Wind Force Newsletter Dec, Edition, 2011

NewsletterNewsletterDec 2011

Issue 04

www.windforce-management.com

Policy and Regulatory

1. Tamil Nadu: Extension of Wind Tariff Order No.1 of 2009 upto 30-06-2012

Earlier, TNERC extended the validity of the tariff order up to 31-12-2011 and was in

the process of revising the tariff order. However due to number of developments

(scheduling of wind energy, REC mechanism etc.), which needed a deeper study of

their implications on the tariff and also, some decisions which has to be taken by

the commission on certain matters like banking of wind energy, concessional

transmission and wheeling charges for wind energy etc., the validity of said order

has again been extended by the commission up to 30-06-2012.

2. Rajasthan Electricity Regulatory Commision (RERC): Revision of wind power

tariff for sale to DISCOMs

RERC has announced revision of tariff for sale of electricity from Wind Power Plants

to Distribution Licensees during FY 2010-11 & FY 2011-12 for the control period

2009-14,, which shall be as under:

This increase in tariff is due to revision in levelised tariff as per APTEL judgement th

dated 30 May 2011. The wind power generators shall claim the difference in

respect of the tariff, determined by earlier order(s) and this order for wind power

plants commissioned during FY 2010-11 and FY 2011-12, from DISCOMs in three

equal instalments payable in month(s) of January, 2012, February, 2012 and March,

2012 respectively.

3. Tamil Nadu Electricity Board (TNEB): Petition for revision of HT Industrial Tariff

TNEB has filed a petition before TNERC for application of preliminary tie-up and

approval of ARR for the years 2010-11 and 2011-12 as well as revision of tariff and

approval of ARR for the year 2012-13. As per this application:

HT Industrial consumers (HT IA):

TNEB requested that the above mentioned tariffs be made effective from 1-4-2012

or earlier.

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Enabling High Efficiency and Reliable Wind Power Projects

Year Particulars Jaisalmer, Barmer and Jodhpur Districts

Other Districts

2010-11 Existing Total Tariff Rs 3.87/kWh Rs 4.08/kWh

Revised Total Tariff Rs 4.10/kWh Rs 4.31/kWh

2011-12 Existing Total Tariff Rs 4.22/kWh Rs 4.44/kWh

Revised Total Tariff Rs 4.46/kWh Rs 4.69/kWh

Tariff category Existing Tariff Proposed Tariff

Demand Charge in Rs/KVA/month

Energy charge Demand Charge in Rs/KVA/month

Energy charge

HT IA 300 400 300 500

4. Comprehensive proposal to overcome the power shortage

TANGEDCO has filed a petition before TNERC submitting a comprehensive proposal

to overcome the power shortage in Tamil Nadu. Key features are as follows:

Wind

In Tamil Nadu, during last year 8707 MU of energy was generated from wind and

this year, the generation from wind energy is expected to be around 9400 MU.

Through proper scheduling, it might be possible to convert part of the wind power

as firm power atleast for part of the year. Once scheduling of wind power is

implemented, the accuracy of forecasting will also improve. Over a period of time,

with constant refining of scheduling, the accuracy can be further improved and

brought closer to reality. In this connection, TANGEDCO is contemplating to

establish a flexible resource of 4 x 125 MW (500 MW) pumped storage project at

Kundah. However, the initial investments for these schemes are very huge.

Tamil Nadu:

Transmission

The State already has an installed capacity of 5887 MW from wind energy stgeneration as on 31 March 2011. Further, an additional capacity of 5000 MW is

likely to be added in the next 5 years. In order to evacuate the power from the wind

generators, separate corridors with 3 new 400 KV substations with 400 KV lines are

also proposed. These substations will be connected to the proposed 765 KV

substation being executed by PGCIL which is expected to be commissioned shortly.

Improvement works of existing infrastructure are under progress for facilitating

proper evacuation of wind power.

TANTRANSCO is already analyzing the optimum requirement of substations for

establishment of upto 100 Nos. 33 KV/ 110 KV substations by wind promoters for

evacuating wind power. As the proposed capacity additions from wind power are

huge, CEA is in the process of issuing guidelines after discussing with PGCIL, Power

Operation System Co. Ltd. (POSCO) and all state utilities along with wind promoters.

Funding

Three 400 KV substations and the 400 KV line to be commissioned for evacuation of

wind power is being proposed to be undertaken under the Public Private

Partnership (PPP) mode. Japan International Co-operation Agency (JICA) has been

approached for funding the establishment of 6 Nos. 400 KV substations, 21 Nos.

230 KV substations and its associated transmission lines in various parts of Tamil

Nadu totalling to Rs. 3590 Crores.

These developments shall lead to better Grid Availability in the affected areas and

shall also provide required infra to new investments.

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5. Determination

of Wheeling Charges and Cross Subsidy Surcharge issued by

MPERC has issued order on Determination of Wheeling charges and cross subsidy

surcharge. As per the order for FY 2011-12 new applicable wheeling charges and

wheeling losses shall be:

The order shall be applicable with effect from November 2011 to all Open Access

Consumers connected at 33 kV and above having contract demand of 1 MW or

above.

6. Maharashtra: Plans to raise duty on captive power plants

Currently, the maximum duty on captive plants, which are set up by companies for

their own consumption, is 40 paise per unit under the Bombay Electricity Duty Act,

1958. Maharashtra government proposes to increase this to Rs 1.50 per unit . It is

also proposed to levy a duty of 10 paise per unit on the sale of captive power to

third parties. Currently there is no charge for such sales.

Madhya Pradesh Electricity Regulatory Commission (MPERC):

Proposals for this are still under consideration and no final decision has been taken

yet, but this has been brought to ensure that industry doesn't use its captive power

generation capacity on merchant basis.

The proposal will also be applicable to renewable energy producers, including

companies that have put wind power plants for captive consumption. Earlier, when

the state was power deficit, use of captive power was encouraged but now the

situation is better. But if now the industry also continues to use captive power, the

state distribution utility Mahavitaran Ltd will lose its high-paying consumers who

cross-subsidize below poverty line (BPL) consumers, farmers and other weaker

sections.

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2011-12

Voltage Level Wheeling Charges (Rs/kWh) Wheeling Losses

33 KV 0.14 6%

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1. Indian Electricity Grid Code (IEGC)

CERC Order, in matter of Implementation of the Renewable Regulatory Funds

(RRF) mechanism under Central Electricity Regulatory Commission (IEGC)

Regulations, 2010: Earlier, for proper evaluation of impact of IEGC on wind power

projects, NLDC asked for the certain details from SLDCs regarding connectivity

declaration from Wind farms/Solar generating plants, contract details and

processed data (i.e. Schedule generation and deviations of generation within

different blocks to RLDCs /NLDC). CERC has ordered to provide the requisite details

latest by 15.12.11. Non delivery of such details has seriously affected the schedule

of mock exercise as directed by the Commission. Based on the data received, NLDC

shall submit the compliance position before the Commission with copies to all

SLDCs which shall decide implementation date of Wind Grid Code.

2. Green Energy to be made mandatory for powering telecom towers

The Department of Telecom will make it mandatory for mobile companies to tap

into renewable sources of energy for powering their towers. Under the new rules,

at least 50 per cent of towers and 20 per cent of the urban towers are to be powered

by hybrid energy sources (renewable +grid) by 2015.This will have to be scaled up to

75 per cent of rural towers and 33 per cent in urban areas by 2020. The move is

aimed at reducing the carbon emissions due to increased dependence on diesel. To

provide incentive to the tower companies, there will be support from the Universal

Services Obligation fund to meet the initial cost.

3. COP-17, Durban

At COP-17 in Durban, 195 countries and as many as 13000 delegates participated.

After negotiations, an agreement was reached as the participating nations agreed

to the “Durban Platform for Enhanced Action”. This will set to lay a road map

towards a global climate change treaty that will make it mandatory for all the

parties under UNFCCC to reduce its GHG emissions beyond 2020.

What's New

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Outcomes of COP-17:

ndAgreement on the 2 Kyoto Commitment Period

ndŸ EU and some other participating parties that signed up to the 2 commitment

period of the Kyoto Protocol.st

Ÿ The second commitment period of the KP would start from 1 January 2013 and

would extend up to either 2017 or 2020 (to be decided at COP 18 at Qatar next

year).

A Globally Binding Climate Change Treaty

Ÿ Participating Nations of the COP-17 agreed to work on a Globally Binding

Climate Change treaty and decide on its modalities by 2015. Implementation is

planned from 2020 onwards.

Ÿ A key aspect of this treaty is that it will include India and China, and the USA-

three of the biggest emitters of GHG in the world, but without a binding

emission reduction target under the Kyoto Protocol.

Ÿ This means countries responsible for more than 85 percent of global emissions

have no legally enforceable target until 2020 but probably after 2020 they may

have the same.

The Green Climate Fund

Ÿ The Green Climate Fund, aimed to provide financial help of around $100 billion

per year by 2020 to the developing countries in building capacity for Climate

Change Mitigation and Adaptation was conceived at COP-15 in 2009.

Ÿ At Durban it has been decided that the fund will become functional in 2012.

Carbon Capture and Sequestration (CCS)

Ÿ It had been agreed at COP-17 that CCS will be added as a mechanism under the

CDM

Implications

Ÿ The outcomes are likely to force governments to invest more heavily on

renewable energy generation

Ÿ There is also a possibility of countries increasing their emission reduction targets

Ÿ Carbon is also likely to fetch better prices and in the process strengthen the

carbon market.

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4. CERC Draft Tariff Regulations, 2012

For renewable energy projects in the Country, the CERC has proposed assured long-

term tariff visibility and alignment of financial norms with the prevailing market

conditions. In its draft tariff regulations, 2012, it has proposed the return on equity

(RoE) to be revised keeping in view the increase in the Minimum Alternate Tax

(MAT). Unlike the earlier three-year control period, the proposed period is for five

years. The various proposals, except the capital cost norms for solar power, would stremain valid for five years from 1 April next year.

As per CERC, which plans to launch these regulations from April next year, the rate

fixed for any project during the control period would be valid for 13 years for

mature technologies like Wind. CERC has reaffirmed its commitment to promote

green energy.

To encourage harnessing of wind power in the low-wind regime, the CERC has

proposed tariff norms for wind power density (WPD) of less than 200 as well. The

capacity utilization factor, a measure of assessing the likely generation from a wind

plant over the year, has been fine tuned keeping in mind the technological

advancement and the impact of an increase in hub height of the wind mill. The

revised norms are expected to encourage better technology, leading to the best

possible utilization of the available wind power in the country. They would, in the

long run, benefit consumers with better efficiency and reduced cost of generation.

Upcoming Eventsth th

Ÿ Wind IPP Summit 2012 to be held on 17 -18 January at Mumbai, organized by

Renewable Markets India.

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REC trading

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

exchanges is increasing every month. Moreover traded volume at both the th

exchanges is also increasing. In the recent trading held on 30 November 2011,

there were buy bids for ~2,78,460 RECs against sell bids for ~1,86,234 RECs. In

November trading session at power exchange most of the RECs have been sold @

Rs. 2900/ Mwh.

Electricity Price

From the above graph it can clearly be said that during the last one year, most of the

time, except 2-3 months, 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 price at exchange was higher than prices under

bilateral arrangement because during this period in southern part of the country

major power crisis happened due to lower production from Telangana project

(singareni coal mines strike). In the same time in rest power surplus states in

Western Region (Chattisgarh Belt & MP) due to heavy rain coal got wet and the

power plants had only 1-2 week coal surplus resulting in reduced power

generation. Hence overall the availability of power was less which resulted in higher

demand of electricity on power exchange with higher electricity price.

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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

Wind Force Newsletter Dec, Edition, 2011