Wind Force Newsletter May, Edition, 2012

Policy and Regulatory

2

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Enabling High Efficiency and Reliable Wind Power Projects

1. Andhra Pradesh Electricity Regulatory Commission (APERC): Final retail supply

tariff schedule for FY 2012-13

Impact: Once the Open Access policy of use of power from wind gets clear in

Andhra Pradesh, sale of wind power under 3rd Party/ Group Captive structure with

Renewable Energy Certificate (REC) shall be very attractive owing to the high HT

Tariff.

2. Ministry of Power (MOP): Committee for Accelerate Development of

Renewable Energy

Ministry of Power (MOP) has constitute a committee for accelerate development of

Renewable Energy through legislative changes and to evolve competitive bidding

guidelines for procurement of RE power from Distribution licenses under sec 63 of

EA 2003 and to address issues relating to connectivity and evacuation

infrastructure.

Issues to be considered for Legislative Changes:

Legislative Changes for long term RPO trajectory and deterrent against non

compliance of RPOs (empowering Regulators to specify RPO targets including

measures by way of penalty for non compliance, in addition to that provided in

sec 142) in accordance with NEP and Tariff Policy.

To make specific provision in the Act to empower Regulators to create innovative

market based instruments like REC for the development of RE Sector.

Need to make provision for levying of RPO on the consumption of the OA

consumers and captive power producers in the Act with more clarity.

Renewable Energy Technologies to be covered under the competitive bidding

guidelines.

To identify the issues at stake in the context and suggest measures including

provision of funds towards facilitating up gradation/development of

transmission infrastructure.

Role of various organizations like MNRE, CEA, CTU etc for planning, generation,

transmission and distribution of electricity through RE sources.

Examination of the provisions pertaining to treatment of financial support/soft

loans extended for development of projects based on RE sources of energy

while determining the tariff from these sources.

Category KV level Existing Tariff (Rs./Kwh) Proposed Tariff (Rs./Kwh)

Green Power (HT VII) 132 KV and above 6.70 7.00

33 KV 6.70 7.00

11 KV 6.70 7.00

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3. KERC: APPC for Fy13

KERC notified APPC of Rs. 2.73/unit for the Financial Year 2012, which ended on

31.03.2012. Commission as an interim measure continues the pooled cost at Rs.

2.73/unit for FY13 also. Any variation in pooled cost based on actual power

purchase cost of FY12 as may be notified by the Commission in the near future shall

be adjusted in the future bills. Hence, in exercise of the powers conferred under

Clause 7(c) of the KERC (Procurement of Energy From Renewable Sources)(First

Amendment) Regulations, 2011, for the purpose of REC, KERC hereby continues the

pooled cost at Rs.2.73/unit till 30th June 2012 or further notification, whichever is

earlier.

4. Government again pushes for swift implementation of open access in power

sector

According to the initial directive issued in November 2011, every consumer with

over 1 MW of power consumption can opt to become an open access user and that

the State Electricity Regulatory Commission would have no right to regulate the

power procurement price for such users, except for wheeling charges and

surcharge. It also stated that a consumer may opt to procure power through

competing sources (say through open access as well as through distribution

companies). In such a case, the distribution companies "do not have an obligation

to compulsorily provide power to such consumers." The distribution company,

however, would be duty bound to provide the open access users access to its

network when the users intend to use it. The open access users need not seek

permission from the distribution company to use its network.

5. APERC: Redetermination of control period of wind tariff order 2009 and

determination of tariff for future wind energy projects

INWEA has filed a petition with APERC regarding redetermination of control period

of wind tariff order 2009 and determination of tariff for future wind energy

projects. Some of the key points discussed are as follows:

Limit the control period of existing wind tariff order to December 2011 instead

of March 2014.

Tariff as proposed by INWEA for future wind power project is Rs 4.92 per unit.

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6. KERC: Retail tariff for 2012-13

Karnataka Electricity Regulatory Commission (KERC) has announced retail tariff for

2012-13. Key points discussed are as follows:

The below mentioned tariff is applicable to all DISCOMS (BESCOM, MESCOM,

HESCOM, GESCOM,CESC) in Karnataka.

Cross Subsidy surcharge (CSS): Open access consumers who opt to buy power from

generating companies or trading companies other than ESCOMs directly (even if

they are using ESCOM's network) are required to pay CSS in addition to wheeling

charges. The rates of cross subsidy surcharge vary from 11 paise per unit to Rs 2.05

per unit depending upon the voltage level and the tariff applicable to the relevant

category of consumers. The CSS payable for 2012-13 by HT industrial consumers

at 66 kV & above voltage level will be 43 paise/unit and at 33/11 kV voltage levels

it will be 11 paise/unit respectively. Similarly, the cross subsidy for HT commercial

consumers at 66 kV & above voltage level will be 205 paise/unit and at 33/11 kV

voltage level will be 173 paise/unit.

Wheeling charges and wheeling losses:

Energy Charges Existing Tariff New tariff

HT Industrial

For 1 - 1 lac Units (Rs./unit) 4.90 5.10

For above 1 lac units (Rs./unit) 5.20 5.40

HT Commercial

For 1 - 2 lac Units (Rs./unit) 6.30 6.50

For above 2 lac units (Rs./unit) 6.60 6.80

ESCOM's Wheeling charges and Wheeling losses at HT Level

Existing New

Wheeling charges (Paise per unit)

Wheeling losses (%)

Wheeling charges (Paise per unit)

Wheeling losses (%)

BESCOM 10.0 2.94% 10.0 4.02%

MESCOM 19.0 4.35% 21.0 4.32%

HESCOM 20.0 9.38% 19.0 8.57%

GESCOM 20.0 5.98% 22.0 5.88%

CES Corp. 18.0 5.13% 19.0 5.20%

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The wheeling charges as determined above are applicable to all the open

access/wheeling transactions for using the ESCOM network, except for energy

wheeled from Non Conventional Energy (NCE) sources to the consumers in the

State.

For the wheeling of NCE energy within the State, the Commission decides to

continue the existing wheeling charges at 5% of the injected energy and for wind

and mini-hydel sources of energy, additional banking charges at 2%, irrespective

of the network used.

Transmission Charges & Losses: Transmission charges for long term open access

consumer is Rs. 1, 12,224/MW/Month & for short term open access consumer is as

follows:

Transmission losses for FY 2013 is 3.96%

7. CSERC: Notification regarding the date of applicability of RPO on captive and

open access consumer

Chhattisgarh State Electricity Regulatory Commission (CSERC) has issued

notification regarding the date of applicability of RPO which specifies the date of

applicability of RPO as April 1, 2012 for the captive and open access (OA)

consumers. Renewable Energy or REC if procured by captive and open access (OA)

consumers during the period March 4,2011 to March 31, 2012 for meeting

renewable purchase obligation shall be considered as deemed to have been

procured for FY 2012-13 and shall be adjusted against their RPO for year 2012-13.

8. Important order regarding clarification APPC Price by TNERC

Commission clarifies that the pooled cost of power purchase will be determined by

the Commission on a yearly basis based on the records to be furnished by

TANGEDCO and the rates so fixed shall be payable year after year. The fixed rate of

Rs 2.37 per Unit is applicable for 2010-11 only and can be extended beyond that

date if no new rate is fixed. Commission therefore directed that the pooled cost of

power purchase shall be the rate as specified by the Commission on a yearly basis

and shall be payable to such of those generators who have entered into an Energy

Purchase Agreement based on average power purchase cost for the purpose of

availing REC benefit.

Transmission Charges (Rs/MW) Fy13

More than 12 hrs & upto 24 hrs in a day in one block 922.39

More than 6 hrs & upto 12 hrs in a day in one block 461.19

Upto 6 hrs in a day in one block 230.60

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9. CERC’s final RE tariff order for FY 2012-13

CERC has issued final RE tariff order for FY 2012-13. Some of the key points

discussed are as follows:

a) Suggestions by stake holders (investors etc):

Must run status should be given to wind energy projects.

Forecasting of wind energy generation within range of +/- 30% as per

IEGC-2010 is not possible.

Some method should be adopted where errors are minimal

Decision by CERC: The review of the above-mentioned points as suggested are not

the subject matter of present regulatory process which has been initiated for

determination of generic tariff

b) Useful Life and Tariff Period for Wind Power Projects: 25 years and 13 years

respectively

c) Capital Cost for FY 2012-13 for Wind Power Projects: INR 575 Lakh/MW

d) Return on Equity:

(a) 20% per annum for the first 10 years, and

(b) 24% per annum from the 11th year onwards

e) O&M expenses for Wind Power Projects: INR 9 lakh per MW with an escalation

of 5.72% p.a.

f) Generic Tariff for Wind Power Projects for FY 2012-13

10. MERC (Maharashtra State Electricity Regulatory Commission) has issued Final

RE Tariff order for FY 2012-13

MERC (Maharashtra State Electricity Regulatory Commission) has issued Final RE

Tariff order for FY 2012-13

a) Capacity Utilization Factor (CUF) specified for wind energy projects as per

WPD have been considered same as earlier

Particulars Levellised Total Tariff

Benefit of AD

(if availed)

Net Levellised Tariff (upon

adjusting of AD) (if availed)

Wind Energy (INR/Kwhr)

Wind Zone -1 (WPD upto 200 W/m2 - CUF 20%) 5.96 0.60 5.36

Wind Zone -2 (WPD 201-250 W/m2 - CUF 22%) 5.42 0.55 4.87



Wind Zone -5 (WPD above 400 W/m2 - CUF 32%) 3.73 0.38 3.35

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b) Tariff for New RE Projects for FY 2012-13 - Wind

11. TNERC (Tamil Nadu Electricity Regulatory Commission) has issued final order

on Determination of Tariff for HT

TNERC (Tamil Nadu Electricity Regulatory Commission) has issued final order on

Determination of Tariff for HT Consumers and Determination of Intra-State

Transmission Tariff:

With this increase in tariff in the state, OA of wind power will turn out to be more

viable option.

12.APERC: announced Renewable Purchase Obligation (RPO), Renewable

Energy Certificate (REC) regulations 2012

APERC (Andhra Pradesh Electricity Regulatory Commission) has announced

Renewable Purchase Obligation (RPO), Renewable Energy Certificate (REC)

regulations 2012. The key points discussed are as follows.

Till the issue of order regarding the Pooled Cost of Power Purchase, the Pooled Cost

of Power Purchase of the previous year shall continue to be valid as Provisional

Pooled Cost of Power Purchase. After the issue of order for the Pooled Cost of Power

Purchase by the Commission, the difference with the Provisional Pooled Cost of

Power Purchase shall be adjusted equally in the bills of the next two months or as

decided by the Commission in the order determining the Pooled Cost of Power

Purchase for that year.

Provided further, that the Pooled Cost of Power Purchase applicable for the period

from the date of publication of these Regulations in the Andhra Pradesh Gazette

till 31-05-2012 shall be R 2.00 per unit which shall be treated as ad-hoc notional

pooled cost of power purchase of the previous year.

APERC has announced the RPPO for various entities like the DISCOMS, OA

Consumers, Captive Consumers on the quantum of electricity to be purchased from

renewable sources to meet the RPPO.

Wind Energy Tariff Period Levellised Tariff for FY

2012-13

Benefits of Accelerated

Depreciation (if availed)

Net Levellised Tariff upon adjusting for Accelerated

Depreciation Benefit (if availed)

Years Rs/kWh Rs/kWh Rs/kWh

WindZone-1 13 5.67 0.81 4.86

WindZone-2 13 4.93 0.70 4.23

WindZone-3 13 4.20 0.60 3.60

WindZone-4 13 3.78 0.54 3.24

Tariff category Energy charge (Paise/Kwhr)

Previous Tariff New Tariff

HT IA 400 550

High Tension Tariff III 550 700

Renewable Power Purchase Obligation (RPPO) for DISCOM

Renewable Power Purchase Obligation (RPPO) for Open

access consumer

Renewable Power Purchase Obligation (RPPO) for Captive

consumer

Every DISCOM shall purchase electricity from different types of renewable energy sources, a quantum of not less than 5% its energy, during each of the years f r o m 2 0 1 2 - 1 3 t o 2 0 1 6 - 1 7 . Provided that a minimum of 0.25 % point out of the 5% Renewable Power Purchase Obligation (RPPO) above specified, shall be procured from generation based on solar as renewable energy source

Every open access consumer in the state of AP shall purchase from renewable energy sources, a quantum of not less than 5% of its energy, during each of the years from 2012-13 to 2016-17 Provided that a minimum of 0.25 % point out of the 5% Renewable Power Purchase Obligation (RPPO) above specified, shall be procured from generation based on solar as renewable energy source

Every consumer owning a captive generating plant of installed capacity of One (1) MW shall purchase Renewable Energy Certificates corresponding to a quantum of not less than 5% of its energy, during each of the years from 2012-13 to 2016-17 Provided that a minimum of 0.25 % point out of the 5% Renewable Power Purchase Obligation (RPPO) above specified, shall be procured from generation* based on solar as renewable energy source

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* Note: Interestingly for the DISCOM and open access consumer the commission is saying to purchase of energy

not less than 5% from RE sources and can buy equivalent REC's to fulfil RPPO. But in case of Captive consumer

commission is saying first to purchase REC for quantum not less than 5% and then it says provided purchase of

energy from RE sources shall also be treated as fulfilment of RPO.

Conditions for Accreditation

A generating company [including a Captive Power Producer (CPP)] in AP engaged in

generation of electricity from RE sources shall be eligible for obtaining

accreditation from the State Agency if it fulfils the following conditions:

a) It does not have any Power Purchase Agreement for the capacity related to such

generation to sell electricity at a tariff determined by the Commission from time to

time for sale of energy to a distribution licensee;

b) It sells the electricity generated either (i) to the distribution licensee in the State

of Andhra Pradesh at the pooled cost of power purchase, or

(ii) to any other licensee or (iii) to an open access consumer at a mutually agreed

price, or (iv) through power exchange at market determined price.

c) In respect of CPP, it has not at all availed or does not at all propose to avail any

benefit in the form of concessional / promotional transmission or wheeling

charges, banking facility and waiver of electricity duty. The entire energy generated

from CPP including self consumption shall be eligible for RECs.

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1. Installed Capacity of Indian Wind Power in FY 12

*As per market report

2. FDI for wind power generation is now allowed

FDI in wind power generation, involving the installation and sale of electricity

produced by wind power generators has now been allowed to be brought in.

3. C-WET RLMM - 19.03.12

Key Inclusions (WTGs) in RLMM List dated 19.03.12

1. Kenersys K100 (RD100, HH85/100) – 2.5 MW

2. Suzlon S95 DFIG (RD95, HH80/90/100) – 2.1 MW

3. Suzlon S97 DFIG (RD97, HH80/90/100) – 2.1 MW

4. Suzlon S88 DFIG (RD88, HH80) – 2.25 MW

FY'12 Installation*

State MW % Share

Tamil Nadu 1086.73 34.34%

Gujarat 790 24.98%

Rajasthan 545.65 17.25%

Maharashtra 408 12.90%

Karnataka 178.65 5.65%

Madhya Pradesh 100.4 3.17%

Andhra Pradesh 54 1.71%

Total 3163.43

What’s New

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4. India's Onshore Wind Energy potential is 3000 GW

A study is pegging Indian potential for wind power at 3,000 GW. C-WET estimated

Indian wind farm potential at 49,000 MW at 50 m Hub Height and increased to 100

GW subsequently at 80 m Hub Height.

"Scientific and research work carried out by Indian wind industry expert Jami

Hossain (Chief Mentor & Co-founder WinDForce) has inspired scientists at

Lawrence Berkley National Laboratory (LBNL) to challenge assessments of the

Chennai based government agency CWET, on the potential for wind farms in India.

Hossain in his paper, published in the international renewable energy journal

Renewable Energy, presented his findings on the assessment for potential for

windfarms using Geographical Information System Platform," read a media

s tate m e nt i s s u e d b y Wo r l d W i n d E n e rg y A s s o c i at i o n ( W W EA ) .

After re-assessing the land that can be used for wind power development, so as to

take into account previously excluded lands, Lawrence Berkeley has come to the

conclusion that the true potential of wind energy in India is between “20 and 30

times higher than the current official estimate of 102 GW.”

It was previously thought that only 2 per cent of lands in windy areas could be used

for putting up wind power projects.

Lawrence Berkeley found after the study that a lot more land was available even

after excluding lands with low wind speeds, lands with slopes greater than 20

degrees and elevation higher than 1,500 metres.

The study looked at wind speeds at heights of 80 metres, 100 metres and 120

metres.

The study found that 1,629 sq.km of area is available for putting up wind turbines at

heights of 80 metres with PLF more than 25 per cent.

“The main importance of this study, why it's groundbreaking, is that wind is one of

the most cost-effective and mature renewable energy sources commercially

available in India, with an installed capacity of 15 GW and rising rapidly,” says

Berkeley Lab scientist Mr Amol Phadke, who authored the report.

“The cost of wind power is now comparable to that from imported coal and natural

gas-based plants, and wind can play a significant role by effectively addressing

energy security and environmental concerns.” The study has come to the attention

of the Ministry of New and Renewable Energy also.Source:

"Reassessing Wind Potential Estimates for India: Economic and Policy Implications" can be downloaded at:

http://ies.lbl.gov/node/473

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5. Windmill developers to lose tax breaks

Windmill developers will no longer enjoy lower tax outgo in the first year, for

investing in windmills.

Effective 1st April 2012, accelerated depreciation – which allows the investing

company to fast track the write-off of certain assets for tax purposes - will not be

allowed to wind energy developers. The Income Tax department has amended the

rules regarding this, through a notification.

Until FY-12, a deduction of up to 80 per cent was allowed if the wind project was

commissioned before September of a fiscal. Projects commissioned in the next half

of the fiscal got a 40 per cent deduction. Now developers will only be allowed 15 per

cent depreciation.

But wind equipments will still enjoy the 20 per cent additional depreciation

prescribed for power equipments in the recent Budget. That would make for an

effective 35 per cent depreciation.

Accelerated depreciation allowed developers to reduce their tax outgo in the first

year as the 80 per cent deduction of investments lowered the taxable profits.

It was in 2009 that the Government decided to give incentives to developers for

their generation and brought in generation-based incentive scheme (GBI). The

move is therefore expected to weed out players who are not serious about

generating wind power. Other captive players in sectors such as textiles and cement

who had wind power plants in hand may also see some impact.

The GBI was active till registration of 4000 MW or 31st March 2012, which ever

earlier. As on date AD has gone and technically GBI is also not clear, this may result

in major impact on wind industry, at least in near future.

REC

Total Accredited = 1226.935 MW – Wind Specific

Total Registered = 1063.48 MW – Wind Specific

Total Issued = 10, 54,243 RECs

Total Redeemed = 10, 15,698 RECs

GBI

Total Capacity Requested for Registration and Registered (MW) for GBI = 1568.49 MW -

Wind Specific

REC & GBI Update (till 31.03.12)

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Primarily, summarizing FY'12, total 9,51,008 RECs were traded at an average rate of Rs

2829/ MWh (at IEX). As expected, the volume trade showed an increase in Q4 with 58%

of REC being traded in this quarter alone for the year. This may be because of

participation of most of the state power distribution companies in the trading, as RPO

deadlines for FY12 approached. The above graph indicates that in last FY the REC

volume traded at IEX was increasing every month. Moreover traded equilibrium price

had also shown some confidence among the stakeholders.

This year, April being 1st trading month of the FY, it was expected that Trading Volumes

will be among the lowest and the clearing price shall also fall drastically. But the market

again has shown some maturity and more than 70,000 RECs were traded in April 2012

@ Rs 2201/ MWh rate at both the exchanges. For the continuous growth of REC Market,

it is very necessary that the entities which have not matched their RPO in FY12 must be

penalized ASAP otherwise other entities which are following the RPO shall start

deviating. Following the same in May'12 trading session total around 1,70,000 RECs

were traded of which 1,53,125 RECs were traded @ Rs 2402/ MWh rate and other

15,550 REC @ Rs 2150/ MWh rate.

This trading session a total 10 Solar RECs of M&B Switch Gears were also traded @ Rs

13000/ MWh rate.

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

electricity in bilateral arrangement is higher than that at power exchanges. This analysis

includes only inter-State transactions. In October 2011, there was steep hike in price at

the exchanges because of major power crises in various power surplus states in India.

The issues encountered were resolved and power prices at exchanges has now again

settle down as seen in the graph above.

REC Trading

Electricity Price

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Contact Us

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

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

this Newsletter.

Parish Gupta

Mob: +91 98717 11445

E-mail: [email protected]

Rupesh Singh

Mob: +91 96507 58884

E-mail: [email protected]

A WinDForce Publication

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

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

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


Wind Force Newsletter May, Edition, 2012

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