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Wind Force Newsletter Dec, Edition, 2011

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  • 1. Issue 04 Newsletter Dec 2011www.windforce-management.com
  • 2. Enabling High Efficiency and Reliable Wind Power Projects2 Policy and Regulatory 1. Tamil Nadu: Extension of Wind Tariff Order No.1 of 2009 upto 30-06-2012 Earlier, TNERC extended the validity of the tariff order up to 31-12-2011 and was in the process of revising the tariff order. However due to number of developments (scheduling of wind energy, REC mechanism etc.), which needed a deeper study of their implications on the tariff and also, some decisions which has to be taken by the commission on certain matters like banking of wind energy, concessional transmission and wheeling charges for wind energy etc., the validity of said order has again been extended by the commission up to 30-06-2012. 2. Rajasthan Electricity Regulatory Commision (RERC): Revision of wind power tariff for sale to DISCOMs RERC has announced revision of tariff for sale of electricity from Wind Power Plants to Distribution Licensees during FY 2010-11 & FY 2011-12 for the control period 2009-14,, which shall be as under: Year Particulars Jaisalmer, Barmer and Jodhpur Other Districts Districts 2010-11 Existing Total Tariff Rs 3.87/kWh Rs 4.08/kWh Revised Total Tariff Rs 4.10/kWh Rs 4.31/kWh 2011-12 Existing Total Tariff Rs 4.22/kWh Rs 4.44/kWh Revised Total Tariff Rs 4.46/kWh Rs 4.69/kWh This increase in tariff is due to revision in levelised tariff as per APTEL judgement th dated 30 May 2011. The wind power generators shall claim the difference in respect of the tariff, determined by earlier order(s) and this order for wind power plants commissioned during FY 2010-11 and FY 2011-12, from DISCOMs in three equal instalments payable in month(s) of January, 2012, February, 2012 and March, 2012 respectively. 3. Tamil Nadu Electricity Board (TNEB): Petition for revision of HT Industrial Tariff TNEB has filed a petition before TNERC for application of preliminary tie-up and approval of ARR for the years 2010-11 and 2011-12 as well as revision of tariff and approval of ARR for the year 2012-13. As per this application: HT Industrial consumers (HT IA): Tariff category Existing Tariff Proposed Tariff Demand Charge Energy charge Demand Charge Energy charge in Rs/KVA/month in Rs/KVA/month HT IA 300 400 300 500 TNEB requested that the above mentioned tariffs be made effective from 1-4-2012 or earlier. www.windforce-management.com
  • 3. Enabling High Efficiency and Reliable Wind Power Projects3 4. Tamil Nadu: Comprehensive proposal to overcome the power shortage TANGEDCO has filed a petition before TNERC submitting a comprehensive proposal to overcome the power shortage in Tamil Nadu. Key features are as follows: Wind In Tamil Nadu, during last year 8707 MU of energy was generated from wind and this year, the generation from wind energy is expected to be around 9400 MU. Through proper scheduling, it might be possible to convert part of the wind power as firm power atleast for part of the year. Once scheduling of wind power is implemented, the accuracy of forecasting will also improve. Over a period of time, with constant refining of scheduling, the accuracy can be further improved and brought closer to reality. In this connection, TANGEDCO is contemplating to establish a flexible resource of 4 x 125 MW (500 MW) pumped storage project at Kundah. However, the initial investments for these schemes are very huge. Transmission The State already has an installed capacity of 5887 MW from wind energy generation as on 31st March 2011. Further, an additional capacity of 5000 MW is likely to be added in the next 5 years. In order to evacuate the power from the wind generators, separate corridors with 3 new 400 KV substations with 400 KV lines are also proposed. These substations will be connected to the proposed 765 KV substation being executed by PGCIL which is expected to be commissioned shortly. Improvement works of existing infrastructure are under progress for facilitating proper evacuation of wind power. TANTRANSCO is already analyzing the optimum requirement of substations for establishment of upto 100 Nos. 33 KV/ 110 KV substations by wind promoters for evacuating wind power. As the proposed capacity additions from wind power are huge, CEA is in the process of issuing guidelines after discussing with PGCIL, Power Operation System Co. Ltd. (POSCO) and all state utilities along with wind promoters. Funding Three 400 KV substations and the 400 KV line to be commissioned for evacuation of wind power is being proposed to be undertaken under the Public Private Partnership (PPP) mode. Japan International Co-operation Agency (JICA) has been approached for funding the establishment of 6 Nos. 400 KV substations, 21 Nos. 230 KV substations and its associated transmission lines in various parts of Tamil Nadu totalling to Rs. 3590 Crores. These developments shall lead to better Grid Availability in the affected areas and shall also provide required infra to new investments. www.windforce-management.com
  • 4. Enabling High Efficiency and Reliable Wind Power Projects4 5. Madhya Pradesh Electricity Regulatory Commission (MPERC): Determination of Wheeling Charges and Cross Subsidy Surcharge issued by MPERC has issued order on Determination of Wheeling charges and cross subsidy surcharge. As per the order for FY 2011-12 new applicable wheeling charges and wheeling losses shall be: 2011-12 Voltage Level Wheeling Charges (Rs/kWh) Wheeling Losses 33 KV 0.14 6% The order shall be applicable with effect from November 2011 to all Open Access Consumers connected at 33 kV and above having contract demand of 1 MW or above. 6. Maharashtra: Plans to raise duty on captive power plants Currently, the maximum duty on captive plants, which are set up by companies for their own consumption, is 40 paise per unit under the Bombay Electricity Duty Act, 1958. Maharashtra government proposes to increase this to Rs 1.50 per unit . It is also proposed to levy a duty of 10 paise per unit on the sale of captive power to third parties. Currently there is no charge for such sales. Proposals for this are still under consideration and no final decision has been taken yet, but this has been brought to ensure that industry doesnt use its captive power generation capacity on merchant basis. The proposal will also be applicable to renewable energy producers, including companies that have put wind power plants for captive consumption. Earlier, when the state was power deficit, use of captive power was encouraged but now the situation is better. But if now the industry also continues to use captive power, the state distribution utility Mahavitaran Ltd will lose its high-paying consumers who cross-subsidize below poverty line (BPL) consumers, farmers and other weaker sections. www.windforce-management.com
  • 5. Enabling High Efficiency and Reliable Wind Power Projects5 Whats New 1. Indian Electricity Grid Code (IEGC) CERC Order, in matter of Implementation of the Renewable Regulatory Funds (RRF) mechanism under Central Electricity Regulatory Commission (IEGC) Regulations, 2010: Earlier, for proper evaluation of impact of IEGC on wind power projects, NLDC asked for the certain details from SLDCs regarding connectivity declaration from Wind farms/Solar generating plants, contract details and processed data (i.e. Schedule generation and deviations of generation within different blocks to RLDCs /NLDC). CERC has ordered to provide the requisite details latest by 15.12.11. Non delivery of such details has seriously affected the schedule of mock exercise as directed by the Commission. Based on the data received, NLDC shall submit the compliance position before the Commission with copies to all SLDCs which shall decide implementation date of Wind Grid Code. 2. Green Energy to be made mandatory for powering telecom towers The Department of Telecom will make it mandatory for mobile companies to tap into renewable sources of energy for powering their towers. Under the new rules, at least 50 per cent of towers and 20 per cent of the urban towers are to be powered by hybrid energy sources (renewable +grid) by 2015.This will have to be scaled up to 75 per cent of rural towers and 33 per cent in urban areas by 2020. The move is aimed at reducing the carbon emissions due to increased dependence on diesel. To provide incentive to the tower companies, there will be support from the Universal Services Obligation fund to meet the initial cost. 3. COP-17, Durban At COP-17 in Durban, 195 countries and as many as 13000 delegates participated. After negotiations, an agreement was reached as the participating nations agreed to the “Durban Platform for Enhanced Action”. This will set to lay a road map towards a global climate change treaty that will make it mandatory for all the parties under UNFCCC to reduce its GHG emissions beyond 2020. www.windforce-management.com
  • 6. Enabling High Efficiency and Reliable Wind Power Projects6 Outcomes of COP-17: nd Agreement on the 2 Kyoto Commitment Period nd Ÿ EU and some other participating parties that signed up to the 2 commitment period of the Kyoto Protocol. st Ÿ The second commitment period of the KP would start from 1 January 2013 and would extend up to either 2017 or 2020 (to be decided at COP 18 at Qatar next year). A Globally Binding Climate Change Treaty Ÿ Participating Nations of the COP-17 agreed to work on a Globally Binding Climate Change treaty and decide on its modalities by 2015. Implementation is planned from 2020 onwards. Ÿ A key aspect of this treaty is that it will include India and China, and the USA- three of the biggest emitters of GHG in the world, but without a binding emission reduction target under the Kyoto Protocol. Ÿ This means countries responsible for more than 85 percent of global emissions have no legally enforceable target until 2020 but probably after 2020 they may have the same. The Green Climate Fund Ÿ The Green Climate Fund, aimed to provide financial help of around $100 billion per year by 2020 to the developing countries in building capacity for Climate Change Mitigation and Adaptation was conceived at COP-15 in 2009. Ÿ At Durban it has been decided that the fund will become functional in 2012. Carbon Capture and Sequestration (CCS) Ÿ It had been agreed at COP-17 that CCS will be added as a mechanism under the CDM Implications Ÿ The outcomes are likely to force governments to invest more heavily on renewable energy generation Ÿ There is also a possibility of countries increasing their emission reduction targets Ÿ Carbon is also likely to fetch better prices and in the process strengthen the carbon market. www.windforce-management.com
  • 7. Enabling High Efficiency and Reliable Wind Power Projects7 4. CERC Draft Tariff Regulations, 2012 For renewable energy projects in the Country, the CERC has proposed assured long- term tariff visibility and alignment of financial norms with the prevailing market conditions. In its draft tariff regulations, 2012, it has proposed the return on equity (RoE) to be revised keeping in view the increase in the Minimum Alternate Tax (MAT). Unlike the earlier three-year control period, the proposed period is for five years. The various proposals, except the capital cost norms for solar power, would remain valid for five years from 1st April next year. As per CERC, which plans to launch these regulations from April next year, the rate fixed for any project during the control period would be valid for 13 years for mature technologies like Wind. CERC has reaffirmed its commitment to promote green energy. To encourage harnessing of wind power in the low-wind regime, the CERC has proposed tariff norms for wind power density (WPD) of less than 200 as well. The capacity utilization factor, a measure of assessing the likely generation from a wind plant over the year, has been fine tuned keeping in mind the technological advancement and the impact of an increase in hub height of the wind mill. The revised norms are expected to encourage better technology, leading to the best possible utilization of the available wind power in the country. They would, in the long run, benefit consumers with better efficiency and reduced cost of generation. Upcoming Events th th Ÿ Wind IPP Summit 2012 to be held on 17 -18 January at Mumbai, organized by Renewable Markets India. www.windforce-management.com
  • 8. Enabling High Efficiency and Reliable Wind Power Projects8 REC trading The above graph indicates that the equilibrium price of REC traded at both the exchanges is increasing every month. Moreover traded volume at both the th exchanges is also increasing. In the recent trading held on 30 November 2011, there were buy bids for ~2,78,460 RECs against sell bids for ~1,86,234 RECs. In November trading session at power exchange most of the RECs have been sold @ Rs. 2900/ Mwh. Electricity Price From the above graph it can clearly be said that during the last one year, most of the time, except 2-3 months, short term market price of electricity in bilateral arrangement is higher than that at power exchanges. This analysis includes only inter-State transactions. In October price at exchange was higher than prices under bilateral arrangement because during this period in southern part of the country major power crisis happened due to lower production from Telangana project (singareni coal mines strike). In the same time in rest power surplus states in Western Region (Chattisgarh Belt & MP) due to heavy rain coal got wet and the power plants had only 1-2 week coal surplus resulting in reduced power generation. Hence overall the availability of power was less which resulted in higher demand of electricity on power exchange with higher electricity price. www.windforce-management.com
  • 9. Contact Us Corporate OfficeKindly write to us if you have any comments on this Newsletter. Your valuable WinDForce Management Services Pvt. Ltd.feedback on this would motivate and help us in improving the quality and enriching 5th Floor, Universal Trade Towerthe content. We are eagerly waiting for your kind response to the articles presented in Gurgaon - Sohna Roadthis Newsletter. Gurgaon - 122001, Haryana Tel: +91 - 124-4353100Parish Gupta Fax: +91-124-4102980Mob: +91 98717 11445 Web: www.windforce-management.comE-mail: parish@windforce-management.comRupesh SinghMob: +91 96507 58884E-mail: rupesh@windforce-management.comA WinDForce PublicationDisclaimer - This Newsletter has been compiled by WinDForce Management Services Private Limitedfor circulation among the stakeholders in the energy market. Though the contents of this bulletin arecorrect to the best of our knowledge, WinDForce does not vouch for their accuracy. www.windforce-management.com