ROUND TABLE ON WIND POWER PROGRAMME

Presentation by Wind Independent Power Producers Association (WIPPA)

August 01, 2012

Amendment in EA2003 / Separate RE Law

Specification of RPO target in the Act/RE Law binding on States Uniform REC Regulations for States; to be derived from the Act/Law itself Member-RE in SERCs, CERC & CEA and other policy making bodies at center and state level/ utilities Promotion of Open Access- RE power should be exempt from cross subsidy surcharge and there should be central level assistance towards wheeling/transmission charges
Renewables is no more a marginal element in generation
As per 12th Plan estimate1, planned conventional generation capacity addition is 75785 MW & envisaged capacity addition of RE based power plant is 30500 MW

Wind would continue to spearhead RE capacity additions

As per FOR study2, envisaged annual RE capacity addition during the 12th Plan period would be:
Source FY12 FY13 FY14 FY15 FY16 FY17 Wind 3,178 3,769 3,988 3,935 3,883 3,680 Solar 391 1,060 1,585 2,005 2,055 2,705 SHP 504 360 474 682 824 460 Biomass 123 850 850 850 850 850 Total 4,197 6,039 6,897 7,472 7,611 7,695

Meeting these targets would require mainstreaming renewables through concise legal provisions
1

http://planningcommission.nic.in/aboutus/committee/wrkgrp12/wg_power1904.pdf http://www.forumofregulators.gov.in/Data/Reports/Final_Report_FOR_RPO_Study.pdf

RPO Compliance & REC

Centralized purchase of REC by centre level agency in case of non- fulfilment of RPO and adjustment in fund allocation to respective state Long term RPO trajectories for all States keeping in line with NAPCC targets Quarterly compliance of RPO REC Floor price projection for next 10 years (to facilitate bankability of RECs) Only new capacities across RE technologies should be allowed participation in REC mechanism
Growth of renewable sector would be contingent on facilitating a market for RE based power; creation of demand through enforcing of RPO and creation of supply through assuring appropriate returns to investors
1

There is no deterrence for not meeting mandatory RPO

Not even a single State has enforced penalty clause.

REC Market1 has started witnessing reduced demand

The buy bid has fallen to lowest level in last year; further buy-sell ratio is at all time low: REC Buy:Sell Ratio
3.00 2.00 1.00 0.00

2.03

2.75

1.58

1.74

1.27 0.34

https://www.recregistryindia.in/

RPO Compliance Awareness

The obligated entities who are to meet RPO are still not meeting the same for FY 2011-12 and are assuming non-compliance will be accepted MNRE along with State Nodal Agencies / ERCs need to enforce compliance sooner than later Support by way of State specific Notifications in the Press advising Obligated Entities to comply with RPO Norms with time line of say Sep.12 6 months after FY Close will help in early implementation of RPO State Utilities also need to be informed thru respective State Governments to meet the RPO in a time bound manner
REC Mechanism brought in to encourage RE Investments and significantly add to Indias Energy needs The REC Mechanism in the past one year has significantly contributed to enhanced RE Capacities across spectrum evolving the Supply side of the Model The objective of RPO Compliance will succeed only when Demand side of the Model also in place Need of the Hour Aggressive media campaign with time bound compliance along with CERCs/SERCs and NODAL Agencies support can make the Mechanism a success Like some of the Tax initiatives ( GST) perhaps a Central Pool can be evolved for the initial period -- say 3 to 5 years to support State Utilities to comply with RPO as still the are the largest Obligated Entities
1

http://www.nrel.gov/docs/fy11osti/50225.pdf

REC Mechanism
PPA at APPC Rates are eligible to Register under REC as per CERC / State REC Regulations Some RECs are insisting on supply of Power under FIT ( Up to 50% of Capacity) and permitting only the balance under APPC Also under APPC - PPA condition the APPC in some States are kept firm with out Annual Reset Even under APPC the period is limited to 10 years for Price while the PPA is for 20 years leaving un-certainty on realisation post 10 years It is suggested that developers as envisaged in regulations is given the option of PPA under FIT/APPC+REC for their projects
Investment decisions in the current environment of interest rates / tax law changes Need visible revenue streams for Financial Closure/ Project Viability State specific changes on CERC Guidelines negates the need to improve RE Capacity Additions General Practice APPC by definition is average of Purchase Price of power in the preceding year and should be re-set annually As investment decisions are made ahead of actual commissioning of Projects Typically 18-24 months ahead with long term perspective it is essential uniform and clear policies are in place to encourage investments in RE

http://www.nrel.gov/docs/fy11osti/50225.pdf

Competitive Bidding
Certainty of power generation in conventional thermal and predictability of solar is not available in wind power generation WRA (wind resource assessment) varies across pockets within States and across country, it needs assessment over long tenure to reasonably estimate PLF State should look to initiate competitive bidding only after acquiring land and sharing the WRA data for at least 3years with the bidders to avoid speculative bidding Competitive bidding in wind has not been successful in most parts of the world
Inappropriate to take cue from solar bidding Solar radiation assessment can be done with fair accuracy based on satellite data; Specific location is not an issue across state unlike wind International experience: NREL, US Dept. of Energy, conclusion1 based on competitive biddings of Brazil, New Jersey, California and China, is Speculative underbidding during the auction process can lead to high attrition rates, which may jeopardize this certainty and lead to fewer projects being built than were initially contracted Unintended consequences: Where material financial repercussions are not associated with an auction, bids may turn out to be inadequate to make projects viable

Implementation of competitive bidding would require putting in place well defined procedure & evaluation methodology; at the same time taking cognizance of wind related issues pertaining to resource assessment and site availability 1 http://www.nrel.gov/docs/fy11osti/50225.pdf

Other issues/suggestions
GBI
GBI to be continued till CERC tariff methodology is adopted by States for APPC/FIT Extension at minimum Re 1/unit for 12th Plan period to ensure a minimum post tax return of 16% on Equity. Present returns on FIT(without GBI) way below government and CERC guidelines

Preparation of comprehensive wind atlas based on revised technical assessments Central support for evacuation infrastructure which presently is the biggest bottleneck for RE promotion. Transparent Policy to facilitate approval/availability of variety of turbines/ new technologies Inter-state transaction of wind power Applicability/impact of changes in tax, regulatory & policy regime prospectively to existing PPAs. e.g. MAT Streamlining the forest land allocation process for wind projects , to enable cut long and cumbersome time. Policy guidelines for forest land assignments in favour of lenders

Wind Independent Power Producers Association (WIPPA)

Contact Details: Sunil Jain- +919810518308 Parag Sharma-+919810052210 Email:- sunil@greeninfralimited.in Email:-Parag@renewpower.in