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.

MERC announces generic tariff for various RE sources

Recently the Maharashtra Electricity Regulatory Commission (MERC) announced an order for generic tariff determination of various renewable resources including Solar and Wind. Even after the generic tariff is realized, DISCOMs opt for competitive bidding for tariffs due to the low rates. The details regarding the tariffs for various RE sources is a follows:

Renewable energy sources

Tariff without AD Tariff with AD
Non-Fossil Fuel-Based Cogeneration Projects INR 4.99 _
Biomass projects INR 7.30 INR 7.44
SHP (5 MW-25 MW) INR 3.66 INR 3.92
SHP (1 MW-5 MW) INR 4.36 INR 4.64
SHP (500 kW-1 MW) INR 4.86 INR 5.14
SHP 500 kW and less INR 5.36 INR 5.64
Wind Energy projects INR 2.87
Utility-Scale Solar PV Projects INR 2.72

Rooftop Solar PV projects INR 3.22

The above mentioned solar rooftop tariff will be applicable from August 1 2018 to March 31 2019 and for wind projects between August 1 2018 – March 31 2019 for  a period of 13 years from the date of commissioning. However, in a recent project auction base tariff of INR 2.52/kWh was discovered (INR 0.35/kWh less than the new generic tariff).

In case of SHP, the above-mentioned tariffs will be applicable between August 1, 2018, and March 31, 2019, for 35 years (with capacity up to 5 KW) and 13 years for SHP with a capacity greater than 5 MW and up to 25 MW.

Recently Maharashtra also announced its final regulations for the forecasting, scheduling and deviation management regulations in July 2018.

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.

EXTENSION ON WAIVER OF INTER-STATE TRANSMISSION CHARGES AND LOSSES FOR ELECTRICITY GENERATED FROM SOLAR AND WIND SOURCES

The Ministry of Power has released an order  which provides extension on the waiver of intra-state transmission charges and losses for transmission of electricity generated from solar and wind sources. As per the last order dated 14 June 2017, MoP had provided an extension on the waiver of transmission charges for electricity procured from solar and wind sources till 31.12.2019. This waiver has been further extended to 31 March 2022 for electricity transmitted both the sources of renewable energy.

 

The waiver shall be applicable for 25 years from the date of commissioning of the projects and only on those projects entering into PPAs with distribution licensees for sale of electricity for compliance of their RPO. The order also states that the waiver shall be applicable to projects awarded through competitive bidding process.

 

This order continues to encompass the same issues present in the previous orders. It is only applicable to solar projects from which the electricity will be sold to the DISCOMs. Secondly, it will only be on those solar projects entering PPAs for the compliance of RPO.

PORTUGAL RUNS ON RENEWABLES FOR FOUR AND A HALF DAYS

In a remarkable achievement reported by The Guardian, the country of Portugal ran only on renewable power for 107 hours in the month of May. The sources of renewable power that the country relied on were hydro, wind and solar power.

During the year 2016, 59% of the national energy production was fulfilled through renewable energy while the remaining was from fossil fuels. Out of the 59% yielded from renewable sources, 2% was from solar, 25% was from wind and remaining 32% was from hydro. The article quoted  “the managing director of the Portuguese Renewable energy association Apren, believes that by 2020, Portugal will be able to generate 60% of its energy from renewables and will be able to completely rely on renewable power by the end of 2040”.

Karnataka Electricity Regulatory Commission Draft Smart Grid Regulations, 2015

KERC came up with its first draft Smart Grid Regulations on 22nd December, 2015. Smart grid through automation and controls system would deliver electricity more reliably, effectively and environment friendly, thus enabling much wider generation and consumer participation in power sector operations.

Some of the Key points of the regulation are as follows:

  • These regulations shall be applicable to all Generation companies, Distribution Licensees, Transmission Licensees and consumers in the state and connected to the state grid.
  • The objective of the regulation is to enable integration of various smart grid technologies, enhance network accessibility and measures to bring about efficiency improvement in generation and integrate renewable energy into grid and micro grids.
  • The Commission may from time to time issue guidelines for generating company, transmission licenses and distribution licensee in execution of activities like formulation and implementation of smart grid programmes.
  • The Commission directs every transmission and distribution licensee to constitute smart grid cells within three months of notification of the regulation which shall be responsible for:
    • Baseline study & Development of data
    • Formulation of smart grid plans, programmes and projects
    • Design and development of smart grid projects including cost benefit analysis and plans for implementation, monitoring and reporting.
    • Assist licensees in getting necessary approvals to smart grid plans.
    • Implementation of smart grid programmes
    • The transmission licensee and distribution licensee may combine activities related to energy efficiency, DSM and smart grid implementation within the same cell.

 

The Regulation can be accessed here.

OERC (Procurement of Energy Renewable Sources and its Compliance) Regulations, 2015

Orissa Electricity Regulatory Commission released the notification on Procurement of energy from Renewable Sources on 10th October, 2015. This regulation set the basic principle for promoting the sale of power from renewable sources to any person within the state of Orissa. Below mentioned are the key points of the regulation:

  • These regulation shall be applicable to all Obligated entities in the state of Orissa, the obligated entities include :
    • Distribution Licensee or any other entity procuring power on their behalf and;
    • Any person consuming electricity

a)      Generated from Conventional Captive Generating plant having capacity of 1MW and above for his own use and or

b)      Procured from conventional generation through open access and third party sale.

  • Every Obligated Entity shall meet its RPO target from its own Renewable Sources or by purchase of REC’s or procurement of power from other developer of Renewable Energy Sources.
  • The minimum quantity of energy to be procured from Renewable Sources by obligated entity is mentioned in the table below :

  • The Cross Subsidy Surcharge is exempted for procurement of power through third party sale from Renewable Energy Sources.
  • No Banking facility is provided for supply (Third Party sale) from Renewable Energy Sources through open access.
  • The energy generation from Third Party sale in each 15 min time block shall be set off against the captive/open access users’ consumption in the same 15 min time block.

In closure we would like to say that this regulation would help the state of Orissa to comply with its solar and non solar RPO targets and promote the procurement of renewable energy.

The detailed document can be accessed here.

National Offshore Wind Energy Policy 2015

The Ministry of New and Renewable Energy released its first ever National Offshore Wind Energy Policy on 1st October 2015. India has already achieved significant success in the onshore wind power development with about 24 GW of wind energy capacity installed. The introduction of this policy, will replicate the success of onshore wind power development in the offshore wind power development.

Following are some of the key points of the policy:

  • The offshore wind farms can be built in the following two maritime areas :
    • Indian territorial waters, which generally extend up to 12 nautical miles (nm) from the baseline; and
    • Exclusive Economic Zone, beyond the 12 nm limit and up to 200 nm, where India has right to construct structures such as wind farm installations.
  • The MNRE will act as the “Nodal Ministry” for development of Offshore Wind Energy in India and will work for Development and Use of Maritime Space within the Exclusive Economic Zone.
  • The National Institute of Wind Energy will act as the “Nodal Agency” for the development of offshore wind energy and will call for proposals under International Competitive Bidding (ICB).
  • A preliminary assessment suggests potential to establish around 1 GW capacity wind farm each along the coastline of Rameshwaram and Kanyakumari in Tamil Nadu.
  • The table below gives the essential elements and objectives of the policy for development of offshore wind farm:

Thus with optimum exploitation of the offshore wind energy and this supportive National Offshore Wind Energy policy regime India will be able to meet its energy demands and will contribute to fulfill the missions of National Action Plan on Climate Change.

The Policy can be accessed here.

India’s Energy Mix to Have 40% Renewable Sources by 2030

The Renewable energy holds a share of 12% in the current energy mix of India. As a part of its contribution under the Paris Climate Change Agreement, India sets target of achieving at least 40% of India’s total power capacity from renewable sources by 2030.

If the National Democratic Alliance approves the proposal then India would be looking to building a total of 350 GW of solar and wind power by 2030. This ambitious target will help India offer a 35% reduction in the greenhouse gas emission intensity of its economy below 2005 levels by 2030.

The above update has been taken from Business Standard’s article published on 22nd September, 2015 which can be accessed here.

Three States to Kick Start Power Sector Reforms

A joint statement was released on 21st September 2015, by Goa, Uttarakhand and Meghalaya where these states have signed a joint statement of reforms with the Central Government in order to enable 24×7 power supplies to consumers.

The joint statement highlighted the five-point agenda for these states:

  • An increase in power generation from local energy sources
  • An improvement in the inter-state transmission network,
  • Enhancement of the use of renewable energy and
  • Enhancement of the use of energy-efficient measures.
  • Strong communication, information technology and monitoring division.

Fulfilling these agendas will improvise the quality of life of the consumers and also promote economic developments overall.

The above update has been taken from Business Standard’s article published on 22nd September, 2015 which can be accessed here.

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