PETITION ON BACKING DOWN ORDERS ON ELECTRICITY GENERATION DISMISSED BY RERC

A petition has been filed by Renew Wind Energy, Ostro Renewables, Mytrah Vayu and CLP Wind Farms against Rajasthan SLDC and Rajasthan Rajya Vidyut Prasaran Nigam Ltd against the unlawful and unpredictable instructions issued by SLDC for backing down of generation of electricity. Wind generation companies argued that SLDC had issued backing down orders in the past giving grid stability as one of the reason. They also pointed out that the backing down orders were random in nature and were given despite providing regular day-ahead forecasts to SLDC

 

To this the SLDC had responded that such orders were given to RE generators only after they had been given to the generators of conventional energy. Also, the reasons for the orders had been duly noted by the SLDC to ensure transparency.

 

The commission held a hearing and after which, it made the decision to dismiss the petition and SLDC has been warned to issue backing down orders to RE generators strictly based on the Grid Code and a record of backing down and its reason shall be maintained.

 

The order can be accessed here.

WIND TARIFF HAS HIT A NEW LOW IN A REVERSE AUCTION HELD BY GUVNL

E-reverse auction for grid connected wind project of 500 MW in Gujarat which took place on 21 December 2017 saw the tariffs dipping to a historically low value of Rs 2.44/kWh. This is lower than the price determined in the second auction for SECI’s 1 GW wind capacity by Rs 0.21/kWh.

 

The lowest tariff was quoted by Sprng Energy Pvt Ltd and K.P. Energy Ltd for capacities of 197.5 MW and 30 MW respectively.  Following graph depicts the trends followed by wind tariff in this year:

 

COMPETITIVE BIDDING POSES A RISK ON THE FUTURE OF WIND ENERGY

The wind energy sector is in a distressed situation after the Union Government’s ‘tariff-based competitive bidding’ mechanism. Earlier, the SERCs used to fix ‘feed-in tariffs’ based on which, the the wind energy companies would sign PPAs with the distribution companies. Since the time this mechanism has changed (February), the state governments are not ready to sign PPA at the higher FiT rates, neither are they ready to take the competitive bidding route, thereby preventing any wind power installations from happening.

This has left the wind industry in a fix. Experts within the industry are predicting that there won’t be any new installations till March 2018. Specially the turbine manufacturers will suffer losses at least in this financial year and so will the image of the wind energy.

The article can be accessed here.

Draft Policy for Repowering of the Wind Power Projects

The Ministry of New & Renewable Energy in consultation with various stakeholders including the Industry and States recently came up with the Draft Policy for Repowering of the Wind Power Projects with an objective to promote optimum utilization of wind energy resources. Some of the key pints of the policy are mentioned below:

  • All the wind turbine generators with the capacity of 1MW or below would be eligible for repowering.
  • The Policy offers incentives in form of an additional interest rate rebate of 0.25% over existing rebate available to the new wind projects by IREDA.
  • Secondly through benefits like Accelerated Depreciation or GBI that would be made available to the repowering project.
  • The power generated corresponding to average of last three years’ generation prior to repowering would continue to be procured on the terms of existing PPA.
  • Augmentation of transmission system from pooling station onwards to be carried out by the respective STU.
  • During the period of execution of repowering, wind turbines would be exempted from not honoring the PPA for the non-availability
  •  Similarly, in case of repowering by captive user they will to be allowed to purchase power from grid during the period of execution of repowering.

 

The Policy can be accessed here.

 

Maharashtra (MSEDCL) Wind Energy Policy, 2014

Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL) has come up with its wind energy policy in consultation with the MEDA (Maharashtra Energy Development Agency) in order to promote the wind energy generation in the state. The policy was notified on 3rd June, 2014, and will be applicable on projects commissioned in FY 2014-15 and onwards.

This can be taken as a positive step by MSEDCL towards RPO compliance. Under the PPA, the entire power produced will be sold to MSEDCL.

In our opinion, since power is to be sold at tariff determined under PPA with MSEDCL, therefore the projects cannot avail REC’s.

MSEDCL has also set up time limits for connectivity permission as given below:


Processing Fee –
The wind power developer has to submit a non-refundable processing fee of Rs. 1.00 Lac per MW of grid connectivity.Extension of 6 months shall be granted on valid grounds as per directives of MSEDCL. If the generator fails to commission the project within extended period, they will have to re-apply for grid connectivity.

Security Deposit – The wind project developer has to submit a Performance Bank Guarantee of Rs. 5.00 Lacs per MW for sanction of gird connectivity, towards security deposit.

Wind Power Scheduling – It is mandatory for the generator to forecast and schedule the power produced, as per CERC guidelines.

More details on the order can be read here.

Maharashtra revises procedures for Wind Open Access

Keys points on Revised Procedure for Wind Open Access in Maharashtra:

1.i) For wind open access application process the documents required would be:

  • Last 3 months energy bills
  • Consent letter from the wind generator
  • Last 3 months generation credit note
  • Declaration regarding installation of SEM at both ends
  • Last open access permission of consumer / generator
  • OA through trader, copy of valid Trading License and MoU between the trader & consumer/generator
  • For Captive use, Chartered Accountant’s certificate regarding 100% ownership of the wind power project or Equity share holding and undertaking regarding more than 51 % self-consumption

ii) Complete open access application to be submitted well in advance i.e. preferably 30 days prior to the date of commencement of open access.

iii) If an open access consumer is situated in the License area of other utility / Distribution Licensee then copy of NOC / open access permission issued by the concerned Distribution Licensee shall be submitted along with the open access application.

iv) If an open access consumer fails to achieve the Maximum Demand equal to or greater than eighty (80) per cent of the threshold level, the open access permission will be cancelled and further he shall be liable to pay, to MSEDCL, a penalty equal to two times the wheeling charges for the financial year or part thereof for which he had failed to achieve such Maximum Demand

v) If the contract demand of the open access consumer is in the range of 1000 KVA– 1500 KVA then Renewal of Open Access Permission shall be subject to use of Maximum Demand equal to or greater than eighty (80) per cent of the threshold level during previous open access period

2)Eligibility conditions:

  • An open access consumer can avail power from a Generating Company only, sourcing power from more than one / multiple generating companies will not be processed
  • Declaration in advance by OA consumer for sourcing power from other sources or generating company.
  • Open Access permission will not be granted to the consumers availing single point supply and sub distributing it further to multiple consumers. Such consumers are required to apply for Distribution Franchisee through MoU route as per relevant MERC & APTEL orders
  • The open access consumer will be entitled to seek open access for sourcing 100% power generated from a wind power project.

 3) Metering:

 Installation of Special Energy Meter (SEM) at both ends i.e. at generation end and at consumption end of wind energy shall be mandatory to seek open access.

4) Energy Accounting & Billing:

  • Joint Meter Reading (JMR), the monthly Generation Credit Notes (GCN) will be issued by the field office in due course of time
  • The open access consumer/ generator shall arrange to pay the requisite open access charges (Wheeling charges, transmission charges, operating charges, charges for import of energy & KVARH charges) and collect the monthly GCN from field office regularly
  • Late fees of Rs. 5000/- will be recovered if the GCN is collected one month later than JMR. Similarly, late fees of Rs. 6000/- will be applicable for issuance of GCN after 2 months from JMR.
  • The GCN shall not be issued after 3 months from the Joint Meter Reading and the energy corresponding to the GCN shall be treated as lapsed
  • The field office, where the open access consumer is situated, will give corresponding TOD time slot – wise credit adjustment in the monthly energy bills of the open access consumer.
  • Open access consumer has to pay CSS charges for third party sale, CSS not applicable for captive.

5) Banking:

MSEDCL, for the time being, has decided to provide the banking facility in part i.e. the wind generation units will be allowed to get carried forward for getting adjusted in next energy bills if could not be adjusted in same month till the end of that financial year, but the surplus units, if any, at the end of financial year will not be purchased by MSEDCL.

6) Change of option not permitted during validity period:

OA consumer will be permitted only to change the option from open access to Sale to MSEDCL during the validity period of open access permission, no other option allowed.

7) Wind energy injected into the grid during the intervening period for which OA permission could not be granted due to late submission of OA application or change of option by wind open access generator from open access to Sale to MSEDCL during the validity period of open access permission, will be purchased by MSEDCL at MERC tariff rate from the wind generators.

  • Gr I: 10 % less than that of GR.II MERC rate of Rs. 2.52 per unit
  • Gr II: Rs. 2.52 per unit.
  • Gr III: As per MERC order dated 24.11.2003
  • Gr IV: Will not be purchased, wind energy will be treated as lapse.

Contributed by – Nishesh Pandit

WEGs move to Court against RRF Mechanism

Wind energy generators (WEGs) of our nation have recently moved Delhi High Court against the central regulator (CERC) for implementation of RRF mechanism; under which the generators are required to participate in scheduling and forecasting of their power generation on a day-ahead basis. Under the renewable regulatory fund (RRF) mechanism, a generator whose schedule deviates from the forecast over the range of -30 % to +30 % will have to face financial penalties based on system frequency. The schedule to be submitted will be for every 15 minutes i.e. for a total of 96 time blocks during a particular day. For more information on the RRF mechanism, click here.

The Hon’ble CERC in an effort to improve grid operation and to enhance integration of renewable power in the grid, had finally mandated the mechanism to be effective from 15th July 2013; followed by prior deferments on two occasions. WEGs assert and fear that being in a range +- 30 % will be a daunting task and will mulct close to 12-15 % of their profits as reported in an article of  The Hindu. The petition is filled by Wind Independent Power Producers Association (WIPPA) and the association has asked for more time. Although they agree to submit the forecasts and schedules on a daily basis, devoid of any penalty mechanism in place.

With RRF mechanism already in effect since 15th July 2013, with a hand-full of participants only, it will be interesting to analyse the after-effects once the Regional Power Committees (RPCs) come out with energy accounting statements for the very first week.

For more details on the mechanism and relevant services provided by us, you may refer to our monthly newsletter “OPEN ACCESS Vol. 32″.

India slips to eighth spot in RE attractive index

India’s overall ranking slipped from previously fourth position to eighth position recently in the world renewable energy attractive index as per Ernst & Young survey. This survey was for first quarter of 2013. The reason for such a decline in overall ranking of India is the antagonistic policy regime, weak enforcement of RPO and high cost of finance.

However India is said to be a “Hot Spot” as it aims to double its renewable energy capacity and is only next to Belgium in terms of priority this sector receives. The wind energy sector after with-drawl of Accelerated depreciation has evidently enervated the sector. All recent wind energy related developments can be assessed in our previous blogs – Blog1Blog2.

In a similar development with regards to wind energy generation MNRE inks to resume a break for depreciation on wind farms and boost a subsidy for alternative generation, though the same is pending for cabinet approval. The proposal is also put up for increasing the amount of GBI. For detailed article on this development by Bloomberg Click Here.

Relevant media article click here.

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

Wind majors selling assets to avert indebtedness

Wind power majors of the likes of Suzlon, DLF etc. are now looking for buyers who can buy their wind portfolios which will provide an opportunity for the former to raise capital and abrogate a situation of indebtedness.  Regulatory failure has left operating a wind farm a costly affair. On the other hand, the buyers are usually cash rich companies planning an expansion of  their green portfolios. For these buyers, owning an operating farm poses less risk and higher returns in terms of already established performance.

According to a study by Bloomberg, DLF (a property developer company) agreed to sell 217 MWs of projects for 5.23 billion rupees. Ushdev Power Holdings Limited has plans to boost its wing generation capacity and is in talks with Suzlon Energy Limited to acquire 400 MWs over the next 15 months. A detailed article by Bloomberg, can be assessed by clicking here.

In the past few days there have been various petitions filed by wind bodies like IWPA requesting to reinstate the accelerated depreciation scheme (Click Here). WEGs are looking for an urgent regulatory push from the government to regain the sector’s sheen.

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