CERC notifies sixth amendment of inter-state sharing regulations of transmission charges & losses, 2010

In a recent notification issued by CERC on the (Sharing of inter-State Transmission Charges and Losses) amendments have been announced. These are the sixth amendment in the regulations and will come into effect in retrospection from 31.12.2018.  The below-stated amendments have come been notified in retrospection and will only be applicable to projects whose generation capacity has been declared under the stated commercial operation period.

The amendments in the regulations are as follow:

  • In regulation (7) of the principal regulations subclass (h) & subclass (z) the date “3.12.2019” will be substituted with “12.2.2018.
  • A new sub-clause (aa) will be included in Clause (1) of Regulation 7 of Principal Regulations as under:-  “ No transmission charges and losses for the use of ISTS network shall be payable for the generation based on solar and wind power resources for a period of 25 years from the date of commercial operation of such generation projects if they fulfill the following conditions.”

Provided such generation capacity has to be awarded projects via a competitive bidding process & should have been declared under commercial operations between 13.2.2018 till 31.3.2022.

Also, Power Purchase Agreement(s) should have been executed for sale of such generation capacity to all entities including Distribution Companies for compliance of their renewable purchase obligations.”

Tamil Nadu announces (Forecasting, Scheduling and Deviation settlement and Related Matters for Wind and Solar Generation) Regulations, 2019

Executive summary:

  • The accuracy band is narrower compared to other states and compared to the Model FOR Regulations
  • However, the per unit DSM charge is also lower compared to other regulations (in these aspects TN regulation is similar to that of Gujarat)
  • Total DSM charge is capped at Rs 0.05/unit on an annual basis
  • Aggregation is not allowed

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 Wind and Solar Energy Generators (excluding Rooftop PV Solar power projects) in Tamil Nadu

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

Generation =  Absolute Error in % = 100 X Actual Generation –  Scheduled/ Available Capacity (AvC)

Point of Forecasting: Plants connected to the Intra-State Transmission System or Distribution System, including those connected through Pooling sub-stations, and using the power generated for self-consumption or sale within or outside the State.

Aggregation: Unlike in Karnataka and AP, Tamil Nadu’s regulation does not have a provision to provide an aggregated forecast.

Role of a QCA:

  • Meter reading and data collection and its communication, and coordination with the Distribution Licensees, the SLDC and other agencies;
  • De-pooling of Deviation Charges within the constituent Generators of the Pooling sub-station and settlement of payments/receivables.
  • Settlement of the Deviation Charges specified in these Regulations with the SLDC on behalf of the Generators.

Revisions:

  • The QCA may revise the Schedule of Generators connected to the Intra-State Transmission Network (excluding collective transactions) by giving advance notice to the SLDC.
  • 16 revisions are permitted for Generators starting from 00.00 Hrs of the All the revisions are effective from the 4th time-block.

Other Key Points:

  • The total deviation charges remitted on account of deviations by a wind / solar generators through QCA into State Deviation Pool Account (Wind and Solar) in a financial year shall be capped at the Ceiling Rate of 5 paise per unit, and excess DSM charges beyond this limit shall be remitted back to the generator.
  • Every QCA shall pay the total amount of Deviation Charges pertaining to the Pooling Sub-station to the SLDC, and collect it from the concerned Generators in proportion to their actual generation.
  • Provided that the onus of ensuring the payment of the Deviation Charges to the SLDC by the QCA shall remain that of the concerned Generators.
  • The QCA shall de-pool the Deviation Charges against each Generator in proportion to the actual generation by the generators.
  • The SLDC will share the curtailment information with the QCA id any, via an IT-enabled communication system; failing which the DSM for subsequent time blocks will not be charged by the SLDC.
  • Further, it is the QCAs responsibility to provide the correct schedule on the basis of curtailment.
  • If the QCA is unable to do so, the SLDC will change the schedule as per the curtailed values.

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 will 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

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

  • Deviations in respect of Inter-State and Intra-State transactions for each source of RE i.e. wind and solar Generation shall be accounted for separately at each Pooling Sub-Station.
  • The SLDC shall provide separate energy and Deviation Accounts for Inter-State and Intra-State transactions in respect of wind and solar Generation to the QCA, who shall settle the Deviation Charges with the concerned Generators.

The TNERC Regulation for Forecasting & Scheduling, 2019 has not provided a summary of timelines designating the activities to QCA and SLDC, to be accomplished within the following stipulated duration.

 

MERC announces amendments in the Forecasting, Scheduling and Deviation Settlement for Solar & Wind Generation, Regulations 2018

Maharashtra Electricity Regulatory Commission (MERC) has announced a notification in accordance with the Principal regulations MERC (Forecasting, Scheduling and Deviation Settlement for Solar and Wind Generation) Regulations, 2018. In accordance with regulation 1.2 of the principal regulations, the commission has notified that the effective date of commercial arrangement will be 1st July 2019. This has come after Commission has noted the concern raised by Stakeholders during the meeting dated 26 February 2019 regarding the short time available for implementation of the Regulations and also the submission made by MSLDC about its preparedness to rollout the Commercial Arrangement by 30 June 2019.

Further, the commission has also announced amendments in the implementation of Procedure under MERC (Forecasting, Scheduling and Deviation Settlement for Solar and Wind Generation) Regulations, 2018.

The clause 7.1 of the said Detailed Procedure specified the MSLDC fee and charges including scheduling fee and the re-scheduling fee payable by QCA to MSLDC. The said issues were highlighted by REConnect also, how the rates stated by MSLDC are exceptionally high and unfair.

A meeting was held by the commission with the stakeholders where they stated their concern regarding the high charges and how these charges are not so high in other states like Andhra Pradesh, Karnataka, Madhya Pradesh & Rajasthan.

The commission has announced the updated fees and charges related to scheduling charges, the abstract of which is as follows:

Gujarat announces RE Forecasting and Scheduling regulations, 2019

Gujarat Electricity Regulatory Commission has recently issued Forecasting, Scheduling, Deviation Settlement, and related matters of solar and wind generation sources regulations, 2019 on 19th January 2019. The notifications are effective from the date of notification, however, the deviation charges specified in the regulations will be effective from 1st August 2019.

The key points of the regulations are as below:

  • Deviation accounting:

Absolute Error in % = Actual Generation – Scheduled Generation /Available Capacity (AvC)

  • Eligibility criteria: The regulations will apply to all wind and solar generators having a combined installed capacity above 1 MW connected to the state grid/substation, including those connected via pooling stations, and selling generated power within or outside the state or consuming power generated for self-consumption.
  • Forecasting and scheduling code: Revision of schedule will be allowed if the revision is more than 2% of the previous schedule. For wind energy-based generations, maximum 16 intra-day and for a solar energy-based generation, a maximum of 9 intra-day revisions will be allowed.
  • Aggregation is not allowed of more than one pooling stations or individual generating station connected to a substation.
  • QCA or the wind and solar generator can submit “Day-ahead” and a “week-ahead” schedule  by 9 am every day for each pooling station or each generating station, wherein the Day-ahead schedule can contain wind or solar energy generation schedule at intervals of 15 mins (time-blocks)for the next day, starting from 00:00 hours of the day, and prepared for all 96 time-blocks and Week-Ahead schedule shall contain the same information for the next seven days.
  • The revisions of schedules for solar generators will be effective form 4th time block and there can be maximum of 9 revisions during the day starting from 5:30 hours to 19:00 hours of that day.
  • The revisions for a wind generating plants will be applicable for the entire 24 hours in a day.
  • The QCA will provide payment security to the extent of 110% against the deviation charges in form of Bank Guarantee. The payment security amount for the first year will be worked out considering average deviations observed during the mock trial dor different set of sites:
  1. Wind generating plant of approximately 50 MW capacity at pooling sub-station.
  2. Solar generating plant of approximately 25 MW capacity at pooling sub-station.

The table for the deviation charges and deviation limits is given below:

Deviation charges for wind operators

Deviation charges for solar generators

 

Andhra Pradesh announces new wind-solar hybrid policy

The government of Andhra Pradesh has recently announced a new wind-solar hybrid policy as the state targets to achieve 18000 MW of renewable capacity by the year 2021-2022. The broad objective of the policy is to provide a framework for the promotion of large grid-connected wind-solar PV systems for optimal & efficient utilization of transmission infrastructure and land, reducing the variability in renewable power generation and thus achieving better grid stability.

The key points of the policy are as below:

  • The policy will be applicable for a period of five years from the date of issuance.
  • The policy intends to procure 5,000 MW of contracted capacity under the five-year timeline.
  • The policy is applicable to new wind-solar projects as well as the existing wind/solar PV projects via hybridization.
  • The rules and eligibility of the categories are specified in the policy.
  • 100% banking of energy is allowed throughout the year based on the feasibility & approval from the TRANSCOs & DISCOMs.
  • Banking charges will be adjusted in kind at 5% of the energy delivered at the point of drawal and the banking will be possible between April to March.
  • Energy settlement will be done on a monthly basis & the unutilized energy will be purchased by the DISCOMs at 75% of the APPC as per the APERC rules.
  • Hybrid projects developed by the manufacturers will be allowed to sell the power to discoms via: (i) project specified tariff determined by APERC, (ii) at APPC under REC mechanism by availing RECs, (iii) via a transparent bidding process.
  • Transmission/distribution charges exempted up to 50% of the applicable charges for wheeling of power generated.
  • No transmission charges for connectivity to the nearest Central Transmission Unit (CTU) via State Transmission Unit (STU) network for inter-state wheeling of power.
  • For existing wind/solar plants applying for hybridization can avail all the incentives w.r.to previous policies balance operative period.
  • 50% of applicable Electricity duty shall be exempted for captive consumption, sale to
    DISCOMs and third party sale provided the source of power is from wind – solar hybrid
    power projects set up within the State.
  • 50% of the Cross subsidy surcharge shall be paid for third party sale provided the source of power is from Wind- Solar Hybrid Power Projects setup within the State.

Currently, Andhra Pradesh has RE installed capacity of 7229.8 MW as on November 2018, as per CEA.

MNRE amends the land allotment clause in the solar park projects guidelines

Ministry of New and Renewable Energy (MNRE) recently announced amendments in two guidelines for setting up a grid-connected solar PV power projects for 2000 MW and 5000 MW along with Viability Gap Funding (VGF) for Batch III & Batch IV, Phase II NSM respectively. The amendments are as below:

Guidelines for setting up a grid-connected solar PV power projects for 2000 MW along with Viability Gap Funding (VGF) for Batch III  Phase II NSM

Guidelines for setting up a grid-connected solar PV power projects for 5000 MW along with Viability Gap Funding (VGF) for Batch IV  Phase II NSM

The amendments are assumed to have come into existence due to the slow interest in the tenders due to lack of land allotments and the financial issues related to it. Currently, around 7% of the total installed capacity is from solar. But lately, the solar installations have taken a back seat due to issues like anti-dumping tariffs, and confusion in the GST rate.

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.

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.

Parliamentary panel worries about the power sector post RBI’s revised framework on NPA’s

Reserve bank of India recently issued a revised framework for the resolution of stressed/non-performing assets. A Lok-Sabha committee was called to discuss the consequences of the framework on the electricity sector. The committee was of the opinion that the electricity sector has been forced towards Non-Performing Assets post the revised framework. As per the guidelines, one of the objectives of the revised framework is to ensure prompt action to provide relief to the stress in a borrower’s account as soon as the default takes place. However, the committee was of the opinion that a solution was indeed necessary but not at the cost of affecting the electricity sector majorly. A  37th report of the standing committee on energy on the subjects of stressed/Non Performing Assets in the electricity sector was presented post extensive discussion in order to resolve the issue of NPA in the electricity sector as per the extant RBI guidelines and other legal/ financial/ statutory provisions applicable at that time.

The Committee focussed on 34 coal-based thermal power plants which were categorized as ‘stressed’ due to issues such as:

  • Non-availability of Fuel:

– Cancellation of coal block.

– Projects set up without Linkage.

  • Lack of enough PPA by states
  • The inability of the Promoter to infuse the equity and working capital
  • Contractual/Tariff related disputes
  • Issues related to Banks/Financial Institutions (FIs).
  • Delay in project implementations leading to cost overrun.
  • Aggressive bidding by developers in PPA.

As per the Revised Framework, the extant instructions on resolution of stressed assets such as Framework for Revitalizing Distressed Assets, Corporate Debt Restructuring Scheme, Flexible Structuring of Existing Long Term Project Loans, Strategic Debt Restructuring Scheme (SDR), Change in Ownership outside SDR, and Scheme for Sustainable Structuring of Stressed Assets (S4A) were withdrawn. The Joint Lenders’ Forum (JLF) as an institutional mechanism for resolution of stressed accounts has also been discontinued. Now, all accounts, including such accounts where any of the schemes have been invoked but not yet implemented, shall be governed by the revised framework.

Although the new guidelines have been termed as ‘harmonized’ and ‘simplified’ generic framework, yet they are far from being so. Prior to these guidelines, an asset was classified as NPA if a loan or an advance where interest or installment of principal remains overdue for a period of 90 days in respect of term loan. Similarly, stressed assets were accounts where there has been a delay in payment of interest and/or payment as against the repayment schedule on account of the financial difficulties of the borrower. Under the previous framework, failure of an asset to serve its debt obligation within the prescribed time was taken to be indicative of a developing stress of potential NPA and consequently, corrective measures of various grades i.e. rectification, restructuring, and recovery were the options keeping in view the totality of the situation.

However, the new regime has let go with all such measures and any failure beyond the duration of SMA (Special Mention Accounts) is supposed to directly and immediately invoke the provisions of a resolution plan, making the revival extremely difficult. The committee, therefore, recommended that in the interest of the economy in general and the Electricity Sector in particular, the revised guidelines should be “harmonized and simplified” in the real sense.

 

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.

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