OPEN-ACCESS

Blog by Team REConnect

APERC Proposes Draft Amendment for RPO Regulation

Andhra Pradesh Electricity Regulatory Commission (APERC), joint commission for the Andhra Pradesh and Telangana, has proposed separate drafts for the amendment in its Renewable Purchase Obligation (RPO) Regulation 2012, for Andhra Pradesh and Telangana.

The summary of the proposed amendments for the both the states is as below:

  1. According to the proposed draft, the commission proposed to remove the .25% solar purchase obligation for distribution licensee & captive generating plants out of the total of 5% RPO, and has proposed that RPO shall be fulfilled by purchase of any renewable source of energy.
  2. The commission has proposed that the Lapsed Banked Energy (Renewable) as according to Open Access regulation 2006 shall be considered towards the RPO of the distribution licensee.
  3. Consumption from captive co-generation power plant, is exempted for levy of RPO.

The commission has also proposed changes in eligibility of and registration for REC’s, which are highlighted below –

  1. The power generating plant shall be of 1 MW and above capacity for obtaining accreditation from the state agency.
  2. A roof top or ground mounted solar power plant of 100 kW and above, shall be eligible for obtaining RECs for the entire generation from such plant.
  3. The entire electricity generated from Captive Power Plant & Co-Generation Plants based on Renewable Sources of Energy, including self-consumption shall be eligible for issue of REC’s.
  4. In case of pre-mature termination of the power purchase agreement (PPA) with a consumer or DISCOM, a generator will not be eligible for REC’s for three years, starting from the date of termination of the agreement.

The proposed draft will directly affect the solar power generators as the Solar RPO has been merged with Non-solar RPO in the state. In our opinion, since the floor price of solar REC’s are much higher, the obligated entities will not purchase solar REC at all.

In contrast to Tamil Nadu, which has moved to Supreme Court, with a clear objective of implementing Solar Purchase Obligation (SPO) of 6% in the state, APERC does not seem to be in favour of incentivising solar power by having separate RPO status for solar in the two states. In addition to this, the cap of 1 MW on Non-Solar and 100 KW on Solar projects, will only deter smaller projects from coming up in future.

The commission through separate Public notices for Telangana and Andhra Pradesh, has invited the comments and suggestions by 08th September 2014.

The Draft Proposed for Andhra Pradesh can be accessed here

The Draft Proposed for Telangana can be accessed here

Contributed by Dheeraj Babariya

 

TN Govt. Approaches Supreme Court against APTEL Order

Tamil Nadu Government has filed a petition in Supreme Court against the order of the Appellate Tribunal for Electricity (APTEL) dated 21st January 2014. The order says that state government cannot specify solar power obligation (SPO) for special category of consumers (applicable for all obligated entities except TANGEDCO), when there already exists Renewable Purchase Obligation (RPO) for the consumers in the state.

Background – The Govt. of Tamil Nadu drafted its solar policy (announced in 2012), mandating certain consumer to buy solar power, which was finalized by the Tamil Nadu Electricity Regulatory Commission (TNERC) in its order dated 7th March 2013. The order stated that – “As prescribed in the Solar Policy, 6% SPO starting with 3% SPO till December 2013 and 6% from January 2014 is applicable”.

The Tamil Nadu Spinning Mills Association appealed to APTEL for the removal of the Solar Purchase Obligation as RPO does mandate purchase of solar power.

The APTEL in its judgment said that the state commission cannot impose any other obligation such as SPO, as RPO already exists in the state. So the State Govt. has moved to the Supreme Court challenging this , as it clearly intends to impose SPO under its Solar Policy.

It is also worth noting that TNERC has mandated RE purchase to a total of 9% under its RPO regulation, which is one of the highest in India, with 0.05% Solar RPO and 8.95% Non-Solar RPO. The commission in its draft RPO Regulation 2014, has increased the solar RPO to 2% and total to 11%, to bolster Solar Power in the state in case SPO is not implemented.

Our Previous Blog Post on the same matter can be read here.

The recent media Article can be read here.

Preceding APTEL Order is available here.

Contributed by Dheeraj Babariya.

GERC Takes Strict Note on RPO Compliance

Gujarat Electricity Regulatory commission (GERC), has initiated the Suo-Motu proceedings to verify the RPO compliance by the distribution licensees of the state. The Petition has been notified on 11th August 2014, and comments and suggestion have been invited by 30th August 2014 through public Notice. The public hearing will take place on 06th September 2014.

The commission has initiated the Suo-Motu proceedings in response of a petition filed by Torrent Power limited, in which it requested the commission to revise the minimum target of RPO percentage for FY 13-14, to the actual level of compliance achieved by him.

The commission has said that, based on the data furnished by the DISCOM’s it has been observed that the DISCOM’s have complied with the RPO target partially. So the commission has asked DISCOM’s to submit the reasons for their non-compliance of RPO.

In its judgment, the commission gave the reference of a Judgment of honorable APTEL dated 25.04.2014, which can be read as -

“After completion of the financial year, the State Commission has to review the actual performance in respect of RPO and pass necessary direction as per the Regulation either suo-motu or on a petition filed by a party. Such review should be subjected to public notice to invite suggestions and objections of all the stakeholders. Thus, in separate proceeding for annual review of RPO or otherwise by the State Commission either suo-motu or on application from a party, the suggestions and objections of the public should be invited. Accordingly, directed for future.”

The commission may take strict action, if the DISCOMs don’t furnish genuine reasons for their non-compliance.

The GERC Sou-Motu petition can be accessed here

The GERC order on Torrent Power petition can be read here

Contributed by Dheeraj Babariya.

REConnect Newsletter Volume 43 – OPEN ACCESS

Dear Reader,

We are pleased to present Open Access Vol 43 – our monthly newsletter covering RECs and regulatory and market developments in the renewable energy space.

The main article covers:

The government announced the re-introduction of Accelerated Deprecaition for wind projects. This was a major announcement for the Renewable energy industry. Our main article provides a detailed analysis of the impact of this change, and the relative merits and de-merits of investing in wind or solar projects.

This issue also covers:

- Details of the next batch of bidding for solar projects announced in JNNSM

- Details of the FOR meeting that took up the need for strong RPO enforcement

- Various other regulatory developments in Maharashtra, Rajasthan, Chattisgarh, Karnataka, and other states

Past newsletters can be accessed here - http://www.reconnectenergy.com/newsletter/past-newsletters/

For latest news and updates, please visit our blog at – http://reconnectenergy.com/blog/

 As always, we will love to hear your feedback on the newsletter.

- Team REConnect

Reinstatement of Accelerated Depreciation benefit for wind and its impact on the Renewable Energy Industry

Earlier last month, when the Union Budget was presented, there was a mention of reinstatement of Accelerated Depreciation ( AD ) for Wind Energy generators, in the Hindi version of the budget, whereas it found no mention in the English version. This caused confusion in the RE industry circles. However, the government clarified that AD has indeed been brought back on wind investments.

Wind Power development in India started in the early 90s. As per Section 80(J) of Income Tax Act 1961, industries were allowed 80% depreciation on capital invested. Since then till 2012 (when the benefit was removed), Wind Power development and growth has always relied primarily on Accelerated Depreciation (AD).

New wind capacity additional peaked in 2011-12 at about 3,200 MW, falling sharply to 1,700 MW the next year as AD benefits were removed. The argument put forward at that time by policy makers was that wind industry had matured, and the focus needed to shift to solar. This fits well with the objectives of the National Solar Mission.

The decline in wind investment due to withdrawal of AD coincided with healthy growth of close to 60% in Solar Power in 2012-13 and 2013-14. The market momentum had definitely shifted in favor of Solar. Our analysis suggests that Wind AD market had an investing capital of close to 7300 crores. This shifted to Solar AD market which saw increase in investments worth Rs 7500 crores during 2012-13.

The new government has announced that it was reintroducing AD (80%) in 2014, much to the delight of Wind Power stakeholders. We believe that the investment momentum will shift again to wind due to more mature policies and attractive tariffs.

Wind tariff in recent years have become very attractive and are close to solar tariff in many states. In Rajasthan, Maharashtra and MP, tariff in the range of Rs. 5, whereas solar tariffs are generally in the range of Rs. 6, leaving a very small gap.

With this, there will certainly be a diversion in investments from Solar to Wind power in the times to come.

These can also be understood from the table and graph below.

The green dots represent the advantage to the sector.

 

DERC to Finalize Solar Tariff Soon

According to an article in Times of India, it is expected that the DERC (Delhi Electricity Regulatory Commission) may soon finalize Solar Tariff Regulation, by the end of this month. It will define the regulation for net metering and solar rooftop in the state.

This will allow private entities and individuals to setup rooftop solar for their use and feed the excess power to the grid, with settlement done using Net Metering.

The net metering proposal is at an advanced stage. It’s likely to be released this month. It’s meant for anyone who plans to supply renewable energy to the grid. For large private players, the tariff will be decided on a case-by-case basis depending on capital cost and the solar regulations we have. For individuals, the energy they produce can offset their electricity bills“, said DERC chairperson P D Sudhakar.

DERC is also working on the subsidies and the incentives to be given.

According to our analysis, in a state like Delhi, where RE generation is still lacking, this regulation will fuel up the RE generation and may bring a positive changes. Also recent tariff hike in Delhi may lead to domestic and commercial consumers to switch to Rooftop Solar, with Net Metering. This Regulation may also help Discom’s, which are currently suffering from poor RPO compliance. We expect the Solar Tariffs to be equivalent to the tariffs prescribed by CERC, or maybe higher, so as to encourage small consumers to go for solar rooftops.

The Media article can be read here.

Our previous blog on DERC tariff hike can be read here.

Tripura Draft Amendment in RPO Regulation

Tripura Electricity Regulatory Commission (TERC) on 18th July 2014 has notified a draft for the amendment in its Renewable Purchase Obligation (RPO) compliance Regulation 2010. In this amendment, TERC has proposed RPO percentages for the next three years (i.e. till FY 16-17).

It is clearly visible that the TERC in the proposed draft has reduced its total the RPO percentage for 2014-15, as compared to 2013-14, but has increased the percentage of Solar RPO significantly. The decrease in the total RPO may be adjudged to the lack in Renewable Energy generation in the state and the increased solar RPO percentage shows that the state commission is setting an ideology to improve the solar energy generation in the state.

The proposed draft can be accessed here.

Contributed by Dheeraj Babariya.

JERC Drafts Solar Tariff Regulation

Joint Electricity Regulatory Commission (JERC) for Goa and Union Territories (UT) on 4th July 2014 has released a draft Regulation of Solar Tariff applicable to Ground Mounted Grid Connected & Rooftop Solar with Net Metering. The regulation shall be applicable to all grid connected Solar PV (including rooftop PV) and solar thermal projects of Goa and the Union Territories.

The primary objective of the policy is to reduce the power deficit in the Union Territories through Solar Power generation. The policy aims to replace diesel power generation by solar power.

Overall the policy is a good initiative by JERC to reduce the dependency on diesel generators. In the recent meeting of Forum of Regulators, emphasis was laid on Solar Rooftop and Net Metering. It can be expected that various SERC’s may come up with their Solar Rooftop and Net Metering policies, which will definitely encourage the sector, that may face tough times ahead after AD was reintroduced for Wind Power.

The Draft Regulation can accessed here.

Contributed by Dheeraj Babariya.

Forum of Regulators discusses Issues of RPO

Forum of Regulators (FOR) held its 41st meeting on 27th June 2014, in Delhi. The Ministry of New and Renewable Energy (MNRE), through a presentation, raised several issues concerning Renewable Purchase Obligation (RPO).

The Key issues highlighted in the presentations are as below:

  • MNRE suggested that the validity REC’s should be extended by 6 months, arguing that a total of 50059 REC’s will expire in next six months.
  • It was suggested that MNRE could consider purchasing the unsold REC’s by using National Clean Energy Fund.
  • The Floor price of Solar REC’s can be reduced due to drastic change (reduction) in Solar PV tariffs over last three years.
  • Giving “MUST RUN” status to RE generation, so that total RE generation could be evacuated, and  have a provision of “Deemed Generation” in case SLDC asked RE generators to back down.
  • Due to poor RPO compliance in all states, the members agreed upon the need of strong RPO enforcement.
  • RPO compliance cost should be allowed in ARR (Average Revenue requirement).
  • The issue of allowing DISCOM’s to purchase REC’s for procuring Renewable Energy beyond their RPO targets was also discussed.
  • The forum suggested that a concept of Renewable Generation Obligation (RGO) for conventional Thermal power plants need to be introduced.
  • Suggestions were given on considering power generated from Large Hydro Projects as Renewable Energy.
  • The Forum also suggested that the concept of Hydro Power Obligation should be introduced.

 From the issues discussed in the meeting it can be deduced that the regulators may come up with strong steps towards RPO compliance. Also, the regulators are set to promote RE generation by making provision for providing proper transmission network for RE generation.

 More information can be accessed here.

 Contributed by Dheeraj Babariya.

 

MNRE issues Draft Guidelines for JNNSM Phase-2 Batch-2 Scheme

MNRE (Ministry of New and Renewable Energy), has officially issued Draft Guidelines for selection of 1500 MW Grid Solar PV power projects under National Solar Mission, Phase-II Batch-II Scheme.

Here are some key points of the proposed scheme:

  • It is to be carried out by NVVN (NTPC Vidyut Vyapar Nigam Limited) through a transparent, tariff based reverse bidding process.
  • NVVN shall enter into suitable Power Purchase Agreement (PPA) with Solar Power Developers and Power Sale Agreement (PSA) with Distribution Companies/ Utilities/ other Bulk Consumers.
  • There will be two bid tranche: 750 MW in 2014-15, and remaining 750 MW in 2015-16.
  • Projects with minimum capacity of 10 MW and maximum capacity of 50 MW, and connection level with transmission utilities at 33kV and above, shall be permitted to bid.
  • A company can only bid for a maximum capacity of 100 MW per tranche.
  • DCR to be 500 MW out of the total 1500 MW. It was 50 % (375 MW) in Phase-II Batch-I scheme.

Interested stakeholders are required to send their comments by 23rd July, 2014.

It is interesting to note that out of the target capacity of 9000 MW in Phase 2 (2013-2017), 750 MW bids have been successfully completed, and as per this scheme 1500 MW bids will be completed by 2015-16. That leaves just 2 years i.e. 2016-17 and 2017-18 for the remaining 6750 MW of bid capacity.

Target achievement will be difficult but not impossible, considering that by 2017 India aims to achieve Grid Parity with respect to Solar Power, by extending the incentives (concessional customs duty) given to the Solar manufacturing sector and inflow of funds from NCEF.

The draft document can be accessed here.

Our previous Blog on JNNSM Phase-II Batch-I can be accessed here.