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The Wind energy OuTlOOk ScenariOS

A p r i l 0 1 1

indian Wind energyOuTlOOk 2011

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cOnTenTS

STaTuS O Wind POWer in india 61.1 renewab e ene g n ind a 7

1. W nd owe scena os 7 1.3 Est mated w nd owe esou ce 10

1.4 O sho e w nd owe deve o ment 12

1.5 W nd tu b ne nsta at ons 12

1.6 re owe ng otent a 12

1.7 Techno og deve o ment t ends 14

1.8 investment n w nd owe secto 15

1.9 Sma w nd and h b d s stems 15

1.10 Ba e s to h ghe g owth 17

POlicy envirOnmenT Or Wind 18.1 Nat ona o c & egu ato amewo k 19

. New n t at ves om the gove nment 22

.3 Nat ona enewab e ene g aw n ind a 28

.4 Nat ona act on an on c mate change 29

grid inTegraTiOn 303.1 ind an e ect c t g d code 31

3. Techn ca cha enges n the ind an g d 31

3.3 Sma t g d n ind a 33

Wind induSTry: key driver OrlOW carbOn develOPmenT 364.1 in t at ves o a ow ca bon econom 37

4. ind a: A g oba manu actu ng hub 38

4.3 W nd tu b nes o owe w nd eg mes 39

inancing, buSineSS mOdelSand cdm challengeS 405.1 p oject nanc ng 41

5. ind an bus ness mode 425.3 pa t c at on n ca bon ma kets 43

addiTiOnal bene iTS OWind POWer Or india 446.1 UN c mate ta ks & the Cancun ag eements 45

6. GHG em ss ons and w nd owe 48

6.3 Ene g secu t 49

6.4 Ene g access 49

6.5 M enn um deve o ment goa s 50

Van V as Saga w nd a m, Ka nataka Enercon India

liST O bOxeS, igureS, TableS and annexeS

Bo 1: GWEO: scena o & assum t ons 8

Bo : Wh e owe ng? 13

Bo 3: Cha enges o e owe ng 14

Bo 4: Summa o cu ent sca and ta ncent ves 19

Bo 5: Ba e s to w de acce tance o GBi 3

Bo 6: H gh ghts o the amewo k rEC mechan sm 6

Bo 7: reduc ng costs & ma m z ng owe ca tu en ow w nd eg me 39

Bo 8: Bus ness mode com a son 4

Bo 9: O t ons o nanc ng w nd owe ojects 43

Bo 10: DirEC dec a at on 45

F gu e 1: State eve e owe ng otent a n ind a 13

F gu e : Annua nsta ed ca ac t o SWTs& w nd so a h b d s stems 16F gu e 3: D st but on o w ndso a h b d s stems 16

F gu e 4: O gan zat ona amewo k o rEC mechan sm 7

F gu e 5: D ag ammat c e esentat on o a sma t g d 34

F gu e 6: p oject nanc ng st uctu e 41

Tab e 1: G d connected enewab e ene g otent a n ind a 10

Tab e : State w se gene at on & nsta ed ca ac t 1

Tab e 3: Com a son o o c es o wnd owe n ke states 4

Anne 1: Com a son o state w se w nd owe deveo ment 5

Anne : Ca ac t acto s n ke states 5

Anne 3: Ave age s ze o WTG nsta ed [ 004 009] 53

Anne 4: Com a son o WTG techno og o t ons& deve o ment t ends 53

Anne 5: Status o rpS & rEC egu at ons 54

Anne 6: T e o ncent ves ava ab e unde SErCs 56

Anne 7: Manu actu e s o e ng c ass ii & iii w nd tu b nes 56

Anne 8: State eve g d nte connect on,mete ng act ces & cha ges 57

Anne 9: D st cts n ke states w th w nd a ms 58

Anne 10: insta ed w nd ca ac t stat st cs 60

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(Fa ooq Abdu ah

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i am de ghted to know that the Wo d inst tute o Susta nab e Ene g , the ind an W nd Tu b ne Manu actu e sAssoc at on and G oba W nd Ene g Counc a e b ng ng out ind an W nd Ene g Out ook 011 du ng the W ndpowe ind a 011, an nte nat ona w nd ene g con e ence and e h b t on be ng he d at Chenna .

W nd ene g s the astest g ow ng enewab e ene g secto n the count . W th a cumu at ve de o ment o ove13,000 MW ca ac t , t accounts o nea 70% o the nsta ed ca ac t n the enewab e ene g secto n thecount . The secto s g ow ng a d and we a e ke to ach eve, o the st t me n the count , a ca ac t addt on o 000 MW n a ea , th s ea .

M M n st has been at the o e ont o ov d ng a out su o t o the acce e ated deve o ment o w ndene g th ough oact ve o c and egu ato nte vent ons. Ou o c es ov de o a host o sca ncent ves,eed n ta s as a ecent act vated renewab e Ene g Ce t cate eg me. We have a so ecent nt oduced aGene at on Based incent ve GBi Scheme to he mo e inde endent powe p oduce s ipps ente the a ena. Wea e con dent that ou st ong ac tat ve measu es w he ind a a d ach eve ts w nd owe otent a .

Des te ou ema kab e og ess ead ng to ind a atta n ng the th os t on g oba n w nd owe gene at on, wea e consc ous that a ot mo e wou d need to be done. Wh e we ha ness ou vast on sho e otent a ; we have toa so a a e e o e ou ong coasta ne to ta the oss b e o sho e w nd otent a . We have to sta t ann ngo e owe ng o o d tu b nes and deve o ng the techno og to ha ness ow w nd eg mes. i ho e that themanu actu ng ndust as we as the deve o e s a e engag ng themse ves se ous n these ssues.

i com ment the ub she s o the out ook t s a ch on c e o ou success so a ; t s a so, i ho e, a em nde othe un n shed agenda and an ns at on o a o us to co ect ve st ve towa ds g eate and g eate he ghts.

D r . FA r O O Q A B D U l l A HM i N i S T E rN E W A N D r E N E WA B l E E N E r G yG O V E r N M E N T O F i N D i A

m e S S a g e

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KlAUS rAVEChairmanGlobal Wind Energy Council(GWEC)

G. M. pillAiFounder Director GeneralWorld Institute o Sustainable Energy (WISE)

D. V. GiriChairmanIndian Wind TurbineManu acturers Association(IWTMA)

5

OreWOrd

ind a s a ke ma ket o the w nd ndust , esent ng substant a o o tun t es o both the nte nat ona anddomest c a e s. in 010, the ind an w nd secto e e enced ts st ongest annua g owth eve , w th .1 GW o

new nsta at ons. W th st ong o t ca w and the ght ncent ves n ace, w nd ene g can a a majo o e nsecu ng a susta nab e and c ean ene g utu e o ind a.

We a e ve eased to e ease the ind a W nd Ene g Out ook 011 oduced jo nt b GWEC, WiSE and iWTMAn t me o the W nd powe ind a 011 event n Chenna . Th s e o t s a va uab e too o membe s o the w ndndust and o c make s a ke to ea n about the ma ket o o tun t es and the ega and egu ato amewo kn ind a. in add t on, t g ves us ns ghts nto the cha enges go ng o wa d and o e s suggest ons o ove com ngema n ng hu d es o w nd owe deve o ment.

The ind an gove nment has been comm tted to e o ng the count s vast enewab e ene g esou ces o theast th ee decades, and the t me has now come to e evate th s o t ca w to conc ete act on, both to ea thedomest c bene ts om enewab e ene g deve o ment, and to bu d on ind as g ow ng eade sh nte nat onan eso v ng both the ene g and c mate cha enges.

in th s, the wo k done b the M n st o New and renewab e Ene g unde the gu dance o the Honb e M n steD . Fa ooq Abdu ah s audab e. We ook o wa d to wo k ng c ose w th a stakeho de s to st engthen theo e that ind a can a n d v ng w nd owe deve o ment g oba ; wh e a so su o t ng the e o ts towa dsdeve o ng a com ehens ve enewab e ene g aw wh ch wou d e n o ce the Nat ona Act on p an on C mateChange ta get o 15% enewab e ene g o ind a b 0 0.

The ind a W nd Ene g Out ook 011 s the w nd ndust s cont but on to these d scuss ons, and the w nd ene gsecto ooks o wa d to cont nu ng the d a ogue w th dec s on make s n o de to a ow ind a to ea the u bene to th s nd genous and c ean ene g sou ce.

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STaTuS O Wind POWer in india

W i n d f a r m

i n B h u j

, G u j a r a t W i n d P o w e r W o r k s

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1.1 reneWable energy in india

Nea two decades ago the ind an econom was snatchedback om the b nk o a com os te econom c c s s1. The ind an gove nment unde took some ha d h tt ng be a zat onmeasu es that wou d have been unth nkab e n a bus ness asusua o t ca andsca e. la ge as a esu t o those act ons,toda ind a s n a os t on to be counted as one o theeme g ng econom es.

Success ve gove nments have ooked towa ds ock ng n anave age econom c g owth ate o at east 6 8%, u om

3.5% om the 1950s th ough the 1980s. The o g na object ve o the 11th F ve yea p an 007 01 was to ach evea GDp g owth ate o 9% ove th s e od. Th s was ev sedto 8.1% ast ea 3 b the p ann ng Comm ss on. G ven theans o a d econom c g owth, the equ ement o ene g

se v ces and su o t ng n ast uctu e s s mu taneousesca at ng.

E ect c t demand has cont nuous outst ed oduct on, and a eak ene g sho tage o a ound 1 .7% eva edn 009 10 4. To meet th s sho t a as we as the Nat onaE ect c t po c ta get o E ect c t o A b 01 5, thec eanest o t ons ava ab e to ind a a e renewab e Ene gTechno og es rETs . Fo the gove nment to se ouscons de meet ng ts om se o e ect c t o a b 01 6,enewab e ene g o t ons nc ud ng w nd owe w have toa a c uc a o e n ind as eme g ng ene g m . Not on

a e the env onmenta sound but a so the oject gestat on e ods a e s gn cant sho te than those o the mao nuc ea owe ants.

Acco d ng to the M n st o New and renewab e Ene gMNrE , toda the sha e o enewab e based ca ac t s10.9% e c ud ng a ge h d o o the tota nsta ed ca ac to 170 GW n the count , u om % at the sta t o the 10th

p an pe od 00 007 . Th s nc udes 13,065.78 MW ow nd, ,939 MW o sma h d o owe , 1,56 MW o bagassebased cogene at on, 997 MW o b omass, 73.46 MW owaste to owe and 17.80 MW o so a pV o g d connected enewab es at the end o 0107.

The o g na stated cumu at ve ta get o the cu ent ane od was to add 9 GW8 o new ca ac t o wh ch about14 GW was to come om enewab e sou ces. G ven theght m o egu ato and nst tut ona su o t, enewab e

sou ces cou d meet the o osed ca ac t add t on o 14 GWom enewab e ene g be o e the end o the 11th ve eaan e od 007 01 . Th s wou d b ng the tota sha e

o enewab e ene g sou ces u to 15% o the new nsta edca ac t n the 11th an e od.

Ove the ne t decade, ind a w have to nvest n o t onsthat not on ov de ene g secu t but a so ov de cost

e ect ve too s o e ad cat ng ene g ove t ac oss theboa d. ind a s a s gnato to the Un ted Nat ons F amewo kConvent on on C mate Change UNFCCC and has as a to ts ob gat ons e eased a Nat ona Act on p an on C mateChange9 e eased n June 008 b p me M n ste Manmohan S ngh wh ch has a d out h s gove nments v s on o asusta nab e and g een utu e o ind as econom .

ind as deve o menta needs w be cha enged b c matechange m acts. Th s equ es a t me e em t ve sh ttowa ds ach ev ng an ene g e c ent and g een econom .Ove the ne t cou e o decades enewab e ene g w a amajo o e n de ve ng that sh t.

1. Wind POWer ScenariOS

The e a e seve a ub shed scena os that e am ne the utu eo e o w nd owe g oba as a a t o the necessa ene gs stem ove hau towa ds a c ean ene g utu e. The G obaW nd Ene g Counc GWEC deve o ed ts scena os n

co abo at on w th G een eace inte nat ona and the Ge manAe os ace Cent e Dlr . These scena os a e u dated b enn a . The esu tant ub cat on the G oba W nd Ene gOut ook GWEO10 st ooks towa d 0 0, and thenonwa ds to 030 and 050. Some o the othe om nentscena os a e the Wo d Ene g Out ook11 010 om the inte nat ona Ene g Agenc iEA and the Ene g [r]evo ut on:A Susta nab e Wo d Ene g Out ook1 b G een eace 010 .

1 The gross scal de cit o the government (center and states) rose to 12.7% by 1990-91. This

de cit had to be met by borrowings, the internal debt o the government rose rom 35% o GDP at the end o 1980-81 to 53% o GDP by 1990-91. The oreign exchange reserves had dried up to the point that India could barely nance three weeks worth o imports and had toair-li t its gold reserves to raise 600 million dollars rom the Bank o England. http://www.cid.harvard.edu/archive/india/pd s/530.pd

2 The Indian Fiscal year runs rom April to March. Hence 11th Plan period will run rom April2007 March 2012, The 12th Plan period will run rom April 2012 to March 2017.

3 http://economictimes.indiatimes.com/Policy/Commission-scales-down-11th-Plan-growth-target-to-81/articleshow/5714921.cms

4 http://www.mnre.gov.in/pd /mnre-paper-direc2010-25102010.pd

5 http://economictimes.indiatimes.com/news/news-by-industry/energy/power/

electricity- or-all-by-2012-power-minister/articleshow/3836381.cms6 Currently about 400 million people do not have access to electricity in India.7 http://www.mnre.gov.in/ Click on link to Achievements section. There could be some

rounding-o errors.8 http://planningcommission.gov.in/plans/planrel/ veyr/11th/11_v3/11v3_ch10.pd 9 http://pmindia.nic.in/climate_change.htm10 http://www.gwec.net/index.php?id=16811 http://www.worldenergyoutlook.org/docs/weo2010/WEO2010_es_english.pd 12 http://www.springerlink.com/content/nu354g4p6576l238/ ulltext.pd

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STaTuS O Wind POWer in i ndia

The e a e man va ab es that w dete m ne the ath odeve o ment and g owth o w nd ene g . The bo above ststhe assum t ons unde ng the GWEO scena os and assocated assum t ons o w nd owe deve o ment.

gWeO ScenariO reSulTS

The GWEO scena os show that even w th the cont nuat ono cu ent o c measu es to encou age w nd owedeve o ment and se ous gove nment e o ts to meet

e st ng ta gets, the esu t ng Mode ate scena o g owthw ut the deve o ment o w nd owe on a d amat cad e ent t ajecto om the iEA based re e ence scena o.

The g oba w nd ma kets have g own b an ave age 8%e ea n te ms o tota nsta ed ca ac t du ng the astdecade. The iEAs re e ence scena o suggests that g owthates o w nd owe wou d dec ease substant a n thecom ng ea s, and that 010 wou d see an add t on o on6.8 GW. Howeve , n ea t the g oba w nd ndust added35.8 GW du ng the ea13.

The ind an ma ket g ew b a most 68% on a ea on ea bas sw th ,139 MW o new ca ac t nsta ed between Januaand Decembe 010. Th s made ind a the th d a gest annuama ket a te Ch na and the USA o 010. W th mo e than13 GW o tota nsta ed ca ac t at the end o 010, ind a anksth n the wo d n te ms o cumu at ve nsta ed ca ac t .

The iEA ojects that 3 7 GW o owe gene at on ca ac tw be needed n ind a b 0 0, wh ch wou d m a eaadd t on o about 16 GW. Th s s efected n the stated ta get

o new ca ac t add t on b the ind an gove nment undets 11th F ve yea p an. The an env sages an add t on o78.7 GW b 01 om t ad t ona sou ces coa , nuc ea anda ge h d o and an add t ona 9 GW b 01 ev sed om10.5 GW om new w nd gene at on ca ac t .

Du ng the st th ee ea s o the 11 th p an e od end ngMa ch 010, ind a added 4.6 GW o w nd owe ca ac t .W th ove a ea to go be o e the cu ent an e od s ovet s ve ke that ind an w nd owe nsta at ons w meetand e ceed the 11th an e od ta get, wh ch w be a eco do so ts as h sto ca the ta gets have neve been metth ough convent ona the ma and h d o ojects w th n aan e od.

BOx 1:glObal Wind energy OuTlOOk: ScenariO and aSSumPTiOnS

r S o iea b s mo t S o a S o

The most conse vat ve o a , there e ence scena o s based on theoject ons n the 009 Wo d Ene g

Out ook om the iEA. Th s takes ntoaccount on e st ng o c es andmeasu es, but nc udes assum t onssuch as cont nu ng e ect c t and gasma ket e o m, the be a zat on oc oss bo de ene g t ade and ecento c es a med at combat ng o ut on. The iEAs gu es on go out tothe ea 030, but based on theseassum t ons, Dlr has e t a o atedboth the ove a re e ence scena oand the g owth o w nd owe u to050.

The Mode ate scena o takes ntoaccount a o c and measu es tosu o t enewab e ene g e thea ead enacted o n ann ng stagesa ound the wo d. it a so assumesthat the ta gets set b man count es o e the enewab e, em ss oneduct ons and/o w nd ene g a esuccess u m emented, as we asthe modest m ementat on o newo c es a med at educ ng o ut onand ca bon em ss ons. it a so takesnto account env onmenta andene g o c measu es that we ea t o man gove nments econom cst mu us ackages m ementeds nce ate 008. U to 014 the gu es o nsta ed ca ac t a e c oseto be ng o ecasts than scena os.

The most amb t ous scena o, theAdvanced ve s on e am nes thee tent to wh ch th s ndust cou dg ow n a best case w nd ene gv s on. The assum t on he e s a c eaand unamb guous comm tment toenewab e ene g as e the ndust s ecommendat ons a ong w ththe o t ca w necessa to ca to wa d.

13 http://www.gwec.net/index.php?id=30&no_cache=1&tx_ttnews[tt_news]=279&tx_ttnews[backPid]=97&cHash=01e9c85e9

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Unde the iEAs re e ence scena o, ind as w nd owe maket s shown to sh nk cons de ab to on about 600 MWe ea b 030. Th s t ans ates nto a tota nsta ed ca ac t o me e 4 GW b 0 0 and 30.5 GW b 030. W ndowe wou d then oduce c ose to 60 TWh eve ea b0 0 and 75 TWh b 030, and save 35 m on tons o COn 0 0 and 45 m on tons n 030. investment n w ndowe n ind a wou d d o to about $910 m on b 03015 [at 010 $ va ue].

Howeve unde the GWEO scena os, we e ect that b theend o 015, between 4.7 GW and 9 GW w be nsta ed nind a. Unde the mode ate scena o th s wou d each a most46 GW b 0 0 and 108 GW b 030. in th s scena o, about$9 b on wou d be nvested n ind an w nd owe deve oment eve ea b 0 0, e esent ng a quad u ng o the009 nvestment gu es. Em o ment n the secto wou dg ow om the cu ent est mated 8,000 jobs to ove84,000 b 0 0 and 113,000 b 030.

14 The actual installed capacity at the end o 2010 was 13,065 MW, which was in act ahead o even the Advanced Scenario projection.

15 http://www.gwec.net/index.php?id=158

india: cumulaTive Wind POWer caPaciTy 2009-2030

[MW] ReferenceModerateAdvanced

2009 2010 2015 2020 20300

50,000

100,000

150,000

200,000

y r [mW] mo t [mW] a [mW]2009 10,9 6 10,9 6 10,9 62010 1 , 76 1 ,6 9 1 ,833

2015 19,0 6 4,747 9,1512020 4,0 6 46,104 65,1812030 30,5 6 108,079 160,741

Source: GWEO 201014 ; pp 31

r [MW] 93,864 1 0, 97 158,505 185, 58 95,783 415,433 57 ,733[TWh] 06 63 347 406 7 5 1,019 1,405

mo t [MW] 93,864 1 0, 97 158,505 198,717 460,364 83 , 51 1,777,550[TWh] 06 63 347 435 1,1 9 ,041 4,360

a [MW] 93,864 1 0, 97 158,505 01,657 533, 33 1,071,415 ,341,984[TWh] 06 63 347 44 1,308 ,6 8 5,4 9

Source: GWEO 2010,pp 6

glObal cumulaTive Wind POWer caPaciTy

0

500

1,000

1,500

2,000

2,500 Reference Moderate Advanced[GW]

2007 2008 2009 2010 2015 2020 2030

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The GWEO advanced scena os show that w nd owedeve o ment n ind a cou d go much u the de end ng u onadequate egu ato su o t and o t ca w . B 0 0 ind acou d have 65 GW o w nd owe n o e at on, em o ng170,000 eo e and sav ng 173 m on tons o CO em ss ons each ea . investment b then wou d be to the tuneo $10.4 b on e ea . The Wo d inst tute o Susta nab eEne g WiSE est mates de o ng just the cu ent gene at on o w nd tu b nes cou d e d a otent a onsho e w ndowe ca ac t o 65 GW100 GW.

The M n st o New and renewab e Ene g MNrE hasso a unde a ed the otent a o enewab e ene g rEsou ces n ind a. WiSE d d a ev sed est mate o the t ue otent a o g d connected rE n ind a as g ven n Tab e 1. WiSEsees ts own numbe s as a conse vat ve est mat on.

W th the esent eve o momentum estab shed n ind asw nd secto , the ten ea s between 0 0 and 030 cou dsee s ectacu a g owth some o the s stem c ba e s a eadd essed n a t me manne . W th the o t ca w gea edtowa ds u e o t ng the count s w nd esou ce andea ng the accom an ng econom c, env onmenta andene g secu t bene ts, the Advanced scena o cou d beeached, wh ch wou d see substant a w nd owe g owthn man eg ons o the count . W nd owe wou d thenbe nst umenta n ach ev ng a genu ne ene g evo ut on,utt ng ind a on the ath to a susta nab e ene g utu e. ind as now at a c oss oads o mak ng these dec s ons, wh ch w

dete m ne the utu e o he ene g s stem. As we as, to ag eat e tent, the utu e o the anet.

1.3 eSTimaTed Wind POWer reSOurce

The Cent e o W nd Ene g Techno og16 C WET ubshed the ind an W nd At as n 010, show ng a ge a eas

w th annua ave age w nd owe dens t es o mo e than00 Watts/m at 50 mete above g ound eve MAGl . Th ss cons de ed to be a benchma k c te on o estab sh ngw nd a ms n ind a as e CWET and the MNrE17.

The otent a s tes have been c ass ed acco d ng to annuamean w nd owe dens t ang ng om 00 W/m to500 W/m . Most o the otent a assessed s tes have an

annua mean w nd owe dens t between 00 50 W/m at50 MAGl. The W nd At as has ojected ind an w nd owensta ab e otent a name ate at ng as 49,130 MW at% and ava ab t 18. Th s s seen as a conse vat ve est mateo w nd owe otent a n ind a. Com a at ve w nd owedeve o ment ac oss some o the ind an states s shown nAnne 1 on age 5 .

16 In April 2010 C-WET published an Indian Wind Atlas which was prepared in collaborationwith Riso, Denmark. Fresh sites are selected or resource assessment by CWET every year and the rest are closed down, having served their purpose.

17 Centre or Wind Energy Technology: Indian Wind Atlas (2010). In India a site having an annualmean wind power density o 200 W/mat 50 [MAGL] is considered a wind power potential site

18 The assessment in the India Wind Atlas is assumed at 2% land availability or all states exceptthe Himalayan States, North-Eastern States and the Andaman & Nicobar Islands. In NE Statesand in the Andamans & Nicobar it is assumed as 0.5%, however the potential would change as per the real land availability in each state. Further the installable wind power potential iscalculated or each wind power density range by assuming 9 MW (average o 7D*5D, 8D*4Dand 7D*4D spacing is the rotor diameter o the turbine) could be installed per square km.

TABlE 1:grid cOnnecTed reneWable energy POTenTial in india

e So c p t mW ass P t lo to Pl a t o o W

W nd onsho e 100,000 5 19Sma H d o 15,000 45 46

Bagasse 5,000 60 6.3B omass 16,881 60 88.7

la ge H d o e st ng & utu e 100,000 60 5 5.6la ge H d o n Bhutan 16,000 60 84.1

Waste to Ene g 5,000 60 6. 8*So a CSp based owe gene at on 00,000 35 613.

*So a pV/CpV based owe gene at on 00,000 0 350.4Geothe ma 10,000 80 70.1

Tot 662,881 2,049.70

Note: Resource Potential o other RE S ources including o shore wind, tidal, biogas-based power not considered.* In India a total suitable desert area o 208,110 square kilometers is available or solar power generation. At 10% utilization o this area the stated CSP/PV potential can be achieved (assuming 20 MW/sq.km)

CSP: Concentrated Solar Power PV: Photovoltaic Source: WISE, January 2011

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W th the m ovement n techno og and nc ease n the hubhe ght o the w nd tu b ne t has become oss b e to gene atemo e e ect c t than assumed n ea e est mates. Based onthe esou ce assessment ca ed out b C WET, w nd s eeds

n ind a a e n the ow to mode ate ange e ce t n someockets ke coasta southe n Tam Nadu and the rann oKatch Guja at . Fu the ind as as et un assessed o sho ew nd otent a was not nc uded n the C WET stud .

Wind POWer denSiTy maP rOm indian Wind aTlaS (2010)

Source: Centre or Wind Energy Technology (2010)

a s

b o b

0 100< 200200 250250 300300 400400 500

Wind POWer denSiTy W/Sq.m

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1.4 O ShOre Wind POWer develOPmenT

A ong coast ne and e at ve ow const uct on costs cou dmake ind a a avou ed dest nat on o o sho e w nd owe .

O sho e w nd deve o ment s a e at ve new henomenon,and Eu o e s the on s zeab e ma ket at esent, w th a totao sho e ca ac t o 3 GW. The g oba o sho e w nd tu b nesegment has been dom nated b two estab shed a e s,Vestas and S emens. Howeve , the e a e othe manu actu e sact ve n the ma ket such as rEpowe , S nove , A eva andBa d, w th st ong nte est om GE W nd, Gamesa, xEMC and

W nW nD.

S ec a const uct on equ ements make o sho e w nd owe1.5 .5 t mes mo e e ens ve than onsho e, mak ng a gesca e o sho e de o ment d cu t n deve o ng eg ons.The cu ent ave age ated ca ac t o o sho e w nd tu b ness .5 MW as com a ed to ave age onsho e w nd tu b neca ac t o 1.06 MW BTM A S, 010 . it shou d be notedthat most o the 4 6 MW tu b nes cu ent n the test ng oea de o ment stage a e des gned o o sho e o e at on.i the gove nment su o ted sma ca ac t o sho e demonst at on ojects, t cou d bu d con dence and b ng n ub cand vate nvestment n th s secto n the ea s to come.

To e am ne the eas b t o o sho e w nd a ms, C WETconducted the st hase o ts stud at Dhanushkod n theState o Tam Nadu. So a , the a ea a ound Dhanushkodhas shown good otent a , whe e w nd owe dens t o350500 Watt e squa e met e w/m has been eco ded.Fo the ne t stage, C WET s cu ent awa t ng a ova omva ous gove nment agenc es.

Based on a stud ca ed out b WiSE on the c ea ancesequ ed o o sho e ojects, t s unde stood that mo ethan 0 cent a and state m n st es and de a tments wou dneed to be nvo ved n the ocess. As th s techno og s nts nascent stage n ind a the e s a need o s ec c o camewo k o o sho e w nd owe gene at on.

On the co o ate s de, the e have been a ew ea moveson o sho e w nd n ind a. O and Natu a Gas Co o at onONGC announced ts ans to ta o sho e w nd owe .Fu the , n June 010, g oba majo s ke A eva, S emens andGE announced the ans to e o e o sho e w nd oweo o tun t es n the count . Tata powe s the st vate

secto a e to subm t a o ma equest to the Gove nmento Guja at and Guja at Ma t me Boa d o a ova o an osho e oject n ind a.

1.5 Wind Turbine inSTallaTiOnS

W nd tu b ne gene ato WTG ca ac t add t on n ind a hastaken ace at a CAGr19 o 4.67% o the e od o 199010. The nsta ed ca ac t nc eased om a modest base o41.3 MW n 199 to each 13,065.78 MW b Decembe 010.

The o c a nsta at on gu es show that amongst the states,Tam Nadu anks the h ghest both n te ms o nsta edca ac t and n te ms o ene g gene at on om w nd, w thsha es o 41.8% and 53.4% es ect ve . Othe states keGuja at, Maha asht a and rajasthan have seen s gn cantg owth n w nd ca ac t ove the ast ou to ve ea s, a sodue to a stab e o c and egu ato eg me. Tab e ov desan ove v ew o the sha e o d e ent states n nsta edca ac t MW and cumu at ve ene g gene at on n M onUn ts0 .

TABlE 2:STaTe WiSe generaTiOn and inSTalled caPaciTy

St tc t

g t o muc t st

p t mWAndh a p adesh 1,451 138.4Guja at 8,016 1,934.6Ka nataka 9,991 1,517.Madh a p adesh 554 30.8Maha asht a 11,790 ,108.1rajasthan 3,938 1,095.6Tam Nadu 41,100 5,073.1Ke a a 110 8Tot 7,6950 12,125.8up to 31 st March 2010 Source: WISE, January 2011

1.6 rePOWering POTenTial

re owe ng s the ocess o e ac ng o de , sma e w ndtu b nes w th mode n and mo e owe u mach nes, wh chwou d ea cons de ab mo e owe om the same s te. inind a, about 46% o the WTGs we e ated be ow 500 kW n010, add ng u to ,331.3 MW about 18% o cumu at vensta ed ca ac t .

19 CAGR : Compound Annual Growth Rate20 One Unit is = 1 kWh

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F gu e 1 shows state w se e owe ng otent a as oMa ch 009. Amongst the states w th good w nd otent aTam Nadu eads w th a e owe ng otent a o mo e than800 MW o owed b Guja at, Maha asht a, Andh a p adeshand Ka nataka.

A s ec a d ve o e owe ng o o d w nd a ms unde takenb the cent a gove nment wou d encou age the ndustto take th s u on a a ge sca e. Th s cou d be done b wao c eat ng su tab e mechan sms and o e ng su o t a ong

w th nanc a ncent ves, to make new e owe ng ojectsv ab e.

Cu ent , ne the the states no the cent a gove nmentov des ded cated o c su o t o ncent ves to encou age

ind an w nd owe deve o e s o nvesto s to e owe theo d ojects. Howeve , the e a e some cha enges to beadd essed be o e a com ehens ve e owe ng attem t nind a. Some o the ke cha enges a e sted n Bo 3.

BOx : Why rePOWering?

Many of the states facing power shortages are also host to sites with good wind power potential which is not beingused e c ent and s cu ent sadd ed w th o d and ne c ent w nd tu b nes. re owe ng w th mo e owe u tu b neswou d b ng cons de ab e bene ts to these states.

Large areas are occupied by more than 8,500 small rating turbines (

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A these ssues e ated to e owe ng can no doubt beeso ved b ea n ng om the e e ences n othe ma ketssuch as Denma k and Ge man , a though the a e st at theea stages o the own e owe ng. These ma kets havent oduced va ous ncent ve mechan sms and o c es toencou age e owe ng, and done awa w th ov s ons thatn t a ham e ed e owe ng. i a sens b e o c ackage

s deve o ed, man o d s tes can ov de two to th ee t mesthe cu ent e ect c t gene at on a te e owe ng.

1.7 TechnOlOgy develOPmenT TrendS

Mode n w nd owe techno og has come a ong wa n theast two decades, and both g oba and n ind a, m ovedtechno og has s ow and stead m oved ca ac t ut zat on. The e st ng and eme g ng t ends n the deve o ment ow nd owe techno og a e d scussed n th s sect on.

A ke t end n the ind an ndust s the deve o ment o mu tmegawatt tu b nes nsta ed at g eate hub he ghts. la ge

d amete oto s mean that a s ng e w nd owe gene ato canca tu e mo e ene g , o mo e owe e towe . Th s a owsWTGs to take advantage o h ghe a t tudes w th st ongew nds and ess tu bu ence w nd s eed gene a nc eases w thhe ght above the g ound . Subsequent a ge mach nes haveesu ted n a stead nc ease n the ca ac t acto on ave ageom 10 1 % n 1998 to 0 % n 010.

Fo two decades now, g oba ave age WTG owe at ngshave g own a most nea , w th cu ent comme c amach nes ated on ave age n the ange o 1.5 MW to .1 MW.Deta s o e st ng ca ac t acto s ac oss the ve ke stateso Guja at, Ka nataka, Madh a p adesh, Maha asht a andTam Nadu a e esented n Anne on age 5 .

The ave age s ze o WTGs nsta ed n ind a has g aduanc eased om 767 kW n 004 to 1,117 kW n 009.Cu ent , megawatt sca e tu b nes account o ove ha thenew w nd owe ca ac t nsta ed n ind a. The ave age s zeo WTGs nsta ed n a the majo ma kets between the ea s004 009 s shown n Anne 3 on age 53.

BOx 3: challengeS Or rePOWering

T ow s p: re owe ng w educe the numbe o tu b nes and the e ma not be one to one e acement.Thus, the ssue o owne sh needs to be hand ed ca e u .

l ow s p: Mu t e owne s o w nd a m and ma c eate com cat ons o e owe ng ojects.

Pow P s a t: ppAs we e s gned w th the state ut t o 10, 13 o 0 ea s and the es ect vee ect c t boa d ma not be nte ested n d scont nu ng o ev s ng the ppA be o e ts st u ated t me.

e t t t o t s: The cu ent g d ac t es a e des gned to su o t esent gene at on ca ac t es andma equ e augmentat on and u g ad ng.

a t o osts: The add t ona decomm ss on ng costs o o d tu b nes such as t ans o t cha ges need to beassessed.

d spos o o t s: The e a e va ous o t ons such as sc a ng, bu back b the gove nment o manu actu e ,o e o t. loca ca ac t ma need to be deve o ed.

i t s: One o the ma ba e s to e owe ng s the gene a ack o econom c ncent ve to e ace the o deWTGs. in o de to com ensate o the add t ona cost o e owe ng, a o ate ncent ves a e necessa .

Po p : A new o c ackage shou d be deve o ed wh ch wou d cove add t ona oject cost and add onta b the State E ect c t regu ato Comm ss ons SErCs and nc ude a e owe ng ncent ve on the nes o theecent nt oduced gene at on based ncent ve scheme b MNrE .

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The sh t n ind a to a ge WTGs s a esu t o m oved n ast uctu e ava ab e to hand e b gge tu b nes and m ovedeconom cs o the secto . As gene ato s ze nc eases, edove a oject costs a on a e un t o out ut bas s. G venthat nd ng s tes and estab sh ng t ansm ss on co do s s as gn cant nvestment, deve o e s need to ma m ze the useo ava ab e s tes o w nd owe gene at on. insta ng eweh gh ca ac t tu b nes, ve sus nsta ng a g eate numbeo sma e tu b nes, educes ove a ca ta nvestment bowe ng nsta at on, ma ntenance and otent a ea estatecosts. Fo e am e, nstead o s t ng ten 600 kW tu b nes onac es o and, deve o e s can nstead s te on th ee .0 MWWTGs. A deta ed com a son o WTG techno og o t onsand deve o ment t ends n ind a s ov ded n Anne 4 onage 53.

1.8 inveSTmenT in Wind POWer SecTOr

The Gove nment o ind a has out ned amb t ous ca ac te ans on and nvestment ans o the cu ent an e od

007 01 and w nd owe ojects o m the majo t othe o osed ca ac t add t on. The tota nvestments ondeve o ment o rE du ng the an e od s e ected to ben e cess o $15 b on ~rs. 60,000 c o es . The majo to th s nvestment s be ng a sed th ough domest c vatenvesto s, concess ona nanc ng om s ec a sed gove nment agenc es and mu t ate a nanc a nst tut ons.

Due to g ow ng awa eness o the bene ts o w nd oweand evo v ng gove nment o t es mo e banks and end ngnst tut ons a e show ng nte est n und ng these ojects. Onto o the nanc ng s ect um s irEDA, the ind an renewab e Ene g Deve o ment Agenc , the a e noda agenc oenewab e ene g deve o ment n ind a and a und ng a m

o MNrE. The othe gove nment agenc es that act ve undenewab e ene g ojects a e the powe F nance Co o at onpFC and ru a E ect cat on Co o at on rEC .

The mu t ate a agenc es such as the Wo d Bank, theinte nat ona F nance Co o at on iFC , and the As anDeve o ment Bank ADB , as we as b ate a agenc es suchas KFW Ge man Deve o ment Bank have a so ste ed uthe ass stance to the secto n the ast ew ea s. p omnent domest c banks that und enewab e ojects a e iDBi,iCiCi, iFCi, SBi and pNB among othe s. Fo e gn banks suchas Standa d Cha te ed, rBS ind a o me known as ABN

Am o and rabobank a e a so ov d ng enewab e ene goject nanc ng.

Cu ent the ma ket n ind a o the rE bus ness s g ow ngat an annua ate o 15%. The sco e o vate nvestmentn rE s est mated at about $3 b on e annum. G ven theevo v ng egu ato and o c eg me, the bus ness out ook sgene a os t ve at th s t me. p o osed o c gu dance andegu at ons a e a so com ng nto ace to u the st engthenth s ate o g owth.

1.9 Small Wind and hybrid SySTemS

The g oba ma ket o sma w nd tu b nes SWTs has beenon the u sw ng ove the ast two to th ee ea s. Th s s d venb a d g ow ng ene g demand, h ghe oss ue cesand m oved SWT techno og , wh ch can be de o ed o ad ve se oo o a cat ons, both n g d t ed and standa one modes.

W th the nc eas ng sho t a n owe su and ene gac oss the count , ind a cou d bene t s gn cant ome o t ng the otent a o m c o gene at on techno og es thatcan meet ene g needs unde the d st buted gene at on mode,so as to ov de ong te m so ut ons. WiSE est mates ind asm c o gene at on otent a at about 83 GW. Howeve , costsa e a majo hu d e and o c su o t needs to be o entedtowa ds omot ng mass manu actu ng and ea ado t on othese m c o gene at on o t ons.

A though a sma annua ma ket o such s stems ~15000 kW cu ent e sts n ind a, t s a ge d ven b theca ta subs d og amme o the MNrE. Most o the cu entnsta at ons a e o the stand a one t e.

W nd a m n Gadag, Ka nataka Suzlon

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The Sma W nd Ene g and H b d S stems1 og ammen t ated n 1994 b the MNrE ocussed so e on sma w ndene g and h b d s stems. The object ve o the og ammes to deve o techno og and omote a cat ons o wateum ng w ndm s and ae o gene ato s/w nd so a h b ds stems. A though the og amme he ed to omote awa eness o sma w nd s stems n ind a, t c eated nte est onamong se ect use s and has et to make a ea m act. Them ementat on o the og amme was e tended n A010 to the sca ea 011 01 . The h s ca annua ta getwas set to nsta ed 500 kW ae o gene ato /w nd so a hb d s stems and 5 wate um ng w ndm s w th est matednanc a budget o rs. 50 m on ove 010 01 .

The og amme s m emented th ough State Noda Agenc es SNA ma n n Andh a p adesh, Assam, B ha , Guja at,Ka nataka, Ke a a, Maha asht a, rajasthan, S kk m, TamNadu, Goa, and West Benga and the Andaman and N cobais ands. Manu actu e s o wate um ng w ndm s, ae ogene ato s, and w ndso a h b d s stems a e a so e g b e toma ket the s stems d ect to use s. The og amme s be nge tended to othe otent a states. The deve o ment ath ow nd so a h b d s stems n ind a s nce 1994 s summa zedn F gu e .

An agg egate ca ac t o 1.07 MW o ae o gene ato s oh b d s stems was nsta ed unde the og amme u toDecembe 010. inte est ng , a most 57% o the tota cumuat ve nsta at ons n the count a e n Maha asht a o owedb Goa, Ka nataka, West Benga , Man u and Tam Nadu.A most a the ojects sanct oned b the MNrE and thoseactua comm ss oned ava ed themse ves o ca ta subs dbene ts om the M n st . The sha e o ke states w th SWTsand w ndso a h b d s stems s shown n F gu e 3.

FiGUrE : annual SancTiOned & acTual inSTalled caPaciTy O SWTs & WindSOlar hybrid SySTemS

MNRE Scanctioned Capacity (Yearly) Actual Installed Capacity, kW (Yearly)

0

50

100

150

200

250

0

200

400

600

800

1,000

1,200

1,400

1,600

1993-94 1995-96 1997-98 1999-00 2001-02 2003-04 2005-06 2007-08 2009-101994-95 1996-97 1998-99 2000-01 2002-03 2004-05 2006-07 2008-09 2010-11

Source: WISE

FiGUrE 3:STaTe-WiSe diSTribuTiOn OWindSOlar hybrid SySTemS

Goa15%

Karnataka4%

Maharashtra57%

WestBengal4%

Manipur7%

Tamil Nadu2%

Punjab3%

Andhra Pradesh1%

Sikkim 1% Rajasthan 1%Gujarat 1%

Haryana 1%Others 3%

Source: WISE21 http://mnre.gov.in/adm-approvals/wind-hybrid-system.pd 22 http://www.mnre.gov.in/ click on link to Achievements on main page.

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1.10 barrierS TO higher grOWTh

The ow ut zat on o the count s w nd owe otent aso a s att butab e to seve a acto s, nc ud ng ack o ana o ate egu ato amewo k to ac tate u chase oenewab e ene g om outs de the host state, nadequateg d connect v t ; h gh whee ng3 and o en access4 cha gesn some states, de a s n acqu ng and and obta n ng statuto c ea ances.

in 010, ind a nsta ed a eco d .1 GW o new w nd oweca ac t . Fo th s g owth to be ma nta ned t s essent a that

the ndust s su o ted b a ed ctab e o c and egu ato env onment. p o osed amendments to ind as ta awssuch as the D ect Ta Code DTC; Goods and Se v ces Ta GST w have an m act on the nvestment o t o o o w ndowe . Bes des these the e a e othe otent a ba e s toach ev ng h ghe g owth ates n the sho t to med um te m.

The ma n eason o the g owth o w nd owe has been theava ab t o Acce e ated De ec at on AD , ov d ng theac t to o set ta es on ncome om othe sou ces. W ththe oss b e nt oduct on o the DTC om the ne t sca ea01 13 , the quantum o th s bene t cou d be a ected,

wh ch cou d have an m act on the nvestments n the ind anw nd secto . The Gene at on Based incent ve GBi schemehas not att acted as man inde endent powe p oduce sas env saged, s nce the nvesto s a e o the o n on that thecu ent ate o rs. 0.5/kWh s not adequate o n ne w th thesca bene ts o e ed unde the AD scheme, and the two a emutua e c us ve.

Fu the , the mu t tude o egu ato agenc es adds to the

con us on the e s the Cent a E ect c t regu ato Comm ss on CErC and each state a so has a State E ect c tregu ato Comm ss on SErC . The CErC ssues gu de neso dete m n ng the eed n ta om rE sou ces and thesea e a cab e to cent a gove nment owe gene at ngstat ons and those who t ansm t owe n the nte stateco do . Howeve , th s s a cab e to a ve sma numbeo owe oduce s and the vast majo t s st cove ed bthe ta dete m ned b the SErCs. Th s dua t s not use u .Fo e am e an SErC cou d dete m ne the ta wh ch ma o

ma not be equ va ent to the ta dete m ned b the CErC.Th s has a majo m act on the oject deve o e s.

inadequate g d n ast uctu e s anothe ke ssue that needs

to be add essed u gent . Ac oss most o those states w ths gn cant w nd otent a , the g d does not have su c ents a e ca ac t to be ab e to evacuate eve nc eas ng amounto w nd owe . As a esu t, the state d st but on ut t esa e e uctant to acce t mo e owe and on a me t o debas s e e the ma owe . Thus, the e s an u gent need toaugment the g d ca ac t and the eg ona Southe n G dneeds to be connected w th the est o the count on a eat me bas s. Th s equ es bette o ecast ng o owe demandac oss the nat on, and a mode n zat on o the g d.

in most o the states ava ab t o and o w nd a ms s acontent ous ssue. Even vate ands a e ava ab e, conves on o and use status om ag cu tu a to non ag cu tu as a t me consum ng ocess. Fu the the and s c ose to aotected a ea o o est ands then obta n ng c ea ance omo est autho t es o us ng the o est and o w nd owegene at on s a so t me consum ng.

Cu ent and ojected g owth ates o w nd owe deve oment n ind a a e utt ng nc eas ng st a n on the WTG manu

actu ng secto , and the com onent su cha n needs tobe m oved. it wou d be bene c a o the sma and med umente ses [SMEs] to have acces to concess ona nanc ng tobea the sks e ated to oduct on ca ac t augmentat on.

As the ndust g ows, the e w be demand o t a ned manowe and acco d ng , the academ c cu cu um ma needto be mod ed. The iWTMA has sta ted an n t at ve towa dsth s end b jo n ng hands w th a oca eng nee ng co ege todeve o a cad e o t a ned man owe w th the he o thendust . De end ng on the success o the ot og amme,th s ndust d ven n t at ve s anned to be e catedac oss othe techn ca co eges and o techn cs.

Vestas India

23 Wheeling charges: An amount charged by one electrical system to transmit the energy o ,and or, another system or systems.

24 Open access: In the Electricity Act, 2003 it is de ned as the non-discriminatory provision or the use o transmission lines or distribution system or a associated acilities with such lines or system by any licensee or consumer or a person engaged in generation in accordance with theregulations speci ed by the Appropriate Commission

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POlicy envirOnmenT Or Wind

W i n d f a r m

i n D

h u l e

, M a h a r a s

h t r a S u z l o n

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.1 naTiOnal POlicy & regulaTOry rameWOrk

Enactments o to the E ect c t Act, 003 EA 003 hadno s ec c ov s ons that wou d omote enewab e o nonconvent ona sou ces o ene g . Des te th s sho tcom ng, theM n st o New and renewab e Ene g 5 MNrE attem tedto g ve m etus to the secto b wa o o c gu de nesn 1994 1995, w th m ed esu ts. Howeve the EA 003changed the ega and egu ato amewo k o the enewab e ene g secto . The Act ov des o o c o mu at on bthe Gove nment o ind a and mandates the State E ect c tregu ato Comm ss ons SErCs to take ste s to omote

enewab e and non convent ona sou ces o ene g w th nthe ju sd ct on.

a e t t a t, 2003The E ect c t Act 003, nt oduced some enab ngov s ons conduc ve to acce e ated deve o ment o g d

connected enewab es.

Unde Sect on 61 h , omot on o cogene at on and gene at on o e ect c t om enewab e sou ces o ene g has beenmade the e c t es ons b t o SErCs, wh ch a e bound baw to take these cons de at ons nto account wh e d a t ngthe te ms and cond t ons o ta egu at ons. Nea aSErCs have ssued the ta egu at ons nco o at ng su tab e c auses, wh ch w enab e them to ov de a e e ent at eatment to enewab e ene g rE du ng the ta dete mnat on ocess.

Unde Sect on 86 1 e , the SErCs a e a so made es ons b eo the o ow ng:

. Ensu ng su tab e measu es o connect v t o enewab eowe to the g d

. Sa e o enewab es based e ect c t to an e son. Mandat ng u chase o a ce ta n e centage o totaene g consum t on om enewab es.

25 MNRE was then known as the Ministry o Non-conventional Energy Sources (MNES)

BOx 4:Summary Of currenT fiScal and Tax incenTiveS

80% accelerated depreciation for investors if the project is commissioned before 30 September of the same nanc a ea ; o 40% the oject s comm ss oned be o e 31 Ma ch o the same nanc a ea .

Generation Based Incentive (GBI) scheme for gridinteractive wind power projects -a GBI of Rs 0.50 per kWh asnt oduced n 009 [deta s be ow]

Concession on import duty on speci ed wind turbine components

10 year income tax holiday for wind power generation projects

100% exemption from excise duty on certain wind turbine components

Wheeling, banking and third party sales, buybackfacility by states

Guaranteed market through a speci ed renewable portfolio standard in some states, as decided by the state electricity regulator

Reduced wheeling charges as compared toconventional energy

100% FDI investment allowed in renewable energy generation projects

Special incentives provided for promotion of exports from India for various renewable energy technologies underenewab e secto s ec c S ec a Econom c Zones SEZ .

Wind potential states have announced preferential tariffs, ranging from Rs 3.395.32 per kWh

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As mandated unde sect on 86 1 e o the E ect c t Act003 , SErCs have ed quotas n te ms o % o e ect c t

be ng hand ed b the owe ut t to ocu e owe omenewab e ene g sou ces. The mandate, wh ch s ca ed arenewab e pu chase S ec cat on 6 rpS , va es om 0.5% to14% n va ous states ove va ng t me sca es. Few states havecome out w th techno og s ec c rpSs. Bes des, the state

egu ato s dete m ne the ta o a rE ojects n the statesand ensu e connect v t to the g d th ough e tens on o oweevacuat on om the rE oject s tes, wh ch a e gene a atemote ocat ons and awa om majo oad cent es.

Fu the the EA 003 n t ated the ado t on o the o ow ngke o c es and e ated egu at on:

i. Nat ona E ect c t po c 005ii. Nat ona Ta po c 006iii. ru a E ect cat on po c 006

i. naTiOnal elecTriciTy POlicy ,2005

in com ance w th sect on 3 o the E ect c t Act 003the cent a gove nment not ed the Nat ona E ect c tpo c n Feb ua 005. C ause 5.1 o the NEpst u ates seve a cond t ons to omote and ha nessenewab e ene g sou ces. The o ow ng a e an e ce tom the e evant o t ons.

5.1 .1 Non convent ona sou ces o ene g be ng themost env onment end the e s an u gent need toomote gene at on o e ect c t based on such sou ces

o ene g . Fo th s u ose, o ts to to t p t ost o p o ts based on non

convent ona and enewab e sou ces o ene g . Cost oene g can a so be educed b omot ng com et t onw th n such ojects. At the same t me, t p oot o s s wo so to t o

op t o t o o s s st owto t s so s.

5.1 . The E ect c t Act 003 ov des that co gene at on and gene at on o e ect c t om non convent onasou ces wou d be omoted b the SErCs b p os t s s o o t t w t and so t t to p so and a so b sp , ou chase o e ect c t om such sou ces, a p to t tot o s pt o o e ect c t n the a ea oa d st but on censee. Such e centage o u chase oowe om non convent ona sou ces shou d be madepp o t t s to t tSercs t t st. p og ess ve the s o t t o o o t o so s wo to s as esc bed b State E ect c t regu ato

Comm ss ons. Such u chase b d st but on com an essha be th ough com et t ve b dd ng ocess. Cons deng the act that t w take some t me be o e non con

vent ona techno og es com ete, n te ms o cost, w thconvent ona sou ces, theco ss o t pp op t t p s to p o ot t s

t o o s.

5.1 .3 indust es n wh ch both ocess heat and e ect ct a e needed a e we su ted o cogene at on o e ect ct . A s gn cant otent a o cogene at on e sts n thecount , a t cu a n the suga ndust . Sercs p o ot ts tw t o to

t o st t o s o p so s p s pow om such ants. Cogene at on s stem

a so needs to be encou aged n the ove a nte est o ene g e c enc and a so g d stab t .

W nd a m n Tam Nadu Vestas India

26 Renewable Purchase Speci cation (RPS) and Renewable Purchase Obligation (RPO) areinterchangeably used terms.

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b i t t e Poin ind a the st attem t at u ng togethe an umb e aene g o c came o th a te a most 60 ea s o thecount s e stence. The p ann ng Comm ss on b ought outthe integ ated Ene g po c : re o t o the e e t comm tteeiEp 7 n Octobe 006, wh ch ov ded a b oad ove a ch ngamewo k o the mu t tude o o c es gove n ng the o

duct on, d st but on, usage etc. o d e ent o ms o ene gom va ous sou ces convent ona and non convent ona .

A though the e o t o the e e t comm ttee has beenava ab e s nce 006, o t ca comm tment to t has beenm ted. A one pub c in o mat on Bu eau8 piB esse ease n Decembe 008 nd cated that the cab net hadassented to the o c and enume ated some ke eatu eso the iEp. The o ow u on ts ecommendat ons a e not aseas dete m nab e as those o the Nat ona Act on p an onC mate Change.

ii. naTiOnal Tari POlicy ,2005

Nat ona Ta po c 006 amed unde the Sect on 3o the EA 003:

Elaborates the role of regulatory commissions

Mechanism for promoting use of renewable energy

Time for implementation

The o ow ng s an e ce t o the e evant o t ons.

1 pu suant to ov s ons o sect on 86 1 e o the Act,the A o ate Comm ss on sha f p t o p s o om such sou c

es tak ng nto account ava ab t o such esou ces nthe eg on and ts m act on eta ta s. Such ecentage o u chase o ene g shou d be made a

cab e o the ta s to be dete m ned b the SErCsatest b A 1, 006. it w take some t me be o enon convent ona techno og es can com ete w thconvent ona sou ces n te ms o cost o e ect c t .The e o e, ocu ement b d st but on com an essha be done at e e ent a ta s dete m ned b theA o ate Comm ss on.

Such ocu ement b D st but on l censees o u

tu e equ ements sha be done, as a as oss b e,th ough com et t ve b dd ng ocess unde Sect on63 o the Act w th n su e s o e ng ene g omsame t e o non convent ona sou ces. in the ongte m, these techno og es wou d need to com etew th othe sou ces n te ms o u costs.

3 The Cent a Comm ss on shou d a down gu de nesw th n th ee months o c ng non m owe ,es ec a om nonconvent ona sou ces, to beo owed n cases whe e such ocu ement s notth ough com et t ve b dd ng.

iii. rural elecTri icaTiOn POlicy, 2006

A so, n com ance w th Sect ons 4 and 5 o theE ect c t Act, 003, the cent a Gove nment e a edthe u a e ect cat on o c rEp ub shed n August006. The o c unde ts Sect on 3 3.3 o the st t meov ded o c amewo k o decent a zed d st buted

gene at on o e ect c t based on e the convent ona onon convent ona esou ces o methods o gene at on.The eb ov d ng the e evant egu ato d ect on oo g d/ stand a one sma sca e w nd a ms. The o owng s an e ce t o the e evant o t ons o EA 003 andrEp, as a cab e to decent a zed gene at on.

Sect on 63 Stand a one s stem means the e ect c ts stem set u to gene ate owe and d st bute e ect c tn a s ec ed a ea w thout connect on to the g d;

Sect on 3.3 Decent a zed d st buted gene at on ac t estogethe w th oca d st but on netwo k ma be basede the on convent ona o non convent ona methods oe ect c t gene at on, wh cheve s mo e su tab e and econom ca . Non convent ona sou ces o ene g cou d beut zed even whe e g d connect v t e sts ov ded t sound to be cost e ect ve.

Sect on 4 The cent a gove nment sha , a te consu ta

t on w th state gove nments, e a e and not a nat onao c , e m tt ng stand a one s stem nc ud ng thosebased on enewab e sou ces o ene g and non convent ona sou ces o ene g o u a a eas.

Sect on 5 The cent a gove nment sha a so o mu ate anat ona o c , n consu tat on w th the state gove nmentsand the state comm ss ons, o u a e ect cat on and obu k u chase o owe and management o oca d stbut on n u a a eas th ough ancha at nst tut ons, use sassoc at ons, co o e at ve soc et es, non gove nmenta ogan zat ons o anch sees.

27 http://planningcommission.nic.in/reports/genrep/rep_intengy.pd 28 http://www.pib.nic.in/newsite/erelease.aspx?relid=46172

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U on e am n ng the iEp u e om the e s ect ve othe su o t t ov des to rETs, the most g ound b eak ngsegment s to be ound n Cha te 7 Policy or promotingrenewable and non-conventional energy sources, wh chem has zes the need to move awa om ca ta subs d estowa ds e o mance ncent ves o omot ng enewab esou ces.

. neW iniTiaTiveS rOm The gOvernmenT

. .1 generaTiOn baSed incenTiveS

in 009, the Gove nment o ind a m emented a Gene at on Based incent ve GBi scheme o g d connected w ndowe ojects. A GBi o rs. 0.50 e kWh, w th a ca oa o mate $33,000 e MW e ea , tota ng $138,000e MW ove 10 ea s o a ojects e s be ng o e ed undeth s scheme. The GBi s ove and above the ta a oved bes ect ve SErC and w be d sbu sed on a ha ea bas sth ough the ind an renewab e Ene g Deve o ment AgencirEDA . Th s scheme s a cab e to w nd owe ojectsnot us ng acce e ated de ec at on bene ts and wh ch a ecomm ss oned be o e 31st Ma ch 01 . Howeve w nd oweojects se ng owe to th d a t /me chant owe ant

a e e c uded om the GBi ncent ves.

The GBi ncent ve scheme s be ng m emented th oughirEDA o wh ch se a ate gu de nes we e ub shed. As ethese gu de nes each nvesto , whethe us ng GBi ncent veso Acce e ated De ec at on ncent ves, s equ ed to eg stew th irEDA. irEDA ssued a Un que ident cat on Numbeo each WTG comm ss oned unde th s scheme a te 17th

Decembe 009 [mo e deta s n ne t segment].

Howeve , ou teen months nto the m ementat on o thencent ves, the og ess on the g ound has been much s owethan e ected. On y 394.21 MW o new ca ac ty was eg ste edo GBi t Janua y 201129. Wh e t s t ue that any new o cyn t at ve takes t me to ga n acce tance, t s a so t ue that thecu ent GBi scheme needs to be made uc at ve enough n o deto encou age w nd owe deve o e s to o t o the GBi ove thee st ng acce e ated de ec at on (AD) benefts.

raTiOnale Or gbi

The ma n object ves o the GBi scheme a e:

a. To b oaden nvesto base b Facilitating the entry of large Independent Power

p oduce s ipps Attracting Foreign Direct Investment (FDI) to the wind

owe sectob. To ov de a eve a ng e d o va ous c asses o

nvesto s.c. To ncent v ze h ghe e c enc es

d. To ov de a amewo k o t ans t on om a u envestment based ncent ve to an outcome based ncent ve

GBi was nt oduced top o ot t t o o wpow athe than the me e nsta at on o WTGs. The GBischeme attem ts to bu d a bus ness case o ipps. The advento ipps n the segment s a so e ected to ead to mo eut t sca e nsta at ons wh ch, n tu n, wou d he bu dnvesto con dence n the secto . To date the majo t oind as w nd owe g owth has been nanced domest ca .The bu k o the nanc ng has been asset nanc ng whe eca t ve owe gene ato s have been nvest ng to e andthe own owe su . C ed t om vate nvesto s hast ad t ona been e tended to w nd owe ojects based onthe ba ance sheet st ength o the deve o e athe than onthe c ed two th ness o the oject tse WiSE, 010 .

W th the ent o ipps, the WTG manu actu ng segment sa so ke to att act a g eate numbe o a e s, esu t ng nmo e com et t ve c ng. S nce the GBi s based on actuae ect c t gene at on athe than ca ac t add t on, deve o e s

w st ve towa ds ma m z ng the e c enc o the ojects n o de to ea the u bene ts. Th s wou d encou agee c enc es n the ent e va ue cha n o the w nd owe secto ,nc ud ng oject nsta at on act ces, tu b ne o e at ons anddes gn as we as o e at on and ma ntenance. Such act ceswou d u the add to the nanc a v ab t o ojects.

imPacT O The gbi Scheme

The GBi scheme was n t a m emented n June 008on a ot bas s. The ot scheme ece ved an ove whe mng es onse w th ove 300 MW o ojects a ng o the49 MW scheme. Tak ng th s as a os t ve s gn, the gove n

29 http://www.ireda.gov.in/pd /GBI%20Projects.pd

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ment e aunched the scheme n Decembe 009, en a gng ts s ze to 4,000 MW. Unde the e anded scheme, thegove nment ea ma ked $84.4 m on/rs. 3.8 b on o w ndowe ojects.

Des te the n t a eu ho a su ound ng the GBi scheme,the actua og ess has been s owe than e ected. S ncets announcement, 53 ojects agg egat ng 394. 1 MWand 408 WTGs have been eg ste ed o GBi bene ts as o31.01. 011 . About 80% o the ca ac t eg ste ed unde theGBi scheme s accounted o b s nsta at ons: 0 . MWo Ch na l ght and powe ind a l m ted; two nsta at ons o

50.4 MW o il&FS30

; and th ee nsta at ons o 40.8 MW othe Vaa u ind a powe Co o at on. The ema n ng 0% smade u o 16.5 MW ojects each o G ace in ast uctu ep vate ltd and Ene g W nd Fa ms p vate ltd and oneoject o Ce co indust es pvt ltd o 1 MW. The ema n ng

39 ojects a e sma sca e ojects. M ss ng om the st oa cants a e majo ipps and ncumbent deve o e s.

Du ng the same e od th ough Janua 31, 011 a tota o69 ojects w th nsta ed ca ac t o 494.6 MW we esubm tted to irEDA o us ng the acce e ated de ec at onoute31. The ba ance o the nsta ed ca ac t n ind a th s eas n the ocess o eg st at on w th irEDA.

Th s cont nued nte est shown n the acce e ated de ec at onscheme and com a at ve oo es onse to the GBi schemec ea h gh ghts the o w o t gbi s .it s ss t to s t t t pw so w t ot o f t o s equ ed o ach ev ng the

e ected outcome o the scheme.

in ts esent o m, the GBi scheme s not att act ve enoughto u deve o e s awa om AD. Acco d ng to est mates birEDA, at the eva ng ta s, the nte na ate o etu n ostta o w nd assets wou d be h ghe b 1. 1.5% n case o ADbene ts n a ke states othe than Maha asht a. A so, the ow

ca ac t acto s 0 5% n most o the states mean that theesent GBi w not make a oject mo e eas b e n com a

son to acce e ated de ec at on.

The scheme has a so a ed to att act ipps ocused onenewab e ene gy. On y those ipps that a e engaged nthe ma owe gene at on and have a mandate to cut downthe ca bon oot nt have o ted o the GBi. A u e rE basedipp wou d not be su fc ent y att acted towa ds us ng the GBibecause at rs 0.50 e kWh as t does not ov de adequateetu ns. Th s numbe needs to be eassessed n the com ngmonths w th o e consu tat ons w th both gove nment andndust y e e ts.

30 IL&FS: In rastructure Leasing & Financial Services Limited (IL&FS) is one o Indias leadingin rastructure development and nance companies.

31 http://www.ireda.gov.in/pd /AD%20Projects.pd

BOx 5: barrierS TO Wider accePTance Or gbi

The GBI scheme was based on the premise that there is a huge market outside the power distribution companies, whichbu s owe at egu ated ates, and the e wou d be eedom to su to d ect, o en access custome s. None o theseem ses has oven t ue n the e d and hence, ve ew deve o e s have o ted o t.

The bureaucratic processes involved in obtaining approvals and clearances for qualifying for GBIs are acting as a

dam ene . it takes a substant a amount o t me o the bene t to come nto the bene c a s hands.

For the evolution of wind projects from a tax planning measure to an energy planning instrument, the GBI schemewou d have to be u the enhanced. indust e e ts n ind a suggest that t s to nc ude ca t veand th d a t sa es, as we as o t t to rs. 1.0 e kWh and/o o t p o rs. 6 lakhs[a o mate $138,000] e MW cou d he boost the a ea o the scheme [WiSE, 010].

There is also a need for clarity with respect to the inclusion of bene ts in the determination of tariffs. While the schemestates that the ncent ves wou d be ov ded to deve o e s ove and above the SErC dete m ned ta , the new CErCegu at ons state that a ava ab e ncent ves, nc ud ng AD and GBi, a e to be nc uded wh e dete m n ng ta s. Ta sbased on the o osed egu at ons wou d mean that the ojected etu ns cou d be owe than n the cu ent scena o.Meanwh e, as the gove nment s et to c a ts stand, com an es a e nd ng t d cu t to an the nvestments.

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. . STaTe eed-in Tari

At esent th teen SErCs have dec a ed e e ent a eed nta s o u chase o e ect c ty gene ated om w nd oweojects estab shed n es ect ve states. A the SErCs have

ado ted a cost us methodo ogy to f the eed n ta , wh chva es ac oss the states de end ng u on the state esou ces,oject cost and othe ta com ut ng a amete s as cons d-

e ed by the es ect ve SErCs. A b e com a son o w nd owee ated o ces n key states s g ven n Tab e 3 be ow.

TABlE 3:cOmPariSOn O POlicieS Or Wind POWer in key STaTeS

St t s T t s p W a t s t oP t r wPo t o o St o w

a P s rs. 3.50 Constant o 10 ea s o the ppAs to be s gneddu ng 01 05 09 to 31 03 014

5% o a rE 011/1

g t** rs. 3.56 No esca at on o 5 ea s o oject e 5% 011/15.5% 01 /13

h rs. 4.08 W th 1.5% e ea t 5th ea 10% 010/11 o a rE

k t * rs. 3.70 No esca at on o 10 ea s 7 10% 010/11 o a rE

k rs. 3.64 No esca at on o 0 ea s o oject e 3% 011/1 & 01 /13 o a rE

m P s ** rs. 4.35 No esca at on o 5 ea s o oject e 6% 011/1

m s t W nd Zone irs. 5.07 No esca at on o 13 ea s 7% 011/1

W nd Zone iirs. 4.41 8% 01 /13 o a rE

W nd Zone iiirs. 3.75

W nd Zone iVrs. 3.38

O ss rs. 5.31 No esca at on o 13 ea s 5% o a rE 011/1

P rs. 3.49 W th base yea 2006/07 & w th 5 annua esca at ons@5% u to 2011/12

4% o a rE 011/1

r st ** rs. 3.87 & rs. 4.08 No esca at on o 5 ea s o oject e 7.5% 011/1rs. 3.87/kWh o Ja sa me , Jodh u & Ba me d st ctswh e rs. 4.08/kWh o othe d st cts

T n rs. 3.39 No esca at on o 0 ea s o oject e 14% o a rE 010/11

utt W nd Zone irs. 5.15* rs. 5.65 o 1st 10 ea & rs. 3.45 o 11th ea onwa d 4.53% o a rE 011/1

W nd Zone iirs. 4.35* rs. 4.75 o 1st 10 ea & rs. 3.00 o 11th ea onwa d

W nd Zone iiirs. 3.65* rs. 3.95 o 1st 10 ea & rs. .55 o 11th ea onwa d

W nd Zone iVrs. 3. 0* rs. 3.45 o 1st 10 ea & rs. .30 o 11th ea onwa d

W st b * rs. 4.87 No esca at on o 10 ea s 3% o a rE 011/1

* RPS or Bangalore Electricity Supply Company Ltd. (BESCOM), Mangalore Electricity Supply Company Ltd.( MESCOM), and Calcutta Electricity Supply Company Ltd. (CESC) is 10% while or Gulabarga Electricity Supply Company Ltd. (GESCOM), Hubli Electricity Supply Company Ltd. (HESCOM) and Hukeri it is 7%.

** RPS percentage speci ed only or wind Conversion Rate : $1.00~Rs. 45.00

32 Alternative term or a Tax (also a tax on tax): The term is still requently used in a ewcountries including Britain, Ireland, to indicate a local tax, Scotland, to indicate a land tax,and India, applied as a su x to a indicate a category o tax such as property-cess;education-cess

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. .3 naTiOnal clean energy und

The Gove nment o ind a o osed the c eat on o theNat ona C ean Ene g Fund NCEF n the Un on Budget010 011 b m os ng a c ean ene g cess 3 o rs. 50 $1.10e tonne on a coa oduced n ind a as we as on coam o ts. F om n t a est mates, the cess cou d gene ate anannua evenue o a o mate $550 m on 500 C o en the ea 010 011. The und s e ected to be usedo esea ch, deve o ment and de o ment o c eane andenewab e ene g techno og es. The F nance M n st has,th ough the C ean Ene g Cess ru es 010, s e ed out the

manne n wh ch the cess wou d be co ected and assessedb the revenue De a tment. An nte m n ste a g ou hasbeen set u n the nance m n st to a ove ojects ande g b t equ ements o access ng unds om the NCEF.

. .4 reneWable PurchaSe SPeci icaTiOn

The E ect c ty Act 2003 o osed mandato y renewab epu chase S ec fcat on (rpS) o a the states. To date, 26states have s ec fed ta gets o the u take o enewab ee ect c ty. W th the nt oduct on o the new renewab eEne gy Ce t fcate scheme, states a e ook ng at u f ng therpSs set by the E ect c ty Act th ough th s ov s on. Thestate-w se status o renewab e pu chase S ec fcat ons as on01.01.2011 s ov ded n Anne 5 on age 54.

. .5 reneWable energy cerTi icaTeS

in o de o d st but on ut t es o censees to meet therpS, enewab e ene g needs to be ava ab e. To ensu e th s,a mechan sm to c eate t adab e renewab e Ene g Ce t

cates rEC was ut n ace b the CErC n 010. A therE ojects comm ss oned a te 01.04. 010 a e e g b e toeg ste unde the rEC amewo k.

A renewab e Ene g Ce t cate rEC s a t adab e ce t cateo oo that one MWh o e ect c t has been gene ated b arE ant n the state. Unde th s amewo k, rE gene ato s cant ade rECs th ough a owe e change at o m that w a owma ket based ce d scove , w th n a ce ange dete m nedb the CErC. The es ect ve ce m ts a e ca ed o bea ance

ce and foo ce and the va ues a e ca cu ated se a ateo so a and a non so a ene g sou ces w nd, b omass, smah d o . Wh e the CErC has st u ated33 foo and o bea ance

ce o non so a rECs and o so a rECs, es ect ve ,

the ea ce o an rEC wou d be dete m ned at the owee changes. rECs w be t aded n the owe e change w th nthe bounda set b the o bea ance ce and foo ce,dete m ned b the CErC om t me to t me. Fo w nd owegene at on, th s ange s rs 1,500 to rs 3,900 e rEC.

no So recrs. / mW

So recrs. / mW

o P 3,900 ~$87 17,000 ~$378oo P 1,500 ~$33 1 ,000 ~$ 67

The on equ ement o a rE gene ato to be e g b e ot ad ng rECs s that the owe gene ato must se ts oweto the host d st but on ut t o censee at Ave age powep ocu ement Cost34 AppC . AppC s the we ghted ave agecost o owe u chase o the ut t and s usua owethan the e e ent a ta o the rE sou ces ava ab e n thestate.

Unde the rEC amewo k, a rE gene ato w have theo t on to se two oducts th ough the owe E change:

Generated electricity (not at preferential tariff but atAppC

Renewable Energy Certi cate (one REC equivalent to oneMWh o e ect c t gene at on

On the demand s de, the rEC amewo k a ows the ut t esw th u chase ob gat ons to bu rECs th ough the nat onae change es ect ve o state otent a and nsta ed ca act . On the su s de, the rEC mechan sm a ows the rEgene ato s to get a base evenue ncome b se ng oweat the AppC and an add t ona ma ket dete m ned evenuest eam th ough the rEC t ad ng at o m.

32 Alternative term or a Tax (also a tax on tax): The term is still requently used in a ew countriesincluding Britain, Ireland, to indicate a local tax, Scotland, to indicate a land tax, and India,applied as a su x to a indicate a category o tax such as property-cess; education-cess

33 CERC: vide Order dated 1st o June 2010 :Petition No. 99/2010

34 The APPC or a state represents the weighted average pooled power purchaseby distribution licensees (without transmission charges) in the state during thelast nancial year (2009-10).

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St t s o p t t o o rec sin o de to ensu e com ance w th the equ ement undethe rEC mechan sm b a t c ants, the CErC has a o ntedcom ance aud to s at the nat ona eve . powe e changeshave a so na sed u es and b aws equ ed to e changerECs. A ong w th ado t ng the CErC egu at ons, the SErCsa e e ected to not the es ect ve egu at ons to enab eu ment o rpS ob gat ons th ough u chase o rECs.it must be noted he e that the ate o state w de rpS atth s stage s d ven b the Nat ona Act on p an on C mateChange ta get o 15% enewab e ene g b 0 0 as a t o

the ene g m o ind a. Howeve the NApCC does not st uate state w se b eakdown o ts to ne ta get.

As o Janua 011, 14 SErCs have amended the rpSs,ecogn s ng rECs as va d nst uments to u the rpS bob gated ent t es. The status o rEC egu at ons o the SErCsac oss the states as on 11.01. 011 s shown n Anne 5 onage 54.

rec s : p t t o s & o s Many SERCs have adopted a normative tariff approach for

dete m n ng a gene c ta o ojects comm ss oneddu ng a es ec ed cont o e od 35 w thout cons de ngthe ocat on, techno og , and s ze o the WTGs. These

no ms va s gn cant ac oss the states. Un o m t nthe es ect ve ta dete m nat on methodo og wou dhe to b ng c a t and ed ctab t n the s stem.

In many states, preferential tariffs once determined haveema ned unchanged ove the cont o e od o ove twoto th ee ea s, des te s gn cant changes n the ma ketcond t ons and the unde ng a amete s. in the case ofoo awnd o ebea ance ce dete m ned b the CErCthe e s a need o a egu a zat on o the ocess odete m n ng these ces. Othe w se, nadequate ceeve s ma act as a ba e to nvestment n w nd based

ojects o gene at ng rECs. Obligated entities, mostly distribution utilities, which have

to u chase a o t on o the owe equ ements omrE sou ces, ma not com w th the rpS eve s set b theegu ato comm ss ons n the absence o an adequateen o cement mechan sm. The con dence o nvesto s/deve o e s n the o p t d m n shes ncase o ack o adequate en o cement mechan sms ande a at on o com ance ta gets. pena t es o non comance need to be en o ced. W th the not cat on o the rEC

BOx 6: highlighTS O The rameWOrk rec mechaniSm

1 re c t f t is equa to 1 MWh gene ated

v t o rec Fo 365 da s a te ssuance

W s o to t rec W th n 3 months o gene at on om the rE sou ces

T p s o recs Solar energy REC Non-Solar energy REC

P pos o rec To encourage renewables based power generation To help meet Renewable Purchase Speci cations

P t o o o p Fo bea ance ce ma mum ce Non-solar (Rs. 3,900/REC) Solar (Rs. 17,000/REC)

P t Th ough F oo ce m n mum ce Non-solar (Rs. 1,500/REC) Solar (Rs. 12,000/REC)

35 Control Period : Control Period means the period during which the norms or determination o tari speci ed in these speci c regulations shall r emain valid (Electricity Act 2003)

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egu at ons b man SErCs, the t s o o so p t s need to be s ec ed and en o ced ac ossa states so as to st engthen and gene ate the necessademand u o rE sou ces.

. .6 direcT Tax cOde

The Gove nment o ind a, w th a v ew to mak ng ind anndust g oba com et t ve and s m ng the cu entta eg me, tab ed the D ect Ta Code DTC B , 010 on30.08. 010 n the pa ament. The o osed DTC B , 010

sha e ace the income Ta Act o 1961 and s env saged tocome nto e ect om 01.04. 01 . The DTC B , 010 needsto be ca e u e am ned om the e s ect ve o ene ggene at on secto and the w nd owe secto , n a t cu a .The ke m act on w nd owe nvestment o some o theDTC ov s ons a e sted be ow:

A domestic wind power investor would be required to paya D v dend D st but on Ta DDT o 15% on d v dendsdec a ed, d st buted o a d. Fu the , n case o a o e gnnvesto , the b anch o ts w be ta ed at the ate o15%, n add t on to the no ma a ab e ta es.

The DTC Bill (2010) proposes a reduction in corporate taxom an e st ng eve o 33.99% nc ud ng su cha ge and

cess to 30%. Th s sha ma g na bene t sma domest cw nd owe gene ato s o whom DDT s not a cab e.Howeve , o a ge ub c sted domest c w nd owegene at on com an es and o e gn w nd owe com an es,a cab t o othe ev es such as DDT at 15% andb anch o t ta at 15% wou d make the e ect ve ta atequ te h gh and ma d scou age a ge nvestment n thew nd owe secto . Also the proposed investment linked incentive regime may be interpreted as a continuation o theaccelerated depreciation bene t to the w nd owe secto .Bes des, va ous ana ses b ndust s ec a sts evea that

o osed ev s ons n ta eg me unde the DTC B manot have s gn cant m acts on ost ta equ t etu nsom the e s ect ve o w nd owe deve o ment.

Compared to the current tax regime under theexistingincome Ta Act, a ma g na nc ease n the M n mumA te nat ve Ta 36 MAT ate om 19.33%, nc us ve osu cha ge and educat on cess, to 0% s o osed w ththe add t ona bene t to ca o wa d the MAT c ed t to15 ea s be ond the e st ng t me e od o 10 ea s.

36 http://law.incometaxindia.gov.in/DitTaxmann/incometaxacts/2007itact/sec_115ja.htm

FiGUrE 4:OrganizaTiOnal rameWOrk Or rec mechaniSm

Accreditation Registration Generation Renewable EnergyAccounting (REA)

Request forIssurance

ComplianceReporting Redeem RECs/ Extinguish RECTrading Issurance ofRECs REAVerication

State NodalAgency

National LoadDispatch Centre

(NLDC)

EligibleEntities

State LoadDispatch Centre

(SLDC)

EligibleEntities

ComplianceAuditors

RPSObligated Entity

/ NLDC

PowerExchange

National LoadDispatch Centre

(NLDC)

NLDC &State Load

Dispatch Centre

Source: WISE

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The most m o tant o them s the t t o op s w w . Bes des that, d nam cand en o ceab e rpSs, o t secto end ng status o rE,emova o subs d es o oss ue s, m ementat on o rECs,a com ehens ve sma t g d deve o ment og amme etc a ea so needed. An u the de a n se ous add ess ng these

conce ns w on add to the cost o t ans t on ng towa ds ac ean ene g utu e o ind a.

.4 naTiOnal acTiOn Plan On climaTe change

On 30th June 008, the p me M n ste s Counc on C mateChange a oved the Nat ona Act on p an on C mateChange NApCC . The NApCC st u ates that a d nam cm n mum enewab e u chase ta get o 5% o tota g du chase ma be esc bed n 009 010 and th s shou dnc ease b 1% each ea o a e od o 10 ea s. That wou dmean that b 0 0, ind a shou d be oduc ng 15% o tsene g om enewab e sou ces.

Acco d ng to WiSEs est mates, the gene at on sha e o 15%o enewab es equates to a ca ac t o 107,000 MW b0 0, a net add t on o a most 90,000 MW ove esent~17,000 MW nsta ed ca ac t . Assum ng that a omate 60% o th s equ ement w be met th ough w ndowe a one, mo e than 50,000 MW add t ona w nd owe

wou d be equ ed to meet the 15% rE ta get b 0 0. TheNApCC out ned ts m ementat on st ateg th ough theestab shment o e ght nat ona m ss ons. O these, two we en the e d o ene g , name the Nat ona So a M ss on andthe Nat ona M ss on o Enhanced Ene g E c enc . Howeve t does not n ts esent state have a m ss on ded catedto w nd owe .

The utu e deve o ment o th s act on an s a so c ose t edto ind as utu e ob gat ons unde the Un ted Nat ons F amewo k Convent on on C mate Change UNFCCC .

Chhadve w nd a m n Dhu e, Maha asht a Suzlon

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grid inTegraTiOn

W i n d f a r m

i n T a m

i l N a d u V e s t a s I n d i a

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grid inTegraTiOn

The nhe ent va ab t o w nd owe b ngs about fuctuat ons n owe out ut, wh ch can c eate ob ems o thet ad t ona g ds n ma nta n ng a su and demand ba ance.Most o the w nd a ms n ind a a e ocated n emote a easand qu te a awa om oad cent es. Due to a weak t ansm ss on and d st but on netwo k, t s d cu t to t ansm t theowe om w nd a ms to the oad d s atch cent es. Th s sone o the ke const a nts o the utu e deve o ment o w ndowe n the count .

in the ast, w th ve t ca nteg ated ut t es, a s ng eo gan sat on was es ons b e o the ann ng and o e at on

o netwo ks and g v ng access to gene ato s, and the e o ethe techn ca equ ements d d not have to be a t cu ac ea de ned o cod ed.

Now, w th nc eased owne sh se a at on between g do e ato s and owe gene ato s the need o de n ng thetechn ca equ ements gove n ng the e at onsh betweenthem becomes essent a . renewab e ene g gene at on o tencom cates the ocess o evacuat on and d s atch, as thesegene ato s have cha acte st cs wh ch d e om the d ectconnected s nch onous gene ato s used n a ge convent ona owe ants.

To nc ease the enet at on o enewab es based e ect ct nto the eg ona g ds the Cent a E ect c t regu atoComm ss on CErC o mu ated g d standa ds o rE andnco o ated them n ts atest g d code. Howeve the chaenges ac ng the ind an g d a e mu t aceted, ang ng omthe need o m oved o ecast ng ca ab t es to ensu ng ao e o out o the ov s ons unde the ind an E ect c t

G d Code 010 . The deve o ment o a Sma t G d wh ch

wou d add ess some the obstac es to nteg at ng enewab ee ect c t cou d huge bene t ind a. Some o these ssuesa e d scussed n deta n the o ow ng sect ons.

3.1 indian elecTriciTy grid cOde

The ind an E ect c t G d Code39 iEGC was ado ted nMa 010 and t su e sedes the ind an E ect c t G d Code,006. it ov des deta ed gu de nes on the o e o va ousa e s nvo ved n the o e at on o a owe s stem. The

iEGC b ngs togethe a s ng e set o techn ca and comme c au es, encom ass ng a the ut t es connected to/o us ng thente state t ansm ss on s stem. On the bas s o iEGC 010,a state egu ato s have to ssue the own g d codes o thestates.

in iEGC 010, majo ov s ons e ated to enewab e ene gnc ud ng w nd a e sted be ow:

Consideration of capacity addition and the transmissionequ ement o evacuat ng owe om rE sou ces n thet ansm ss on an

Special arrangements for data transfer andcommunication Provision for managing generation from variable sources

ke w nd and so a wh e ensu ng g d secu t Appropriate meters and Data Acquisition System facilities

o account ng o Unschedu ed inte change Ui40 cha ges Forecasting and scheduling of wind and solar power

gene at on has been made mandato w th e ect om1.1. 01

Another provision is that the grid operator can instruct therE deve o e to cu ta gene at on on cons de at on o g dsecu t o the sa et o an equ ment o e sonne sendange ed

Some count es w th a a ge quant t o rE have m ementedtechn ca standa ds and egu at ons o the nteg at on oowe om enewab e ene g sou ces nto the e ect c t g ds stem. iEGC s a good st ste towa ds he ng to nteg aterE owe sou ces nto the g d. Howeve t s st a ong wabe o e enewab e ene g sou ces can be t eated at a tw th convent ona owe sou ces.

3. Technical challengeS in The indian grid

3. .1 grid TranSmiSSiOn Planning

The best w nd s tes n va ous states w th h gh w nd otent a ,and thus the a ge sca e w nd owe gene at on a e ocated nemote ocat ons. Howeve , s nce g d n ast uctu e s o tennsu c ent to t ans o t the w nd owe to the oad cent es,the owe out ut needs to be consumed w th n the eg onao nat ona owe g d.

39 http://www.nldc.in/docs/gridcode.pd 40 Unscheduled interchange is the di erence between actual generation and scheduled generation.

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Const uct on o new ong d stance t ansm ss on nes to meetthe needs o a ge sca e w nd owe deve o ment a e thuse t eme necessa , and the ack o adequate evacuat onca ac t s one o the majo ssues that needs to be add essedn g d t ansm ss on ann ng GTp . it s essent a o thet ansm ss on ca ac t ann ng ocess to nco o ate a ongte m v s on o w nd owe add t ons. GTp must nvo ve w ndsecto a e s at the ann ng stage, n o de to m n m sebott enecks a s ng om the ack o evacuat on ca ac t . it

wou d be adv sab e to o m a se a ate t ansm ss on ann ngautho t o enewab e ene g sou ces w th n the Cent aE ect c t Au tho t CEA n o de to add ess these ssues.

3. . inTercOnnecTiOn STandardS

G d stab t s a ke cons de at on o nte connect on o annew s stem to the e st ng g d. Fo a convent ona e ect ct netwo k based on a ad a owe d st but on mode , h gheve s o w nd owe wou d ose some cha enges e ated tothe stab t and e c enc o the nte connected s stems.The va ab e natu e o w nd owe necess tates the deveo ment o nte connect on standa ds to enab e the g d tosusta n the va ab t w thout a ect ng the owe qua t

adve se . The iEGC 010, nco o ates s ec a ov s onsthat equ e s stem o e ato s to make e o ts to evacuate aava ab e w nd and so a owe .

3. .3 develOPing lOcal diSTribuTiOn neTWOrkS

in ind a, the oca d st but on netwo k s stem s weak ando ten equ es substant a augmentat on and a out oa a e evacuat on n ast uctu e. Th s adds to the oject

costs and a so causes de a s. The ssue s u the com catedb st u at ons e ated to cost sha ng o th s add t ona n ast uctu e, wh ch e esent an ssue es ec a o state ownedut t es that a e cash st a ed. Mo e o ten than not, thehost ut t has a s gn cant sa n dec d ng the cost sha ngmechan sm.

recogn z ng the c t ca t o the ssue, the Nat ona C eanEne g Fund cou d be used o ov d ng n ast uctu esu o t o g een n t at ves such as w nd owe ojects. itcou d a so be used to he m ove the ca ac t o the ocad st but on netwo k to be ab e to evacuate w nd owe andthus he make w nd a e e ed owe gene at ng sou ce ooca and eg ona g d o e ato s.

grid inTegraTiOn

W nd a m n Thosegha , Maha asht a Enercon India

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3. .4 bene iTS O OrecaSTing and Scheduling

Cu ent n ind a, due to the edom nance o the ma andh d o owe , the g d ba ances the fuctuat ons w th m n mante vent ons. Howeve w th mo e and mo e va ab e sou ceske to come on ne, th s scena o w change. One o the

conce ts be ng foated to add ess these ssues s that o aSma t G d, wh ch s d scussed n deta n the ne t sect on

iEGC 010, made o ecast ng and schedu ng mandato ow nd and so a owe gene ato s w th e ect om Janua01 . Accu ate o ecast ng s c t ca to manag ng w nd owe s

va ab t . To m ement the iEGC gu de nes, each neww nd owe deve o e has to make a angements o a dataacqu s t on s stem ac t o t ans e o n o mat on to g do e ato s. Th s w he both the w nd a m and g d o e ato sto sha e data and ass on n o mat on n a sho t t me s an.Da gene at on schedu es and ev sed schedu es can a so becommun cated to the g d o e ato th ough th s a angement.Fo g d o e ato s t w be conven ent to accommodate thesegene at on schedu es w th n the d s atch schedu es.

A though o ecast ng equ es some n t a nvestment, tw be bene c a n the ong un. Schedu ng equ ementscan he gene ato s to t ade owe and com ete w thschedu ab e convent ona owe on the t ad ng at o m,a ow ng gene ato s to ea n s gn cant h ghe evenues.Th s s m o tant o ind a whe e evenue co ect on s amajo ob em o the owe secto .

in w nd owe o ecast ng the ma n a t c ants a e w nda m o e ato s and g d o e ato s and ts success de endsu on c ose coo e at on between them. W nd o ecast ng uses

so h st cated nume ca weathe o ecasts, w nd owe antgene at on mode s and stat st ca methods. W th accu ateed ct on o w nd owe gene at on, g d o e ato s can an

e ect ve o the ava ab e owe . Th s w esu t not on nm ov ng the econom c e c enc o g d o e at on but a sohe n ann ng o an ma ntenance and outages to be takenu b the o e ato s. it w u the he n com ensat ng oanned outages o the ma ants, and ov de add t onaese ve ma g n n case o un anned outages. Thus,o ecast ng w nd owe s m o tant to ts cost e ect venteg at on w th n the eg ona and nat ona owe g ds.

Anothe bene t om e ab e o ecast ng and schedu ng ow nd owe s the change n the m ndset o g d o e ato s.

The b ggest advantage o schedu ng w nd owe w be thatt w make w nd a ms a ea mo e ke convent ona owestat ons, b dg ng the ga between demand and su w ththe g d o e ato s. Once w nd owe s unde stood to bee ab e and ed ctab e, t s mo e ke to get h ghe etu nsto the o e ato s.

Unde the iEGC 010, the w nd a m o e ato s w haveto ed ct w nd gene at on w th easonab e accu ac oo e schedu ng and d s atch ng o owe om w nd n thente connected g d s stem. i actua gene at on s be ond+/ 30% o the schedu e, the w nd gene ato wou d have to

bea the Ui cha ges. Howeve n matu e ma kets ke Eu o ethe equ ements a e a ot mo e st ngent .e. equ ng anaccu ac o 85 90% o the ne t 4 hou e od.

3.3 SmarT grid in india

The atest buzz wo d n owe ndust co do s s Sma tG d, wh ch n s m e te ms means nte gent owegene at on, t ansm ss on, d st but on and management, aswe as nc eas ng so h st cated eve s o oad management.The g d must be des gned to be ab e to manage owe fowsom va ab e and geog a h ca d st buted gene ato s to

d s e sed oad cent es. pa t cu a n the case o rE sou cessuch as h d o, so a and w nd the gene at ng esou ce cou dbe d stant om the oad cent e and owe has to be t ansm tted ac oss a nat ona g d to d s e sed oad cent es.

The M n st o powe took the st ste towa ds g d e o mswhen t set u the ind a Sma t G d Task o ce n June 010.The v s on o a sma t g d b ngs togethe the e ds o

commun cat ons, iT and the owe secto to estab sh acom ehens ve owe n ast uctu e. Fu the , on the demands de t env sages g v ng a cho ce to the custome to dec de thet m ng and amount o owe consum t on based u on the

ce o the owe at a a t cu a moment o t me.

W th the owe g ds ac oss the count be ng equ ed totake on e ect c t oduced om non t ad t ona sou cesunde va ous schemes renewab e pu chase S ec cat onsand the renewab e Ene g Ce t cate mechan sm , the needto evam and mode n ze the nat ona / eg ona and ocag ds must be one o the ma a eas o nvestment anddeve o ment.

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w need to measu e and agg egate n ea t me the ca ac tbe ng added b m ons o ene g oduce s that owe sto be o e outed as e c ent as oss b e.

One o the g eat advantages o d st buted ene g s that tdoes not need to be t ansm tted ove ong d stances becauset s gene ated n c ose o m t to consum t on cent es,m n m z ng t ansm ss on and d st but on osses. Howeve , asind an ut t es beg n to have d st buted ene g ead avaab e, the w need to unde stand the best wa to d st buteand make use o t.

To enab e g d o e ato s to o e d s atch the e ect c toduced om d st buted gene at on sou ces, commun cat on

s stems that can ca ce s gna s and commands a e a must.A a t om n o mat on techno og iT and commun cat onconce ns, man eng nee ng cha enges con ont the u g adng o g d

wind data 2010

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