SECI favours lowest bid in recent solar auctions, cancels rest

The nodal agency for National Solar Mission, Solar Energy Corporation of India (SECI) has canceled mostly all but the lowest bid project in its mega solar auctions held in July. The decision to cancel 2400 MW solar capacity out of 3000 MW came to light at a meeting of developers with government officials and SECI on August 1st, 2018. Out of all the tenders, only ACME solar won 600 MW for quoting INR 2.44/unit. The government felt all the other bids were too expensive and not competitive enough.

Among the canceled projects were 1100 MW by SB energy (a Joint Venture between Japan’s Softbank, Taiwan’s Foxconn & Bharti Airtel), 500 MW by Renew Power, both of which quoted INR 2.71/unit and lastly 300 MW each by Mahindra solar and Mahoba solar (Adani group) who quoted INR 2.64/unit. The developers felt that if they quoted below INR 2.71/unit, it would be not feasible for them to sustain.

Recently an auction in Uttar Pradesh was also canceled for 1,000 MW without stating any reasons.

Post the Safeguard duty implementations, Ministry of New and Renewable Energy (MNRE) has also requested the Finance Ministry to exempt the ongoing solar power projects from the 25% safeguard duty imposed on imported solar equipment. The developers showed their concern over the increase in capital of the projects. While the duty seeks to protect the domestic solar manufacturing industry, project developers have mentioned that the duty would increase solar power tariffs.

Looking at the trend of the competitive tariff over the past years, tariff prices have dropped drastically, and the developers have gone weary of the ongoing trend and believe that they won’t be able to sustain the long-term agreement. However, the government is of the opinion that the tariff is too high and not competitive enough yet.

Maharashtra joins the list of states with final Forecasting and Scheduling regulations

Recently Maharashtra became the latest state to publish final Forecasting and Scheduling (F&S) regulations. These regulations were published in the State Gazette on July 20, 2018. With this, all supposedly “RE rich” states except Gujarat and Tamil Nadu have finalized their F&S regulations.

The detailed summary of the regulations is as below:

Regulation Applicable on All grid-connected Wind and Solar Power Generators with pooling station capacity not less than 5MW or that of an individual Generator connected to some other Substation, shall not be less than 5 MW.

Deviation Accounting: The deviation accounting can be either carried out based on the Available Capacity:-

Available Capacity (AvC) = 100/Actual Generation – Scheduled Generation AbsoluteError in %

Point of Forecasting: Pooling Station or STU Feeder where injection is made.

Keypoints

  • No Aggregation – Clause 5.13 specifies the aggregation of schedules at Pooling Substation level only, and not of multiple pooling station capacity.
  • Further charges in case of shortfall in DSM pool – Clause 12.1 (d) specifies that any shortfall in the aggregate amount of Deviation Charge payable by Solar and Wind Energy Generators at the State periphery and the amount receivable from them by the Pool Account shall be recovered in proportion to their deviation reflected at the State periphery.

Sr.

No.         

Absolute Error in %age terms in 15-minute time block                               Deviation Charge payable to Pool Account for Wind/Solar Generation
1 < = 15%

None*

2 >15% but <=25% At Rs. 0.50 per unit for the shortfall or excess beyond 15% and up to 25%
3 >25% but <=35% At Rs. 0.50 per unit for the shortfall or excess beyond 15% and up to 25% + Rs. 1.00 per unit for the balance energy beyond 25% and up to 35%
4 >35%

At Rs. 0.50 per unit for the shortfall or excess beyond 15% and up to 25% + Rs. 1.00 per unit for the shortfall or excess beyond 25% and up to 35% + Rs. 1.50 per unit for the balance of energy beyond 35%      

Role of a QCA:

  • Provide day ahead, weak ahead and intra-day forecast, schedules and periodic revisions;
  • Coordination with DISCOM/STU/SLDC for metering, data collection, communication/issuance of dispatch/curtailment.
  • De-pooling of charges among generators
  • Commercial settlement of DSM charges and all other ancillary and incidental matters.
  • The QCA shall furnish weekly meter readings to the SLDC by 00.00 hours on Thursday of the previous week, in addition to the data provided to the SCADA Centre, for the purpose of energy accounting under these Regulations.

Revisions:

  • 16 revisions are permitted starting from 00:00 Hrs of the day for Wind & Solar Generators
  • All revisions will be effective from the 4th time-block

Important differences between intrastate and interstate transactions:

  • The sale of power within Maharashtra by Solar and Wind Energy Generators connected to the Intra-State Transmission Network shall be settled by the Procurers on the basis of their actual generation.
  • The sale or of power outside Maharashtra by Solar and Wind Energy Generators connected to the Intra-State Transmission Network shall be settled by the Procurers on the basis of their scheduled generation.
  • Inter-State transactions at a Pooling Sub-station shall be permitted only if the concerned Generator is connected through a separate feeder. In that case, a separate Schedule will have to be provided for its energy generation.
  • The Generator shall pay the Deviation Charges applicable within Maharashtra in case of deviations in the State DSM Pool Account, the consequences of such deviation at the Inter-State level being governed by the CERC Regulations governing the Deviation Settlement Mechanism and related matters.

REC trade results July 2018

Non-solar: Non-solar RECs prices continue to rise on the back of robust demand and limited availability. The RECs were traded at the price of INR 1050 at PXIL ( 5% above the floor price) and INR 1200 at IEX (20% above the floor price). The non-solar REC inventory was completely exhausted in July 2018 with a clearing ratio of 100% at PXIL & IEX both respectively. A total of 235,437 RECs were traded in this session.

Solar: Solar RECs registered the highest ever traded volume. Total 13,82,632 RECs were traded in the current trade session. The clearing ratio was 40.23% at PXIL & 36% at IEX respectively. RECs traded at the floor price, i.e. INR 1000 at PXIL and IEX both respectively. As compared to the available supply of Solar RECs on March 31, 2018, 77% of the RECs have already been sold.

 

Government to float 12 GW solar energy scheme which may help domestic manufacturers

Amidst the US-India WTO dispute a new 12 GW energy scheme which has been deftly crafted to mandate local manufacturing without violating WTO’s trade rules, is in the final stage of approval and will help local industry in India sustain the blow of cheap imports.

The scheme worth INR-8,000 cr will be a significant boost for Indian manufacturers who are also waiting for the imposition of a safeguard duty on solar components. The scheme has already been cleared by the Expenditure Finance Committee which is a part of the Department of Expenditure in the finance industry.

The government can mandate the use of locally manufactured components as a part of the scheme since the power is for the government’s own consumption. The scheme will have an implementation period of four years by 2022, with a minimum manufacturing capacity of 3 GW of solar cells per year which is the current size of the domestic solar cell market in India.

In the recent developments of the safeguard case, the Directorate General of Trade Restrictions recently recommended up to 25% safeguard duty on imports from China and Malaysia for a period of two years.

Initially, in February 2013 the United States requested conversations with India concerning certain measures of India relating to domestic content requirements under National Solar Mission for solar cells and solar modules. The appellate body post listening to both parties plea gave the verdict that DCR measures were inconsistent with WTO non-discrimination obligations.

MoP reveals proposed amendments related to captive power plants in Electricity Rules 2005

Ministry of Power recently announced proposed amendments in the electricity rules 2005 related to provisions regarding captive generating plants. The captive power producers body ICPPA expressed their woes against the proposed amendments.  According to ICPPA, these amendments are aimed at creating new ways of earning Cross Subsidy Surcharge (CSS) from captive users.

The amendments state that any captive user whose ownership of that plant is not exceeding 15% shall not qualify the power plant as a captive power plant. The proposed amendments have associated the ownership of the captive power plant with the eligibility of being a captive user.

In case the captive user fails to abide by the rules, then the electricity generated by the plant will be considered as if its a supply element by a generating company.

ICPPA secretary Rajiv Agrawal while interviewing with Economic Times said that “If any user is forced to draw lesser power share due to genuine reasons like the closure of its end-use plant for maintenance then the whole power generated in a year will be treated as non-captive and state income will charge CSS on it. It means all users of CPP will also have to pay the penalty, and thus the CPP may have to close down.”

The amendments suggest each captive user utilize 51% of the generated electricity from the captive plant and in case of group captive, each member should have a 26% equity share in the plant to be able to utilize the power from the plant.

“Captive plant set up by a company or any other body corporate, shall mean the issued and paid-up share capital in the form of equity share capital with voting rights (excluding equity share capital with differential voting rights) only as per the provisions of the Companies Act, 2013. In other cases, ownership shall mean proprietary interest and control over generating station or power plant, Provided further that for the purpose of assessing status as captive generating plant, a normative debt : equity ratio of 70:30 will be considered i.e. at least 26% of the equity base of 30% of capital employed, in the form of equity share capital with voting rights (excluding equity share capital with differential voting rights) needs to be invested by Captive user(s).”

In our opinion, the proposed amendments can bring stability in the electricity sector and increase the workability of DISCOMs across the country. By suggesting the eligibility of captive plants to be associated with the ownership in the plant the commission is asking the captive users to conduct rightful investments and be responsible towards the generation from the plant.

Read the document here.

HERC announces a combined order for multiple matters

Haryana Electricity regulatory commission recently announced an order on multiple matters including Suo Motu for amendment and/or modification of HERC (Terms and Conditions of Determination of Tariff from Renewable Energy Sources, Renewable Purchase Obligation and Renewable Energy Certificate) Regulations, 2010 and its subsequent amendments (hereinafter referred to as RE Regulations, 2010). The Commission invited views and comments from the stakeholders and answered to them individually. The order also talks about the following:

Suo-Moto proceedings on RPO compliance

If an Obligated entity fails to comply with the obligation to purchase the required percentage of power from renewable energy sources or the renewable energy certificates, it shall also be liable for penalty as may be decided by the Commission under section 142 of the Act. Provided that in case of genuine difficulty in complying with the renewable purchase obligation because of the limited availability of renewable energy or non-availability of certificates, the obligated entity can approach the Commission for relaxation or carry forward of compliance requirement to the next year. However, in normal circumstances, the renewable purchase obligation shall not be waived off. Provided further that where the Commission has consented in writing on an application made by the obligated entity to carry forward of compliance requirement, the provision of regulation 58 (1) of these regulations or the provision of section 142 of the Act shall not be invoked.

The petition filed by Amplus seeking implementation of exemption or waiver of  wheeling charges, cross-subsidy charges, transmission and distribution charges and surcharge for ground-mounted and rooftop solar power projects

Waivers/concessions shall be applicable till the aggregate installed capacity of 500MW of Solar PV Plants in the State is achieved, where after the Commission shall review the provision of waivers/concessions taking into account the financial impact on the Distribution Licensees. Further, provided that waivers/ concessions once provided to any project shall be applicable for a period of 10 years,

The petition filed by Haryana Power Purchase Centre (HPPC) on behalf of the Haryana Distribution Licensees seeking a relaxation of Renewable Purchase Obligation

The Commission has considered the above submissions and is of the considered view that, after considerable deliberation, the RPO targets have been fixed. Further, even the Discoms have raised the issue of these targets being on the higher side. Further, it has been submitted by the Discoms / HPPC procurement of RE power in the peak hours will not only add to the demand-supply gap but also add to the surplus and backing down of cheaper conventional power putting an avoidable financial burden on the electricity consumers of Haryana. Hence, the Commission finds no reason to change the RPO targets as appearing in the draft Regulations as the same in the considered view of the Commission attempts to balance the interest of all the stakeholders.

Read the complete order here.

Energy Ministers discuss hydro power revival at the bi-annual state power ministers’ conference

Recently at a Pan-India biannual energy ministers meet in Simla, the water scarcity of Simla and woes of power sector were discussed. The host state Simla suggested immediate and long-term reforms in the hydro power sector. Himachal Pradesh’s Chief Minister Jai Ram Thakur requested the government to give hydropower similar status as solar power.

“For years, the people of Himachal have given their land and labor for the growth of hydro power in the state. They have not been duly compensated till yet even after giving up their river catchment areas and natural resources. The pain of displacement from their ancestral land still exists. We urge the Central agencies to expedite the compensation,” – Jai Ram Thakur, Chief Minister of Himachal Pradesh.

He further suggested that “hydro sector needs ‘Hydro Purchase Obligation” for assured take-off of power, medium term sale of hydro power, giving renewable status to hydro is the need of the hour and we urge the Centre to look into these demand.”

In other developments, the draft amendments in the National Tariff Policy 2018 also has a clause suggesting exclusion of Hydro Power and “waste heat gases as a byproduct of industrial process” from RPO calculation. The draft NTP proposes to change the basis of calculation of RPO. It states that consumption from hydropower and from “waste heat gases as a byproduct of industrial process” shall be deducted to calculate RPO.

Further the Union Minister RK Singh suggested of a new hydro policy in the pipeline and said that “All advanced countries are exhausting their hydro capacity. In the past few years, hydro projects have been stalled because of that (protests) and geological challenges. The hydro power (delay in commissioning of projects) then becomes costly.”

The new policy is supposed to have points like:

  • To bring down the capital cost of hydro power projects
  • To discontinue mandatory sale of free power for 10-12 years so that the developers can recover the cost
  • To provide soft loans no longer than 30 years

All these points are in turn supposed to reduce the cost of hydropower projects.

Shimla hosted close to 18 state power ministers, 29 senior officials from 26 states at the conference. Currently, Shimla is facing a major water scarcity and the tourism is also affected due to this. Hydropower and tourism are two major revenue generation activities in the state.

MERC denies Cleanmax’s plea to use Open Access and Net metering simultaneously

In a petition filed by Cleanmax Enviro Energy Solutions Pvt. Ltd., the organization had sought clarification regarding the net metering arrangements for Open Access consumers under the MERC regulations 2015 from the commission. As a part of the reply to the petition, according to the ruling by MERC, the generators cannot use both Open Access and net metering simultaneously. The regulatory commission also mentioned that benefits of net-metering are limited to the rooftop solar installations with capacity up to 1 MW only. The generators above 1 MW can avail Open Access.

The explanatory ruling came as a result of responding to a petition filed by Cleanmax Solar to grant net metering permission for a 991 kW rooftop solar photovoltaic (PV) project at Asahi India glass limited situated at MIDC – Taloja, Raigad Maharashtra. Asahi was a customer of MSEDCL with a contract demand of 7500 kVA connected at 100 kV. Asahi also availed partial open access at 3,000 kVA from traditional energy under a group captive arrangement from Sai Wardha Power Generation Limited. In 2017, Asahi made an application for Net Metering arrangement for the Rooftop Solar Photovoltaic system under the rooftop solar regulations 2015.

After listening to both the party’s petition the commission came to a decision that…

“Net metering and Open Access are two different sets of arrangements for different eligible consumers and its Regulatory framework also has been provided by the two different Regulations. If these two arrangements are mixed up then there are various issues related to Grid security, accounting, billing, settlement etc. Hence, the Commission has made Net Metering Regulations for “below 1 MW” and Open Access for “1 MW and above” and cannot avail simultaneously by same consumer”.

Hence denying Cleanmax’s plea.

One of the reasons for the commission to take this decision was their concern for grid security due to which the DISCOMs would have to go into distribution network contingencies and other related issues to Open Access and Net Metering Simultaneously.

REC Trade Results – June 2018

Considering that this was the third trading session of the new financial year, in the month of June both Solar and Non-solar RECs saw a robust trade. Due to the shortage of Non-Solar RECs, and excessive demand, the prices for Non-Solar RECs soared 15% above floor price (Rs. 1000/REC). The Solar RECs, on the other hand, traded at the floor price of Rs. 1000/REC with a very robust demand trend. Given the shortage of Non-Solar RECs and continuously rising demand, we may soon see prices of Non-Solar RECs rallying up much faster than anticipated earlier during the beginning of the FY19.

Analysis of Trading:

Non-Solar – The Non-solar RECs inventory was not completely exhausted in the June 2018 trading session with clearing ratio for non-solar being at 100% at IEX and PXIL respectively (means all the bids below market clearing price got cleared at both power exchanges). A total of 303,828 RECs were traded, despite the demand is as high as 1,111,235 (YoY decrease of 43.56% as compared to 538,371 RECs traded April 2017). The RECs were traded at the price of Rs 1,050/REC at PXIL (5% above floor price), and at Rs 1,150/REC (15% above floor price) at IEX.

Solar – In case of solar a  total of 592,401 RECs were traded in the current month (a YoY Increase of 184% as compared to April 2017). The clearing ratio for solar stood decent at 11.40% and 15.70% in IEX and PXIL respectively.

 

The below graph depicts the Clearing ratio trend of Non-solar and Solar. In case of Non-solar, the clearance was 72.38% at IEX and 91.61% at PXIL and for solar, the clearance was at 11.4% and 15.7% in IEX and PXIL respectively.

 

Madrid-based developer in talks to sell India projects

According to recent news, a Madrid-based developer of large-scale solar plants ‘Fotowatio Renewable Ventures (FRV) is in talks to sell its 100 MW power project in India in a deal of approximately INR 500-600 crore.

The company is in talks with various investors like Macquarie Infrastructure and Real Assets (MIRA), green infra JV between PE fund Everstone Group & UK-based Lightsource BP’s Eversource Capital and Edelweiss Infrastructure Yield Plus Fund for the deal.

The project up for sale was awarded to FRV by SECI in a PPA for 100 MW in 2016. This is FRVs first project in India, situated in Ananathpuram solar park in Andhra Pradesh.

Recently in April PE firm Everstone Group joined hands with Lightsource BP, the UK-based leader in renewable energy development, to form a JV platform name ‘Eversource Capital’ to fund the green energy businesses in India. The platform has also launched a Green Growth Equity Fund (GGEF) with a target of $700 million where the UK government and India’s National Investment and Infrastructure Fund (NIIF) will be co-anchors with a commitment of $160 million each.

Another participant, Edelweiss Infrastructure Yield Plus Fund, is a new set up the infrastructure-focused fund by Edelweiss Alternative Asset Advisors. The fund has already raised Rs 2,000 crore till last month and plans to raise $1 billion in total.

Australia’s Macquarie Infrastructure and Real Assets (MIRA) has been an active investor in Indian energy sector and have previously invested in Adhunik Power & Natural Resources, Soham Renewable Energy India and Ind-Barath Energy Utkal.

If we look at the past years’ trend of global investment in India, the Compound Annual Growth Rate (CAGR)  of the investments from 2004-2017 is about 11.33%. The graph depicts many ups and down over the years, with the highest investment in 2011.  2017 also shows decent investment scenario. 

                                                                              Source: Indian Environment Portal Report – Global Trends 2018

Several other foreign entities are also in the process of bringing their businesses to India, with the Indian market picking up speed and shining globally.

 

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