for next 10 years. Huge opportunity.
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FOR Working Group : Recommendations
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What is a REC?
• What is a REC?
A REC represents the attributes of renewable energy generation
that can have value separate from commodity electricity
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Concept of Renewable Energy Certificate
Commodity
Electricity
Renewable
Distribution Company
Energy REC
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Concept of Renewable Energy Certificate
Local
Commodity Distribution Company
Electricity
Renewable
Energy
REC DISCOM
OA /Captive
Consumers
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Important Features of REC
• Effective implementation of RPS
• Reduce risks for local distribution company by limiting its liability to only energy
purchase
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REC regulation : Highlights
• Generator would have an option to opt for
Fixed tariff (as per the tariff order prevalent in the state)
REC mechanism
Existing projects having firm PPA would not be eligible till the end of the contract
period
Two revenue stream
Average procurement tariff (windy states) : Basket price : Rs 2.90 – Rs 3.50 per
kWh
RE certificates : Floor price & Forbearance price (ceiling price)
• Categories of Certificates
Solar certificates and Non-solar cerificates
• Denomination
1 REC = 1 MWh
• REC trading only through power exchange(s)
For price discovery and ensuring transparency
• Validity of Certificates
Apply for REC within 3 months of generation
Validity : 1 year from the date of issuance of such certificate
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Various stakeholders for implementing REC
• Power Xchange(s)
• Reconcilation agencies
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1
Accreditation of RE power plants
(State nodal agency: SNA)
3
Information
related to
RE
Sale of electricity at par Auditing Panel
generation
with conventional power
4
Discom issuing
RE injection State Load
certificate Despatch Centre
(SLDC) Information on REC
electricity purchase/redemption
Energy
accounting SERC: Compliance State Nodal
based on SNA Report Agency SNA
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FOR Draft RPO Regulation
for consideration of SERCs
The Commission to designate an agency as State Agency:
• For accreditation renewable energy projects
• Recommend renewable energy projects for registration
• To function in accordance with the directions issued by the Commission
• To act in consistent with the procedures rules laid by Central Agency for
discharge of its functions under the CERC Regulations
• Submit quarterly status to the Commission in respect of compliance of RPO by
the obligated entities
• Suggest appropriate action to the Commission if required for compliance of the
renewable purchase obligation
• Commission fix the remuneration and charges payable to the State Agency for
discharge of its functions
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FOR Draft RPO Regulation for consideration
of SERCs:
• Effect of default
Obligated entities have to deposit amount at the forbearance price
decided by the Central Commission into a separate fund on the basis of
the shortfall in units of RPO
Separate fund to be created and maintained by such obligated entity
Such fund to be utilized for purchase of the certificates
If distribution licensee fails to deposit the amount directed by the
Commission within 15 days shall be considered breach of its license
condition
Where any obligated entity fails to comply shall also be liable for penalty
as may be decided by the Commission under section 142 of the Act
In case of genuine difficulty in complying with the RPO because of non-
availability of certificates, the obligated entity can approach the
Commission for carry forward to the next year
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CERC Notification Dated 29.1.2010
• CERC Order on Determination of Forbearance and Floor Price for the REC
framework: 99/2010 dated 23.3.2010
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• Scenario I : APPC +REC floor price + GBI. In the short run, at a minimum
REC price (Rs 1.45 per kWh), Gujarat, Maharashtra, Rajasthan, Tamil
Nadu & AP would make a great sense
Total
Existing Preferred Mode (base-
State APPC REC min GBI Under
Preferential Tariff case)
REC
Rajasthan 2.48 1.45 0.5 4.43 3.83 Both at par
Gujarat 2.21 1.45 0.5 4.16 3.56 REC
3.50
Maharashtra 2.43 1.45 0.5 4.38 Both at par
to be revised
4.0
Madhya Pradesh 2.04 1.45 0.5 3.99 Preferential tariff
to be revised
Karnataka 1.85 1.45 0.5 3.8 3.70 Both at par
3.14
Kerala 1.46 1.45 0.5 3.41 Preferential tariff
to be revised
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SCENARIO : II APPC + REC mean price + GBI
(since in the coming period, the market would built up, and REC pricing would be
market linked) In the long run, when the REC market price would stabilise
(assumed at a mean of the trading range @ Rs 2.60 per kWh), all states would
make a sense against the preferential tariff
Preferred
REC Total under Existing/Proposed
State APPC GBI Mode (median-
mean REC Preferential tariff
case)
Rajasthan 2.48 2.6 0.5 5.58 3.83 REC
Gujarat 2.21 2.6 0.5 5.31 3.56 REC
Maharashtra 2.43 2.6 0.5 5.53 3.50 REC
Madhya
2.04 2.6 0.5 5.14 4.0 REC
Pradesh
Karnataka 1.85 2.6 0.5 4.95 3.7 REC
Kerala 1.46 2.6 0.5 4.56 3.14 REC
TN 2.62 2.6 0.5 5.72 3.39 REC
Andhra
1.78 2.6 0.5 4.88 3.5 REC
Pradesh
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Current status
• CERC
Notified the REC regulations & registry (viz. NLDC)
• SERC
GERC on 17th April 2010 came out with REC Regulation
States floated the draft REC regulation based on FOR model regulations
Maharashtra, Orissa, Uttar Pradesh, Jharkhand, Tamilnadu & Madhya Pradesh have invited
comments
RPO obligation imposed on Captive and OA consumers
Other States to follow
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Thank you
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