Conventional and Non Conventional Energy

8/13/2019 Conventional and Non Conventional Energy

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Conventional Sources of Energy I. The sources of energy which have been in use for a long time,

e.g., coal, petroleum, natural gas and water power.II. They are exhaust able except water.III. They cause pollution when used, as they emit smoke andash.IV. They are very expensive to be maintained, stored andtransmitted as they are carried over long distance throughtransmission grid and linesNon-Conventional Sources of Energy I. The resources which are yet in the process of development

over the past few years. It includes solar, wind, tidal, biogas, andbiomass, geothermal.II. They are inexhaustible.III. They are generally pollution free.IV. Less expensive due to local use and easy to maintain.


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Renewable Energy Policies and Regulations in India


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Background of the Ministry of Non-conventional EnergySources (MNES)

Early 70 s: search for new and renewable

energy resources that would ensuresustainable development and energysecurity.1981: GoI establishes CASE (Commissionfor Additional Sources of Energy) in theDST1982: CASE formally incorporated in the

newly founded DNES (Dept of Non-conventional Energy Sources).1992: DNES became MNES (Ministry ofNon-conventional Energy Sources)


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Policies, Procedures and Incentives

PoliciesPrime Minister of India has announced a

goal of 10% share for RE or 10,000 MW

in the power generation capacity to beadded during the period upto 2012. An exclusive and comprehensive Policy on

RE has been proposed aiming to raiseRE capacity to 100 GW by 2050


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Policies, Procedures and Incentives

Renewable Energy Policy A comprehensive RE Policy for all-rounddevelopment of the sector, encompassingall the key aspects, has been formulated byMNES. The broad objectives envisaged inthe policy are:Meeting the minimum energy needs through RE

Providing decentralised energy supply inagriculture, industry, commercial and householdsectors in rural and urban areas, andProviding grid quality power.


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Policies, Procedures and IncentivesPolicy for All-round Development of Renewable Energy

Policy measures aim at overall development and promotion ofrenewable energy technologies (RETs) and applications.

Policy initiatives encourage private as well as FDI includingprovision of fiscal and financial incentives for a wide range ofRE programmes.

Further, the procedures have been simplified, and provideexcellent opportunities for increased investment intechnology up-gradation, induction of new technologies,market development and export promotion.


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Foreign Investment policy

Foreign investors can enter into a joint venture with anIndian partner for financial and/or technical collaborationand for setting up of RE-based power generation projects

Hundred per cent foreign investment as equity ispermissible with the approval of the Foreign InvestmentPromotion Board (FIPB).

The Government of India also encourages foreign investorsto set up RE-based power generation projects on Build, Ownand Operate (BOO) basis . Various Chambers of Commerceand industry associations in India provide guidance to theinvestors in finding appropriate partners


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Industrial policyMNES is promoting medium, small, mini and micro enterprises

for manufacturing and servicing of various types of REsystems and devices.

Industrial clearances are not required for setting-up of an REindustry

No clearance is required from Central Electricity Authority(CEA) for power generation projects up to Rs 1,000 million

A five-year tax holiday is allowed for RE power generationprojects

Soft loans are available through IREDA for RE equipment

manufacturing


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Industrial policyFacilities for promotion of Export Oriented Units (EOUS) are

available for the RE industry

Financial support is available to RE industries for R&Dprojects in association with technical institutions

Private sector companies can set up enterprises to operate aslicensee or generating companies

Customs duty concession is available for RE spares andequipment, including those for machinery required forrenovation and modernisation of power plants. Excise duty on a number of capital goods and instruments in the REsector has been reduced or exempted


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Policies by State GovernmentsSome states are providing concessions or exemption in state

sales tax. These rates vary widely from state to state and

between different technologies.

More than 17 states have so far announced policies forpurchase & support of electrical energy generated through

various RE sources

More than 11 state regulators have under the NTP 2006,passed orders for a minimum offtake of renewable power by

distribution licensees (called RPOs)

A no. of states have introduced policies for purchase ofelectricity from Biomass, Wind Energy and Small Hydro

Power Projects.


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IncentivesIncentives for Investing in RETsMNES provides financial incentives, such as interest and capital subsidy

Soft loans are provided through:IREDA, a public sector company of the MinistryNationalised banks and other financial institutions for identifiedtechnologies/systems

The government also provides various types of fiscal incentives for the REsector, which include:Direct taxes - 100 per cent depreciation in the first year of theinstallation of the projectExemption/reduction in excise duty

Exemption from Central Sales Tax , and customs duty concessions on theimport of material, components and equipment used in RE projects


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Incentives

Direct TaxesConcession under Income Tax RulesUnder Income Tax Rules number of concessions are

available to the non-conventional energy sector

Financial IncentivesDetails of various schemes on financial incentives and

promotional measures provided for different renewableenergy technologies categorised asEnergy from Waste, Solar Photovoltaic Power, SolarThermal Systems, Biogas Plants


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Electricity Act 2003The Act 2003 has several enabling provisions, with a view to

promote accelerated development of non-conventionalenergy based power generation

Section 86(1) (e), The State Commission shall

promote co-generation and generation of electricityfrom renewable sources of energy by providingsuitable measures for connectivity with the grid andsale of electricity to any person, and also specify,

for purchase of electricity from such sources, apercentage of the total consumption of electricity inthe area of a distribution licence


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EA 2003Section 3 (1), Government of India (GoI) shall, from

time to time, prepare the National Electricity Policyand Tariff Policy, in consultation with the StateGovernments for developing the power systembased on optimal utilisation of resources such as

coal, natural gas, nuclear, hydro, and renewablesources of energy.

Section 4, GoI shall, after consultation with the StateGovernments, prepare a national policy, permittingstand-alone systems (including those based onrenewable sources of energy) for rural areas.


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Legal Frame Work for Renewable Energy

Section 61 (h) of the Act - SERC may specifythe terms and conditions for thedetermination of the Tariff for co-generationand generation from the Renewable EnergySources

May be guided by the Central Commission.


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The National Action Plan on Climate Change (NAPCC) aims at increasing the share of RenewableSources of Energy from 5% of the total Energy Mixin 2010 to 15% by 2020

Ministry of Power, GoI Resolution dated 20.01.2011 SERCs shall also reserve a minimum percentagefor purchase of Solar Energy from the date of

Notification in the Official Gazette (22.01.2011)which will go up to 0.25% by end of 2012-12 andfurther upto 3% by 2022.

Policy and Regulatory Frame Work for Renewable Energ


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RE Generation in the country

Renewable Energy Installed Capacity PotentialWind Power 13066 48756

Small Hydro Power 2939 14292

Biomass Power 997 8680

Bagasse Cogeneration 1562 5000

Waste to Power 72 7000

Solar Power (SPV) 18 200000

Total 18654 283728Capacities in MW as on31.12.10

Source: MNRE


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Quantum of RE required to meetNAPCC target (BU)


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Technology wise capacity additionrequired (MW)


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Implementation and Delivery mechanismMinistry: encouraging the setting up of grid-interactive power

projects based on renewable energy through privateinvestment route.

State Nodal Agencies: are responsible for promotion anddevelopment of private sector projects by way of providingnecessary clearances, allotment of land, allotment ofpotential sites in case of SHP projects and facilitating powerpurchase agreements etc.

SERCs: determining tariffs.

Leading financial institutions and banks: financing renewableenergy based power projects.


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CERC (Terms & Conditions forrecognition & issuance of RECfor RE Generation)Regulations,

2010


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2. Definitions and Interpretation

Act means the Electricity Act, 2003 Certificate means the renewable energycertificate issued by the Central Agency in

accordance with the procedures laid down byit and under the provisions specified in theseregulations eligible entity means the entity eligible to

receive the certificates under theseregulations


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2. Definitions and Interpretation floor price means the minimum price asdetermined by the Commission in accordance withthese regulations at and above which the certificatecan be dealt in the power exchange

forbearance price means the ceiling price asdetermined by the Commission in accordance withthese regulations within which only the certificatescan be dealt in the power exchange

obligated entity means the entity mandated underclause (e) of subsection(1) of section 86 of the Act tofulfill the renewable purchase obligation


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2. Definitions and Interpretation preferential tariff means the tariff fixed by the Appropriate

Commission for sale of energy, from a generating station usingrenewable energy sources, to a distribution licensee

renewable purchase obligation means the requirementspecified by the State Commissions under clause (e) of sub-section (1) of section 86 of the Act, for the obligated entity topurchase electricity from renewable energy sources;

State Agency means the agency in the concerned state asmay be designated by the State Commission to act as theagency for accreditation and recommending the renewableenergy projects for registration and to undertake such functionsas may be specified under clause (e) of subsection (1) ofsection 86 of the Act;

&


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RPO & RECThe Electricity Act, 2003, the policies framed under the Act, as alsothe National Action Plant of Climate Change (NAPCC) provide for aroadmap for increasing the share of renewable in the total generationcapacity in the country.

However, RE sources are not evenly spread across different parts ofthe country. In some states there are avenues for harnessing the RE

potential beyond the RPO level fixed by the SERCs. However, thehigh cost of generation from RE sources discourages the localdistribution licensees from purchasing RE generation beyond the RPOlevel mandated by the State Commission.

It is in this context that the concept of REC assumes significance. Thisconcept seeks to address the mismatch between availability of REsources and the requirement of the obligated entities to meet theirrenewable purchase obligation . It is also expected to encourage theRE capacity addition in States where there is potential for REgeneration as the REC framework seeks to create a national levelmarket for such generators to recover their cost.


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3. Central Agency and Functions

CERC has designated National Load Dispatch Center(NLDC) to undertake the functions of Central Agencyunder the CERC REC Regulations.The CERC REC Regulations envisage functions of theCentral Agency as follows:

1. Registration of Eligible Entities,2. Issuance of Certificates,3. Maintaining and Settling Accounts in respect of certificates,4. Repository of Transactions of Certificates and5. Other function incidental to the implementation of RenewableEnergy Certificate Mechanism as may be assigned by theCommission.


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State Agency

Designated by the SERCShall act as agency for accreditation andrecommending the RE projects for registrationIf acreditation granted, it shall intimate the

acreditation to the NLDC (central agency), hostSLDC and the distribution company in whose areathe proposed RE generation project shall belocated


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State Load Despatch Centrea. Follow Indian Electricity Grid Code and State Grid Code for the purpose

of accounting renewable energy injected into the grid.

b. In case the Eligible Entity is connected to the transmission network,maintain the record of meter readings and communicate the energyinjection report for each accredited RE project of the registered EligibleEntity within State to the Central Agency on monthly basis.

c. In case the Eligible Entity is connected to the distribution network ofDistribution Utility, establish protocol for receipt of information andmaintenance of the record of meter readings for such RE projects.

Further, arrange to communicate injection report for each accredited REproject of the registered Eligible Entity within the State to the Central

Agency on monthly basis.


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Model Guidelines / Procedure for Accreditation


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MODEL GUIDELINES FOR ACCREDITATION BY STATE

AGENCY


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Model Guidelines: ContentsObjective

Applicability & ScopeStep wise descriptionFunctions, roles and responsibilities of entities

involvedInformation requirement application form &contentReport: format for accreditation certificateTimelinesFees and chargesEvent of default and consequences thereof

Powers to remove difficulties


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Model Guidelines: Information Requirement OwnerOperatorRE StationConnectivityMeteringStatutory ClearanceGeneral

Fees & ChargesDeclaration

Online generation of Application, print & submit toState Agency along with enclosures


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REGISTRATION BYCENTRAL AGENCY

R i t ti A li bilit d S


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Registration: Applicability and Scope

Applicable to all RE Generating companieswho have received the Certificate ofaccreditation

Undertake registration Not earlier than 3 months prior to proposeddate of commissioning

After receipt of Certificate of Accreditation

Validity of Registration: 5 Years

R i i I f i R i


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Registration: Information Requirement Ap pl ica tion fo r Regis t ra t ion as per the fo rm at sp eci f iedShould co n ta in

Owner detailsRE Generation Station detailsCertificate of Accreditation by the state agencyGeneration facility commissioning schedule

Any other relevant information as specifiedNon-refundable registration fees/charges and annualfee/charges shall be accompaniedDeclaration

Separate appl icat ion s in c ase of m ult ip le RE generat ionpro jec ts

Online generat ion o f Ap pl ica t ion , p r in t & sub m it to Cent ral

Ag ency along w i th enc losu res

R gi t ti Ti Li


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Registration: Time Line


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Procedure for Registration

4 C t g f C tifi t


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4.Category of Certificates

Solar and Non-Solar certificates

5. Eligibility and Registration of

CertificatesEligiblity conditions:Obtained accreditation from state agencyNo PPA to sell at preferential tariffSell electricity to distribution lecensee at a price not

exceeding the pooled cost of power purchase of thatlicensee

6 R i f R i i


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6.Revocation of RegistrationCentral agency based on the report of theCompliance Auditors, shall enquiry andrevoke registration under the followingconditions

Wilful and prolonged default by eligible entityEligible entity breaks any of the terms & conditions of itsaccreditation/registrationFails to show that it can fully discharge its responsibilitiesFails to make deposit/ furnish security/ pay fees andcharges required for accreditation/ registration


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7.Denomination & Issuance of Certificates

Eligible entity to apply to central agency within 3

months after corresponding generation; applicationfor issuance of certificates to be made onfortnightly basis

Certificates to be issued after central agencysatisfied on compliance

Certificates to be issued within 15 days from dateof application


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ISSUANCE OF RECs BYCENTRAL AGENCY

I f REC


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Issuance of RECsApplicability & ScopeEligible Entities, who have received Certificate of Registration

from the Central AgencyCentral Agency while issuing the REC S to Eligible Entities

Information RequirementRenewable Energy Injection ReportThe Registration Number issued by Central AgencyDetails of Fee and Charges

Compliance Auditor report, if any

Denomination1 REC = 1 MWh

I f REC Ti li


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Issuance of RECs: Timelines Eligible Entity to apply for issuance of

renewable energy certificates within three (3)months of energy injection

The application for issuance of RenewableEnergy Certificates may be made on afortnightly basis

Central Agency to issue the REC to theEligible Entities within fifteen (15) days fromthe date of application


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Procedure for Issuance


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8. Dealing in certificates

Certificates to be dealt only through PE

9. Pricing of CertificatesPrice to be discovered in the PEComission to determine the floor price andthe forbearance price in consultation with thecentral agency anf the FOR

10.Validity of certificates

Certificate to be valid for 365 days


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REDEMPTION OF RECs

AFTER TRADE IN POWEREXCHANGE(s)

R d ti f REC


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Redemption of RECsValidity of RE Certificates : 365 days

Applicable to the Eligible Entity that chooses to place theRECs for dealing on the Power Exchange(s)

Bidding in the Power Exchange(s)

Central Agency to verify quantity of valid RECs available withthe concerned eligible entity

Extinguishing of the RECs based on the succesful tradesculminated in the Power Exchange(s)First-in-first-out order for extinguishing


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d h


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11. Fees and Charges

One time application processing fee Rs. 5,000/applicationOne time Accreditation Charges Rs. 30,000/application

Annual charges Rs. 10,000/application payable on 10 th Aprilor each anniverasry date of initial accreditationRevalidation/extension fee Rs. 15,000/application after 5 yrs

Fees and charges collected by central agency to be utilisedfor meeting cost and expense towards remuneration payableto compliance auditors, officers , employees, consultantsengaged to perform the various functions


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13. Appointment of Compliance Auditors

Compliance Auditors to enquire into and report on

compliance of these regulations Auditors can be a person or a firm with experience andqualification in the following areas

Finance / accounts/ commerce

Experience/ qualification in the field of engg withspecialisation in generation, transmission or distribution ofelectricity an adequate understanding of the electricitysector, institutions, regulatory commissions, govt.institutions, state agencies, their role and responsibilities

Commission to fix remuneration and charges payable tosuch auditors


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14. Power to give Directions

Commission to issue directions and orders appropriate forimplementation of these regulations and for thedevelopment of the market in power for RE sources

15. Rower to Relax

Commision may relax any of the provisions of theseregulations on its own or on an application made before itby any interested person

Salient Features of REC framework


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Renewable Energy Certificate (REC) mechanism is amarket based instrument to promote renewable energyand facilitate renewable purchase obligations (RPO)

REC mechanism is aimed at addressing the mismatchbetween availability of RE resources in state and therequirement of the obligated entities to meet therenewable purchase obligation (RPO).

Cost of electricity generation from renewable energysources is classified as cost of electricity generationequivalent to conventional energy sources and the costfor environmental attributes.

S li t F t f REC f k


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Salient Features of REC frameworkRE generators will have two options i) either to sell the renewable energy atpreferential tariff or ii) to sell electricity generation and environmentalattributes associated with RE generations separately .



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Salient Features of REC frameworkThe environmental attributes can be exchanged in the form ofRenewable Energy Certificates (REC).

REC will be issued to the RE generators for 1 MWh of electricityinjected into the grid from renewable energy sources.

REC would be issued to RE generators only.

REC could be purchased by the obligated entities to meet their RPOunder section 86 (1) (e) of the Act. Purchase of REC would bedeemed as purchase of RE for RPO compliance.

Grid connected RE Technologies with minimum capacity of 250 KWand approved by MNRE would be eligible under this scheme.

RE generations with existing PPAs are not eligible for RECmechanism.

Salient Feat res of REC frame ork


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Salient Features of REC frameworkSERC to recognize REC as valid instrument for RPOcompliance.

SERC would define open access consumers, captiveconsumers as obligated entities along with distributioncompanies.

SERC to designate State agency for accreditation for RPOcompliance and REC mechanism at State level.

CERC to designate Central Agency for registration,repository, and other functions for implementation of RECframework at national level.

Only accredited project can register for REC at Central Agency.



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Central Agency would issue REC to RE generators for specifiedquantity of electricity injected into the grid.

REC would be exchanged only in the CERC approved powerexchanges.

Price of electricity component of RE generation would be equivalentto the weighted average power purchase cost of the discom includingshort term power purchase but excluding renewable power purchase.

REC would be exchanged within the forbearance price and floor price.

This forbearance and floor price would be determined by CERC inconsultation with Central agency and FOR from time to time.



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In case of default SERC may direct obligated entity todeposit into a separate fund to purchase the shortfall ofREC at forbearance price.

However, in case of genuine difficulty in complying withthe renewable purchase obligation because of non-availability of certificates, the obligated entity canapproach the Commission for carry forward of compliancerequirement to the next year.

Documents

Conventional and Non Conventional Energy