GETTING THE CPP/IPP GETTING THE CPP/IPP INTO THE GRIDINTO THE GRID

REGULATORY ASPECTSREGULATORY ASPECTS

Harnessing Maximum Potential Harnessing Maximum Potential

from from

Non-Convetional Energy Non-Convetional Energy

SourcesSources

SUITABLE PROMOTIONAL MEASURES SUITABLE PROMOTIONAL MEASURES FOR FOR

NON CONVENTIONAL ENERGY NON CONVENTIONAL ENERGY RESOURCESRESOURCES

EXTRACTS FROM ELECTRICITY ACT EXTRACTS FROM ELECTRICITY ACT 20032003

Para 3(1) NATIONAL ELECTRICITY POLICY AND Para 3(1) NATIONAL ELECTRICITY POLICY AND PLAN:PLAN:

The Central Government shall, from time to time, The Central Government shall, from time to time,

prepare the national electricity policy and tariff prepare the national electricity policy and tariff

policy, in consultation with the State Governments policy, in consultation with the State Governments

and the Authority for development of the power and the Authority for development of the power

system based on optimal utilisation of resources such system based on optimal utilisation of resources such

as coal, natural gas, nuclear substances or materials, as coal, natural gas, nuclear substances or materials,

hydro and renewable sources of energy.hydro and renewable sources of energy.

EXTRACTS FROM NATIONAL ELECTRICITYPOLICYEXTRACTS FROM NATIONAL ELECTRICITYPOLICYPara 3.2.Para 3.2.

ENVIRONMENTAL CONSIDERATIONS SHALL BE KEPT IN ENVIRONMENTAL CONSIDERATIONS SHALL BE KEPT IN MIND WHILE SELECTING/SUGGESTING:MIND WHILE SELECTING/SUGGESTING:

-- AREA / LOCATIONS FOR CAPACITY ADDITION-- AREA / LOCATIONS FOR CAPACITY ADDITION

-- FUEL CHOICES-- FUEL CHOICES

SUITABLE PROMOTIONAL MEASURES SUITABLE PROMOTIONAL MEASURES FOR FOR

ON CONVENTIONAL ENERGY RESOURCESON CONVENTIONAL ENERGY RESOURCES

Para 5.2.20 NON CONVENTIONAL ENERGY Para 5.2.20 NON CONVENTIONAL ENERGY RESOURCESRESOURCES

EFFORTS WOULD BE MADE TO ENCOURAGE EFFORTS WOULD BE MADE TO ENCOURAGE PRIVATE SECTOR PARTICIPATION THROUGH PRIVATE SECTOR PARTICIPATION THROUGH SUITABLE PROMOTIONAL MEANSSUITABLE PROMOTIONAL MEANS

Wind EnergyWind Energy

POSSIBLE OPTIONS FOR SALE OF WIND POSSIBLE OPTIONS FOR SALE OF WIND ENERGY:ENERGY:

- - Short Term Open AccessShort Term Open Access

- Unscheduled Interchange(UI)- Unscheduled Interchange(UI)

- Through Tariff determined by Regulator- Through Tariff determined by Regulator

ISSUES OF IMPORTANCE IN CASE ENCOURAGEMENT TO SOURCES LIKE WIND

ENERGY IS TO BE GIVEN

- FAVOURED ACCESS / WHEELING - FAVOURED ACCESS / WHEELING CHARGESCHARGES

- POSSIBILITY OF BANKING- POSSIBILITY OF BANKING

- - EXEMPTION FROM MERIT ORDEREXEMPTION FROM MERIT ORDER

- - MUST RUN STATUS MUST RUN STATUS POSSIBLY SIMILAR TREATMENT IS TO BE MOOTED TO SUCH OTHER RENEWABLE SOURCES VIZ. MINI / MICRO HYDEL ETC.

HOW TO GET CPP HOW TO GET CPP INTO THE GRIDINTO THE GRID

AN EVERY DAY AN EVERY DAY EXAMPLEEXAMPLE SEB

CPP + STEEL PLANT

CAPACITY : 2X65 MW

RATE : 180p/UNIT

REQUIREMENT : 120±10 MW

CAPABILITY : 120 MW

AVAILABILITY: FULL FOR 10 MONTHS, ONE UNIT ON OVERHAUL FOR 1 MONTH EVERY YEAR

CONNECTIVITYCONDITIONS

1) 30 MW MINIMUM DEMAND

2) 70 MW MAX DEMAND FOR 2 MONTHS

REPURCUSSIONS:

FOR 10 MONTHS THE CPP RUNS AT PART LOAD OF 90 MW DUE TO CONDITION 1) ABOVE

HARNESSING CPPsHARNESSING CPPs

SEB/TRANSCO’S CONCERN:-SEB/TRANSCO’S CONCERN:-

OVERLOADING OF LINE OVERLOADING OF LINE

COMPENSATION FOR LOSSESCOMPENSATION FOR LOSSES

WHEATHER ACCESS MECHANISM IN FORCEWHEATHER ACCESS MECHANISM IN FORCE

CPPs NEEDCPPs NEED

RELAXED CONSTRAINTS ON PLANT OPERATIONRELAXED CONSTRAINTS ON PLANT OPERATION

HIGH AVAILABILITY OF EVACUATION PATHHIGH AVAILABILITY OF EVACUATION PATH

‘‘OPEN ACCESS’OPEN ACCESS’

LET’S TALK MONEY……LET’S TALK MONEY……

THE CPP MUST GET A PRICE BETTER THAN THE CPP MUST GET A PRICE BETTER THAN HIS INCREMENTAL COSTHIS INCREMENTAL COST

THE PURCHASER SHOULD GET THE POWER THE PURCHASER SHOULD GET THE POWER AT THE BEST PRICEAT THE BEST PRICE

THE SEB’S/TRANSCO/DISCOM’S ARE THE THE SEB’S/TRANSCO/DISCOM’S ARE THE INEVITABLE INTERFACE – THEIR SUPPORT INEVITABLE INTERFACE – THEIR SUPPORT IS VITAL TO THE SUCCESS OF THE DEALIS VITAL TO THE SUCCESS OF THE DEAL

DIFFERENT CURVES FOR DIFFERENT CURVES FOR BUYING AND SELLINGBUYING AND SELLING

INSULATES THE TRANSCO FROM LOSSES AND INSULATES THE TRANSCO FROM LOSSES AND OTHER CHARGESOTHER CHARGES

SIMPLE AND TRANSPARENT PROCEDURESIMPLE AND TRANSPARENT PROCEDURE

SEAMLESS OPERATION FOR CPPsSEAMLESS OPERATION FOR CPPs

RESIDUAL UI:- SOME WAY OF APPORTIONING RESIDUAL UI:- SOME WAY OF APPORTIONING CAN BE WORKED OUTCAN BE WORKED OUT

WHAT THE REGULATOR CAN FURTHER DO WHAT THE REGULATOR CAN FURTHER DO TO BRING THE CPPs INTO THE GRIDTO BRING THE CPPs INTO THE GRID

FOR BILATERAL TRADESFOR BILATERAL TRADES TRANSMISSION FLOOR RATES IN SEB PERIPHERY TO BE TRANSMISSION FLOOR RATES IN SEB PERIPHERY TO BE

RATIONALISEDRATIONALISED TIME BOUND PROCEDURES FOR APPROVING OA TIME BOUND PROCEDURES FOR APPROVING OA

TRANSACTIONSTRANSACTIONS

FOR TRADES IN THE SPOT MARKETFOR TRADES IN THE SPOT MARKET MAKE CPPs REPRESENTATIVES MEMBERS OF MAKE CPPs REPRESENTATIVES MEMBERS OF

FORUMS/COMMITTEESFORUMS/COMMITTEES

MAKE THE UI CURVE STEEPERMAKE THE UI CURVE STEEPER VARIABLE COST OF CPPs ARE AROUND Rs 3-5, THIS WOULD VARIABLE COST OF CPPs ARE AROUND Rs 3-5, THIS WOULD

HELP DESPATCH THEM EARLIERHELP DESPATCH THEM EARLIER REGULATE THE ‘BUFFERED’ CURVES ON CASE TO CASE BASISREGULATE THE ‘BUFFERED’ CURVES ON CASE TO CASE BASIS

LINKSLINKSVARIABLE COST AND UI CHANGE

EFFECT

UI PRESENT ANDHYPOTHETICAL

OPPORTUNITYDURING CRISIS

CPP SCHEDULING DASHBOARD

25 MAY 05

CPP SCHEDULING DASHBOARD

11 MAY 05

HARNESSING CPPsHARNESSING CPPs

WHAT IS REQUIRED :-WHAT IS REQUIRED :-

ROBUST SETTLEMENT SYSTEM ROBUST SETTLEMENT SYSTEM

UI:- SPOT MARKET IN PLACEUI:- SPOT MARKET IN PLACE

FINE TUNING OF UI CURVEFINE TUNING OF UI CURVE

- Buffered Buy/Sell Curve- Buffered Buy/Sell Curve

- Further Rationalisation of slope- Further Rationalisation of slope

ESC TO EXIT

SALE OF WIND ENERGY THROUGH STOA:

- NOT A REAL TIME DISPATCHABLE - NOT A REAL TIME DISPATCHABLE ENERGY;ENERGY;

- AVAILABLE ON SEASONAL BASIS;- AVAILABLE ON SEASONAL BASIS;

- - TO BE TAPPED WHENEVER AVAILABLETO BE TAPPED WHENEVER AVAILABLE

- APPLICATION OF ACCESS CHARGES- APPLICATION OF ACCESS CHARGES (Access Charges could very from 10 -25 %)(Access Charges could very from 10 -25 %)

HENCE POSSIBILITY OF SELLING WIND HENCE POSSIBILITY OF SELLING WIND ENERGY THROUGH STOA IS NOT VERY ENERGY THROUGH STOA IS NOT VERY ENCOURAGING.ENCOURAGING.

SALE OF WIND ENERGY THROUGH UI

- CANNOT REGULATE THE GENERATION - CANNOT REGULATE THE GENERATION DEPENDING ON FREQUENCY DEPENDING ON FREQUENCY

AVG. UI RATE COMES IN THE RANGE OF AVG. UI RATE COMES IN THE RANGE OF AROUND Rs. 2.25 - 2.50/ Per unitAROUND Rs. 2.25 - 2.50/ Per unit

HENCE POSSIBILITY OF SELLING HENCE POSSIBILITY OF SELLING THROUGH UI IS ALSO NOT MUCH THROUGH UI IS ALSO NOT MUCH ENCOURAGING.ENCOURAGING.

DETAILS

EXTRACTS FROM KERC ORDER DATED 18EXTRACTS FROM KERC ORDER DATED 18THTH JAN 2005 JAN 2005 IN THE MATTER OF DETERMINATION OF TARIFF IN IN THE MATTER OF DETERMINATION OF TARIFF IN RESPECT OF RENEWABLE SOURCES OF ENERGY.RESPECT OF RENEWABLE SOURCES OF ENERGY.

TYPETYPE UNIT UNIT RATE(RS.)RATE(RS.)

MINI HYDEL PROJECTS (10 YEAR PERIOD)MINI HYDEL PROJECTS (10 YEAR PERIOD) 2.802.80

WIND PROJECTS (10 YEAR PERIOD)WIND PROJECTS (10 YEAR PERIOD) 3.403.40

CO-GENERATION PROJECTS (1CO-GENERATION PROJECTS (1STST YEAR AND YEAR AND 2% PER ANNUM ESCALATION FOR NEXT 9 2% PER ANNUM ESCALATION FOR NEXT 9 YEARS)YEARS)

2.802.80

BIO MASS PROJECTS (1BIO MASS PROJECTS (1STST YEAR AND 2% YEAR AND 2% PER ANNUM ESCALATION FOR NEXT 9 PER ANNUM ESCALATION FOR NEXT 9 YEARS)YEARS)

2.852.85

YEARYEAR AVG.UNIT AVG.UNIT RATE(RS.)RATE(RS.)

2002-032002-03 3.313.31

2003-042003-04 3.483.48

2004-052004-05 3.043.04

2005-062005-06 3.043.04

EXTRACTS FROM APERC ORDERS IN THE EXTRACTS FROM APERC ORDERS IN THE

MATTER OF DETERMINATION OF TARIFF IN MATTER OF DETERMINATION OF TARIFF IN

RESPECT OF RENEWABLE SOURCES OF ENERGY.RESPECT OF RENEWABLE SOURCES OF ENERGY.

GENERATOR

STUDISCOM 2

CONSUMER

DISCOM 1

ACCESS CHARGES UNDER STOA

CASE 1

WHEN BOTH GENERATOR AND CONSUMER ARE EMBEDDED CUSTOMER OF DISCOMS

GENERATOR

STU DISCOM 2

CONSUMER

ACCESS CHARGES UNDER STOA

CASE 2

WHEN ONLY CONSUMER IS EMBEDDED CUSTOMER OF DISCOM

GENERATOR

STU

CONSUMER

ACCESS CHARGES UNDER STOA

CASE 3

WHEN BOTH GENERATOR AND CONSUMER ARE DIRECTY CONNECTED TO STU

UI PRICE CURVE : BUY AND SELL

0

50

100

150

200

250

300

350

400

450

500

550

600

65048

.7

48.8

48.9 49

49.1

49.2

49.3

49.4

49.5

49.6

49.7

49.8

49.9 50

50.1

50.2

50.3

50.4

50.5

50.6

50.7

50.8

50.9 51

FREQUENCY IN HZ

UI P

RIC

E

"BUY" CURVE

"SELL" CURVE

WHY UNBUNDLE ?WHY UNBUNDLE ?

REGULATOR POLITICAL

COSTS

DEMAND SHORTAGE

DEMAND FORECAST

TRADER