The document discusses India's experience with power procurement through international competitive bidding. It outlines the guiding principles of promoting competition and protecting consumer interests. Case I bidding allows flexibility for developers while Case II bidding specifies project parameters. Early Case I bids saw tariffs around Rs. 2-3/kWh but they have risen to Rs. 4-6/kWh due to fuel supply and cost uncertainties faced by developers over 25-year contracts. Case II bids saw lower initial tariffs of Rs. 1-2.5/kWh but projects like the Tilaiya UMPP face delays from land and clearance issues. Key learnings are a need for mid-term tariff reviews, provisions for uncertainties, and readiness of key
This presentation gives a brief about the Indian Power sector. It covers evolution, growth, major players of Power sectors. Also, it focuses various acts, regulations and tariffs related to it. The important part is issues which are there in Power sector and we have made an attempt to provide recommendations for the same.
Indian Power Sector - Industry AnalysisArjun Yadav
The power sector in India has entered into the growth stage since 2003. With a production of 1,006 TWh, India is the fifth largest producer and consumer of electricity in the world after Russia. The sector is also witnessing robust growth in renewable sources of energy with wind and solar energy estimated to contribute 15GW and 10GW respectively, during the next five year plan. The government passed the National Tariff Policy in 2006 that ensured adequate ROI to companies engaged in power generation, transmission and distribution and assured the consumers affordable rates.
2020 SOLAR PLUS ENERGY STORAGE: FEASIBILITY OF BEHIND-THE-METER SYSTEMS FOR L...AurovilleConsulting
A transition towards a decarbonized and sustainable energy future will incorporate renewable energy sources, such as solar and wind. The intermittency of these renewable sources creates a substantial mismatch between energy produced and required. Energy storage plays an important role in balancing supply and demand and helps to create a more flexible and reliable electricity grid. If we want to source 100% of our electrical energy from renewables by 2050, significant investment in energy storage is necessary.
Lithium-ion (Li-ion) battery is a rapidly developing and the future energy storage solution, the cost of Li-ion battery has seen a steady decline over the past years, this trend is expected to continue for the foreseeable time. A 78% reduction in the cost of Li-ion battery pack over the 2015 cost is expected by 2030. Consumers, in India particularly, are highly cost-sensitive. With the increasing affordability solar plus energy storage becomes a viable investment option while at the same time providing a certain degree of energy security and independence for the consumer.
This report focuses on the financial feasibility of investing in solar plus energy storage (lithium-ion) on the consumer side of the service connection (behind-the-meter) for selected LT consumer categories in Tamil Nadu.
The presentation highlights the following :
a) Current status of Renewable Energy in India
b) The issue of duck curve due to high volume of solar energy
c) Demand increase due to Electric Vehicle (EV) will lead to more demand for Renewable Energy
d) Global & Indian Market Scenario for Electric Vehicle (EV)
e) Recommendation of Niti Aayog for development of Electric Vehicle (EV) market in India
Umpp(ultra mega power plant and international bidding )Gurparvesh kaur
slide2-background With India being a country of chronic power deficits, the Government of India has planned to provide "power for all" by the end of the Eleventh Five-Year Plan (2007–2012).
This would entail the creation of an additional capacity of at least 100,000 MW by 2012
Ultra Mega Power projects, each with a capacity of 4000 MW or above, are being developed with the aim of bridging this gap
Launched by Ministry of Power in 2005-06
slide3-Central government has taken the initiative under tariff based competitive bidding route using super critical technology on BOO basis
Central Electricity Authority is the technical partner & Power finance corporation is the nodal agency
Separate SPVs were provided for each project to undertake project development activities including bid process management
In addition to Ultra Mega thermal power Projects, Ministry of Power is also taking steps for bringing up large Hydro Projects and large size Transmission Projects on the fast track
slide4-role of ministry - Ministry of Power to be facilitator for coordination with concerned Ministries/ agencies and State Government for ensuring:
Coal block allotment for pithead projects
Environment/ forest clearances
Facilitate acquisition of land
Required support from State Govt. & its agencies
To facilitate proper payment security mechanism with State Govt./ State utilities
slide5-concept Setting up of large projects of 4000 MW at a single location: ensuring economies of scale
Award of projects to developer through tariff based competitive bidding : ensuring cheaper power
Utilization of super critical technology: ensuring higher efficiency and lower CO2 emissions
slide 7-PROVISION OF ELECTRICITY ACT, 2003
Provides that regulatory commissions shall adopt the tariff if it is determined through transparent process of bidding accordance with guidelines issued by central government
Aims at moving away from cost plus approach for tariff determination & expected to encourage private sector investment
slide8-national electricity policy-Aim of this policy is to supply reliable & quality power of specified standard in an efficient manner & at reasonable rates
Policy recognizes that competition will bring significant benefits to consumers
Policy stipulates that all efforts will need to bring the power industry as early as possible in the overall interest of consumers
slide9-Access to Electricity Available for all households in next five years.
Availability of Power Demand to be fully met by 2012.
Shortages to be overcome and spinning reserve to be available.
Per capita availability of electricity to be increased to over 1000 units by 2012.
Minimum lifeline consumption of 1 unit/ household/day as a merit good by year 2012.
Financial Turnaround and Commercial Viability of Electricity Sector
slide 10-electric tariff policy
slide11-20 international bidding comparison with national bidding
This presentation gives a brief about the Indian Power sector. It covers evolution, growth, major players of Power sectors. Also, it focuses various acts, regulations and tariffs related to it. The important part is issues which are there in Power sector and we have made an attempt to provide recommendations for the same.
Indian Power Sector - Industry AnalysisArjun Yadav
The power sector in India has entered into the growth stage since 2003. With a production of 1,006 TWh, India is the fifth largest producer and consumer of electricity in the world after Russia. The sector is also witnessing robust growth in renewable sources of energy with wind and solar energy estimated to contribute 15GW and 10GW respectively, during the next five year plan. The government passed the National Tariff Policy in 2006 that ensured adequate ROI to companies engaged in power generation, transmission and distribution and assured the consumers affordable rates.
2020 SOLAR PLUS ENERGY STORAGE: FEASIBILITY OF BEHIND-THE-METER SYSTEMS FOR L...AurovilleConsulting
A transition towards a decarbonized and sustainable energy future will incorporate renewable energy sources, such as solar and wind. The intermittency of these renewable sources creates a substantial mismatch between energy produced and required. Energy storage plays an important role in balancing supply and demand and helps to create a more flexible and reliable electricity grid. If we want to source 100% of our electrical energy from renewables by 2050, significant investment in energy storage is necessary.
Lithium-ion (Li-ion) battery is a rapidly developing and the future energy storage solution, the cost of Li-ion battery has seen a steady decline over the past years, this trend is expected to continue for the foreseeable time. A 78% reduction in the cost of Li-ion battery pack over the 2015 cost is expected by 2030. Consumers, in India particularly, are highly cost-sensitive. With the increasing affordability solar plus energy storage becomes a viable investment option while at the same time providing a certain degree of energy security and independence for the consumer.
This report focuses on the financial feasibility of investing in solar plus energy storage (lithium-ion) on the consumer side of the service connection (behind-the-meter) for selected LT consumer categories in Tamil Nadu.
The presentation highlights the following :
a) Current status of Renewable Energy in India
b) The issue of duck curve due to high volume of solar energy
c) Demand increase due to Electric Vehicle (EV) will lead to more demand for Renewable Energy
d) Global & Indian Market Scenario for Electric Vehicle (EV)
e) Recommendation of Niti Aayog for development of Electric Vehicle (EV) market in India
Umpp(ultra mega power plant and international bidding )Gurparvesh kaur
slide2-background With India being a country of chronic power deficits, the Government of India has planned to provide "power for all" by the end of the Eleventh Five-Year Plan (2007–2012).
This would entail the creation of an additional capacity of at least 100,000 MW by 2012
Ultra Mega Power projects, each with a capacity of 4000 MW or above, are being developed with the aim of bridging this gap
Launched by Ministry of Power in 2005-06
slide3-Central government has taken the initiative under tariff based competitive bidding route using super critical technology on BOO basis
Central Electricity Authority is the technical partner & Power finance corporation is the nodal agency
Separate SPVs were provided for each project to undertake project development activities including bid process management
In addition to Ultra Mega thermal power Projects, Ministry of Power is also taking steps for bringing up large Hydro Projects and large size Transmission Projects on the fast track
slide4-role of ministry - Ministry of Power to be facilitator for coordination with concerned Ministries/ agencies and State Government for ensuring:
Coal block allotment for pithead projects
Environment/ forest clearances
Facilitate acquisition of land
Required support from State Govt. & its agencies
To facilitate proper payment security mechanism with State Govt./ State utilities
slide5-concept Setting up of large projects of 4000 MW at a single location: ensuring economies of scale
Award of projects to developer through tariff based competitive bidding : ensuring cheaper power
Utilization of super critical technology: ensuring higher efficiency and lower CO2 emissions
slide 7-PROVISION OF ELECTRICITY ACT, 2003
Provides that regulatory commissions shall adopt the tariff if it is determined through transparent process of bidding accordance with guidelines issued by central government
Aims at moving away from cost plus approach for tariff determination & expected to encourage private sector investment
slide8-national electricity policy-Aim of this policy is to supply reliable & quality power of specified standard in an efficient manner & at reasonable rates
Policy recognizes that competition will bring significant benefits to consumers
Policy stipulates that all efforts will need to bring the power industry as early as possible in the overall interest of consumers
slide9-Access to Electricity Available for all households in next five years.
Availability of Power Demand to be fully met by 2012.
Shortages to be overcome and spinning reserve to be available.
Per capita availability of electricity to be increased to over 1000 units by 2012.
Minimum lifeline consumption of 1 unit/ household/day as a merit good by year 2012.
Financial Turnaround and Commercial Viability of Electricity Sector
slide 10-electric tariff policy
slide11-20 international bidding comparison with national bidding
GIZ support mechanism for RE development in VietnamTuong Do
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Day-3, Mr. Vimal Kirti Singh, IAS
1. POWER PROCUREMENT
UNDER
INTERNATIONAL COMPETITIVE BIDDING
(EVALUATING COMPETITIVE REGIME)
3rd Aug 2013
Presentation by
VIMAL KIRTI SINGH, IAS
PRINCIPAL SECRETARY,
DEPTT. OF ENERGY,
GOVT. OF JHARKHAND
2. AGENDA
Background and Context
Guiding Principles
Experience of Competitive Bidding
Challenges faced in competitive bidding
Case Study
Key Learning
3. BACKGROUND AND CONTEXT
Electricity Act 2003 emphasizes promotion of competition in
electricity market
Competitive procurement of electricity is planned to reduce
cost of power and facilitate development of power market
Section 61 and 62 of Act provides for tariff regulation and
tariff determination for generation, transmission, wheeling
and retail sale of electricity by appropriate commission
Section 63 of Act states,
“Notwithstanding anything contained in Section 62, the Appropriate
Commission shall adopt the tariff if such tariff has been determined
through transparent process of bidding in accordance with the
guidelines issued by the Central Government”.
Indian Electricity Act, 2003 aspires to create a liberal framework for the
development of the power sector – “ An Act to consolidate the laws…for
taking measures conducive to development of electricity industry, promoting
competition therein, protecting interest of consumers and supply of electricity
to all areas…”
4. GUIDING PRINCIPLES
Tariff Policy under the Act aims at:
Promote competitive procurement of electricity
Facilitate transparency & fairness in procurement process
Protect consumers’ interest by facilitating competitive
conditions in procurement of electricity
Implementation of competitive bidding to encourage
private sector investment
Reduce capital cost, promote efficiency in operations and
enable competitive pricing of electricity
Competitive Bidding Guidelines:
Bids invited by power procurers under
Case I Bidding
Case II Bidding
PPA signed for 25 years; yearwise tariff to be quoted by
the bidders
5. CASE I AND CASE II BIDDING
Case I bidding:
Flexibility in Location, technology or fuel
Developer to select any location and any type of fuel
Developer to obtain all clearances, build transmission lines, obtain
long term access and connectivity
Fuel risks of availability of fuel, price of fuel, transportation
cost, foreign exchange, taxes, duties to be taken by developer
All risks loaded on the project developer
Price discovery is relatively on higher side
Case II bidding:
Location, technology or fuel is specified by Procurer
Attractive price discovery due to advance action by procurer
To acquire land and to undertake Preliminary studies of coal mining
blocks
In principle, environmental clearance for project and mining blocks as
well as other statutory clearances
Power is sold at the bus bar of power station, no requirement of
transmission lines by developer
6. EXPERIENCE OF CASE I BIDS:
PPA SIGNED
State
Quantum
(MW)
Date Developer
Levelized Tariff
(Rs /kWh)
Gujarat (Bid 1) 1000 Sep 2006 Adani 2.89
Gujarat (Bid 2)
200
Dec 2006
Aryan Coal 2.25
1000 Adani 2.35
Gujarat (Bid 3) 1000 Dec 2006 Essar 2.40
Haryana
300
Nov 2007
PTC - GMR 2.88
1425 Adani 2.94
Maharashtra
1320
Feb 2008
Adani 2.64
300 JSW 2.72
684 Lanco 2.72
Maharashtra
200
Aug 2009
GMR 2.88
450 IndiaBulls 3.27
1200 Adani 3.29
Rajasthan 1200 Aug 2009 Adani 3.25
7. EXPERIENCE OF CASE I BIDS:
PPA SIGNED
State
Quantum
(MW)
Date Developer
Levelized
Tariff
(Rs /kWh)
Gujarat
1010
Jan 2010
KSK Energy 2.35
800 Shapoorji Pallonji 2.80
1000 Essar Power 2.80
Bihar 450 Jan 2010 Essar 3.06
Karnataka
430
Jan 2010
Thermal Powertech 3.77
200 Meenakshi Energy 3.80
600 JSW Energy 3.81
400 East Coast Energy 3.89
400 NCC 3.89
Bihar
300
Apr 2011
Essar 3.69
260 GMR 3.69
8. EXPERIENCE OF CASE I BIDS:
UNDER EVALUATION
State
Quantum
(MW)
Date Developer
Levelized
Tariff
(Rs /kWh)
Uttar Pradesh
300
Sep 2012
NSL 4.47
390 PTC – Aryan Coal 4.89
423 Lanco 5.07
350 RKM – Power Gen 5.09
1000 KSK Energy 5.44
361 PTC – Moserbaer 5.73
800 Navyuga 5.84
Rajasthan
195
Sep 2012
PTC – MCCPL 4.51
311 PTC – DB Power 4.81
100 Lanco 4.94
200
PTC – Athena
Power
5.14
9. MOVEMENT OF CASE I BID TARIFFS
1.79
2.78
3.17
3.69
5.25
-
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
5.50
6.00
2006-07 2007-08 2009-10 2011-12 2012-13
Weighted Average Levelized Tariff for all Case I bids per
year
Levlized Tariff
(Rs / kWh)
Upward trend in Case I bid tariff due to increase in risk perception on
fuel supply, fuel cost, payment guarantee
10. EXPERIENCE OF CASE II BIDS:
PPA SIGNED
Project
Quantum
(MW)
Date Developer
Levelized
Tariff
(Rs /kWh)
Tata Mundra
UMPP
4000 Apr 2007 Tata Power 2.26
Sasan UMPP 3960 Aug 2007 Reliance Power 1.19
Krihnapatnam
UMPP
4000 Oct 2007 Reliance Power 2.33
Tilaiya UMPP 3960 Dec 2008 Reliance Power 1.77
Jhajjar –
Haryana
1320 Mar 2008
China Light and
Power
2.99
Talwandi Sabo –
Punjab
1980 Jun 2008 Sterlite 2.86
Karchana – UP 1320 Nov 2008 Jaypee 2.84
Bara – UP 1980 Feb 2009 Jaypee 2.89
Nabha – Punjab 1320 Nov 2009 L&T 2.89
11. MOVEMENT OF CASE II BID TARIFFS
2.03
2.40
2.89
1.50
2.00
2.50
3.00
2007-08 2008-09 2009-10
Weighted Average Levlized Tariff for all Case II bids per year
Levelized
Tariff
(Rs/kWh)
12. CHALLENGES IN COMPETITIVE BIDDING
Tariff to be quoted by the bidders for 25 years
Period of 25 years too long for project developers to
assess the uncertainties with respect to fuel
availability, fuel costs, cost escalation etc
Case I bids require project developer to obtain all
clearances, land acquisition etc.
Delay in land acquisition, approvals and clearances result in
stretched project timelines
Scope of limited cost escalation in contracts dents investors’
confidence in projects
Bid Tariffs trending upwards due to:
Uncertainty in fuel supply and fuel prices
Developers incorporating delay risks in tariff
13. CHALLENGES IN COMPETITIVE BIDDING
Uncertainty in Fuel Supply and Fuel Prices
Linkage based projects:
Coal Supply varies significantly
Only 50%-60% of coal requirement available thro’ linkage; balance
coal to be procured from other sources at much higher rates
Captive Mine based projects:
Developers failure in preempting challenges in land
acquisition, obtaining approvals and clearances
Regulatory Changes posing further challenges to developers
Imported Coal based projects:
Major regulatory changes in countries of export
Absence of any provisions in contracts to safeguard project
developers as well as procurers against the major changes in fuel
costs
14. CHALLENGES IN COMPETITIVE BIDDING
Delay in Land acquisition, Clearances and Approvals
Inadequate preparation of projects creating information
asymmetries and competitive distortion
Absence of provisions in contracts for dealing with project
implementation delay due to inability of either party
Absence of proper mechanism and indexation for cost
escalations due to unforeseen circumstances
15. CHALLENGES IN COMPETITIVE BIDDING
Power from UMPPs (Case II bids) being supplied to a
group of procurers
Highly difficult to arrive at consensus on disputes arising
between procurers and developers
Delay in decision making resulting in delayed project
implementation
Absence of electricity from planned projects resulting in
purchase of power from other sources driving power
procurement cost upwards and hampering financial health of
procurers
Decision making during project execution suffers due to
a variety of reasons
Procurers, mostly Govt. entities, are bound by public
procurement policy leaving little flexibility
Collective decision making in cases like UMPPs is a major
challenge
Lack of benchmarks and indexation to deal with cost variations
in the PPA
16. CASE STUDY: TILAIYA UMPP (1/2)
Tilaiya UMPP:
One of the four UMPPs envisaged by Govt. of India to meet
power deficit in the country
Tilaiya UMPP, an integrated power project based on domestic
coal from Captive coal mines
Project awarded to Reliance Power through International
Competitive Bidding process in Aug 2009
25 years long term PPA signed with 18 Procurers from 10 States
Electricity to be supplied at Levelized tariff of Rs. 1.77 / kWh
Under the UMPP regime, Procurers responsible for:
Land acquisition for power plant and coal mine
Water allocation
Power evacuation systems
Major clearances like Forest Clearance, Environmental
Clearance
17. CASE STUDY: TILAIYA UMPP (2/2)
Current Status:
Land Acquisition still under progress with developer claiming
huge increase in land cost and rehabilitation and resettlement
cost
Delay in clearances and approvals for the coal mine impeding
development of the project
Developer claiming pass-through available under the PPA clause
of Change in Law insufficient to compensate for the actual
increase in cost due to change in law
Slow Progress in the project implementation
18. KEY LEARNING
Basic framework of Competitive bidding in line with the intent
of providing affordable power and introduce transparency and
accountability in the sector
As 25 years is too long to factor in uncertainties, mid term
reviews –say every 5 years – of tariffs to be provided for
Modifications required to incorporate mechanism to
appropriately compensate developers for fuel side
uncertainties
Appropriate Provisions / indexation to be provided in contracts
for unanticipated events / uncertainties
Wide post-bid variation in conditions like fuel supply, fuel
prices, capital costs etc makes firm capacity and energy price
bid impractical in current times
Crucial role of Public sector in Case I and Case II projects:
Complete readiness of projects prior to bidding for early
fructification of envisaged projects
Continuous monitoring by procurers to avoid any slipups by
developers
19. CONCLUSION
Procurers’ interests will be served better by ensuring the
completion of the projects on time and making available the
competitively priced power. This will result in
Reduction in average power purchase cost of the state
Triggering large scale economic growth coupled with substantial
local development
Key to achieve this:
Complete readiness of project inputs prior to bidding for early
fructification of the projects
Continuous monitoring by procurers and central agencies to avoid
any slipups by developers
A comprehensive PPA with inbuilt protections for both the
parties, well prepared to deal with uncertainties, defined automatic
compensation mechanisms to deal with deviations in a fair manner
Set up Inter-Ministerial Group for resolving problems involving
various ministries (similar to the CCI)