Wind Force Newsletter July, Edition, 2012


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Wind Force Newsletter July, Edition, 2012

  1. 1. Enabling High Efficiency and Reliable Wind Power Projects2 Policy and Regulatory WinDForce Achievements 1. MERC: Determination of Transmission Tariff for Intra-State Transmission  Wind Resource Assessment for 3000+ System (InSTS) for FY 2012-13 MW  Owner’s Engineer for 250+ MW Item Description FY 2011-12 FY 2012-13  Technical Due Diligence for 900+ MW Transmission Tariff (long term/ medium term) 5414 Rs/ MW/ day 7113 Rs/ MW/ day  Own Project Development for 100 MW Transmission Tariff (short term/collective/ renewable energy) 0.29 Rs/ kWh  Detailed Project Report for more than 300+ MW  Total Wind Advisory 3500+ MW From the above table, we can evaluate that the Long/ Medium term Transmission Tariff for FY13 at 20, 00,000 kWh generation per MW comes out to be Rs 1.28 per kWh which has increased from Rs 0.988 per kWh for FY12. However, for short term/ collective/ renewable power, it is Rs 0.29 per kWh. In case an RE generator opts for availing REC benefit then long/ medium term tariff shall be applicable and w/o REC benefit, Renewable Energy tariff @ Rs. 0.29/ Kwh shall be applicable. 2. GERC: Retail Tariff for FY 2012-13 HT Tariff - Base Energy charges Applicable for UGVCL, DGVCL, MGVCL and PGVCL Existing Tariff New Tariff Paise per Unit Paise per Unit Upto 500 kVA of billing demand 390 400 For next 2000 kVA of billing demand 410 420 For billing demand in excess of 2500 kVA 420 430 As the tariff has increased by 10 paisa per unit, this has further firmed up the viability of captive wind power projects in the state of Gujarat, as invester can freeze the cost of power for next 20 years. With respect to the Draft GERC Policy discussion paper dated July 2012, an RE generator shall be eligible for availing REC benefit if it goes for captive arrangement without availing any preferential benefit. However, it is not clear that if any captive consumer wishes to go for REC benefit then what type (TOD etc) of banking facility shall be available to him (if any).
  2. 2. Enabling High Efficiency and Reliable Wind Power Projects3 3. GERC: Determination of tariff for procurement of power from Wind Power Projects in Gujarat GERC has issued Draft discussion paper on determination of tariff for procurement of power by distribution licensees and others from Wind Power Projects in Gujarat. The important aspects of the same are : Proposal for new control period starting from 11th August 2012 Option I Option II As per Wind Tariff Order Parameters (Interconnection point at (Interconnection point at dated 30 January 2010 wind farm pooling S/S) GETCO S/S) Tariff Rs. 3.56 per kWh Rs. 3.97 per kWh Rs. 4.21 per kWh From the two tier tariff, Investor have to invest more for project to get higher tariff PPA as it will require to build extra electrical lines from the windfarm pooling sub- station to the GETCO sub-station Transmission and Wheeling Charges  Wind power projects wheeling power for own use/ third party sale and opting for RECs, will have to pay normal open access charges and losses.  Wind power projects not opting for REC benefits can avail transmission and wheeling charges/ losses as per the GERC Order dated 30 January 2010. Cross Subsidy Surcharge  Exempted for captive use and for third party sale of wind energy. Energy Metering  Wind projects shall have to provide ABT compliant meters at the interface points and shall conform to the Central Electricity Authority (Installation and Operation of Meters) Regulations, 2006.  Metering shall be done at interconnection point of the generator bus-bar with the transmission or distribution system concerned. Banking of Surplus Wind Energy  One month banking allowed for captive wind energy projects. They are eligible to utilise the same during the month in proportion to the energy generated during peak and normal hour period.  No banking facility offered to third party sale of wind energy. Purchase of Surplus Power from Wind Power Projects opting for Captive use and Third Party Sale under Open Access  For captive wind energy projects, the surplus energy after one months banking is considered for purchase by distribution licensee at 85% of the wind tariff.  For third party wind energy sale, the surplus energy after 15 minutes time block is considered for purchase by distribution licensee at the rate of 85% of the tariff declared by the Commission. Renewable Energy Certificates for Third party sale and Captive Use of Wind Energy  Third party sale and captive use of wind energy will be eligible for availing Renewable Energy Certificates as per CERC REC Regulations.
  3. 3. Enabling High Efficiency and Reliable Wind Power Projects4 4. TNERC: Stakeholder’s hearing on determination of tariff and allied issues related to power generation from NCES WinDForce Services TANGEDCO made a plea before the TNERC for abolishing the system of banking of  Wind Resource Assessment (WRA) electricity by wind power producers.  Structuring of PPA/ Sale of power and The banking system allows wind power producers to put power into the grid and management draw the power back for consumption within a year. This is particularly useful for  O w n e r ’s E n g i n e e r d u r i n g t h e wind power producers who also own other industries that may need electricity to complete project implementation & run. post commissioning TANGEDCOs plea was that banking was hurting the organisation because wind  Detailed Project feasibility Study power producers put electricity into the grid when there is enough power but  Detailed Project Report exercise their option to draw power when there is a scarcity of power. As  Contract Advisory TANGEDCO is bound to supply them the power, it has to purchase power at high  Technical Due Diligence of proposed rates from the market for that purpose. In the bargain, TANGEDCO makes a loss. as well as existing wind farms Furthermore, it has to supply power to the wind producers (who had banked the  Technical Due Diligence of New power) in preference to other consumers. Manufacturing Facility Wind power producers, on the other hand, said that the facility of banking was a  Environment Impact Assessment  Development/ Co-development of promise made by TANGEDCO on the basis of which heavy investments have been made & withdrawing the promised facility would tantamount to breach of Wind Power Projects at Identified agreement, wind power producers demanded higher rates in the range of Rs 5.32 a sites by WinDForce unit to Rs 6.40 under preferential tariff, while TANGEDCO opposed for raising the feed-in tariff beyond the current Rs 3.39. 5. TNERC: Extension of validity of the Commissions Tariff Order for Wind Projects The Commission issued a comprehensive Tariff Order on wind energy in Order No 1 of 2009 on 20.03.2009. As the validity of the Order expired on 31.03.2011, the validity was extended by the Commission upto 31.12.2011 vide Tariff Order No 1 of 2011 dated 08.04.2011. The validity of the said Order was further extended till 30.06.2012 by Order No 4 of 2011 dated 15.12.2011. A stakeholders hearing was held on 08.06.2012 to elicit their views on the tariff determination. Various issues were raised in the hearing which needs to be examined in detail before finalising the tariff order for the wind energy generators. Therefore, the Commission has extending the validity of Order No 1 of 2009 upto 31.07.2012 or the date of issue of tariff order, whichever is earlier.
  4. 4. Enabling High Efficiency and Reliable Wind Power Projects5 6. RERC: Draft Tariff Order for Wind Power Plants for FY13 New Tariff (Rs/kWh) New Tariff (Rs/kWh) if higher Existing Tariff FY12 if Higher Sr. No. Particulars depreciation (Rs/kWh) depreciation benefit is not benefit is availed availed Wind Power Plants located in Jaisalmer, 1 4.46 5.18 4.90 Jodhpur & Barmer districts Wind Power Plants located in districts other 2 4.69 5.44 5.14 than Jaisalmer, Jodhpur & Barmer districts. The above tariff is levelised for 25 years. In the Order, following were introduced: (i) As all reasonable costs and returns are being allowed to be recovered through the tariff, therefore, any policy support by way of capital subsidy/Capital Finance Assistance (CFA), higher depreciation benefit or Generation Based Incentive (GBI), which becomes available to the developer/generator, needs to be passed on to the utilities. - This is been introduced first time and mostly not introduced by any SERCs (only CDM benefit is being shared with state utilities) (ii) In case, any wind power plant getting commissioned during FY 12-13 avails the benefit of GBI/Tariff subsidy under any Government Scheme, the applicable tariff worked out as above, would get reduced to the extent of GBI/Tariff subsidy so availed. In case such a benefit has not been availed, an undertaking to that effect would have to be given while signing PPA - This means if any developer has availed GBI benefit to the tune of INR 50 paise/kWhr then the same has to be reduced from the applicable tariff (iii) Tariff if Higher Depreciation is availed and Tariff if Higher Depreciation is not availed - Not clear whether Higher Depreciation is 15% + 25% or its 15% alone. Also in the tariff calculation depreciation benefit is considered as 17.50% ((50% (15%+20%))
  5. 5. Enabling High Efficiency and Reliable Wind Power Projects6 (iv) Considering that considerable capacity of the wind projects already stands commissioned in the State, the Distribution licensees, in the interest of the WinDForce Esteemed Clients consumers, must strive to procure wind energy at a generic tariff being lower of the Hindustan Zinc Limited, NSL Renewable, two streams namely, with or without higher depreciation benefit by giving Techno Electric, Bhilwara Energy Limited, preference, while finalising/signing PPA, to developers/generators offering the KSK Wind, Green Infra, Avigo Capital, lower rate among the said two tariff streams. However, if capacity in excess of RPO Olympus Capital, PTC India, Auro Mira, is to be contracted, the licensee must obtain prior approval of the Commission MSPL, TVS Energy, Indian Energy, based on reasons and full justification before contracting for capacity in excess of Reliance Power, CRISIL, IFCI Limited, RPO requirement. Oswal Woolen Mills Limited, Ushdev - This clearly means if DISCOM has fulfilled their RPO obligation by procuring Power Holdings, Bharat Light and power under FIT mode, then it is in the hands of commission to give clearance for Power,RSPL Ltd. (Ghari Detergent), signing of any new PPA for any excess power beyond the DISCOMs RPO. Due care Modelama Exports Ltd, Tata Power, L & T should be taken by investors before finalization of their projects. Infra, Kiran Gems, Dharmanandan Diamonds, Shah Promoters, Fena (P) Ltd., 7. KERC: Second Amendment to Procurement of Energy from Renewable Sources Bhabani Pigments, Panama Group, Regulations, 2012 Kandla Port Trust etc. KERC has issued second amendment to REC/ RPO Regulations for Procurement of Energy from Renewable Sources Regulations, 2012. Existing Regulation Amendment proposed Captive Power Producers (CPP) based on Grid Connected Captive Power Producers (CPP) renewable sources of energy shall be eligible to based on renewable sources of energy shall be get accredited for obtaining RE certificates for eligible to get accredited for obtaining RE the entire energy generated from their plants certificates for the energy generated and used including the energy used for captive for captive consumption and for surplus energy, consumption. if any, sold to the distribution licensee/s of the State at the average pooled power purchase cost notified by the Commission from time to time This amendment provides more clarity on Captive format.
  6. 6. Enabling High Efficiency and Reliable Wind Power Projects7 What’s New 1. Government rating of DISCOMs to include RPO fulfilment as a criteria Ministry of Power has developed an integrated rating methodology covering the DISCOMs. The system is an attempt to harmonize the rating of DISCOMs by banks and financial institutions. One of the criteria for ranking of the DISCOMs will also be the level of their Renewable Purchase Obligation (RPO) fulfilment. Renewable Energy Purchase Obligation shall account 25% weightage of total rating. A system of negative marks has also been introduced in the rating methodology. The parameters assigned negative marks include non-auditing of accounts (upto minus 12%), SEB unbundling (upto minus 5%), non-filing of tariff petition (upto minus 5%), untreated revenue gap (upto minus 5%), deterioration in AT&C Loss (upto minus 5%), increase in payables (upto minus 3%), presence of Regulatory Asset (upto minus 3%), negative net-worth (minus 3%) and extent of cross subsidy (upto minus 2%). The first ranking is expected to release in March 2013. As all the distribution companies require huge amount of funds for their planned capital expenditure as well as working capital, all need good rating. With above criteria, very high weightage is given to RPO compliance as well as negative ratings for other management issues, DISCOMS are likely to follow the best practices to maintain high ratings and this should in return should give much needed push to offtake to RECs. 2. MNRE: Guidelines for installation of prototype wind turbine models in India The Ministry has decided to permit the installation of a limited number of prototype wind turbines to facilitate indigenization and encourage national industry. The guideline document is applicable for all the wind turbine manufacturers in India, who wish to install prototype wind turbine model(s) in the country and synchronize with the Indian grid system. The installation of a prototype wind turbine model will be allowed only to carry out type testing for obtaining type certificate from Internationally Accredited Certifying Agencies.   
  7. 7. Enabling High Efficiency and Reliable Wind Power Projects8 Upcoming Events  Wind Power Project Development: Planning, Contracting, EPC organized by th Renewable Market India to be held on 24 August 2012 at The Lalit Intercontinental, Mumbai  Wind Power Development Forum India, organized by Wind Energy Update to be held on 6th - 7th September 2012 at Le Meridien, New Delhi
  8. 8. Enabling High Efficiency and Reliable Wind Power Projects9 REC Update (till 30.06.12) Total Accredited = 1811.31 MW – Wind Specific Total Registered = 1426.08 MW – Wind Specific Total Issued = 16,69,827 RECs Total Redeemed = 14,92,437 RECs Total Inventory = 1,77,391 RECs REC Trading Equilibrium Price 250000 3,000 200000 2,500 (Rs/REC) 150000 2,000 100000 2,500 50000 1,000 0 Apr’11 May’11 Jun’11 Jul’11 Aug’11 Sep’11 Oct’11 Nov’11 Dec’11 Jan’12 Feb’12 Mar’12 Apr’12 May’12 Jun’12 IEX Traded Volume (REC) 260 14,002 15,902 14,668 22,095 41,385 92,303 96,154 1,05,942 1,65,460 1,90,482 1,92,354 62,277 1,53,125 2,23,164 IEX Equilibrium Price (Rs / REC) 1,500 1,500 1,505 1,555 1,800 2,300 2,700 2,900 2,950 3,051 3,066 2,900 2,201 2,402 2,402 In June12 trading session total around 2,50,000 RECs were traded at an average rate @ Rs 2402/ MWh. Last year in Q1 at IEX total 30,164 RECs were traded at an avg. rate of Rs 1502 per REC where as this year in Q1 at IEX total 4,38,566 RECs have been traded at an avg. rate of Rs 2373 per REC. This year, in Q1 it was expected that Trading Volumes will be on lower side and the clearing price shall also be low as last year. But the market has shown some maturity and confidence amongst the stake holders. 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. At various public forums, the investors have expressed their concern on the bankability of REC based Wind Projects primarily because of short (5 years) control period (currently upto 2017 only) & the enforceability of RPO. The Government representatives have indirectly indicated that these issues are being taken care of and soon new order to address these issues shall come.
  9. 9. Contact Us Corporate OfficeKindly write to us if you have any comments on this Newsletter. Your valuable WinDForce Management Services Pvt. 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 6653100Parish Gupta Fax: +91 124 6653200Mob: +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.