Wind Force Newsletter Dec, Edition, 2011

Issue 04

Newsletter
Dec 2011

www.windforce-management.com

Enabling High Efficiency and Reliable Wind Power Projects
2

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.


3

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.


4

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 doesn't 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.


5

What's 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.


6

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.


7

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.


8

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.


Contact Us Corporate Office
Kindly 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 Tower
the content. We are eagerly waiting for your kind response to the articles presented in Gurgaon - Sohna Road
this Newsletter. Gurgaon - 122001, Haryana
Tel: +91 - 124-4353100
Parish Gupta Fax: +91-124-4102980
Mob: +91 98717 11445 Web: www.windforce-management.com
E-mail: parish@windforce-management.com

Rupesh Singh
Mob: +91 96507 58884
E-mail: rupesh@windforce-management.com

A WinDForce Publication
Disclaimer - This Newsletter has been compiled by WinDForce Management Services Private Limited
for circulation among the stakeholders in the energy market. Though the contents of this bulletin are
correct to the best of our knowledge, WinDForce does not vouch for their accuracy.


Wind Force Newsletter Dec, Edition, 2011

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (7)

Similar to Wind Force Newsletter Dec, Edition, 2011

Similar to Wind Force Newsletter Dec, Edition, 2011 (20)

Wind Force Newsletter Dec, Edition, 2011