Solar installations in India drop down in the second quarter : Report

According to a report, solar installations have gone down by 52% in the second quarter of 2018, primarily due to the uncertainties related to trade duty & module price fluctuations. The Q2 installations were at the lowest since Q1 2017 with 1599 MW, compared to 3,344 MW in 2018. The plant installations were also down by approximately 21% year-on-year compared to 2.025 MW installed in Q2, 2017.

The downfall in the installations was an expected one, pertaining to PPA negotiations post the all-time low bids which led to a slowdown in the tender auctions in 2017 resulting in weaker project pipeline in 2018.

The large-scale installations totaled at 1,184 MW compared to 2954 MW in Q1, 2018. In case of rooftop installations, 415 MW was installed (6% higher than 390 MW in the previous year.)

Cumulative solar installed capacity summed to be at 24.6 MW at the end of the second quarter of 2018 with large-scale projects accounting for 90% & rooftop solar making up the remaining 10%.

It is expected that the installations will be close to 8.3 GW in 2018 if the schedule remains on time.

REC trade results – August 2018

Non-Solar: Non-solar RECs prices continue to rise with robust demand but the clearance volume is constrained due to limited supply availability. This session the RECs were traded at the price of INR 1101 at PXIL (10.1% above the floor price) and INR 1200 at IEX (20% above the floor price). The non-solar REC inventory completely exhausted in August 2018 with a clearing ratio of 100% at PXIL & IEX both respectively. A total of 3,33,479 RECs were traded in this session.

Solar: Total number of solar RECs traded in this session was 4,86,129 (184% decrease from the last trade). The clearing ratio was 29.06% at PXIL & 15.42% at IEX respectively. RECs traded at the floor price, i.e. INR 1000 at PXIL and IEX both respectively.

The overall trade volume of (8,19,608) decreased almost by 50% from the last trade (16,18,069).

MNRE proposes a draft schedule for solar tender activities to avoid clashes between agencies

The Ministry of New and Renewable Energy (MNRE) has approached all the central & state governments as well as public sectors implementing agencies for tendering of solar PV capacities to follow a timeline for implementing renewable energy projects. According to the letter “It has been seen that sometimes bids of two organizations clash with each other, thus distorting the market.” It is being assumed that by following a timetable for bidding, these organizations can evenly distribute their tender and auction activity throughout the year.

According to the timetable, SECI will have the months of Dec, Mar, Jun & Sept for its tender and auction activity. NTPC and other public sector units will utilize Jan, Apr, Jul, and Oct for tender & auction activity. Further, the state implementing agencies will use Feb, May, Aug, and Nov for the activities.

MNRE has requested implementing agencies to follow this timetable in light of the tender trajectory that was announced earlier. As per the trajectory, 30 GW of solar will be tendered and auctioned in the current and the next Financial years. The timeline is to be followed by the large-scale projects tenders only and not the rooftop solar tenders.

The manufacturers are in acceptance of the proposed plan and believe, that now they will be able to plan their activities in an efficient manner. However, people in the industry are skeptical if the state will follow this timetable, since MNRE is an organization providing guidelines and it is up to the state to decide whether to follow it or not.

Not implementing Safegaurd Duty on solar modules and cells for time being: Ministry of Finance

A recent development in the safeguard duty event, the Orissa High Court has directed the Ministry of Finance to withdraw the duty by August 13, 2018, and issued a stay until August 20, 2018. The stay came after a petition was filed by Hero Future Energies, ACME, and Vikram Solar against the Directorate General of Trade Remedies (DGTR).

Vikram Solar’s petition stated the following:

  • Suitable exemption/clarification for SEZs (Special Economic Zones) from duties of safeguard, which will put SEZs at par with manufacturing units located in domestic tariff area (DTA).
  • Considering SEZ units as a part the of domestic industry for the purpose of safeguard investigation.
  • EPC contracts which are already awarded should be kept out of the ambit of safeguard duty

The safeguard duty is currently applicable to companies in SEZ affecting a majority of the domestic solar manufacturing capacity.

Ministry of Finance had announced to levy 25% safeguard duty based on the final recommendation proposed by the DGTR. The duty came into effect from July 30, 2018. The ministry levied the duty despite Orissa High Court’s order to put a stay on the safeguard duty on solar modules and cells. ACME Solar had filed a petition post the DGTR recommendations and received the stay order from the court. The Orissa court had then directed the government not to issue any notification regarding the safeguard duty until August 20, 2018. But after the sudden imposition of the duty, the three companies filed a new petitions in the Orissa HIgh Court.

Hence, considering the recent stay order put in force by the Orissa on the safeguard duty notification, the Ministry of Finance announced that the government will, for the time being, not imply the payment of safeguard duty on solar imports.

The current scenario draws doubts on the future of safeguard duty and whether the Indian solar sector embraces it going ahead.

MERC announces generic tariff for various RE sources

Recently the Maharashtra Electricity Regulatory Commission (MERC) announced an order for generic tariff determination of various renewable resources including Solar and Wind. Even after the generic tariff is realized, DISCOMs opt for competitive bidding for tariffs due to the low rates. The details regarding the tariffs for various RE sources is a follows:

Renewable energy sources

Tariff without AD Tariff with AD
Non-Fossil Fuel-Based Cogeneration Projects INR 4.99 _
Biomass projects INR 7.30 INR 7.44
SHP (5 MW-25 MW) INR 3.66 INR 3.92
SHP (1 MW-5 MW) INR 4.36 INR 4.64
SHP (500 kW-1 MW) INR 4.86 INR 5.14
SHP 500 kW and less INR 5.36 INR 5.64
Wind Energy projects INR 2.87
Utility-Scale Solar PV Projects INR 2.72

Rooftop Solar PV projects INR 3.22

The above mentioned solar rooftop tariff will be applicable from August 1 2018 to March 31 2019 and for wind projects between August 1 2018 – March 31 2019 for  a period of 13 years from the date of commissioning. However, in a recent project auction base tariff of INR 2.52/kWh was discovered (INR 0.35/kWh less than the new generic tariff).

In case of SHP, the above-mentioned tariffs will be applicable between August 1, 2018, and March 31, 2019, for 35 years (with capacity up to 5 KW) and 13 years for SHP with a capacity greater than 5 MW and up to 25 MW.

Recently Maharashtra also announced its final regulations for the forecasting, scheduling and deviation management regulations in July 2018.

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.

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.

 

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.

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.

 

Telangana announces final DSM regulations for wind and solar

Recently TSERC announced regulations on wind and solar forecasting, scheduling regulations, 2018. This is the final regulation and with this Telangana became the sixth, and latest, state to implement Forecasting and Scheduling regulations.

The detailed summary of the regulations is as below:

  • Title of the Regulation: Telangana State Electricity Regulatory Commission (Forecasting, Scheduling, Deviation Settlement and Related Matters for Solar and Wind Generation Sources) Regulations, 2018.The Telangana Forecasting regulation has been finalized within two months of the release of draft regulation.
  • Applicability:
      • From the date of publication in the official gazette.
      • Forecasting tool to be established in three months period.
      • Levy and collection of DSM Charges shall commence after six months from the date of publication in the official gazette.
  • Regulation Applicable on: All grid-connected Wind and Solar Power Generators (except Rooftop PV Solar Power Projects) connected to a pooling substation of the capacity not less than 5 MW irrespective of commissioning date.
  • Deviation Accounting:  The deviation accounting will be carried out based on the Available Capacity:
  • Absolute Error in % =   100 x  Actual Generation – Scheduled Generation  ⁄ Available Capacity (AvC)
  • Point of Forecasting: Pooling Station or STU Feeder where the injection is made.
  • Aggregation: Unlike in Karnataka and AP, Telangana’s order of F&S does not have a provision to provide an aggregated forecast.
  • Role of a QCA:
      • Provide day ahead, week -ahead schedule generator wise and aggregated schedule for each pooling station and the periodic intraday revisions.
      • Coordination with DISCOM/STU/SLDC for metering, data collection, communication/issuance of dispatch/curtailment;
  • Provide day ahead, week- ahead schedule generator wise and aggregated schedule for each pooling station and the periodic intraday 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 on a weekly basis and
      • All other ancillary and incidental matters.
  • Revisions:
      • 16 revisions are permitted for Wind Generators starting from 00:00 Hrs of the day.
      • 9 revisions are permitted for Solar Generators starting from 05.30Hrs of the day.
      • All the revisions are effective from the 4th time-block.
  • Other Key Points:
    • DSM Settlement will be done on a Weekly basis, with Meter data to be provided by SLDC, and verification to be done in coordination with SLDC.
    • After recovering DSM amounts, if there is a gap between the actual commercial impact for the state as a result of deviation of wind and solar generation, such amount will be further recovered from each generator.
    • The wind and solar generator or the QCA will provide payment security to SLDC by the way of BG or revolving LC which will cover the DSM payment for 6 months.
    • De-pooling will be done in proportion to energy injected in each time block by each generator.
    • The QCA will only be forecasting on PSS level. Aggregation to create a virtual pool/aggregate of multiple substations is not allowed. States like A.P and Karnataka have allowed Aggregation in their final regulations.
  • Important differences between intrastate and interstate transactions:
    • The deviations for Inter-State and Intra-State transactions at Pooling Station will be accounted for separately. Separate schedules have to be sent for the interstate to SLDC and RLDC.
    • The Inter-State transactions will be settled on the basis of their scheduled generation and will be considered only if the Inter-state capacity is connected to the STU via the separate feeder.
    • The Generator will pay the Deviation Charges for under or over injection applicable within Telangana in case of deviations in the State DSM Pool.          

 Deviation Charges in case of under or over-injection for sale/supply of power within the State

Sr. No

Absolute Error

DSM Charges Payable to State Pool Account
1 ≤ 15% None
2 >15% but ≤ 25% At Rs. 0.50 per unit
3 >25% but ≤ 35% At Rs. 1 per unit
4 >35% At Rs. 1.50 per unit

Deviation Charges in case of under or over-injection for sale/supply of power outside the State

Inter-state Deviation Charges will follow the same mechanism as defined by CERC (PPA linked). However, the final deviation settlement for Inter-state generators shall be done by SLDC on the basis of deviations and its impact at state periphery.

The TSERC Regulation for Forecasting & Scheduling, 2018 has provided a summary of timelines designating the activities to QCA and SLDC, to be accomplished within the following stipulated duration.

Sr. No. Activity/Milestone Action By Duration (Months)
1 Technical Specification and Information Sharing protocol by QCA to SLDC SLDC 3
2 Forecasting tool, alternate means of communication, formats for submission SLDC 3
3 Forecasting tools to be established by QCAs QCA 3
4 Guidelines for registration of QCA, data exchange between QCA and SLDC SLDC 2
5 Manner of making State Pool Account and settlement thereof SLDC 3
6 Detailed Procedures covering plan for data telemetry SLDC 3
7 Trial Run –During this period all parties shall comply with the above All 6
8 Commencement of commercial arrangement. All 6

 

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