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REPORT
ON
GLOBAL REGULATORY BEST PRACTICES
FOR THE PROMOTION OF RENEWABLE
ENERGY & ENERGY EFFICIENCY
BY
KOTHAWADE SACHIN ARUN
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EXECTIVE SUMMERY
Regulation is primarily designed to address the failure of markets to
deliver desired goods, whether these are economic, social or
environmental. One model of regulation will not fit all energy systems.
Whether a system is state-owned or privatized, monopoly or
competitive, integrated or unbundled, established or developing will
affect the role of the regulator and the degree to which the regulator
can intervene in the system. However, various regulatory models can
be adopted or adapted to encourage the development of sustainable
energy technologies.
The renewable electricity sector is a quite advanced sector with
already well developed market and business structures. Most of the
activities reach beyond general awareness raising and promotion.
Issues like favorable, reliable and forward-looking policy frameworks,
investment security, access to electricity grids and fair regulation,
operation and maintenance etc. dominate the picture. Although the
sector is generally very dynamic and well developed, it still faces
considerable regulatory, administrative and grid barriers.
Some of the challenges for utility regulation
Poor financial performance of many state-owned utilities
Inappropriate pricing (usually as a result of political
pressures)
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Managerial and technical deficiencies (regulation is a
relatively new concept for many countries)
Unsustainable subsidies
Limited public sector finance for new infrastructure
Limited private sector participation
Low levels of access to services
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In addition to above challenges following three prominent issues with
regards to RE based electricity generation which regulatory authorities
must address in order to accelerate development in this sector,
namely:
Share of Renewables
Pricing
Grid connectivity
Thesis is also considering initiatives that must be taken in order to
promote Energy efficiency in India & study of existing mechanisms in
rest of the world. Currently efficiency programmes are largely absent
in most countries. With the exception of a few countries in sub-Saharan
Africa, energy efficient systems development is often undertaken
within an energy planning and policy vacuum. As a result, the
development of energy efficiency systems often follows an ad hoc path
with no reference to a coherent vision and plan. Regulatory framework
and tariff setting mechanisms can play an important role in driving
utilities towards increased energy efficiency in all three segments.
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TABLE OF CONTENTS
CHAPTER 1: THESIS OBJECTIVES ....................................................... 7
CHAPTER 2: RENEWABLE ENERGY TECHNOLOGY OPTIONS ................. 9
2.1 RENEWABLE ENERGY SCENARIOIN INDIA...............................................................10
2.2 RE TECHNOLOGYOPTIONSFOR INDIA...................................................................12
2.2.1 Co-Generation .................................................................................12
2.2.2 Wind Power ....................................................................................12
2.2.3 Solar power ....................................................................................14
2.2.4 Small hydroelectric plants ..............................................................14
2.2.5 Biomass Power ................................................................................16
2.2.6 ALL INDIA REGIONWISE GENERATING INSTALLED CAPACITY (MW) As
on 31-12-2009 .........................................................................................17
CHAPTER 3: RE MARKET MODELS IN INDIA ...................................... 18
3.1 OLDMARKETMODEL.......................................................................................18
3.2 NEWMARKETMODEL......................................................................................18
3.3 NEWINITIATIVES...........................................................................................18
3.4 EXISTING POLICY & REGULATORY FRAMEWORKFOR RE PROMOTIONIN INDIA......................20
3.4.1 New Initiatives ................................................................................20
3.4.2 Fiscal Incentives ..............................................................................21
3.4.3 Foreign Investment Policy ...............................................................23
3.4.4 Other Incentives .............................................................................23
3.4.5 Electricity Act 2003 .........................................................................24
3.4.6 National Tariff Policy: ......................................................................25
3.5 ROLEOF VARIOUS STAKEHOLDERSOF RE SECTOR INTHEPROMOTIONOFDEVELOPMENT IN INDIA
....................................................................................................................26
3.6 CHALLENGES & CONSTRAINTSIN RE DEVELOPMENTIN INDIA........................................28
3.6.1 Current Issues with RE in INDIA ......................................................28
3.6.2 The major barriers for this RE development ....................................28
3.6.3 To address these barriers it is necessary to have ...........................29
3.7 KEY FINDINGS & OBSERVATIONSOF RE DEVELOPMENTSCENARIOIN INDIA.......................30
3.7.1 Features of RE market & Regulations of India .................................30
3.7.2 RE Opportunities for India ...............................................................30
3.7.3 Challenges & Barriers for RE development in India .........................32
3.7.4 Policy Initiatives taken in order to promote RE development in India
................................................................................................................333.8 TARGET AREASAND PRIORITIESNEEDSTOBEFOCUSONTOACHIEVE GOALS.......................34
CHAPTER: 4 APPROACHES & POLICY MECHANISMS .......................... 35
4.1 TYPES OF REGULATORY APPROACHES & POLICY MECHANISMS
ENVISAGED AROUND THE WORLD FOR THE PROMOTION OF RENEWABLE
ENERGY .......................................................................................................35
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4.2 ANALYSISOF VARIOUS REGULATORY APPROACHES/PRACTICES & POLICY MECHANISMSADOPTED BY
RESTOFTHEWORLD............................................................................................41
4.2.1 RE promotion in EU .........................................................................41
4.2.2 RE promotion in Germany ...............................................................43
4.2.3 RE promotion in UK .........................................................................43
4.2.4 RE promotion in Texas ....................................................................43
4.2.5 RE promotion in Thailand ................................................................45
4.2.6 RE promotion in Vietnam ................................................................45
4.3 WAY FORWARDFOR RE PROMOTIONIN INDIA.........................................................46
CHAPTER 5: KEY FINDINGS & SUGGESTIONS ................................... 47
5.1 KEYFINDINGS..............................................................................................47
5.2 SUGGESTIONS .............................................................................................49
5.3 ASSESSMENTOFMAJOR RE SUPPORTMECHANISMBASEDONABOVESTUDY..........................51
CHAPTER 6: SUMMERY & CONCLUSION ........................................... 52
6.1 DIFFERENTMECHANISMTOPROMOTERENEWABLEGENERATION........................................52
6.2 PRO & CONSOF RENEWABLE ENERGY POLICY MECHANISMSFORTHEPROMOTIONOF RE ........536.3 CONCLUSION...............................................................................................55
CHAPTER 7: ENERGY EFFICIENCY .................................................... 57
7.1 INTRODUCTION.............................................................................................57
7.2 IMPACTOF UNBUNDLINGON ENERGY EFFICIENCY......................................................59
7.3 IMPACTOF ELECTRICITY LAW AMENDMENTON ENERGY EFFICIENCY..................................64
7.4 IMPACTOF CORPORATIZATIONON ENERGY EFFICIENCY................................................65
7.5 IMPACTOF INDEPENDENT POWER PRODUCERSON ENERGY EFFICIENCY..............................66
7.6 ENERGY EFFICIENCY POLICIESIN INDIA..................................................................68
CHAPTER 8: CONCLUSION & OBSERVATIONS ................................... 69
LIST OF REFERENCE ....................................................................... 70
DATABASE ...................................................................................................70
SEARCH ENGINES .......................................................................................70
WEBSITES ....................................................................................................71
WEB PAGES .................................................................................................72
ARTICLES & MAGAZINES .............................................................................72
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CHAPTER 1: THESIS OBJECTIVES
This thesis is mainly focusing on the existing regulatory practices for
the promotion of RE technologies & Energy Efficiency in some of the
European Countries & in India; there comparison & implications to
India. Thesis primarily aims to find answers of following questions:-
A. What can be done to overcome the impediments
facing renewable energy and energy efficiency?
B. Why regulatory/policy intervention for Renewable
Energy Promotion?
Prima facie it gives mainly following reasons for it:-
Present market conditions make renewable uncompetitive
Bur Regulatory support and improvement in RE technology
will help RE to achieve Grid Parity.
In addition, chronic power shortages and increasing fuel
cost builds a strong case for promoting renewable.
During the course of thesis, other reasons of regulatory intervention for
promotion of Renewable Energy & other promotion mechanisms will be
discussed.
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Thesis examines the following themes:-
Regulation is primarily designed to address the failure of
markets to deliver desired goods, whether these are
economic, social or environmental.
One model of regulation will not fit all energy systems.
Whether a system is state-owned or privatized, monopoly or
competitive, integrated or unbundled, established or
developing will affect the role of the regulator and the degree
to which the regulator can intervene in the system. However,
various regulatory models can be adopted or adapted to
encourage the development of sustainable energy
technologies.
The need to develop sustainable energy policies raises new
issues for policymakers and regulators, including how to
integrate possibly conflicting policy goals.
Regulation is carried out in a number of different ways by
different institutions. Each has strengths and weaknesses.
Similarly, there are different models of regulatory strategy
employing a range of incentives and penalties.
Comparison of worlds best regulatory practices for the
promotion of RE Technologies & their implications to India &
Asian countries.
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CHAPTER 2: RENEWABLE ENERGY
TECHNOLOGY OPTIONS
Renewable energy is energy generated from natural resources -such as
sunlight, wind, rain, tides, and geothermal heat-which are renewable
(naturally replenished). In 2006, about 18% of global final energy
consumption came from renewables, with 13% coming from traditional
biomass, such as wood-burning. Hydroelectricity was the next largest
renewable source, providing 3% of global energy consumption and
15% of global electricity generation. Various RE technology options are
discussed below:-
Wind Energy : - Represent 70% of total RE capacity, most
matured/commercialized, backed with highly organized
industry, low gestation period
All major players are in India (Suzlon etc.)
Bagasse cogeneration /Biomass : - Slow, but verypromising.
Solar (PV/thermal) : - Sunrise sector in RE, ridden with high
costs, big players, lack of organized industry, but very
promising in the coming years, second only to wind
Small hydro : -Limited resource and high gestation period
(Huge potential in Himachal & North-East; strategically
important for Rural electrification as a standalone system).
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2.1 Renewable Energy Scenario in India
Conventional sources of energy such as coal and petroleum products
have several drawbacks, especially with respect to the impact on theenvironment and the depletion of natural resources. World fossil fuel
reserves have been depleting rapidly. It has been estimated that at the
current rate of production, natural gas reserves are expected to last for
31-34 years while coal reserves in India are expected to last for 118
years.
Hence, the government has been focusing on exploiting non-
conventional and renewable sources of power. RE market in India is
one of the oldest, developed & matured renewable energy market in
the world Initiated in late 80s. At present, non-conventional sources of
energy account for a negligible proportion of the total energy
consumed in India. India is blessed with an abundance of sunlight,
water and biomass. Vigorous efforts during the past two decades are
now bearing fruit as people in all walks of life are more aware of the
benefits of renewable energy, especially decentralized energy whererequired in villages and in urban or semi-urban centers. India has the
worlds largest programme for renewable energy. Government created
the Department of Non-conventional Energy Sources (DNES) in 1982.
In 1992 a full fledged Ministry of Non-conventional Energy Sources was
established under the overall charge of the Prime Minister. The range
of its activities cover:-
Promotion of renewable energy technologies,
Create a conducive environment to promote renewable
energy technologies,
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Create a conducive environment for their
commercialization,
Renewable energy resource assessment,
Research and development and its demonstration
Production of biogas units, solar thermal devices, solar
photovoltaic, wind energy and small hydropower units.
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2.2 RE Technology options for India
2.2.1 Co-Generation
In some industries like chemicals, the manufacturing process
generates considerable amounts of heat, which can be used to produce
steam. This steam, in turn, can be used to run a turbine generator. In a
co-generation plant the turbine runs on low-pressure steam, as
compared with the high-pressure steam used in conventional thermal
plants.
The capital required to set up a co-generation plant is much lower, ascompared with a coal-based plant, as the need for a boiler is
eliminated (due to the availability of process steam). Typically, co-
generation plants cost Rs 20-30 million per MW of capacity, while coal-
based power plants cost Rs 40-50 million per MW of capacity
(SOURCE: http://www.bharatbook.com/Market-Research-
Reports/Indian-power-sector-database.html). The main factors that
determine the cost of a co-generation plant are the quantity and thequality of steam generated in the manufacturing process.
In addition, as the cost of fuel is nil, the cost of the electricity
generated through co-generation is marginal, as compared with the
cost of purchased power. The surplus power (after meeting the
requirement of the manufacturing process) can be sold to the grid.
2.2.2 Wind Power
In India, wind power potential is largely concentrated in the coastal
regions, and is estimated at around 48,500 MW (SOURCE:
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http://www.bharatbook.com/Market-Research-Reports/Indian-power-
sector-database.html). The functioning of a wind power generation
starts when the wind turbine converts the kinetic energy of wind into
rotary motion, which can be used, either directly to run a machine
(wind mills or wind pumps), or to run an electric generator, that is, a
wind turbine generator (WTG). The velocity and density of wind and
the size (diameter) of the rotor determine, at a particular site, the
output of a WTG.
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2.2.3 Solar power
Electricity from solar energy can be generated by two methods - solar
photo-voltaic (SPV) cells and solar thermal power. SPV devices
generate power by directly converting light energy to electricity. SPV
modules are composed of semi-conductor material (silicon) and when
sunlight falls on them, it frees electrons, which produces electricity.
SPV modules are made of several inter-connected solar cells, in order
to provide power on a large scale. Modules can be further inter-
connected to form solar arrays. In solar thermal power systems, heat
energy from the sun is concentrated, using parabolic reflectors, to heata fluid like water to a high temperature. The cost of generating solar
power has been estimated at Rs 15 per kWh. The Centre and state
governments have tied up to give incentives of Rs 12 per unit for
generating power from solar energy. Cost of generation from
conventional sources is Rs 2.5-3.5 per kWh (SOURCE:
http://www.bharatbook.com/Market-Research-Reports/Indian-power-
sector-database.html). Generation of solar power is more expensive
owing to the higher capital costs of solar power plants.
2.2.4 Small hydroelectric plants
Taking into account the problems associated with large hydel plants,
small hydroelectric power plants (up to 25 MW) are considered to be
economical and environment friendly. They are suitable for remote and
inaccessible areas, as a decentralized source of power. Over 4,000
prospective sites, with a total potential of over 15,000 MW, have been
identified to set up small hydel plants (up to 25 MW). The highest
potential is found in Himachal Pradesh, Uttaranchal, Jammu and
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Kashmir and Arunachal Pradesh (SOURCE:
http://www.bharatbook.com/Market-Research-Reports/Indian-power-
sector-database.html).
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2.2.5 Biomass Power
The Biomass power/cogeneration programme is implemented with the
main objective of promoting technologies for optimum use of countrys
biomass resources for grid and off grid power generation. Biomass
materials successfully used for power generation include Bagasse, rice
husk, straw, cotton stalk, coconut shells, soya husk, de-oiled cakes,
coffee waste, jute wastes, and groundnut shells, saw dust etc. The
technologies being promoted include combustion/ cogeneration and
gasification either for power in captive or grid connected modes or for
heat applications.
Potential
The current availability of biomass in India is estimated at about 500
million metric tons per year. Studies sponsored by the Ministry have
estimated surplus biomass availability at about 120 150 million
metric tons per annum covering agricultural and forestry residues
corresponding to a potential of about 16,000 MW (SOURCE:http://www.bharatbook.com/Market-Research-Reports/Indian-power-
sector-database.html). This apart, about 5,000 MW additional power
could be generated through Bagasse based cogeneration in the
countrys 550 Sugar mills, if these sugar mills were to adopt technically
and economically optimal levels of cogeneration for extracting power
from the Bagasse produced by them.
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2.2.6 ALL INDIA REGIONWISE GENERATING INSTALLED
CAPACITY (MW) As on 31-12-2009
Sources / Systems Estimated Potential( MW)
CumulativeAchievements
(MW)
Wind Power 45,195 10,925
small hydropower 15,384 2,559
biomass power 16,881 829
Grid Interactive SolarPower
50,000 6
Bagasse cogenerationprojects
5,000 1307
Waste to Energy 2,700 68
Total 135,160 15694
Source- www.mnre.gov.in
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CHAPTER 3: RE MARKET MODELS IN INDIA
3.1 Old market model
Captive utilization
Feed-in tariff fixed by state government based on
guidelines by central government
Fiscal incentives (viz. accelerated depreciation)
3.2 New market model
Fixing of RPO by various state governments
Procurement tariff by State Electricity Regulatory
Commissions to achieve the % procurement
3.3 New initiatives
NAPCC targets 5% by 2010 to 15% by 2020
Nationwide tradable REC market mechanism
CERC tariff regulations
Feed-in tariff in form of Generation Based Incentives (GBI)
As an alternative to accelerated depreciation
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National solar mission
20 GW by 2020
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3.4 Existing Policy & Regulatory Framework for
RE promotion in India
3.4.1 New Initiatives
MNRE has announced Roof-top SPV system demo program
in FEB 09 with or without grid connection with total physical
target of 4.25 MW. The program may be extended to include
SWT / Wind-SPV hybrid systems. ( SOURCE: www.mnre.gov.in
)
Under the Electricity Act-2003, Sec. 86.1(e) empowers
regulators to create suitable environment and ensure grid
connectivity for renewable energy systems. Taking benefit of
this provision SWT may be connected to the local grids.
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Net metering concept can be introduced so as to feed extra
energy generation in the local grids. Net metering concept for
SPV systems is already introduced in West Bengal during 2008
for government buildings.
SWT, SPV-Wind hybrid, Wind-Diesel hybrid systems are
also covered under village electrification program through
Decentralized Distributed Generation (DDG) under Rajiv
Gandhi Grameen Vidyutikaran Yojana. Up to 90% of the total
project costs (capital cost and soft cost) will be provided as a
financial assistance to the implementing agency. (
SOURCE:www.india.gov.in )
Centre for Wind Energy Technology (C-WET), Chennai has
set-up testing and certification unit which provide testing and
certification services to the SWT manufacturers in India.
3.4.2 Fiscal Incentives
Packages of incentives are available to renewable power projects such
as:
fiscal concessions such as 80 per cent accelerated
depreciation,
concessional custom duty,
excise duty exemption,
sales tax exemption,
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Income tax exemption on profits from power generation for
10 years, etc.
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3.4.3 Foreign Investment Policy
Foreign Investors can enter into a joint venture with an
Indian partner for financial and/or technical collaboration and
also for setting up of renewable energy based Power
Generation Projects.
Liberalized foreign investment approval regime to facilitate
foreign investment and transfer of technology through joint
ventures.
The proposal for up to 74% foreign equity participation in a
joint venture qualifies for automatic approval.
100% foreign direct investment as equity is permissible
with the approval of Foreign Investment Promotion Board
(FIPB).
Government of India is also encouraging foreign Investors
to set up renewable energy based power generation projects
on Built- Own and Operate basis.
(SOURCE:Paper on New Policy & Regulatory Framework for achieving
the NAPCC and Solar Mission Objectives, Page no 53, Article 7.7, Dated
February 05, 2010 by Sunil Varma Marri, Program Leader Energy
Practice,ICRA Management Consulting Services Limited)
3.4.4 Other Incentives
In addition, a host of fiscal incentives and facilities are available to
both manufacturers and users of renewable energy systems, which
include:
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No excise duty on manufacture of most of the finished
products.
Low import tariffs for capital equipment and most of the
materials and components.
Soft loans to manufacturers and users for commercial and
near commercial technologies.
Financial Incentives/Subsidies for devices with high initial
cost.
3.4.5 Electricity Act 2003
Section 3 - National Electricity Policy and Plan for
development of power system based on optimal
utilization of resources including renewable sources of
energy,
Section 4 - GoI to prepare a National Policy permitting
stand alone systems (including those based on
renewable sources of energy and non-conventional
sources of energy) for rural areas.
Section 61(h) - Tariff Regulations by Regulatory
Commission to be guided by promotion of generation of
electricity from renewable energy sources in their area
of jurisdiction.
Section 86(1)(e) - Regulatory Commission to specify
purchase obligation for licensee from renewable
energy
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3.4.6 National Tariff Policy:
SERCs to fix minimum percentage for purchase of energy
from Renewable Energy sources taking into account
availability of such resources in the region and its impact on
retail tariffs
National tariff policy prefers procurement of power from
NCES based on preferential tariff
Future procurement of power from NCES through
competitive bidding under section 63 within suppliers offering
energy from same type of non-conventional sources
In the long-term, these technologies need to compete with
other sources in terms of full costs
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3.5 Role of Various Stakeholders of RE Sector in
the promotion of development in India
Stakeholders Role in RE Sector
Central GovernmentBodies/Institutions
The Ministry of New and Renewable Energy(MNRE) is the nodal Ministry of the Governmentof India for all matters relating to new andrenewable energy. The broad aim of theMinistry is to develop and deploy new andrenewable energy for supplementing theenergy requirements of the country. - MNREoperates through state-level nodal department
and agencies. Ministry of Power (MoP) is responsible fordesigning policies for grid-connected Powersupply from RE projects. Ministry of Environment and Forests (MoEF)is a nodal agency for the planning, promotion,co-ordination and overseeing theimplementation of environmental (and forestry)programs. Department of Science and Technology isresponsible for research and development of RE
technologies.
Regulators
Central Electricity Regulatory Commission(CERC) regulates the tariff of generatingcompanies owned or controlled by the CentralGovernment. (This includes tariff that stategovernment bodies pay for renewable energy). State Electricity Regulatory Commissions(SERCs) take measures conducive to anefficient electricity industry in the state,safeguard interests of the consumers, andprovide advice to the Government.
FinancialInstitutions
The government owned financial institutionssuch as Indian Renewable Energy DevelopmentAgency (IREDA), Power Finance Corporation(PFC), Rural Electrification Corporation (REC),provide concessional finance for renewableenergy projects.
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Private financial institutions and banks(nationalized and private) provide loans to REprojects on commercial terms and conditions.
Stakeholders Role in RE Sector
ResearchOrganizations
MNRE funded technical institutions such asthe Solar Energy Centre, Centre for WindEnergy Technology, and Sardar Swaran SinghNational Institute of Renewable Energy work astechnical focal points in key RE technologyareas. Educational institutions such as IndianInstitute of Technology (Department of Energy
Studies) help government agencies throughR&D efforts and RE training and developmentinitiatives.
(SOURCE:www.mnre.gov.in)
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3.6 Challenges & Constraints in RE development
in India
3.6.1 Current Issues with RE in INDIA
Development of RE sources in India is still slow to date vis--vis other
countries due to the following reasons:
Lack of experiences for the energy sector;
Limited policy and framework;
Lack of funding for the sector;
Inadequate data and information; and
Insignificant utilization of the RE sources in the contribution
to the total energy supply mix which is based on imported fuel
(coal) for power generation.
3.6.2 The major barriers for this RE development
High initial investment;
Organizational and managerial obstacles;
Lack of means; and
Weakness in financing and banking sectors.
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3.6.3 To address these barriers it is necessary to
have
Human resources, which are both competent and
motivated.
The market should be developed in order to reduce the
cost, and subsidies must be provided.
The International communities must extend their political
influence in order to break the vicious cycle of poverty and
endless donors' assistance, through intelligent and
sustainable development.
Also technology transfer from developed countries to
developing countries is must for the development of RE in
developing countries.
Increasing awareness about RE technologies among the
investors, financial institutions & local communities is very
essential in order to increase their support & participation in
RE development & promotion.
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3.7 KEY Findings & Observations of RE
development scenario in India
3.7.1 Features of RE market & Regulations of India
Large market would drive towards investment by
Utilities
Funds
Constraints will be removed on
Market size & viability
Intermittency
Forecasting protocols
Adopting approaches by Spain and Australia
3.7.2 RE Opportunities for India
RE Sources Opportunities
Biomass
Various fuels available (rice husks,straw, Bagasse, palm oil, forestry residue,
plantation timber/crops (e.g., rubber)) Many technologies now mature and inuse elsewhere Need thorough resource assessment +feasibility studies current fuel uses mustbe investigated
Hydropower
Excellent potential, proven ability in-country Pico/micro suitable in many smallvillages on rivers (Especially in Himachal& other North-Eastern states)
CDM: gather small projects into oneproposal
Wind
Huge Potential available in somesouthern states (Source:C-WET) Huge Potential available in off shore isstill untapped due to lack of technology
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Solar PV
Excellent potential available But duetechnology access problems & hugeinvestments it is still not exploited inIndia.
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3.7.3 Challenges & Barriers for RE development in
India
Poor financial performance of many state-owned utilities
Inappropriate pricing (usually as a result of political
pressures)
Managerial and technical deficiencies (regulation is a
relatively new concept for many countries)
Unsustainable subsidies
Limited public sector finance for new infrastructure
Limited private sector participation
Low levels of access to services
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3.7.4 Policy Initiatives taken in order to promote RE
development in India
Independent Nodal Ministry
Nodal Agencies in Each state
Accelerated Tax Depreciation benefit
Capital Subsidy
Tax Holiday Section 80 IA
Mandatory Procurement of RE Power for Distribution
Licensees
Facilitation of Grid Connectivity
Carbon Credits
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3.8 Target Areas and Priorities needs to be focus
on to achieve Goals
Vertical Key Action addresses five Target Areas
National indicative targets: Actions to increase the
future share of RES electricity (e.g. through benchmarking
and new approaches to use/interpret data).
Support schemes: Actions to add value to existing
support schemes to improve their operational efficiency and
market impact.
Grid system issues (in first instance large-scale
integration): Addressing potential impacts on RES markets
following from changes in the distribution/transmission
networks.
Green electricity: Actions to foster marketing of green
electricity, including information campaigns, to improvemeasures or to help new actors to participate in RES markets.
Distributed electricity generation: Actions to address
policy, legislative or standardization issues related to
distributed generation from RES (including CHP based on
biomass), effects of intermittency, potential benefits of
intelligent grid control, demand management and storage
systems.
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CHAPTER: 4 APPROACHES & POLICY
MECHANISMS
4.1 TYPES OF REGULATORY APPROACHES &POLICY MECHANISMS ENVISAGED AROUND
THE WORLD FOR THE PROMOTION OF
RENEWABLE ENERGY
The age and extent of electricity systems can have a direct impact on
the costs and technical implications of implementing sustainable
energy policies. In a mature system, networks are already
established and are generally geared towards shifting power fromlarge-scale, centralized generating plants to the end user via
transmission and distribution lines. In contrast, less mature systems
can develop to accommodate sustainable energy technologies as they
retain flexibility by virtue of the fact that they are still growing. New
technologies can be designed in to the expanding system, and new
consumers can be offered services rather than just energy supply.
Regulation can have a direct impact on changes and developments in
the system through the provision and regulation of incentives such as
support mechanisms (e.g. investment subsidies, tax credits) for
renewable power technologies or the operation of demand-side
management programmes.
Regulation can also play a less overt role in the technological choices
within energy systems by addressing rules and practices which favour
the dominant technologies in the system. For example, companieshave developed to sell kWh rather than to provide energy services;
regulators can take action to encourage the emergence of energy
service supply companies, which will in turn improve the energy
efficiency of consumers. Similarly, the rules governing connection and
performance have developed to support the large-scale, centralized
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nature of many electricity systems and have therefore tended to
exclude the possibility of connecting smaller-scale generation to
distribution networks. Regulators can address these imbalances and so
provide greater incentives to implement smaller scale, often
renewable, generation.
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Electricity industry structures vary widely from country to country. The
main variations are in terms of:
Level of competition;
The degree of integration (vertical and/or horizontal);
Ownership (public or private);
The degree to which the system is established or
developing.
There are various approaches by which Renewable Energy generation
has been or is being promoted. The various policies may be classified
into various categories ( SOURCE:Paper on Public policy mechanisms;
Page no 21 article 3.3 by Benjamin K. Sovacool Assistant Professor,
Lee Kuan Yew School of Public Policy, National University of
Singapore ):
1. Price Setting and Quantity forcing Policies(E.g. Feed in
tariff & Quota Mechanism)
2. Cost Reduction Policies
3. Public Investment or Market Facilitation Policies
4. Power Grid Access Policies
5. Command & Control
6. Incentive based mechanisms
7.Tradable certificates
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Few of them are discussed in details as under:-
1. Command and control:-
Command and control (C&C) regulation is typically the imposition of
standards backed up by legal sanctions if the standards are not met.
The law is therefore used to define and prohibit certain types of
activity or force certain types of action. Standards can be set either
through legislation, or by regulators empowered by regulation to define
rules. E.g. RPO
Strengths Weaknesses
Fixed performance standardsbacked up in law
Close relationship betweenregulator andbusiness could lead toregulatory capture
Clear definition of unacceptablebehavior
Can be complex and legalistic
Seen as politically decisiveDefining acceptable standardscan be difficult
2. Incentive-based regulation :-
The aim of incentive-based regimes is to induce a regulated entity to
limit or stop an undesirable activity by imposing taxes or granting
subsidiesin other words a carrot and stick approach to ensure a
socially or environmentally desirable end. The scheme of punishment
and reward operates in a mechanical way, so reducing the scope for
regulatory discretion, which in turn reduces the possibility of regulatory
capture. It also allows the company a degree of flexibility in deciding
whether to conform to the rule, or to accept the punishment. An
incentive is any policy, rule, pricing mechanism or procedure that
seeks to modify the behaviour of companies by changing the marginal
costs or marginal benefits associated with particular decisions and
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activities. It could be said that all regulation is based on incentives in
one way or another, as regulation functions through the basic concept
of penalties for bad behaviour and rewards for good behaviour.
One type of incentive-based regulation is performance-based
regulation (PBR), where incentives are tied to improvements in utility
performance, price reduction and service quality improvement. There
is less reliance on costs and less relationship to earning, with more
emphasis on prices. PBR is also more reliant on external performance
standards and less sensitive to company specific actions. The
advantages of PBR are that it may help improve plant utilization,
reduce operation and maintenance (O&M) costs and improve systemreliability. It also sets specific goals for utility management to focus on,
can promote demand-side management (DSM) and simulates
competition where real competition may not be practical.
In general, PBR is also regarded as giving greater flexibility to utilities
to make their own choices on how to respond to regulation. The
disadvantages of PBR are that by placing emphasis on reducing costs,
it may lead to inadequate O&M in an effort to save money. Incentives
on certain items and not on others may divert attention to those areas
where an incentive is offered to the detriment of other areas which
may be equally important. It is also very important to set the rules
correctly from the outset. If benchmarks and targets are wrong they
could benefit the utility or the customer to the disadvantage of the
other party. However, overall, PBR aims to promote sharing of benefit
between the utility and the customers. The utility benefits throughincentives and lower costs, leading to higher profits and better return
on investments for its shareholders. The customers benefit from lower
prices and improved service.
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Strengths Weaknesses
Low regulatory discretionRules may be complex andinflexible
Allows choice for regulatorsAssumes economic rationalitynot always the case
Low enforcement costs Difficult to predict impactEncourages technologicalinnovation
May reward polluters
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4.2 Analysis of various Regulatory
approaches/practices & Policy mechanisms
adopted by Rest of the world
Development of renewable energy supplies promises improvements in
the security of supply due to a lower dependence on foreign primary-
energy supplies and reduction in the price volatility of electricity.
Renewable energies also reduce air pollution and greenhouse gas
emissions, while facilitating improvements in the economic and social
prospects of rural and isolated regions. The cumulative effect of all
these benefits makes a robust case for renewables support.
4.2.1 RE promotion in EU
Renewable generation (excluding hydro) in general is still not
economically feasible and requires appropriate state support in order
to meet EU goals for the development of renewable generation
supplies. Consequently, all CEE EU member states have implemented
supportive policies to encourage renewable generation; the design of
each is decided at a national level and consequently varies by country.
The level of development of renewable energy supplies varies widely
throughout the EU region depending upon the local natural resources
and the implementation of policies to support renewable generation.
Some countries have rich hydro potential; these include Albania,
Bosnia and Herzegovina, Croatia, Lithuania, Romania, Serbia andMontenegro, Slovakia and Slovenia. As a result, their renewable
generation goals have been set accordingly high. Other member states
such as Hungary and Estonia must rely on more expensive technology,
such as wind and biomass, with their renewable generation goals being
set accordingly lower. The renewable electricity directive has been a
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historical step, and a major driving force, in the development of
renewable electricity in EU region.
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4.2.2 RE promotion in Germany
In Germany, largest share of renewable energy is from wind (47.9%)
followed by biomass (28.6%).The Country has Feed in law for
Renewable Energy promotion. The Renewable Energy sources act,
2000, has a different provision for solar generated electricity, wind
power, biomass power & other renewable base power. The feed-in-law
provides greater flexibility & low transaction costs for implementation.
4.2.3 RE promotion in UK
In the UK, 2.67% of the Power is produced by Renewables whereas gas
is the main source of power generation. The country has specified a RO
(Renewable Obligation), primarily to ensure that licensed suppliers
procure a certain percentage of power from renewable sources. For
Renewable energy based generation contracts, competitive bidding
system is employed & the contract is awarded for up to 15 years.
4.2.4 RE promotion in Texas
In Texas, USA, the contribution of RE is 1% of the total power
generated, gas being predominant resource (49%).Under the RPS
(Renewable Portfolio Standard) year wise target are set & all electricity
retailers have to meet this obligation, besides renewable energy
credits (green certificates)are given for the electricity produced
through renewable energy. The regulatory body establishes the RPS
regulations & enforces penalties for power production lesser than the
stipulated quantum from renewable energy sources. The RPS also
facilitates competition, lower cost, provides flexible procurement
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options, & reduces uncertainty of eventual electricity prices borne by
consumer. A tracking system is also in place for monitoring the status
of the Green Certificates.
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4.2.5 RE promotion in Thailand
In Thailand, there are power purchase regulations for promotion of RE.
It allows energy generator to export electricity up equivalent to 1 MW
capacity & has a provision for aggregate net metering along with time
of the day metering.
4.2.6 RE promotion in Vietnam
Vietnam produces 59% of RE from Hydro resources. The country has
set a renewable energy action program to support an acceleration of
renewable electricity production to meet the needs of sustainable
development.
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4.3 Way Forward for RE Promotion in India
At one stage, we are promoting renewable by specifying RPO's and
penalty mechanisms but it is also important to address transmission
and UI issues-
The Regulators should appreciate the intermittent nature
of wind and hydro resources and exempt them from UI
charges and scheduling.
To avoid state level open access constraints, CERC should
promote inter-state open access at retail levels and exempt
wind and hydro from the scheduling and imbalance charges.
There should be clear monitoring mechanism to assess if
there is really no progress on renewable supply or is it on
account of the bottlenecks created by the utilities.
More transparency and accountability in enforcing RPO
obligations should be ensured. Are the companies (especially
SLDC) operating independently?
How can we enforce RPO penalties? What is the status and
progress on the penalties? Are the Regulators seriously
imposing these penalties on the utilities for not complying
RPO obligations?
How are we enforcing RPO on open access and captive
consumers? Who is monitoring them? How are we accounting
their consumption and monitoring compliance?
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CHAPTER 5: KEY FINDINGS & SUGGESTIONS
5.1 Key findings
The Effectiveness of any policy/regulation depends on
country specific traditions & conditions, apart from resource
potentials & policies.
The main success factor for any mechanisms are-
Stable support systems
And low overall barriers
Effectiveness of the promotion of innovative technologies
like wind energy, biomass & photovoltaics have been the
highest in countries with feed-in-tariff.
Effectiveness of the promotion of low cost options like
sewage gas has been high in countries with non-technology
specific RE promotion schemes like tax incentives & quota
obligations based on tradable Green Certificates.
Key factor for effective mechanisms are-
Long term institutional commitment that provides
investor security & long term certainty.
The administrative simplicity of the procedures to
reduce delays for investors.
Following are the main prerequisite of policy/mechanism
for the promotion of RE in any country-
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Ensure effectiveness
Reduce risk to investors
Minimize cost for consumers
Set Long term (Sufficiently ambitious) realistic
targets. This is of particularly importance in quota
systems.
Policy stability, no stop & go policy.
Existing capacities & new capacities should not be
mixed.
Support for new capacities should be for specific
time duration.
Remove non economic barriers like administrative,
legal & grid connectivity.
Compatibility with other policies e.g. with climate
policy, agriculture policy & demand side management
measures
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5.2 Suggestions
1. Design criteria for quota mechanism is as below
Set correct penalty
Higher than marginal production costs at quota level.
Ensure sufficient market size in order to guarantee liquidity
& to increase competition
Try to form an international system
Ensure minimal administration & transaction costs.
In case of an ambitious quota, windfall profits can be
reduced through-
Additional technology specific support e.g. tax relief,
investment incentives, soft loan.
Or by technology dependent length of certification
period e.g. 8 years for on shore wind or 12 years for off
shore wind.
Guaranteed minimum tariff to be implemented in immature
market.
2. Design criteria for feed in tariff mechanism is as below
The level of tariff should be guaranteed for a sufficient
duration in order to minimize investment risk.
Use technology specific tariffs.
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Apply a stepwise tariff scheme (where appropriate) in order
to reduce producers profits & therefore consumer costs.
Tariff should decrease in time for new installations in order
to account for technology learning effects.
Options to participate in liberalized power markets could
facilitate the integration into market.
3. Tradable Renewable Energy Certificates (TREC)
TRECs can be used for harmonization in RE markets across
the countries like harmonization in EU & certificate market in
US.
TRECs can be used as a proof of RE
generation/labeling/disclosure obligations, for
statistics/monitoring, & as a proof of import/export of
renewable energy.
TRECs facilitates international trade of RE
TRECs provides robust mechanism for tracking &
verification of RE trade.
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5.3 Assessment of major RE support mechanism
based on above study
Increase inInstalledPower
Administration
Efforts
EconomicEfficiency
EnhanceCompetiti
on
Investmentsubsidies
H M M N
Feed-in tariffs H L M N
Renewablecertificates
L/M M/H H Y
Competitivebidding
L H H Y
Environmentalpricing (e.g.
CO2 tax)L L H Y
H: high, M: Medium, L: Low, Y: Yes, N: No Source: Secondary
research 2010, PWC
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CHAPTER 6: SUMMERY & CONCLUSION
6.1 Different mechanism to promote renewable
generation
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6.2 Pro & cons of Renewable Energy Policy
Mechanisms for the promotion of RE
Mechanism Advantages Disadvantages
RenewablePortfolio
Standards
Diversifies investment risk;Creates continuous pressurefor lower electricity prices;Minimizes governmentintervention; Providesflexibility when coupled witha renewable energy creditmarket
Will not initially supporthigher cost of renewableenergy; Does not supportoff-grid systems;Renewable energy creditprices will fluctuate anddiminish in price
Green PowerPrograms
Allows consumers in areaswithout plentiful renewableresources to support them;Does not impose the cost ofrenewable energy on thosethat do not wish to pay for it
Voluntary nature means noguarantee that newprojects get built; Does notuniformly promoterenewable energy projects;Inflated costs of renewableenergy may create littleincentive to improveefficiency among providers
Research &Development
Easily controlled by
government; Provides supportto specific technologies
Concentrates investment
risk with no guarantee ofsuccess; At risk to decliningpublic and private budgets
System BenefitFunds
Socializes the cost of renewable energy; Can beused to promote other policygoals
Narrow geographic focus;Modest funding;Regulatory uncertainty
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Mechanism Advantages Disadvantages
Investment TaxCredit
Directly promotes R&D;Distributes risk to privatecompanies
Can send false pricesignals; Concentrateswealth in investors, notconsumers; Can inflatevendor prices; May have noeffect on behavior
Production Tax
Credit
Wide in scope; Socializes the
costs of renewable energy
Can be insufficient toattract newinvestment; Significantbudget must be available;Must be known by
producersProducers must havesignificant incomestream; Exclusionary toindividuals and small firms
TenderingSystem
Government can control levelofrenewable penetration;Provides an incentive to keepcosts low; Distributes savings
onto consumers
Fixed price distorts themarket; Reduces investormargins and can hurt R&D; Tends to hurt domesticmanufacturing, as investorsseek least cost international
suppliers
Feed-In Tariffs
Provides stable investmentstream todevelopers; Suppliers receivepaymentsimmediately; Puts pressureon lower equipment prices;More consistent than manyunclear RPS
Little incentive may exist todrive electricity rates downor to innovate withoutdegression;Initially inflates the cost ofelectricity until significantamounts of renewableenergy are deployed.
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6.3 Conclusion
In brief, above analysis about the various mechanisms shows that
following steps can be taken to overcome the impediments facingrenewable energy
Eliminate subsidies
Create accurate electricity prices and encourage feedback
Pass a national feed-in tariff
Enact a systems benefit charge (to fund energy efficiency)
Enact a systems benefit charge (to educate the public and
disseminate information)
Enact a systems benefit charge (to assist low-income
families)
Strengthen appliance standards / product labeling
Increase funding for energy R&D
Offer low-interest loans and/or government financing
Implement stricter building codes
Pass a renewable portfolio standard
Interconnection standards
Green power programs
Offer rebates and/or free energy-efficient equipment
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Extend and bolster tax credits
Net metering
Unbundling of generation, transmission, and distribution
Streamlined permitting and siting
Offer workshops and training seminars
Government sponsored energy audits
Energy-efficient mortgages
Energy efficiency portfolio standards
Government procurement
Create and fund an Advanced Research Projects Agency-
Energy
Force building managers to disclose energy use
Provide leases on government land
Prohibit master-metering in apartment complexes
Ban incandescent light bulbs
Coal moratorium
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Chapter 7: ENERGY EFFICIENCY
7.1 Introduction
Currently efficiency programmes are largely absent in most countries.
With the exception of a few countries in sub-Saharan Africa, energy
efficient systems development is often undertaken within an energy
planning and policy vacuum. As a result, the development of energy
efficiency systems often follows an ad hoc path with no reference to a
coherent vision and plan. For example, in Malawi, the policy vacuum
has meant that the majority of energy efficient system dissemination
efforts have not only been ad hoc in nature, but operated largely as an
informal activity outside the formal Government planning and
budgeting cycle, thus failing to attract significant support from the
national treasury and/or donor agencies (Kafumba, 1994).
Policies that are supportive of energy efficiency should therefore
explicitly set the stage for the implementation of innovative
institutional structures in the form of energy agencies which can help
to promote energy efficiency in the region (Pretorius, B. and Bleyl, W.,
2006). In Kenya, for, example, it is estimated that between 10-30 per
cent of the primary energy input is wasted (IEEN, 2002). In general,
power reform options were not primarily designed to promote energy
efficiency. The main objective of reforms was to increase electricity
generation capacity and to enhance the financial health of the utilities.
Very few countries have included provisions in reforms to secure and
enhance activities and resources for energy efficiency.
In Africa, most reforms measures are generally seen to hinder the
wider use of energy efficiency options (SOURCE:ADB, Promotion of
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Renewable Energy, Energy Efficiency, and Greenhouse Gas Abatement
(PREGA), Project Initiation Workshop Report,
www.adb.org/Documents/Events, retrieved on 22 March 2005).For
example, requiring utilities to reduce consumer demand for electricity
through energy efficiency is, in an ideal setting, expected to promote
competition. However, in the majority of African countries where the
monopoly of national utilities prevails with a static customer base,
reduction in consumer demand might appear to affect profitability of
the utility due to a reduction in sales. On the other hand, energy
efficiency regulations may enable a utility to have more electricity
available for distribution thereby encouraging it to seek more new
customers to absorb the excess energy. However in practice, most
national utilities consider promotion of energy efficiency to reduce
consumer demand only during periods in which there is a shortfall in
generation capacity. As soon as the generation capacity resumes to
normal, promotion of energy efficiency peters out. Other reform
options however, appear to present opportunities and/or barriers to the
promotion of energy efficiency.
This part of thesis discusses how various reform options impact on the
promotion of energy efficiency and it provides examples from African
countries to illustrate these impacts. We will also see the initiatives
taken by the India to promote Energy Efficiency.
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7.2 Impact of Unbundling on Energy Efficiency
The key objective of unbundlingseparation of the core business units
of generation, transmission and distribution into legally and
operationally distinct and independent entitiesis to enhance overall
operational efficiency of the power sector. There are two types of
unbundling: vertical unbundling and horizontal unbundling. Since the
implementation of horizontal unbundling in India is limited, this section
will focus on the impacts of vertical unbundling.
Perhaps the most important positive impact of vertical unbundling isexposing the inefficient sections in the power system. Prior to
unbundling, utilities facing high system lossesan indicator of an
inefficient energy systemwould cover for the losses by using part of
the reserve generation capacity to dispatch higher amounts of
electricity into the system. However, unbundling implies that the
generation, transmission and distribution segments have to minimize
electricity and financial losses to meet committed generation,transmission and distribution levels as well as economic performance.
In each of these cases, the regulatory framework and tariff setting
mechanisms can play an important role in driving utilities towards
increased energy efficiency in all three segments.
Besides the aforementioned potential and desirable positive impact of
vertical unbundling on energy efficiency, there are also some negative
impacts to be considered. One of these is linked to the fact that theseparation of generation and distribution segments means that the
distribution utility is at liberty to obtain electricity from different
sources. The general response by the distribution utilities to increases
in electricity demand appears to be seeking additional suppliers of
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electricity rather than embarking on demand-side energy efficiency
programmes. In this regard appropriate regulation could reconcile the
objective of distribution utilities to increase sales with that of improved
energy/power efficiency. Besides charging distribution companies for
power demanded; a possible way to address low efficiency could be
that of allocating distribution utilities a fixed portion of available
power generating capacity, for a certain period of time (e.g. 1-2 years).
It would be then in the interest of the distribution utilities to attain for
such power capacity the best possible load factor in order to maximize
energy sales. It would also serve as an important incentive for
improved efficiency if a parameter linked to the efficiency of the
distribution was incorporated into tariff calculation formulae.
The need for additional electricity generation appears to have in turn
encouraged a focus on large-scale thermal IPPs. As a result,
opportunities for both energy efficiency through DSM and distributed
generation (offered by renewables such as small hydro, cogeneration
and geothermal) have not been fully exploited. Another negative
impact that power sector reforms seem to have had on energy
efficiency is the fact that integrated resource planning has become less
useful or relevant (IEA, 2000). Prior to unbundling, integrated resource
planning was an important tool in the hands of the one utility, usually
state-owned, mandated to manage and develop all sector-related
activities: generation, transmission and distribution. Within a vertically
unbundled power sector, various established autonomous entities
would likely tend to carry out resource planning largely independently
unless appropriate institutional and coordination mechanisms are put
in place to ensure that integrated resource planning is to be used
effectively. This includes any supply-side management (SSM) and
demand-side management (DSM) programme would need to be
initiated and monitored from outside the utility, i.e. by the independent
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regulator and/or supported by an Energy Efficiency Agency or
Government ministries.
In most European countries the integrated approach including resource
planning and security of supply tend to become responsibilities of
regulators and governments, rather than of (national) utilities. This
approach makes it easier to integrate the priorities of the national
energy policy in the future development of the energy sector, as well
as to make social and environmental corrections in the market. On the
other hand it remains a difficult task as regulators often do not have all
the information about resources and market players strategies, and in
addition the advice from regulators is not necessarily followed by thenational government and parliament. Figure 1 presents the
organization and different roles with regard to energy efficiency in an
unbundled power sector.
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Figure I. Power sector reform and energy efficiency: possible
way forward for Africa
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(G: Generation; T: Transmission; D: Distribution; S: Supply)Source: IT Power
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7.3 Impact of Electricity Law Amendment on
Energy Efficiency
One important contribution of the amended Electricity Acts is that they
stipulate the formation of the regulatory authority. In most countries of
the region there are at the moment, no explicit and effective incentives
or requirements in place for the promotion of energy efficiency or
demand-side management.
In India Energy conservation Act 2001 has some provisions related to
energy efficiency but still it is not mandatory requirement for all except
some designated consumers. Government of India through Ministry ofPower in coordination with Bureau of Energy Efficiency promoting
Energy efficiency in India, also state regulatory authorities (SERCs)
fixing tariffs for distribution utilities based on performance trajectory
basis where utilities gets incentives if they improve their efficiency by
reducing losses & penalized for not doing so or for not meeting
efficiency mandate given by SERCs.
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7.4 Impact of Corporatization on Energy
Efficiency
Corporatization has positive impacts on energy efficiency. The
potential for the stated positive impacts to materialize could be
influenced significantly by the type of regulatory framework/electricity
sector legislation that is in place. For example, it is legitimate to expect
that a utility would pursue efficiency improvements and costs
reduction under a price-cap regulatory system. On the contrary, under
a rate-of-return (ROR) regulatory mechanism, a utility might not have
any financial and economic interest in pursuing efficiency
improvements unless an efficiency factor is accounted for in the ROR
setting calculating formula. These positive impacts are as under:-
Corporatization of state-owned utilities leads to enhancing
the utilities competitiveness by driving them to reduce their
cost of production in order to maximize profitability. This
development encourages utilities to implement energy
efficiency measures that minimize system losses, which in
turn reduces the cost of power production.
Peak load shaving in the power system thereby
minimizing the need for huge investments to meet peak
demand, which lasts for only a few hours in a day. For
example, the peak load experienced in the mornings is often
associated with water heating. Therefore, using energyefficient water heating technologies such as solar water
heaters can shave off a significant amount of the peak load
and also provide attractive returns to the end-user
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7.5 Impact of Independent Power Producers on
Energy Efficiency
The advent of independent power producers (IPPs) has had a positive
impact on the promotion of energy efficiency in several ways. For
example, IPPs have enabled utilities to retire old and inefficient
generation power plants. Some of the inefficient power plants were
kept in service longer than their useful lifetime due to inadequate
electricity generation capacity and, at the same time, lack of capital to
build new power plants. The perceived profitability of IPPs appears to
have convinced some industries whose core business is not electricity
sales to implement energy efficiency measures to enable them
become net electricity exporting entities in two ways. Firstly, some
entities with embedded generation have embarked on in-house
energy efficiency measures thereby consuming less energy. The
resultant excess generation capacity leads to higher electricity sales to
the grid. This is the case of the sugar industry in Mauritius, which
currently contributes to 40 percent of the electricity production in the
country.
Secondly, industrial entities located near attractive small hydropower
sites are developing the sites for captive power as well as for exporting
the excess electricity to the grid. This is the case of the tea industry in
Eastern and Southern Africa. Another positive impact of IPPs on energy
efficiency is that some utilities appear to encourage privately owned
distributed generation in order to enhance energy efficiency and
stability within the grid. A case example is in Zimbabwe where the
national utility entered into an IPP agreement with a sugar mill in the
Chiredzi area to foster energy efficiency and enhance stability of the
grid in that part of the country. The advent of IPPs has also had some
negative impacts on energy efficiency. By definition, an IPP implies a
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certain amount of vertical unbundling, which complicates attempts to
implement integrated resource planning (IRP) a key platform for
promoting demand-side management (DSM).
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7.6 Energy Efficiency Policies in India
The Indian government recognized the importance of energy efficiency
in passing the Energy Conservation Act of 2001. The implementation of
energy efficiency programs, however, has accelerated in the last few
years through the efforts of the BEE under the Ministry of Power (MOP).
The MOP launched the Standards and Labeling program and the
Energy Conservation Building Code (ECBC) in 2006 and 2007
respectively. Under these regulations, the BEE has launched several
successful programs, and in the process made noteworthy progress in
building an institutional infrastructure to regulate efficiency. Some of
these achievements include:
The manufacturers of four key electrical products
(refrigerators, air conditioners, distribution transformers and
fluorescent tube lights) have adopted labeling for their
models. The BEE will make labeling mandatory from January
2010.
715 large companies are classified as Designated
Consumers and are required to appoint energy managers.
The BEE will soon set efficiency improvement targets for each
of these units.
The BEE conducts National Certification exams, to train
Energy Managers and Energy Auditors.
Furthermore, the BEE has embarked on a number of country-wide
schemes across industries, many of which are recent and therefore
bode well for future reductions in energy intensity. These fall into the
National Mission on Enhanced Energy Efficiency, and include standards
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and labeling, market-based incentives, public procurement regulations,
technology programs and financing assistance. The Prime Ministers
Council on Climate Change approved the NMEEE in principle, and
claimed the mission will help save about 5% of annual energy
consumption and nearly 100 million tons of carbon dioxide every year
by 2015.
Chapter 8: Conclusion & Observations
Energy efficiency in India is generally given a low priority, both at the
industrial and domestic level. The power sector reforms have not
adequately supported the promotion of energy efficiency in the power
sector. However different reform options appear to have different
impacts on energy efficiency i.e. some have neutral impacts while
others have positive and/or negative impacts. Involvement of IPPs and
the unbundling of the power sector generally appear to have
significant benefits on energy efficiency
To promote Energy efficiency in India it required to have strong
support of stringent policy mechanism & regulations along with
awareness creation regarding energy efficiency among the different
stake holders.
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LIST OF REFERENCE
DATABASE
Capital line plus
CERC ( Central Electricity Regulatory Commission )
CEA ( Central Electricity Authority India )
Indiaenergyportal.org
Ministry of Power
MERC ( Maharashtra Electricity Regulatory Commission )
SEARCH ENGINES
Google.com
Askjeeves.com
Soople.com
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WEBSITES
Regulatory Assistance Project (RAP): www.raponline.org
About regulated industry: www.utilityregulation.com
National Association of Regulatory Utility Commissioners
NARUC: www.naruc.org
Centre of Regulation and Competition: www.competition-
regulation.org.uk
The Global Regulatory Network (GRN) strengthens regional
associations and promotes the understanding of complex
regulatory practices: www.globalregulatorynetwork.org
www.greennet-europe.org
www.realise-forum.net
www.newenergyindia.org
www.mnre.gov.in
www.Ibef.org
www.india.gov.in
www.teriin.org
www.coreinternational.com
www.hansuttam.com
www.elsevier.com
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http://www.raponline.org/http://www.utilityregulation.com/http://www.naruc.org/http://www.competition-regulation.org.uk/http://www.competition-regulation.org.uk/http://www.globalregulatorynetwork.org/http://www.greennet-europe.org/http://www.realise-forum.net/http://www.newenergyindia.org/http://www.mnre.gov.in/http://www.raponline.org/http://www.utilityregulation.com/http://www.naruc.org/http://www.competition-regulation.org.uk/http://www.competition-regulation.org.uk/http://www.globalregulatorynetwork.org/http://www.greennet-europe.org/http://www.realise-forum.net/http://www.newenergyindia.org/http://www.mnre.gov.in/8/3/2019 Best Regulatory Practices for Promotion of RE
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www.sciencedirect.com
www.crisilresearch.com
WEB PAGES
http://www.indexmundi.com/India/electricity_consumption.
html
http://www.indexmundi.com/India/electricity_production.ht
ml
http://www.cea.nic.in
http://www.topnews.in/business-news/power-sector.html
http://www.energywatch.org.in
http://www.bharatbook.com/Market-Research-
Reports/Indian-power-sector-database.html
http://www.marketresearch.com/product/display.asp?
productid=1695991
ARTICLES & MAGAZINES
ADB, Promotion of Renewable Energy, Energy Efficiency,
and Greenhouse Gas abatement (PREGA), Project Initiation
Workshop Report, www.adb.org/Documents/Events,
retrieved on 22 March 2005.
Central and Eastern European Electricity Outlook 2007
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Paper on Public policy mechanisms; Page no 21 article 3.3
by Benjamin K. Sovacool Assistant Professor, Lee Kuan Yew
School of Public Policy, National University of Singapore
Paper on New Policy & Regulatory Framework for achieving
the NAPCC and Solar Mission Objectives, Page no 53,
Article 7.7, Dated February 05, 2010 by Sunil Varma Marri,
Program Leader Energy Practice, ICRA Management
Consulting Services Limited
Secondary research 2010, PWC
http://recindia.nic.in/download/T_D_Overw.pdf
www.wwf.org.uk/filelibrary/pdf/ipareport.pdf
www.ibef.org/Attachment/Investment%20opportunities
%20in%20Power%20Sector.pdf
http://www.adb.org/Documents/Studies/Timor-Power-
Sector-Dev/default.asp
www.appanet.org/files/PDFs/RestructuringStudyKwoka1.pdf
www.saneinetwork.net/pdf/SANEI_II/Reforms_and_PowerSe
ctor_in_SouthAsia.pdf
www ebrd com/projects/eval/showcase/psr pdf
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