Policy and Regulatory...CUF Tariff Period Levellised Tariff for FY 2012-13 Benefits of Accelerated Depreciation (if availed) Net Levellised Tariff upon adjusting for Accelerated Depreciation

Policy and Regulatory

2

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Enabling High Efficiency and Reliable Wind Power Projects

1. MERC: Draft RE Tariff order for FY 2012-13

MERC following CERC's RE Regulations has proceeded to determine the Generic

Tariff for RE Technologies for Control Period FY 2012-13 through the Draft Order

and has invited objections and suggestions from various Stakeholders. As per this

draft order:

Capacity Utilization Factor (CUF) specified for wind energy projects & Tariff for New

Wind Projects for FY 2012-13 are as under:

Once approved by MERC, the above Tariff shall be valid for Projects Commissioned

in FY 2012-13 and shall be valid for a PPA Tenure of 13 years from the Commercial

Operation Date (COD) of the Wind Power Projects(WPP).

SHARING OF CDM BENFITS

Since all risks, costs and efforts associated with the availing of carbon credits shall

be borne by the Generating Company,the entire proceeds of carbon credit from

approved CDM project, if any, shall be retained by the Generating Company.

Useful life for wind energy projects is assumed as 25 years from the COD.

http://www.mercindia.org.in/pdf/Order%2058%2042/MERC_Draft%20RE%20Tariff%20Order%20%28SuoMotu%29_for%20FY2

012-13_Case%20No%2010%20of%202012.pdf

2. MSEDCL: Grant of Open Access to the consumers sourcing power from RE

Generators

MSEDCL had issued Circular No. 155 of Open Access(OA) to Consumers Sourcing

power from Renewable energy generators (Such as Wind, Biomass, Bagasse, Solar,

Small Hydro etc.). Some of the suggested changes were as follows:

Source:

Wind Energy Annual Mean Wind Power Density

CUF Tariff Period Levellised Tariff for FY 2012-13

Benefits of Accelerated Depreciation

(if availed)

Net Levellised Tariff upon adjusting for

Accelerated Depreciation Benefit

(if availed)

Zones W/m2 % Years Rs/kWh Rs/kWh Rs/kWh

WindZone-1 (200-250) 20% 13 5.49 0.79 4.70

WindZone-2 (250-300) 23% 13 4.78 0.69 4.09

WindZone-3 (300-400)a 27% 13 4.07 0.59 3.48

WindZone-4 (above 400) 30% 13 3.66 0.53 3.13

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Metering: As provided under Regulation No. 7.1 of the MERC (Distribution Open

Access) Regulations, 2005, every consumer, person whosoever has been granted

Open Access or Generating Company or Licensee shall have to install "Special

Energy Meter" (SEM) at both the ends, i. e. at injection point & drawal point. As per

new order - A time period upto 31.3.2012 is allowed to comply with the MSEDCL

metering requirements in totality. Till that time, OA may be allowed if at least one

SEM is provided at both ends.

Banking Facility: Earlier if any OA consumer had a separate agreement for banking

or sale/purchase of this over injection, banking provision was allowed. As per new

order - No Banking facility is available - It is necessary that the consumer / person

whosoever has opted for OA shall use the entire power contracted from OA

Generator and ensure that every unit injected shall be consumed by the consumer /

person in every corresponding 15 minutes time block. In case of excess injection /

under drawal by the consumer, the OA Generator is at liberty to sell the excess

power to any legal entity including MSEDCL. In absence of agreement to sell this

excess power, the excess injection shall be treated as lapsed. The OA Generator is

not allowed to bank the excess power.

With respect to above, MERC vide its order dated 23.02.2012 has put stay on the

operation of the Circular No. 147 dated 30.09.2011 and Circular No 155 dated

23.1.2012 of MSEDCL with immediate effect, till further Orders. MSEDCL shall not

take any consequential action on the basis of these circulars, till the Commission

finally looks into the matters.

http://www.mahadiscom.in/consumer/Comm_circu_%20155.pdf

http://www.mercindia.org.in/pdf/Order%2058%2042/Daily%20Order_case%20no%208%20and%2018%20of%202012_%20dt%

2023.02.12.pdf

3. CERC: Notification - Terms & Conditions for Tariff Determination from RE

Sources Regulations, 2012

CERC issued Notification for Terms and Conditions for Tariff determination from

Renewable Energy Sources Regulations, 2012.

These regulations shall come into force on 1.4.2012, and unless reviewed earlier or

extended by the Commission, shall remain in force for a period of 5 years from the

date of commencement of which the first year shall be the financial year 2012-13:

a) Useful life for Wind energy power project is considered as 25 years

b) All renewable energy power plants, except for biomass power plants with

installed capacity of 10 MW and above and non-fossil fuel based cogeneration

plants, shall be treated as ‘MUST RUN’ power plants and shall not be subjected to

‘merit order despatch’ principles

Source:

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Annual Mean Wind Power Density (W/m2) CUF

Upto 200 20%

201-250 22%

251-300 25%

301-400 30%

> 400 32%

c) Wind power generation plants where the sum of generation capacity of such

plants connected at the connection point to the transmission or distribution system

is 10 MW and above and connection point is 33 KV and above shall be subjected to

scheduling and despatch code as specified under Indian Electricity Grid Code (IEGC)

-2010, as amended from time to time

d) Capital cost for wind energy projects shall be 575 Lakh/MW (FY 2012-13 during

first year of Control Period)

e) Capacity Utilisation Factor (CUF)

The annual mean wind power density shall be measured at 80 meter hub-height.

For the purpose of classification of wind energy project into particular wind zone

class, as per MNRE guidelines for wind measurement, wind mast either put-up by

C-WET or a private developer and validated by C-WET would be normally extended

10 km from the mast-point to all directions for uniform terrain and limited to

appropriate distance in complex terrain according to the complexity of the site.

Based on such validation by C-WET, State Nodal Agency should certify zoning of the

proposed wind farm complex.

http://www.cercind.gov.in/2012/regulation/RE_Tariff_Regulations_2012_SOR%206-2-2012.pdf

4. Banking in Tamil Nadu: TANGEDCO Petition for withdrawing Banking Scheme

before TNERC

TANGEDCO called for the views regarding retaining/ reducing/ dispensing Banking

Scheme of Wind Energy, from various members and filed consolidated reply as a

petition against TNERC on 22.09.2011. TANGEDCO also called for views on the tariff

fixation (an inclusive consideration of all benefits/ concession granted to the

industry other than purchase/ sale price of wind energy) which was under process.

This petition filed by the department was unwarranted.

Consequently, TNERC denied to admit the petition of TANGEDCO and ordered the

case to be posted after TANGEDCO includes the Government of Tamil Nadu, TEDA,

TANTRANSCO and other interested parties like wind generators and gives them

copies of petition.

Source:

5



What’s New

5. HESCOM: Retail Supply Tariff for the Financial year 2012-13 in Karnataka

HESCOM has filed a Petition before KERC for approval of Retail Supply Tariff for the

financial year 2012-13. HESCOM has proposed 73 paise/ unit hike in tariff for HT

Industrial and commercial consumers.

If approved, with 73 paise/ unit increase in tariff in the state, OA of wind power will

turn out to be more viable option.

1. Gamesa launches 2-MW Wind Energy Generator

Wind Energy Generator major Gamesa on 05.02.2012 formally launched its 2.0

MW WEG. The WEG was unveiled by the Minister of New and Renewable Energy,

Dr. Farooq Abdullah, at the 3rd International Wind Conference and Exhibition in

Coimbatore.

The machine comes with an in-built 'condition monitoring system', which collects

real time performance data. This feature, company officials explained, helps in

preventive maintenance, and hence increases the turbine's uptime.

Next year, the company plans to offer its customers the option of a concrete tower

too.

2. Clarification Regarding GBI Claims

ŸGBI Claims are being processed for applicants who have claimed depreciation @

7.69%.

ŸAll other applications where depreciation is claimed at a rate other than 7.69% is

kept on hold.

ŸGBI Claim shall be released on annual basis after receipt of IT returns for the

concerned period.

http://www.ireda.gov.in/pdf/CLARIFICATION.pdf

Source:

HT Industrial Existing Tariff New Tariff

Demand Charges Rs 170/KVA Rs 170/KVA

Energy Charges

For 1-100000 Units (Rs./unit) 4.90 5.63

For above 100000 units (Rs./unit) 5.20 5.93

HT Industrial Existing Tariff New Tariff

Demand Charges Rs 190/KVA Rs 190/KVA

Energy Charges

For 1-200000 Units (Rs./unit) 6.30 7.03

For above 200000 units (Rs./unit) 6.60 7.33

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3. APPC Karnataka: KERC notifies APPC for FY 2012

KERC (Karnataka Electricity Regulatory Commission) notified average pooled cost

of power purchase (APPC) as Rs 2.73/unit for the Financial Year 2012. This gives

another way for promotion of Wind Project Development in the state under REC

Mechanism with Rs 4.23/ unit Net tariff at base REC Rate (i.e. Rs 1.50/ unit) and with

an upside in REC till Rs 3.30/ unit. In the last 12 sessions, REC rates have been

encouraging with an average tariff of Rs 2.80/ unit.

4. Up to Rs 0.55/ kWh to be charged from renewable power OA users in

Maharashtra

MSEDCL has issued a circular notifying that open access users who procure power

from renewable energy projects shall be liable to pay cross subsidy charges. Cross

subsidy charges for industries have been determined to be as high as Rs 2.20 per

kWh. However, open access users procuring power from renewable energy would

be required to pay only 25 percent of the cross subsidy charges.

The contract demand of open access users procuring power from renewable

energy projects shall be reduced only to the extent of the capacity utilization

factor (CUF) of the renewable energy technology. Therefore, the contract

demand of an open access user procuring power from 1 MW wind project (with

CUF 23%) would be reduced only by 0.23 MW and not by 1 MW.

The notification could have significant impact on the renewable energy projects

under the Renewable Energy Certificate (REC) scheme which are selling their power

to open access users. Open access users would face additional costs even though

consumers procuring from renewable energy projects would face lesser charges.

Captive users would also be impacted as they would be required to install new

"Special Energy Meters" with active energy recording of 15 minutes time block.

Cross Subsidy Charges on HT OA Consumers (in Rs/ kWh):

Source:

www.kerc.org/Draft%20Regulations/Notification%20of%20pooled%20cost.doc

Consumer Category EHV Consumer(> = 66 kV)

HT Consumer(33 kV)

HT Consumer(22/ 11 kV)

Express Feeder 0.92 0.61 0.31

Non - Express Feeder 0.52 0.21 -

Seasonal Industry 2.20 1.89 1.59

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5. TNERC: Grant of NOC under Group captive scheme under REC mechanism in

Tamil Nadu

A generator who is an Independent Power Producer (IPP) has filed a petition against

TNERC for directing TNEB to issue NOC under the Group Captive Scheme and to

execute subsequent Wheeling Agreement under the REC Mechanism. Commission

has granted the permission for the same.

As of now Tamil Nadu is the only state which has issued Energy Wheeling

Agreement (EWA) under Captive/Group Captive mode under REC mechanism.

TNEB is also allowing and granting NOC for wind power project under group captive

mode under REC mechanism.

6. TNEB: Power holiday to industries from 01.03.2012

Due to delay in commissioning of many power projects, there is power shortage

and increasing demand. In view of this TNEB has announced a power holiday to all

industries with effect from 01.03.2012, and also announced 40 per cent power cut

to all industrial and commercial consumers.

As the present restrictions and control measures are not sufficient to cover the

demand - supply gap, TANGEDCO is forced to resort to unscheduled load shedding,

in order to ensure grid security. To address the issue, 40 per cent power shall be cut

to all industrial and commercial establishments, Chennai city and suburban areas

will see two hours load shedding, other rural and urban areas will see four hours of

load shedding. Evening peak hour (6.00 PM to 10.00 PM) restriction to commercial

consumers and power holiday to all industries will be in effect from 01.03.12. The

restrictions and controls shall be implemented according to the local needs and

shall be suitably altered whenever required. Load shedding measures will be

revised, depending upon the demand and supply gap, said the release.

As per TNEB, this deficit situation is likely to last for few months. From June, when

wind generation will pick up and power projects become functional one after

other, it will be possible to relax some of the restrictions and controls.

8



ŸRENERGY 2012, International Conference Cum Expo, organized by Tamil Nadu

Energy Development Agency, 12-13 March 2012, Chennai Trade Centre,

Nandambakkam, Chennai, India

ŸRenewable Energy Finance Summit: India 2012, Debt, Equity and Market

Mechanisms, organized by Renewable Markets India, 20th March 2012,

Mumbai, India

WinDForce supported 3rd International Wind Conference & Exhibition (WE20 by

2020) organized by Indian Wind Power Association, in Coimbatore.

ŸMr. Jami Hossain, Chief Mentor & Founder WinDForce, who is a member of IWPA

also, was session chair & speaker in many panel discussions related to:

Ÿ Power Evacuation and Large scale integration of WE in grid

Ÿ Need for Project Due Diligence etc

ŸMr. Hossain also made a presentation on “Integrating Wind Energy with the

Conventional Power System in the long term”

ŸMr. Rupesh Singh, Manager WinDForce was also speaker in a panel discussion on

Wind Forecasting and IEGC 2010 code. Mr. Singh made a very interactive

presentation on “Strategy on Scheduling Wind Power and IEGC 2010”.

ŸMr. Sankalp Sharma, Manager WinDForce was also speaker in a panel discussion

on Asset Management. Mr. Sharma gave an interactive presentation on “Owner's

Engineers - Role in Asset Optimization”

Upcoming Events

Events

9



The above graph indicates that the equilibrium price of REC traded at IEX is

increasing every month. Moreover traded volume is also increasing month by

month.

In the recent trading held on 29th February 2012, there were buy bids for 3,89,263

non-solar RECs against sell bids for 2,34,202 RECs. In the last trading, RECs have

been traded @ Rs 3066/ MWh at IEX and @ Rs 3055/ MWh at PXIL. Summarizing till

date, in last 12 sessions, total 7,58,654 RECs have been traded at an average rate of

Rs 2811/ MWh (at IEX). As expected, the volume trade is showing an increase in Q4

as most of the state power distribution companies must have started participating

in the trading, as RPO deadlines for FY12 have also approached.

From the above graph it is observed that during last one year short term market

price of electricity in bilateral arrangement is higher than that at power exchanges.

This analysis includes only inter-State transactions. In October 2011, there was

steep hike in price at the exchanges because of major power crises in various power

surplus states in India. The issues encountered were resolved and power prices at

exchanges are also settled down as seen in the graph above.

For Newsletter subscription please follow the link below:

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REC Trading

Electricity Price

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Contact Us

Kindly write to us if you have any comments on this Newsletter. Your valuable

feedback on this would motivate and help us in improving the quality and enriching

the content. We are eagerly waiting for your kind response to the articles presented in

this Newsletter.

Parish Gupta

Mob: +91 98717 11445

E-mail: [email protected]

Rupesh Singh

Mob: +91 96507 58884

E-mail: [email protected]

A WinDForce Publication

Disclaimer - This Newsletter has been compiled by WinDForce Management Services Private Limited

for circulation among the stakeholders in the energy market. Though the contents of this bulletin are

correct to the best of our knowledge, WinDForce does not vouch for their accuracy.


Documents

Policy and Regulatory...CUF Tariff Period Levellised Tariff for FY 2012-13 Benefits of Accelerated Depreciation (if availed) Net Levellised Tariff upon adjusting for Accelerated Depreciation