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.

Ministry of Power announces renewed RPO trajectory for long-term

Ministry of Power (MoP) recently announced an order for long-term growth trajectory of Renewable Purchase Obligation (RPO) for solar and Non-solar for a period of three years i.e. 2019-20 to 2021-2022. In order to achieve the target of 175 GW of RE by March 2022, the MoP in consultation with MNRE notified the long-term trajectory for RPO as below:

The obligations described are on total consumption of electricity by an obligated entity excluding consumption from the hydro source of power. It is necessary that the achievements of solar RPO compliance are up to 85% and above. If so, the remaining shortfall if any can be met by excess non-solar purchased beyond Non-solar RPO for that particular year. The same goes in case of Non-solar compliance which will be met by solar, beyond the solar RPO for that year.

RPO mechanism has been in the frame for a long time but have its own share of ups and down. Since last year, the process is getting back on trade and REC trading is also working consistently. MNRE recently announced about building an RPO compliance cell providing aid to SERCs for better implementation.

An article by Quartz India has also talked about how the Indian government is now pursuing major energy consumers to take the renewable energy route and has quoted entrepreneurs in the industry expressing their views on the current developments.

The trend till now has seen states not following their RPO obligations religiously. It is known by all the states that RPO is very important and abiding by it is mandatory. The order also falls under the National Tariff Policy 2016, which in itself is a recommendatory document in nature.

The updated RPO targets also come into the picture after the country’s  Power Minister R.K.Singh announced in an interview about the increased capacity target to 227 GW from 175 GW earlier.

Union government proposes to build a National Discom consulting the state discoms

In recent news, the Union Government has planned to set up a national power distribution company that will have a grip on the state discoms in electricity distribution activities and ensure timely implementation of central schemes.

The proposed company is said to compete with the private firms and contractors to bag contracts for appointing franchises or engineer tenders. Currently, there is no national-level distribution company, only small level distribution consultancy wings like Rural Electrification Corporation (REC), Power Grid Corporation and NTPC. The new company will act as a consultancy firm without acquiring a distribution license. This announcements also gives support to the Prime Minister’s wish to of giving power to all till the 2019 elections.

Similar to the National Tariff Policy (NTP) 2016 amendments, the draft Electricity Act is also in the process of being circulated for comments. The proposed amendments suggest separation of distribution infrastructure ownership from power supply licenses and also penalties in income for unexpected load shedding.

According to Deutsche Bank Market Research report, the annual losses of discoms have reduced by 70% to approximately INR 17,350 crore in the past two years.

We feel that with various amendments being proposed in the policies if the implementation is carried out strategically, the state of country’s electrification will see a new sun in the coming years.

National hybrid wind and solar policy announced by MNRE

Ministry of New and Renewable Energy (MNRE) announced the National Wind-Solar Hybrid policy in a press release on 14th May 2018. The objective behind this is to provide a framework for promoting large grid-connected wind and solar PV hybrid system for efficient utilization of transmission infrastructure and land. Along with this, it also aims to help reduce the inconsistency in the renewable power generation and in turn achieve better grid stability.

The policy also intends to encourage new technologies, methods, and solutions related to the combined operation of wind and solar PV plants.

The summary of the policy is as below:

  • According to the policy, the Wind Turbine Generators (WTGs) and Solar PV systems both will be configured to operate at the same point of grid connection.

  • The integration of wind and solar can vary depending on the size of each source and their technology type.

  • If the wind turbines are connected to the grid at a fixed speed using an inducing generation, the integration can be on the High Tension (HT) side at the AC output bus.

  • And in case of variable speed, wind turbines using inverters for connecting to the grid, the wind, and solar system can be connected to the intermediate DC bus of the AC-DC-AC converter.

  • Depending on the size of the respective renewable capacity, the other resource can be integrated. However,  a plant will only be considered hybrid if the power capacity of anyone resources is at least 25% of the rated power capacity of the other resource. (i.e. wind and solar).

  • The implementation will depend on various configuration and technology:

                      1. Wind-Solar hybrid – AC integration

                      2. Wind-Solar hybrid – DC integration

                      3. New Wind-Solar hybrid plants

  • The hybrid power generated from the wind-solar hybrid project can be used for captive, sale to third-party through Open Access, sale to the distribution company (ies) either at tariff determined by the respective SERC or at tariff discovered through transparent bidding process; and ) sale to the distribution company (ies) at APPC under REC mechanism and avail RECs.

  • In case of bidding, the Central/State can follow competitive bidding process and can select the winner on the basis of the tariff.

  • The additional power generated from the hybrid plant can also be used for solar/non-solar RPO fulfillment.

  • Battery storage is also enabled in the hybrid projects.

Central Electricity Authority and CERC shall formulate necessary standards and regulations including metering methodology and standards, forecasting and scheduling regulations, REC mechanism, grant of connectivity and sharing of transmission lines, etc. for wind-solar hybrid systems.

With significant capacity additions in renewables in recent years and with Hybrid Policy aiming at better utilization of resources, it is envisaged that the Hybrid Policy will open-up a new area for availability of renewable power at competitive prices along with reduced variability. A scheme for new hybrid projects under the policy is also expected shortly.

In conclusion, the new policy for hybrid wind-solar plants seems to be a good move at a Pan-India level as all the states will get an opportunity to utilize the much abundant renewable sources (Wind and Solar) in the country. We here at REConnect feel that if the implementation of this policy is done correctly, India will get a step closer to its goal of installing 175 GW renewable capacity till 2022.

The detailed policy can be found here.

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