Rajasthan publishes draft Forecasting and Scheduling regulations

RERC has released draft forecasting and scheduling (F&S) regulations. Rajasthan has become the 4th state to release draft F&S regulations in recent days (MP, Karnataka and Tamil Nadu are the others).

The key points of the regulations are:

  • The regulations will be applicable on all wind and solar generators with individual or combined capacity of 5MW and above that are connected to the state grid

  • Deviation will be calculated on the basis of available capacity

  • Settlement with the buyer will be on the basis of actual generation

  • Qualifying Coordinating Agency (QCA) will play a key role in the total process. QCA will be responsible for forecasting, telemetry, scheduling and settlement of deviation.

The draft regulations are in-line in every aspect with the model F&S regulations released by FoR earlier and can be accessed here.

Five More States to Kick Start Power Sector Reforms

In addition to Meghalaya, Goa and Uttarakhand, five more states would be signing a joint statement of reforms with the Central Government in order to enable 24×7 power supplies to consumers. The states Rajasthan, Andhra Pradesh, Jharkhand, Chhattisgarh and Assam are set to take up the government’s “Power for All” programme. Maharashtra is also trying to achieve the impetus to take up the programme. As the Center is pursuing states to cut their losses and by hiking tariff and raising funds from the market, the states would be hiking their tariffs as follows:-

Among these big states only Andhra Pradesh doesn’t require any raise in the tariff, as it is not burdened with any financial losses unlike the rest of the states. The following graph depicts the financial losses incurred and the funds required by the states to cover up their losses, with Rajasthan being the state with highest financial losses and Assam being the least.

The above update has been taken from Business Standard’s article published on 19th October, 2015 which can be accessed here.

Our previous blog on power sector reforms can be accessed here.

Rajasthan Finalizes Wind Tariff for FY 15-16

The Rajasthan Electricity Regulatory Commission (RERC) has finalized the tariff for wind energy projects; it will be applicable for FY 15-16. Earlier the commission notified a draft and invited comments and suggestions from the stake holders.  The details of the tariff finalized are given in the table below:

Below are the graph for tariffs finalized by RERC and CERC and a comparison between them.

The Commission (RERC) in its order has reduced the tariff by 3.23% compared to previous year, which appears to be inspired by tariff of CERC (reduced by 2.02%). In the previous years the tariff for wind energy in Rajasthan was one of the highest in the country, and was an attractive destination for industry.

The commission order can accessed here.

Rajasthan Finalizes Tariff for Biomass Projects

Rajasthan Electricity Regulatory commission (RERC) in its order dated 7th May 2015, has finalized the tariff for biomass projects in the state. The regulation will come in force from 1st April 2015 and will remain in force for a period of four (4) years.

Tariff for Biomass power plants, for which Power Purchase Agreements (PPA) have been executed under GoR Policy of 1999 and commissioned before 30.09.2008 will be as under:

The commission has also finalized the capital costs for the technology specific projects. For Biomass Gasifier based power plants the capital cost has been fixed at Rs. 457.24 lakh/MW, and for Biogas based power projects it has been determined at Rs. 883.62Lakh/MW.

Other charges payable by the generators:

kVArh charges: Net kVArh drawal by generating plants from the Grid will be billed at 12.50 paise/kVArh w.e.f 01.04.2015 escalated annually at 0.50 paise/kVArh, unless otherwise revised by the Commission by Order.

Transmission & wheeling charges: For third party sale or captive use within or outside the state the wheeling and transmission charges will be recovered as per orders of the commission.

Banking: Banking of energy is allowed at consumer end for only captive consumption within the state. The period of banking will be monthly basis and banking charges at 2% of banked energy would be payable.

The commission order 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

 

Rajasthan Proposes Wind Tariff for FY 15-16

The Rajasthan Electricity Regulatory Commission (RERC) on 20th March has proposed new tariff for wind energy sources, which will be applicable for the projects commissioned during FY 15-16. The commission has invited comments and suggestions from interested parties by 20th April 2015. The tariff will be applicable for 25 years.  The details of the tariff proposed is in the table below:

Below are the some graphs on the year-wise tariff’s of CERC and RERC for wind energy and the % changes in the tariff’s over the years.

Note: All figures of CERC relate to wind zone-2 as defined by CERC, and all RERC tariffs relate to Wind Power Plants located in districts other than Jaisalmer, Jodhpur & Barmer districts.

It can be noticed from the graphs above that RERC has constantly increased Wind tariffs over the last three FYs, while CERC wind tariffs have risen more in terms of % whereas that proposed for FY 2015-16 has been reduced compared to previous FY.

Rajasthan has a wind power potential of 5050 MW’s and with these tariffs proposed, it will become an attractive destination for setting up Wind projects.

The Tariff proposed by RERC can be read here.

Our previous post on RERC Net Metering Regulation can be read here.

Analysis of net-metering regulation of Rajasthan

Key points of the Regulation:

Rajasthan came out with the final net-metering regulation on 26 Feb 2015. The below are key points of the regulation:

• Net-metering permission to be provided on a first-cum-first-serve basis by the distribution licensee. Overall capacity to be limited to 30% of the capacity of the distribution transformer.
• Maximum capacity of the plant will be 80% of the contract demand of the consumer.
• Minimum size of the plant – 1kwp, maximum – 1000 kwp.
• Time bound approval process by the Discom.

Energy accounting related points:

• Consumer will get credit for energy injected into the grid for the billing period
• If electricity injected exceeds the units consumed in the month, credit  will be carried forward to next period to the extent of 50 units (the draft  regulation had allowed a full carry forward to the next month).
• Excess units (>50 units) will be paid for at the rate set by RERC (currently Rs 6.631) by the Discom.
• The plant will be exempt from banking, wheeling and cross-subsidy charges. This will encourage the model of third-party ownership of the plant.
• A bi-directional/ net-meter will be required to be installed. Those with ABT meters already installed will not be required to install a net-meter

Issues for consideration:

1. Clarity on Solar RPO fulfillment by an obligated entity through net-metered solar PV project:

The policy is not absolutely clear on the ability of an obligated entity to meet its solar RPO through generation of rooftop solar. The policy says: “The quantum of electricity generated from the Rooftop PV Solar Power Plant under net metering arrangement by an Eligible Consumer, who is not defined as obligated entity, shall qualify towards compliance of Renewable Purchase Obligation (RPO) for the distribution licensee in whose area of the supply the Eligible Consumer is located.” (emphasis supplied)

Thus, the Discom can meet its solar RPO through entire generation from a net-metering plant, when the consumer is not an obligated entity. Since, for an obligated entity the Discom will not be able to use the power generated for RPO offset, it implies that the obligated entity will be able to use it. However, the regulation does not expressly state so.

Can an obligated entity avail RPO benefit by installing a net-metered solar PV project?

In our opinion, the answer is a qualified ‘yes’.

The draft regulation allowed the entire generation from the plant to be adjusted against the consumption by carrying forward such excess  (without any limit) to the next months.  However, the final regulation allows carry forward to next month only to the extent of 50 units. The excess is paid for by the Discom at the preferential tariff. This will make claiming RPO offset difficult as when the Discom pays preferential tariff, it will be allowed to use such power to meet its RPO.

Thus, an obligated entity will only be able to meet its RPO to the extent of offset available against its consumption, not on the excess for which received preferential tariff.

It is worth noting that the ability of claiming RPO offsets is not expressly mentioned in this regulation – instead it is mentioned in the  RPO regulation (2nd Amendment) as an observation by the commission:

Treatment for Roof Top/Land mounted solar plants in consumer premises: 

10. The Commission observes that no new provision as suggested by the stakeholders is required in the regulations since any RE power produced by captive RE source for own consumption or taken through open access is considered towards fulfillment of their RPO…..

However, the energy accounting methodology will be complex (because of the change where only a limited carry forward is allowed).
In our opinion, the best course of action for an obligated entity is likely to be to build capacity well within its consumption requirements on a monthly basis, so that the situation of carry forward does not arise.

2. REC eligibility for a net-metered solar plant:

The draft regulation contained a clause that allowed RECs as per CERC REC regulations. However, in the final regulation such a clause has been removed. Thus, it appears that net-metered plants will not be eligible for RECs.

The RERC final regulation is available here.

Power Tariff shoots up again in Rajasthan

Rajasthan Electricity Regulatory Commission (RERC) in its order dated 20th Feb 2015, has finalized tariff for FY 14-15.

Industrial tariff (HT-5 category) has gone up by Rs 1/ unit to Rs 6.5/unit (this is an increase of 18% from existing tariff, and overall a 56% increase in 5 years). The hike is similar in other categories of industrial tariffs also.

For Non-Residential or Commercial (LT 2) for Hotels, Malls etc.  it is increased 20.5% for first 100 units and 19.2% for next 100 units. This tariff order will come into force w.e.f 01.02.2015

This power hike will affect all industries as electricity is major part of their expenditure. This tariff hike comes after almost 2.5 years, as the annual hike was put on hold due to elections.

The Order can be accessed here.

Media article on the same can be read here.

Contributed by Neeraj Nasiar.

Rajasthan Draft Net Metering Regulation

Rajasthan Electricity Regulatory Commission (RERC) has recently notified draft regulation for Net Metering & small solar grid interactive systems. The regulation will come into force from the date of notification in the official Gazette.

The regulation will apply to the distribution licensee and the consumers of the licensee. The consumers in the area of distribution licensee are allowed to install rooftop systems under Net Metering arrangement for their internal use and are allowed to supply surplus energy into the distribution system.

Individual Project Capacities: The rooftop solar system should of minimum 1KWp capacity and should not be more than 1MWp. The maximum capacity for rooftop systems to be installed shall not be more than 80% contract demand of the consumer.

Interconnection with the Grid: The connectivity levels at which the Rooftop PV Solar Power Plants shall be connected with the grid are as specified below:

Energy Accounting and Settlement: The distribution system shall install metering equipment at the point of interconnection. For each billing cycle the distribution licensee shall show quantum of energy injected into the distribution and energy drawn for the system. If the energy injected is more than energy drawn for distribution system then the surplus energy will be carried forward to next month, and if the energy drawn is more than energy injected then in such case the licensee will raise invoice after adjusting previous energy credits.

Applicability of Charges: The Rooftop PV Solar Power Plant under net metering arrangement shall be exempted from banking charges.

Solar RPO and REC Eligibility: The quantum of energy generated from rooftop systems will qualify towards the RPO of the distribution licensee, in case the consumer is not an obligated entity. Considering that the consumer can self-consume or sell to a third party under open access, as per current REC Regulation, a consumer availing Open Access benefits is not eligible for REC. Captive consumers who do not avail Open Access benefits for the entire generation (self-consumption + injection into grid) are eligible for RECs for the entire generation.

The comments and suggestion on the draft ca be submitted on or before December 4, 2014.

The Draft Regulation can be accessed here.

Our earlier blog on Rajasthan Solar tariff can be read here.

Contributed By Dheeraj Babariya

Rajasthan Approves Solar Energy Policy 2014

Rajasthan Renewable Energy Corporation (RREC) has notified its new Solar Energy Policy 2014. On 08th October 2014. The new policy will supersede the previous Rajasthan Solar Policy 2011.

Previously RREC circulated a draft policy and invited comments and suggestions from the interested stakeholders. The key features of the new policy are mentioned in the points below:

 

The policy is finalized with a vision of further enhancing the Solar Sector in the state. The state receives highest solar irradiation in the country with availability of low cost land and receives highest no. of sunny days. This conditions has made it the ideal destination for investments in the solar energy space.

The policy has given investors considerable benefits like making availability of land for project development and amending the land rules so as to remove the difficulties in procuring land for projects.

The policy can accessed here.

The FAQ’s on the policy can be read here.

Our previous blog on comparison with previous Solar policy can be read here.

Contributed by Dheeraj Babariya

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