Orissa to Set up 1000MW Solar Power Park

The Orissa government plans to add aggregate clean energy capacity of 1,000 MW by establishing solar parks in the state by 2020. The target, fixed by the state government in its draft Orissa Solar Park Policy, 2014, primarily aims at facilitating accelerated deployment of solar energy in the state to support sustainable development and address the climate change issues.

The state government had set an ambitious target of adding 3,000 Mw of renewable energy capacity by 2022 in the draft policy. The park has been approved by Ministry of New and Renewable Energy which will likely involve investment of about Rs 6,500 crores.

A total of 5000 acres of land would be required for setting up of the solar park. Since it’s difficult to find this stretch of land in Orissa, the park would be developed in three to four Green Energy Development Corporation of Orissa Ltd (Gedcol) will be signing a pact with Solar Energy Corporation of India clusters, where Gedcol will act as the nodal agency.

The above update has been taken from Business Standard’s article published on 17th October, 2015 which can be accessed here.

Analysis of changes in CSS and its impact on Open Access market

Cross-subsidy regime used as a tool to influence the open access market

In this financial year (FY 2015-16), Andhra Pradesh, Telangana and MP suddenly raised cross-subsidy surcharge (CSS) applicable on industrial units significantly. In the case of AP and Telangana last years’ cross-subsidy was nil, but this year its Rs 2.23 and Rs 1.42 respectively. In the case of MP, the cross subsidy increased from Rs 0.48 to Rs 2.16 (an increase of 350%).

An analysis of several states suggests that cross-subsidy is often increased suddenly and substantially. In each of the above cases, the immediate impact will be that third-party transitions will come to a halt, as they will no longer be viable. For example, in MP the revised CSS is 46% (vs 12% last year) of the applicable tariff. In AP and Telangana, its 40% and 25% respectively.

These three states accounted for approximately 20% of the volume on power exchanges as per the market monitoring report from CERC for February (the most recent available). This volume is likely to dip to insignificance thanks to the steep rise in CSS.

Another good example is the case of Haryana. In FY 2013-14, the applicable CSS was Rs 0.53. Next year it was raised to Rs 2.02 (a four-fold increase). As a result, the traded volume between February 2014 and February 2015 has fallen by half (160 MUs and 86 MUs respectively). One must keep in mind that the above volume includes purchase from Discom’s, if any, on which CSS is not applicable. Thus, the actual fall in volume from open access consumer is must larger.

Changes on the horizon

It is clear from the above examples that cross-subsidy is varied by states to influence the open access market.

However, some fundamental changes are on the horizon. The first one pertains to applicability of CSS on renewable energy. One of the amendments proposed to the Electricity Act, 2003 seeks to remove CSS applicability from renewable energy transactions. This will have a significant impact as it will make RE transactions very attractive. One hopes that states will adopt this in its true spirit.

The second change pertains to the way CSS is calculated by the States. The existing National Tariff Policy (NTP) suggests that CSS be calculated as the difference between the top 5% of the incremental power procured by the Discom (this is often proxy for the most expensive power procured) and the applicable tariff. However, this is a very opaque measure – for example, between 2013-14 and 2015-15, the cost of top 5% of the power in MP fell from Rs 5.47 to Rs 4.59 (a fall of 20%), despite increase in overall costs and tariffs.

The amendments to NTP will require the calculations to be done by taking the overall costs (including the cost of regulatory assets, ie losses incurred by the Discom).

 

 

Further, the proposed NTP seeks to limit the CSS to 15% of the applicable tariff in the category. It is noteworthy that till now, NTP has been more recommendatory in nature. For example, it requires that CSS should be brought down progressively to bring it to 20% of the opening level by 2010-11. However, the significant changes done recently clearly indicate that this objective of the policy has not been achieved.

Team REConnect Energy

 

Odisha Finalizes Guidelines for Net Metering

Odisha Electricity Regulatory Commission (OERC) through an order has finalized the guidelines for Net Metering systems, including LT connectivity for Government/ PSU owned buildings only.

 A brief summary of the guidelines is given in table below:

The commission is mandated to promote Renewable Energy by providing connectivity with grid and sale of electricity to any person under EA 2003, which is why it has released this guidelines to enable consumers to set up Rooftop systems.

The state of Odisha has fairly good potential for solar power generation with 280-300 days of sunshine in a year and Global Horizontal Irradiance of about 4.5-5.0 kWh/m2/day.

This guidelines does not make consumers eligible for REC’s. This may be due to the fact that solar tariffs are on the decline whereas the state retail tariffs are increasing year-on-year.

The order can be accessed here.

Odisha Proposes Draft for RPO Regulation, 2014

Odisha Electricity Regulatory Commission (OERC) on 5th December 2014 has notified draft for RPO Regulation 2014. The regulation has been named as Procurement of Energy from Renewable Sources and its Compliance Regulations, 2014.

The targets proposed by OERC for procuring minimum percentage of electricity from Renewable Sources of Energy are given the table below:

Odisha in its previous RPO regulation 2010 defined RPO targets till FY 15-16. The RPO targets for FY 15-16 is same as it was in its previous regulation, but RPO target for Solar has been increased by 0.10%.

The draft also proposes Cross Subsidy exemption for Third Party mode of Open Access. However, no banking facility will be provided for supply (Third Party Sale) from Renewable Energy Sources through Open Access.

Odisha has not been a very active in Renewable Energy space, and has not seen good capacity addition in RE sector till date. On the Solar front it has a potential of 25 GW, but does not fare well in terms of Wind or Biomass potential. Considering the high Non-Solar RPO, it becomes quite obvious that good number of RECs will be purchased by Discoms and other obligated entities. As far as Solar RPO is concerned, there is good scope for Solar IPPs to invest there, as there are good number of big industries in the state to buy solar power under Third Party Mode of Intra State Open Access.

With the current trading price of Solar REC at Rs. 9.3/Unit, it will favor the IPPs under Third Party mode, but in the long run, with the 3rd Amendment of REC Mechanism soon to be finalized, purchasing Solar RECs might become a more economical option, unless there is significant drop in capital cost of Solar projects.

The draft Proposed can be read here.

Odisha Declares Open Access Charges for 2014-15

Odisha Electricity Regulatory Commission (OERC) has determined the Open Access charges through a notification dated 10th October.

The new charges determined are applicable for FY 14-15m with effect from 1st April 2014. The details of the charges are in the table below:

The normative transmission loss at EHT (3.75%) and normative wheeling loss for HT level (8%) are applicable for the year 2014-15. No additional surcharge over and above the Cross-Subsidy Surcharge is payable.

 The consumers availing Renewable Power are exempted from payment of Cross-subsidy surcharge and those drawing power from Renewable source excluding Co-generation & Biomass, have to pay 20% of the wheeling charge.

The relevant order can be accessed here.

Contributed by Dheeraj Babariya.

Go to top