Tamil Nadu announces a draft solar energy policy 2018

TEDA has recently announced the draft solar energy policy 2018. Earlier the state had Tamil Nadu policy 2012 (one of the first solar energy policy in the country.) The state has announced for a vision Tamil Nadu 2030 wherein the solar energy target for the state is of 5,000 MW. Under the targets set by MNRE, TN aims for an installed capacity of 8,884 MW of which (40%) that is 3,553 MW is to come from consumer scale rooftop solar system. Tamil Nadu solar energy Policy 2018 intends to create a framework that enables an accelerated development of solar energy in the state. It also intends to facilitate open access to the public electricity grid of the state and create opportunities for a grid-connected distributed generation of solar power in order to reduce the dependence on fossil fuels.

Key points of the draft policy as below:

  • If a DISCOM fails to comply with the RPO mandates, penalties specified by TNERC for such non‐compliance shall be strictly enforced.
  • Solar grid feed-in mechanisms included in the policy are:

 

Solar  energy gross feed-in (utility scale) The solar energy is fed into the grid and sold to the distribution licensee or a third party under the open access facility. In the case of distribution licensees, the solar energy fed into the grid will be purchased by the distribution licensee at the prevailing solar energy tariff as determined by the TNERC or a tariff determined by a bidding process
Solar energy wheeling (utility scale) The solar energy is fed into the grid and credited in one or more service connections of the solar energy producer. Solar energy wheeling will be
applicable to all electricity consumer categories and tariffs and for electricity service connections at any voltage level
Solar energy gross feed-in (consumer scale) The solar energy is fed into the grid and sold to the distribution licensee. An extra energy meter will be installed that records the consumption of energy at the premises to record the energy fed into the grid by the distribution licensee. The energy will be sold to the distribution licensee at the tariff determined under this mechanism can also be sold to a third-party under Open Access.
Solar energy net feed-in The solar energy is used for self-consumption with the surplus, if any, being exported to the grid. A bidirectional service connection energy meter will be installed by the distribution licensee to record the imported and exported energy. The imported energy is debited at the applicable consumer tariff while the exported energy is credited on the basis of a consumer solar energy tariff to be determined by TNERC.
Solar energy group net-metering: To encourage solar plants on rooftops of buildings that cannot consume all of the energy generated locally, there shall be Group Net Metering, whereby surplus energy exported to the grid from a solar plant in excess of 100 percent of imported energy at the location of the solar plant can be adjusted in any other (one or more) electricity service connection(s) of the consumer within the State of Tamil Nadu.
Solar energy virtual net feed-in To give access to the solar net feed-in facility for consumers who do not have a suitable roof for installing a solar system (e.g. residential consumers who live in apartments, consumers with shaded rooftops) there will be the facility of Virtual Net Feed-In. In Virtual Net Feed-In consumers can be beneficial owners of a part of a collectively owned solar system. All energy produced by a collectively owned solar system will be fed into the grid through an energy meter and the exported energy as recorded by that the meter will be pro rata credited in the electricity bill of each participating consumer on the basis of beneficial ownership.

 

Various solar project implementing models:

 

  • Self-owned: Solar PV system is owned and operated by the building owner/user
  • RESCO (Renewable Energy Service Company) owned: The Solar PV system is owned and
    operated by a RESCO. The consumer pays the RESCO for the solar generation and makes
    use of the solar energy gross feed-in or net feed-in mechanism.
  • Lease: The consumer leases the solar PV system from a leasing company and makes use of the
    solar energy gross feed-in or net feed-in mechanism.

 

Any person or entity willing to put a solar project needs to abide by the building by-laws and Energy Conservation Building Code Compliance (ECBC). All the public buildings are mandated to meet 30% of their energy requirement from solar energy by 2022.

 

Solar energy imported by the distribution licensee from non-obligated solar energy producers (including electricity consumers with gross or net feed-in facilities) can be claimed by the distribution licensee towards the fulfillment of their renewable energy purchase obligations (RPO).
The Government of Tamil Nadu wishes to promote the manufacturing of solar energy components including solar cells, inverters, mounting structures and batteries in the state. The land will be identified for the development of solar manufacturing. A single window process for all departmental approvals, including a set time limit for each approval, is expected to be designed.
An incentive program will be designed to promote the co-utilization of land for solar energy projects, crop cultivation, and rainwater harvesting.

 

The policy is open for suggestions and comments to individuals, organizations, and institutions till 15th October 2018.

MPUVNL announces new decentralized solar policy and rooftop solar tariff reaches at INR 1.38/kWh

  • Madhya Pradesh Govt. recently introduced a decentralized solar policy to encourage the development of the decentralized RE projects and applications in the state. The policy allows decentralized RE systems of the following types:
  1. Grid-connected RE systems:
  • Category I: On Net-metering basis
  • Category II: Gross metering with wheeling and banking
  • Category III: For consumption within premises with no export of power (Reduction in the base load during the day)
  • Off-Grid RE systems
  • The policy also encourages Net-metering RE systems under the categories mentioned above. The system capacity for both grid-connected and off-grid is of 2 MW. Bulk consumers who are single point consumers are also eligible under the policy.
  • The maximum permissible capacity of the RE systems for all the Net-metered RE systems connected to a particular distribution transformer of the licensee’s grid shall be equal to the rated capacity of the said distribution transformer w.r.to MPERC Net metering regulations 2015.
  • In case the cumulative capacity of the proposed RE system exceeds, it is the distribution transformers responsibility to provide the infrastructure to accommodate the proposed capacity.
  • In the case of an LT Net metered consumer, the RE beneficiary will not bear the cost of the augmentation of the infrastructure, whereas, in case of the HT consumer, the infrastructure will be upgraded by the distribution licensee at the cost of the consumer.
  • In case installation of the decentralized renewable energy system for low tension (LT) consumer requires system augmentation, such as replacement of existing distribution transformer (DT) with a DT of higher capacity, the entire cost related to augmentation for the interconnection of the renewable energy system with the network of the DISCOM will be borne by the DISCOM. The DISCOM can claim it as part of the ARR filing.
  • Excess or surplus energy remaining banked with the distribution licensee at the end of the year will be settled at an Average Pooled Power Purchase Cost (APPC).
  • Ways to implement the RE projects under RESCO include:
  • Build Own Operate Maintain (BOOM): RESCO will Build, own and operate the system for its lifetime period and supply power to the consumer for the lifetime agreement. RESCO will uninstall the infrastructure once the lifetime period is over and build the roof in the same condition.
  • Build Own Operate Transfer (BOOT): RESCO will finance, develop own and supply power to the consumer from the RE system for the lifetime period under the agreement. Post the agreement period, the system will be transferred to the RE consumer as per the agreement, wherein the consumer can assign the RESCO for the O&M maintenance under the suitable agreement between both the parties.
  • Incentives on various charges are as follows: Open access to be available to all RE systems specified in the MPERC open access regulations 2015, Wheeling charges will be available to all RE systems as specified in the MPERC regulations. Further, Govt. of MP will provide a grant of 4% in terms of energy injected and the balance if any, shall be borne by the RE consumer.
  • Cross-subsidy is exempted for RE system under this policy and net metered systems are exempted from banking charges & wheeling charges as per MPERC regulation 2015. However, Category II, III and Off-Grid systems ate not exempted from the above-mentioned charges.
  • Electricty duty will not be applicable to the producer of renewable energy beneficiary, consumer, licensee for supply, sale or consumption of RE from generating systems installed under this policy for a period of 10 years from the date of start of supply.
  • Consumers connected at LT level will be exempted from electricty duty for a lifetime of the RE system.
  • The installation of the RE system on the premises of the RE beneficiary will not be considered in the Floor Area Ratio (FAR) and will be provided additional FAR for construction in the premises according to the capacity proposed as per the regulations by Urban Development & Housing Dept. Govt. of Madhya Pradesh.
  • Energy consumed from net-metered renewable energy system by a non-obligated entity qualifies towards renewable purchase obligation (RPO) compliance of the concerned distribution company (DISCOM). The DISCOM does not need to pay for such power.

In addition to the policy, in a new auction for the rooftop RE system, a new tariff of INR 1.38/kWh was discovered for the 35 kW rooftop capacity. The tariff has reduced more than the last discovered tariff for rooftop capacity auction at INR 1.58/kWh.

No clarity on GST brings confusion for the solar plant developers

There is still no clarity on the rules of Goods and Service Tax (GST) that’s applicable on solar plants and the issue has divided the industry as well as the two state appellate who ruled differently to the individual plea of the appellants. Two different decisions were received from the Karnataka and Maharashtra Advance Ruling Authorities which was to levy GST rate at 5% and 18% respectively.

The Karnataka Appellate Authority for Advance Ruling (AAAR) was of the opinion that supply of photovoltaic modules is a unique transaction and cannot be naturally bundled with the supply of other components and parts of a solar plant. Until now, there has been no clear definition of solar power generating system under the GST regime,  but there have been similar scenarios under the previous excise law where similar exemptions were provided to non-conventional energy devices.

In general, it is observed that the supply of other components and parts and the supply of services of erection, installation, and commissioning of the solar power plant are ‘composite’ as they are naturally bundled and accordingly, the tax rate applicable to the dominant nature of supply will prevail.

Contradicting to the Karnataka AAAR ruling, the Maharashtra AAAR in the case of Fermi solar farms and Giriraj Renewables held that the supply of solar power generating system consists of composite work contract in turn liable to an 18% tax in sync with general belief.

The solar industry is also in a state of confusion and is charging 18% and 5% differently as per their understanding and hence a clear notification from the government might be of great help to the industry and developers.

 

REC Trade Result – September 2018

Non-Solar: The shortage of Non-solar RECs continues in the current session of September 2018. This session the RECs were traded at the price of INR 1300 at PXIL (30% above the floor price) and INR 1100 at IEX (10% above the floor price). A total of 3,45,576 RECs were traded in this session leaving an inventory of 18,83,673 Non-Solar RECs.

Solar: Total number of solar RECs traded in this session was 15,58,062 (220% increase from the last months’ trade). The clearing ratio was 37.10% at PXIL & 100% at IEX respectively (w.r.t floor price). RECs traded at the floor price, i.e. INR 1000 at PXIL and IEX both respectively. This was the highest ever Solar REC trade by volume, and the second time in the history of REC trading, where the solar REC trading volume surpassed 10 lakh, leaving behind an inventory of just 7,82,333 Solar RECs.

The overall trade volume (19,03,638 RECs) increased by almost 132% from the last months’ trade volume (8,19,608 RECs). In the last six months, this trading session has recorded the highest clearance to issuance ratio.

CERC announces regulations for implementation of Interstate Transmission System in the country

The Central Electricity Regulatory Commission (CERC) recently announced a regulation called the Central Electricity Regulatory Commission (Planning, Coordination and Development of Economic and Efficient Inter-State Transmission System by Central Transmission Utility and other related matters) Regulations, 2018 which came into effect from July 2018. The objectives of the regulation are to:

(1) Lay down the broad principles, procedures, and processes to be followed for planning and development of an efficient, coordinated, reliable and economical system of an inter-State transmission system (ISTS) for smooth flow of electricity from generating stations to the load centers;

(2) Ensure wider participation of stakeholders in the planning process and specify the procedures for stakeholders consultation and participation;

(3) Specify procedures to bring about transparency in the planning process; and

(4) Demarcate the roles and responsibilities of various organizations in line with the Act for meeting the above objectives;

The regulation states responsibilities of the concerned entities like the Central Transmission Utility, Transmission Licensees, Regional Power Committee (RPC), RLDCs, NLDCs & SLDCs respectively and their roles in implementing the above-stated objectives of the regulations. This regulation is in accordance with other CERC regulations like Central Electricity Regulatory Commission (Procedure, Terms, and Conditions for grant of Transmission License and other related matters Regulations), 2009; Central Electricity Regulatory Commission (Grant of Regulatory Approval for execution of Inter-State Transmission Scheme to Central Transmission Utility Regulations), 2010; and the Tariff Regulations issued by the Central Commission from time to time under section 61 of the Act.  

Further, the regulation has mentioned the process for the planning of the inter-state transmission and lastly, there are details provided for the process to be followed by CTUs and transmission licensee for application filing in order to start inter-state transmission.

The regulation has come well in time as there have been recent solar PV auctions with Interstate Transmission System connected solar projects. The regulations have also considered the augmentation of renewable capacity addition and Renewable Purchase Obligation with respect to each state in the country.

TNERC announces the Pooled Cost of Power Purchase for FY 2018-19

TNERC recently announced an order for the pooled cost of power purchase payable by Tangedco for FY 18-19 under TNERC (Renewable Energy Purchase Obligation) Regulations, 2010). The order has mentioned the criteria, mandatory for a renewable energy generating company for  obtaining accreditation from the state agency which are:

“(a) It does not have any power purchase agreement for the capacity related to such generation to sell electricity at a preferential tariff determined by the Commission; and

(b) It sells the electricity generated either (i) to the distribution licensee in the State of Tamil Nadu at a price not exceeding the pooled cost of power purchase, or (ii) to any other licensee or to an open access consumer at a mutually agreed price, or through power exchange at a market-determined price.”

With these specifications, the commission declared the Pooled Cost of Power Purchase payable by the TANGEDCO for the year 2018-19 as Rs.3.97 per unit subject to the maximum of 75% of the preferential tariff fixed by the Commission to that category / subcategory of NCES generators i.e. Rs.3.97 per unit or 75% of the preferential tariff fixed by the Commission to that category / subcategory of NCES generators, whichever is less. The Order came into effect from 1st April 2018.

The trend of the pooled cost of power purchase in Tamil Nadu in the past years is as given below.

 

The government might ask RBI to classify renewable energy projects under priority sector lending

The Ministry of New and Renewable Energy (MNRE) is expected to write to RBI seeking to bring renewable energy projects under the priority sector lending. The development comes to light post there is stress seen in the conventional power sector which is negatively affecting the renewable energy sector and questions are raised by renewable energy project developers over lack of funds by banks.

At recent stakeholders meet, the Power Minister R.K. Singh talked about the matter.

“We are committed to remove the obstacles in the financing of renewable energy projects. We have taken inputs from different stakeholders. One suggestion was that priority lending should be done for renewable energy projects and without any limit.”

Currently, the rooftop solar projects are under the priority sector lending category, but the funding quantum is only 15 crores.

In the current scenario, the Non-performing assets (NPAs) in the thermal power sector are impacting investments in the renewable energy projects, disrupting the lending situation for the power sector completely including renewable projects.

Along with this, RE developers also face financial drawback with added cost due to safeguard duty implementation in the country and conflicting to that competitive tariffs with each auction announced. Developers at the meeting also raised issues regarding payment delays by distribution companies and their demand for 2-3% rebates on delayed payments.

HPPC asks SECI to allot solar capacity at fixed rate to fulfill its RPO target

HPPC petitioned to seek in-principle approval of the commission to purchase 250 MW of solar power from SECI under 2000 MW ISTS scheme. HPPC wished to purchase 250 MW of power from SECI at INR 2.93/kWh (excluding trading margin)  fixed rate for 25 years in order to meet the state’s solar RPO targets. The commission approved the petition and asked HPPC to deposit a filing fee of INR 2 Lakh. SECI has agreed to allot 100 MW solar project capacity to HPPC at 2.54/kWh (excluding the trading margin of INR 0.07 kWh) against the requisite of 250 MW.

The solar Power Purchase Obligation target till FY 2022 is as below:

Financial Year

Solar RPO (as a percentage of total consumption)
2013-14 0.10
2014-15 0.25
20 15-16 0.75
2016-17 1.00
20 17-18 1.25
20 18-19 1.50
20 19-20 2.00
2020-21 2.50
2021-22 3.00

The existing solar power capacity available with Haryana Discoms is 125.8 MW. As per the current contracted capacity, the potential energy consumption for FY 2018-19 is supposed to be 41906 MUs and similarly, the availability of solar power projects in the coming years along with the shortfall situation is as below:

Read the order here.

Andhra Pradesh Government asks the state discoms to accept full power from the wind developers

Andhra Pradesh Government has asked the state DISCOMs to take all the power the wind developers produce and further pay for it, irrespective of the Capacity Utilization Factor (CUF) of the developer’s project. In one of the state’s order regarding the feed-in-tariff for wind energy, the CUF was discovered at 23.5% for an average wind project. Post this, the state DISCOMs interpreted it as a directive to accept only the quantity of power a wind plant would generate it is was 23.5% and reject any additional power supplied. If the plant, produced more power by adopting efficiencies that led to a higher CUF, the DISCOMs would reject it.

After this development, the MNRE Secretary had written to the Principal Secretary in Andhra Pradesh’s Energy Ministry in December 2017 that “the generic tariff determined by the Andhra Pradesh Electricity Regulatory Commission (APERC) may have taken 23.5% CUF as average CUF in the state for wind power projects and therefore, it is likely that there may be certain sites where CUF is more than the average CUF”. Recently Mr.Jain (MNRE) wrote to the Andhra Pradesh Electricity Regulatory Commission (APERC), as well as all state discoms, that “in the view of Secretary, MNRE’s letter, discoms have to treat wind power as must-run stations and take the entire power from them without curtailment.”

Due to the previous announcement from the APERC, the developers had assumed that about 2,000 MW of projects which had been turned down by the state’s discoms would have turned into Non-Performing Assets.

Despite the letter, some people in the industry feel that the bigger problem is of ‘backdown’ – discoms’ refusal to take wind power at times citing non-availability of grid capacity which has gone unaddressed and the MNREs letter won’t be of much help to the developers.

Industry reacts to the 25% duty as the Supreme Court allows to impose the safeguard duty on imports.

It has been a roller-coaster ride for the Indian Solar Industry and developers when it comes to the safeguard duty implementation. Recently the Supreme Court of India in the matter of the safeguard duty to be levied on imported solar cells has allowed the Central Government to levy 25% safeguard duty on imported solar cells and follow the previously announced order accordingly. This announcement nullifies the earlier stay from the Orissa High Court on the duty.

For the import-dependent solar power developers, the Supreme Court order which will be effective retrospectively from July 30th, 2018 might cost approximately an extra INR 500 crore ($ 72 Million) for some 1,000 MW of solar modules imported between July 30 & now. The financial burden will slow down the aggregate 16,000 MW projects in the pipeline. However, the announcement is being appreciated by the domestic manufacturers who believe that this step will help the industry which is currently facing competition with Chinese & Malaysian modules which are 8-10% cheaper.

However, not all domestic manufacturers stand to gain from the order. It will hurt the local manufacturers based in special economic zones (SEZs), which currently accommodate 40% of 10 GW of solar module manufacturing units and 60% of the 3 GW cell production base.

“The aggressive bid tariffs from July 30 up to now, are a clear indication that the industry has already factored in the 25% safeguard duty. The new projects will not be gravely impacted; the big worry lies with the aggregate 16 GW solar projects in the pipeline”, Mr. Pranav Mehta, Founder Chairman, National Solar Energy Federation of India (NSEFI) and Chairman-elect Global Solar Council (GSC).

Post the order from the Supreme Court, safeguard duty on the above-mentioned goods for a period of two years.

25% safeguard duty 30th July 2018 to 29th July 2019 (both days inclusive)
20% safeguard duty 30th July 2019 to 29th January 2020 (both days inclusive)
15% safeguard duty 30th January 2020 to 29th July 2020 (both days inclusive)

The notification which came into effect post a complaint from Indian Solar Manufacturers Association (ISMA) in Dec. 2017 after self-investigation. The investigation concluded that locally manufactured cells and panels, which constituted only 10% of the Indian solar projects in 2014-2015 and had reduced more in the subsequent years. 

Read the document here.

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