MNRE announces a public procurement order gives preference to Make in India

In order to encourage ‘Make in India’ and to promote the manufacturing and production of goods & services in India, the Government has issued a public procurement order with preference to make in India. The order intends to enhance the income flow & employment in the country. The eligible parties for the order include all the ministries /departments of the Government of India, along with any autonomous bodies controlled by the Government of India (GoI). The order is specifically for procurement of renewable energy components, the details of which are as below:

Renewable energy technology List of products covered under the order (preference make in India) Minimum percentage of local content required in renewable energy products
Small hydropower Apart from civil construction, preference shall be provided in Central Ministries/Department and Central PSUs to domestically manufactured/produced products such as turbines, generators, penstock, pipelines, control panel, governors, cables, valves, transformers, switch gears etc. 80
Wind power Apart from civil construction, preference shall be provided in Central Ministries/Department and Central PSUs to domestically manufactured/produced products such as gearbox, blades, rotor, generator, tower, bearings, yaw mechanism components etc 80 (Besides hub and nacelle assembly/manufacturing facility should be in India)
Off-grid/decentralized solar power Apart from civil construction, preference shall be provided in Central Ministries/Department and Central PSUs to domestically manufactured/produced products such as solar street lights, solar home lighting systems, solar power packs/microgrid, solar water pumps, inverters etc. 70
Grid-connected solar power projects Apart from civil construction, preference shall be provided in Central Ministries/Department and Central PSUs to domestically manufactured/produced products such as solar PV modules & other components such as inverters etc. Solar modules – 100

Other components like inverters etc. – 40

Biomass gasifier Apart from civil construction, preference shall be provided in Central Ministries/Department and Central PSUs to domestically manufactured/produced products such as biomass gasifier reactor, feed hopper. 80
Biomass co-generation Apart from civil construction, preference shall be provided in Central Ministries/Department and Central PSUs to domestically manufactured/produced products such as boiler & its auxiliaries like ESP, turbine generators & its auxiliaries etc. 80
Municipal solid waste projects Apart from civil construction, preference shall be provided in Central Ministries/Department and Central PSUs to domestically manufactured/produced products such as boiler, flue gas cleaning system, grab crane system, waste processing system, leachate treatment plant etc. 60
Waste to Energy (Biomass/Bio-CNG) Apart from civil construction, preference shall be provided in Central Ministries/Department and Central PSUs to domestically manufactured/produced products such as feed mixer tank, mixing agitation feeding pump, digester tank etc. 80

 

  • Products/items related to renewable energy research & development shall be exempted from the current order. Any kind of electricity or end product generated from these RE products under this order can be utilized for captive/non-commercial purposes only.
  • Self-verification of the local content is required from the supplier during the tender/bidding. In case the procurement value crosses INR 10 crores, the local supplier will be needed to provide a certificate from the certified auditors.
  • False declaration of any kind can lead to a suspension for up to two years as per general financial rules.
  • Ministry of New and Renewable Energy will be the nodal agency for all the activities related to the order.

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.

MNRE proposes amendments in the biomass co-generation policy

MNRE has been working towards supporting biomass-based cogeneration projects in the country and had introduced a scheme for the same in May 2018. The scheme provides CFA of INR 25 Lakhs/MW for bagasse cogeneration projects and INR 50 Lakh/MW for non-bagasse cogeneration projects.

Recently MNRE has made two amendments in clause 5 & 6 of the scheme to provide more financial support to the projects. The changes are as follows:

Apart from this, The Madhya Pradesh Electricity Regulatory Commission (MPERC) has rejected two petitions filed by owners of bagasse-based cogeneration projects against the imposition of cross-subsidy surcharge for self-consumption of power in Madhya Pradesh.

The petitioners Shri Durga Khandsari Sugar Mills and Narmada Sugar Private Limited had approached MPERC to not impose cross-subsidy on self-consumption of the electricity from its own bagasse-based cogenerating stations. However, both the plaintiffs were selling the majority of its generated electricty via open access and less than 51% was being self-consumed. Hence, the commission was of the opinion that whole power supplied by the cogeneration plants of the petitioners will be treated as if the power is supplied by a generating company.

MNRE has also invited an Expression of Interest (EOI) for tapping the potential of biomass and bagasse co-generation in the country as of October 2018, to promote the source of energy.

MNRE proposes draft certification scheme for Indian wind turbines

Recently the Ministry of New & Renewable Energy in consultation with National Institute of Wind Energy Chennai prepared a draft certification scheme incorporating various guidelines under “Indian Wind Turbine Certification Scheme (IWTCS).” The IWTCS is a consolidation of relevant National & International guidelines. The document also contains various best practices from other countries to ensure the quality of the wind energy projects. The scheme is envisaged to assist & facilitate OEMs, End-users, Utilities, SNAs, developers, IPPs, owners, investors, certification bodies and testing laboratories. The document is open for comments from stakeholders till 5th December 2018.

Wind sector in India is growing at a rapid pace with increased utilization of wind energy for the power development, The modern wind turbines have higher hub heights, larger rotor diameter, higher capacity, and improved CUF along with technological improvements. The IWTCS is a consolidation of relevant National and International Standards (IS/IEC/IEEE), Technical Regulations and requirements issued by Central Electricity Authority (CEA), guidelines issued by MNRE and other international guidelines. The Scheme enlists the guidelines for the benefit of all the stakeholders from concept to lifetime of a wind turbine, including Indian Type Approved Model (ITAM), Indian Type Certification Scheme (ITCS), Wind Farm Project Certification Scheme (WFPCS) and Wind Turbine Safety & Performance Certification Scheme (WTSPCS).

The IWTCS defines certification system guidelines for wind turbines that comprise of Prototype Certification and Type Certification; Project Certification, Failure reporting of installed wind turbines, Safety and Performance assessment and De-commissioning & Safe Disposal of the wind turbine/wind turbine projects installed onshore and offshore. It specifies guidelines for carrying out conformity evaluation of wind turbines and wind farms, with respect to specific standards and other technical requirements, relating to safety, reliability, performance, testing, and interaction with electrical power networks.

The new guidelines are expected to bring better evaluation standards for wind turbines & wind farms in the country in terms of technical requirements, relating to safety, reliability, performance, testing, certification, and interaction with electrical power networks

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.

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.

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.

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.

Creation of an RPO compliance cell, MNRE declares in its order

According to a recent order by Ministry of New and Renewable Energy (MNRE) dated 22 May 2018, a creation of Renewable Purchase Obligation (RPO) Compliance cell is in process. This cell will be handling all the matters related to RPO compliance across states and publishing monthly reports on the updates.

The cell is expected to work in accordance with Central Electricity Regulatory Commission (CERC) and SERCs. The cell is also expected to coordinate on publishing a periodic report with the Government of India and take up non-compliance issues with appropriate authorities.

In the past, there have been several efforts initiated by MNRE to increase awareness among RPO obligated entities regarding RPO obligations, and explaining its advantages to them.

With the help of this cell, data management, a repository of obligated entities, preparing state-wise defaulters lists and storing authorities specific information would be convenient.

Currently, there are some gaps in the implementation of RPO in some states, and with the creation of this cell, the issues can be taken care of state-wise, bringing the country closer to achieving its national target of installing 175 GW of renewable energy till 2022.

With the cell formation, supervision of the Renewable Purchase Obligation process across the country can be performed in a seamless manner. All the stakeholder information associated with the process can be maintained in one place making implementation and invigilation easy.

This is a very positive step by MNRE, as there will be a cell responsible for looking over the RPO compliance in the country, ensuring consistent implementation of RPOs across the states while publishing timely reports.

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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