TNERC Draft Intrastate Regulation on Forecasting and Scheduling of Wind and Solar Generating Stations

The Forum of Regulators recently announced a Model Regulation on intra-state RE deviation settlement regulation which will cover all the existing and upcoming wind and solar power producers in India. States like Karnataka and Madhya Pradesh electricity regulators have already announced their draft regulation on wind/solar forecasting and scheduling, in line with FOR’s Model Regulation.

Tamil Nadu Electricity Regulatory Commission also, recently came up with its first Intrastate draft regulation on Forecasting and Scheduling of Wind and Solar Generating stations.

Detailed Analysis

The draft regulation broadly covers the following aspects:

  • Mandatory forecasting and scheduling of all the existing and upcoming wind/solar power generation at interstate level.
  • The state load dispatch centers are also mandated to carry out their own parallel forecasting mechanism primarily to manage secure grid operations.
  • A wind/solar power producer can either choose to have his own forecast or opt for SLDC’s forecast for the scheduling purpose. The deviations arising due to a difference between the scheduled generation and actual generation will be settled as per the penalty mechanism adopted under the respective regulations.
  • Similar to the FOR’s Model Regulation the Qualified Coordinating Agency (QCA) will manage the entire exercise of forecasting, scheduling, energy metering, telemetry, deviation management and penalty de-pooling at every wind/solar pooling station.
  • In deviation Settlement, the deviations and errors are quantified w.r.t available generation capacity at the time of scheduling. This will reduce the absolute error magnitude especially during low wind/solar seasons and thus reducing the penalty amount that a generator may have to absorb.
  • A permissible deviation band of +/-10% (w.r.t available capacity) and a permissible deviation band of within 5 % (w.r.t available capacity) have been permitted without any penalty separately for all the existing wind and solar power producers respectively.
  • Deviation Charges in case of under or over-injection by wind generators, for sale of power within the State.
  • Deviation Charges in case of under or over-injection by solar generators, for sale of power within the State.
  • Though the draft regulation is in line with the Model Regulation. The table below depicts how the two regulations vary with each other in terms of the Deviation charges and the deviation band for solar and wind generators :
We feel that though this regulation will help to streamline the large scale grid integration and security and benefit intrastate sale of power but it is a much more stringent regulation than the other regulations, since the error deviation has been narrowed down from +/-15% to +/-10% for Wind and +/-5% for Solar.

The Draft Order can be accessed here.

 

International Solar Alliance

The 2015 United Nations Climate Change Conference, COP 21 was held in Paris France, from 30 November to 12 December 2015. The COP21 witnessed a major alliance (ISA- International Solar Alliance) between India and France, towards their effort to combat the impacts of Climate Change.

The ISA which is a partnership of 120 solar rich countries was officially and jointly launched by Prime Minister Narendra Modi and French President Francois Holland on 30th November 2015, in Paris. The foundation-laying ceremony of the Interim Secretariat of ISA was done by both on January 25, 2016 at the National Institute of Solar Energy in Gurgaon. It has been confirmed that the ISA headquarters will come up on five acres of land in the campus of the National Institute of Solar Energy (NISE).

India plays a major role in this since Government of India will support ISA by hosting its secretariat for an initial period of five years and thereafter it would be generating its own resources and become self-financed. The total financial support by India, including cost of the land, will be Rs 400 crores while the French president has committed to the amount of 300 million Euros for the initial projects of the ISA

Objective:  The objective of the alliance is

  • To create a collaborative platform for increased deployment of solar energy technologies, this will enhance the energy security & sustainable development.
  •  Improve access to energy and opportunities for better livelihoods in rural and remote areas.

ISA plans to work on five key areas to achieve the above objectives:-

  • Promote solar technologies and investment in the solar sector to enhance income generation for the poor and global environment:
  • Formulate projects and programmes to promote solar applications:
  • Develop innovative Financial Mechanisms to reduce cost of capital:
  • Build a common Knowledge e-Portal:
  • Facilitate capacity building for promotion and absorption of solar technologies and R&D among member countries

Following the International Solar Policy, Ministry of New and Renewable Energy has also promised to come up with a policy next month for creation of special solar zones across India having an area of 100 sq.km at least. The MNRE Secretary said that they would also explore option of hybrid zones which would have possibility of setting up both wind and solar power projects.

OERC Draft DSM Regulations 2015

In order to maintain grid discipline and grid security as envisaged under the Indian Electricity Grid Code and Orissa Grid Code, Orissa released its first draft Deviation Settlement Mechanism Regulations on 23rd September 2015.

The Regulations are applicable to:

  • All Generating Stations including Solar and Wind Generators in the state of Orissa, except the Inter-state Generating Stations connected to Inter-State Transmission system.
  • All CGPs in the state of Orissa, with capacity of 5 MVA and above
  • All Distribution/Trading Licensees in the state of Orissa.
  • All Open Access Customers (Above 5 MW) in the state of Orissa.

The charges for the Deviations for all the time-blocks has been classified as:

A. For all generators except wind and solar, and all buyers in the state

The charges payable for deviation, will be UI linked and is worked out on the average frequency of a time-block at the rates specified as per CERC (Deviation Settlement Mechanism and related matters) Regulations, 2014 and amendments thereto.

B. For the Intra State Wind and Solar Energy Generators

These entities will be treated differently, and the error resulting from the deviations, will not be penalized based on the UI mechanism, but by a mechanism very similar to the recent amendments to CERC Inter State Forecasting, Scheduling and Imbalance Handling Regulation of 2015.

The detailed deviation linked penalty mechanism has been proposed as below:

The commission has invited comments and suggestions till 22nd October 2015.

The relevant regulation can be accessed here.

MoP at odds with proposal of Commerce Ministry on imposing solar duties

Power minister Mr. Piyush Goyal has reportedly given a statement which goes against the proposal of Ministry of Commerce to impose solar duties on imported equipments. An article in Bloomberg says that as per Mr. Goyal, solar duties will undermine PM’s vision of fostering solar generation in the country. He adds that India currently doesn’t have adequate solar manufacturing capacity to catch up with national targets. India’s transport minister Mr. Nitin Gadkari also holds same views.

The decision must have brought a lot of cheer to lobby and industry associations striving hard against imposition of such duties. A background of the case is detailed below -

Background –

Directorate general of anti-dumping & allied duties (DGAD) under Ministry of commerce and Industry had recommended to impose steep anti-dumping duties on import of solar products like US, China, Malaysia, Taiwan etc. By such levy of duties, DGAD wants to secure favourable market condition for domestic solar manufacturing cos. The DGAD has recognized that despite huge potential of manufacturing, India has negligible capacity operational.  To bolster the fate of Indian solar equipment manufacturers, India had introduced DCR in NSM, but following a dispute with US at WTO, some other means to check dumping was required.

Although DGAD paid heed to complaints raised by Indian manufacturing association, many solar experts across India fear that imposing of such duties is going to adversely affect the growth of solar sector in India.  Intense lobbying against such a decision has been observed. MNRE is also voting against imposing anti-dumping duties.

It is expected that anti-dumping duties are going to make projects selected under open category of NSM also unviable. On the flip side, Indian manufacturing still lags on technological front and the quality of products domestically manufactured is inferior to their imported counterparts. Solar power developers argue that both quality and price is going to be affected if the Min. of Commerce & Industry favours levy of anti-dumping charges.

Recent media articles can be accessed -

PV Tech

Hindu Businessline 

Moneycontrol

Economic Times

JNNSM Phase 2 Batch 1 bid results

We thank solar industry expert – Mr. Gopal Lal Somani, who has graciously provided his inputs and comments on the results of bidding process. 

The MNRE had authorized Solar Energy Corporation of India (SECI) to implement NSM Phase 2 program. In light of this, SECI auctioned 750 MW of solar energy projects and announced the financial bid results on 21st February 2014. In the subsequent paragraphs, we have covered these results in detail.

A total of 68 bids were received from 58 developers, covering 122 projects with a cumulative capacity of 2,170 MW. Of this, 36 projects with a capacity of 700 MW opted to bid under the Domestic Content Requirement (DCR) part A of the bidding process and the remaining 86 projects with a capacity of 1,470 MW opted for the open category Part B. Each part eventually got allocated an equal 375 MW capacity projects. Bids by PMP Auto Components, Zandu Realty, Golden Crystal and Green Energy Wind were cancelled as they did not meet the techno-commercial criteria. The bid by Moser Baer was cancelled as they could not provide bank guarantee.

Figure 1 : Total projects & cumulative capacity that participated in bidding of JNNSM Phase 2 Batch 1.

The financial bids followed a technical qualification round. Developers competed in the reverse-bid auction in two parts. Half the 750MW available had a mandatory domestic content requirement (DCR), and the other 375MW was left open with no domestic requirement.

The US filed a complaint to the World Trade Organisation earlier this month claiming that it should have equal access to the procurement round. First Solar had dominated the thin film market in Phase I Batch 1 & 2; courtesy a loop hole in previous JNNSM bids. The company which worked with the US Export-Import Bank on a number of projects, missed out its share in this bidding cycle. India in reply to allegations from US said – that First Solar had missed out “only based on the bid submitted by them. There are no political considerations. India cannot be blamed to be investment unfriendly”.

The reverse bid mechanism included bids for viable gap funding (VGF), a government capital subsidy to provide up to 30% of JNNSM project costs subject to maximum Rs. 250 lac / MW. There is a cap of up to 50MW per developer for funding applications.

The lowest bid under the DCR was for INR 13.5 million (US$0.2 million) by Swelect for 10MW and highest bid has been INR24.9 million (US$0.4 million) by IL&FS Renewables also for 10MW. Under the DCR, another 15 PPAs are to be signed for 21 projects, totalling 375MW.The lowest and highest VGF sought for projects outside the DCR were INR 1.7 million by Gujarat Power Corporation Limited (10 MW) and INR 24.9 million by Madhav Infra (10 MW) respectively. The highest bid under the non-DCR category is INR 24.5m (USD 0.4m) by Tata Power Solar. Under the non-DCR category, 15 project developers will be invited to sign power purchase agreements (PPAs) for 24 projects totalling 375 MW. Part A with the DCR oversubscribed twice whereas the non-DCR (open) part B four times over. The entire capacity of 750 MW will be converted into Letters of Intent (LOI) likely to be confirmed to respective winning bidders by end of February.

Figure 2 : Maximum-Minimum VGF sought in JNNSM Phase 2 Batch 1.

Average VGF (DCR) – 22.14 million INR, Average VGF (non-DCR) – 15.7 million INR

The average project size per developer would be around 25 MW and top solar potential states i.e. Gujarat and Rajasthan are the most preferred locations opted by most developers for implementation.

VGF payments are estimated for non-DCR projects to cost INR 97 billion (US$1.5 billion), whereas the DCR bids are estimated to cost much more at INR 160 billion (US$2.5 billion).

The difference in government funding of INR 63 billion (US$1 billion), has sparked questions from solar industry analysts who are of the view that this funding should have been extended as direct funding to encourage domestic manufacturing instead.

It is speculated that some of the winning firms who made aggressive bid would not sign the PPA and therefore the figures will not be final until PPAs are signed, which is expected to happen by March/April 2014.

21st February 2014 was a momentous day for solar in India as financial bids were opened at SECI.

It may also be noted that the tariff for the NSM Phase II batch I projects were fixed at Rs. 5.45/kWh while the bids were called for Viability Gap Funding (VGF) required by the developer.

Bidders enthusiasm and aggression in bidding perfectly matched with NSM Phase I Batch 1 and 2 success stories. This he infers is due to declining cost trends in EPC cost, more reliable players in the market, lenders confidence in funding on higher efficiencies/output, improved performance, improvised O&M (evidently observed in Phase I projects) and bankable PPA with SECI.

The lowest bid for VGF has been made by GPCL (Gujarat Power Corporation Ltd), a Gujarat State company; also the promoters of Gujarat Charanka Solar Park. This was the first solar park in the country with more than 500MW installed capacity. The VGF bid by GPCL was a jaw-dropping Rs. 17.5 lakhs/MW in the non-DCR category. The next bid in the non-DCR category was Rs. 73.29 lac /MW by Sun-Edison, a US based developer.

Amongst wide variance in bidding amounts from various bidders in Part A and Part B, there were some bids in Part A which matched with those of Part B, which is an indication that VGF can now be capped at INR 135 Lac/MW and going forward paves the way for subsequent bidding cycles conducted for entire capacities under VGF as it creates more jobs and thrives economic development of India.

This will also allow large scale solar energy deployment and boost local solar industry for sustainable development.   The success of this bidding has reconfirmed the interest of investors in solar projects and is a big booster from crawling solar market.

The heavy VGF discounting seen in Part A and Part B is almost unbelievable but allows Solar Power emerge  as a clear winner.

“Achieving status of financial closure by all winning bidders would be a world class result ever seen elsewhere in emerging markets.”

-

For a brief profile of Mr. Somani please visit page 4 of our NL Vol. 39

Kerala finalizes its Solar Energy Policy 2013

Kerala is the latest state to  join the league of states (TN,AP,Gujarat,MP, Rajasthan) which have final state solar energy policies in place. On 25th Nov 2013, the state finalized its state solar policy. The following are the highlights of the policy:

  • Kerala aims to have an installed capacity of 500 MW till 2017 and of 2500 MW by 2030. The policy will remain in force till any further solar energy policy is introduced.
  • Net-metering is available for all agencies that consume grid power and have some solar installations with govt. subsidies. KSERC will notify the pooled cost of power purchase and feed-in-tariff for procurement by KSEB.
  • Solar procurement obligation (SPO) is mandated for all HT/EHT consumers to the tune of 0.25 % till March 2015 (with annual increase of 10%).  April 2015 on-wards the same shall become applicable for commercial & LT consumers also.
  • Incentives -
  1. No open access charges  for wheeling of solar power within the state.
  2. No wheeling charges and T&D losses for solar captive generators.
  3. Electricity Duty exempted for projects under the policy.
  4. Banking facility (conditional) available for captive generators.
  • ANERT shall be the nodal agency for facilitating the provisions under the policy.

For other provisions please refer the policy document  - here

Media articles can be assessed on the following links:

Hindu Businessline

The Hindu

 

75% local content in JNNSM 2nd Phase – MNRE

Against the backdrop of the recent episode in which the United States dragged India in World Trade Organization (WTO) for local content requirement in JNNSM Ist phase, the ministry of new and renewable energy has come out with a bold step to incorporate 75 % local content in phase 2 of its solar scheme. Mr. Farooq Abdullah said – “We want to encourage domestic industry also. The bidding would start in the coming month”, giving signs that India is still keen in developing local green manufacturing market and expecting that WTO will turn US’s allegation in its favor.

Another important statement given with respect to the fledgling wind energy market in India was to reinstate the withdrawn accelerated depreciation mechanism. Hon’ble minister was spotted saying that the proposal for reinstatement would be taken up to the cabinet and the same will be pushed. He also asserted that MNRE has taken cognizance of the predicament of investments in wind energy and how the same is affecting the small and medium scale enterprises, which house a high capacity of captive wind power in the nation. Our blog-post on petition filed by IWPA recently can be assessed here.

Relevant media articles -

The Hindu 

EFY Times

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