1. business and industrial
2. energy
3. renewable energy
4. wind energy

Volume : 2
Issue : 10
October 2014
` 10/-
POWERING A GREENER TOMORROW
INDIAN WIND POWER ASSOCIATION
NATIONAL COUNCIL
Office Bearers :
Chairman
Prof. Dr. K Kasthoorirangaian, C.M.D., RSM Autokast, Coimbatore
Vice President, WWEA, Bonn, Germany
Vice Chairmen
Shri S V Arumugam, M.D., Shiva Texyarn, Coimbatore
Shri Rajiv Samant, Head - BD, Wind,
The Tata Power Company Ltd., Mumbai
Honorary Secretary
Shri Chetan Mehra, M.D., Weizmann, Mumbai
Honorary Treasurer
Shri A Raja Sukumar, President, Indo Wind Energy, Chennai
Editor
Dr. Jami Hossain
Council Members :
Dr. V Bapeshwar Rao, V.P. Marketing, Suzlon Energy, Chennai
Shri T Balachandran, M.D., Arvind Green Infra, Karur
Shri Balram Mehta, S.V.P., Renew Power Ventures, Gurgaon
Shri Chandra Shekhar Khunteta, Director, Indocot, Jaipur
Shri M K Deb, M.D., Consolidated Energy Consultants, Bhopal
Shri Devansh Jain, Director, Inox Wind, Noida
Shri V Dev Anand, Director, Violet Green Energy Pvt. Ltd., Rajasthan
Shri Jami Hossain, Chief Mentor & Founder,
WindForce Management Services, Gurgaon
Treasurer, WWEA, Bonn, Germany
Shri T S Jayachandran, V.P., F & A, Premier Mills, Coimbatore
Shri Jitendra L Thakkar, CMD, Elveety Industries India, Hubli
Dr. N. Karunamoorthy, ED, AWT Energy pvt ltd, Mumbai.
Shri R Kannan, Senior Vice President, Beta Wind Farm, Chennai
Shri V K Krishnan, E.D., Leitwind Shriram Manufacturing, Chennai
Shri Madhusudan Khemka, M.D., Regen Powertech, Chennai
Shri K R Nair, GM, (Liaison), Wind World (India), Mumbai
Shri Rajsekhar Budhavarapu, CTO-Renewable Investments,
IL & FS Energy Development Company, Gurgaon
Shri Rajeev Karthikeyan, MD, Leap Green Energy Pvt. Ltd., Coimbatore
Shri K V S Subrahmanyam, V.P.-Power, MSPL, Bangalore
Shri Sunil Jain, CEO & ED, Hero Future Energy, New Delhi.
Shri U B Reddy, MD, Enerfra Projects (India) Pvt Ltd., Bangalore
Dr. R Venkatesh, President, Power Quality Solutions, EPCOS India, Nashik
From the Editor’s Desk...
The Paradox of Inverse Proportionality!
I write this on the day of Diwali and take the
opportunity to wish all the readers a Very Happy
Diwali!
A great paradox prevails today, perhaps not
only in the wind sector but also the entire
infrastructure sector. As the capital at stake
increases, the time given to undertake due
diligence reduces. One would assume that
large projects, large investments would require that adequate time
be given to analysis, due diligence, planning etc. However, it seems,
in practice this logic stands on its head. The Inverse Proportionality!
Larger the project and more the money at stake, less the time given to
due diligence. We as consultants, witness this often. If an investment
of USD 20 million will allow one month in such due diligence, an
investment of USD 200 million would prefer only a week.
Those sitting behind these funds to be deployed, be it banks or
private equities or FIs, are actually sitting on a hot seat as greater the
delay in deployment, higher is the interest amount foregone. Those
who need the funds want their project to be commissioned as soon as
possible. Even a week’s delay in commissioning of the project implies
loss of generation and revenue that was projected. It’s a similar story
for the private equities, as long as the amount to be invested remains
idle, it is foregoing the high returns on equity and they are in a equal
hurry to park this equity in a profitable project. All together, the
whole process has become a logic defying paradoxical vicious cycle.
Everything has to be done as if it was due yesterday. Young managers,
consultants, lawyers, engineers from all sides - start working all night
long – Contracts, Term sheets, ToRs, NDAs are finalized data rooms
set up in a matter of hours.
However, surprisingly, the investors, developers and lenders turn a
blind eye to the possibility that at the neck break speed they wish
to pursue their dreams (transactions), they might be missing out on
some crucial aspect which could mean that the “dream of windfall
profits” they chase could turn into a nightmare. There are many a
pitfalls on the road – a small slip in in the worksheet, a missing a
bracket in a formula, a slip of the mouse of the sleepy analyst - could
turn out to be a recipe of “all fall down.” Surprising indeed that even
the so called ‘conservative bankers’ are ready for this party and its
pitfalls (the NPAs).
While there is good logic in deploying funds in a profitable business,
there is equally strong logic in not deploying funds in a loss making
proposition. Once the funds are locked in a bad projects, there would
be additional outgoing revenue streams to the lawyers and arbitrators!
Moreover, it is equally important that in the great hurry and the narrow
mindedness of project level profits, we do not miss out on some big
opportunity.
As well wishers of all those working and investing in wind energy we
would recommend that they should indeed be careful of falling into
this vicious cycle this trap.
INDIAN WIND POWER ASSOCIATION
Door No. E, 6th Floor, Tower-1, Shakti Towers
No. 766, Anna Salai, Chennai 600 002
Phone : 044 4550 4036 | Fax : 044 4550 4281
E-mail : iwpahq@windpro.org, Website : www.windpro.org
(For Internal Circulation Only)
Contents...
Editorial
1
From the Chairman's Desk
3
Proceeding of the 4th AGM held at at Babasaheb Dahanukar Hall, Maharashtra Chamber of Commerce,
Kala Ghoda, Mumbai
5
SRPC's Letter regarding Wind Integration
10
Annexure I - Integration of Wind Generation - A National Perspective
11
Annexure II - Suggestions/Observations of TANTRANSCO / TANGEDCO
12
Annexure III - Grid Impact of Wind Power Variability
13
Annexure IV - Letter to Shri S R Bhat, Member Secretary,
Southern Regional Power Committee, Central Electricity Authority
16
Annexure IV - Letter to Thiru K Gnanadesikan, I.A.S.,
Chairman cum Managing Director, Tamilnadu Electricity Board
19
Follow-up Letter to SRPC
22
Extra Ordinary General Meeting held at Mumbai on October 16, 2014
23
IWPA’s comments on TNERC’s Consultative Paper on Comprehensive Wind Tariff
24
IWPA Comments - Workings - TNERC’s Comprehensive Wind Tariff Order
35
Telangana State Issues
36
Andhra Pradesh State Issue
38
List of Advertisements
Page No.
Cape Electric Corporation
1st Wrapper
Wind World (India) Ltd.
2nd Wrapper
RRB Energy Limited
3rd Wrapper
Gamesa Wind Turbines India Pvt. Ltd
4th Wrapper
Pioneer Wincon Pvt. Ltd.
Suzlon Energy Ltd.
2
Page No.
9
20 - 21
Evergreen Solar Systems India Pvt. Ltd.
27
The Ramco Cements Ltd.
31
Revathi Power Transmission
34
Kay Arr Engineering Agency
37
From the Chairman's Desk
Dear Friends
Greetings and salutations. May this Deepavali bring light and
happiness to all. There were positive developments this month.
The Government’s thrust of renewable energy in the energy mix
was evident in the internal circular of the SRPC. When we came
upon this circular regarding integration of wind into the grid,
IWPA, as a stakeholder, offered our positive suggestions and
expressed our interest to be part of the discussion on this vital
topic. In response, the SRPC extended an invitation to IWPA to
participate in their internal technical discussions. Slowly but surely
the Government’s policies are manifesting at the ground level
Two technical experts, Dr. M P Ramesh former ED of C-WET
(NIWE) and Shri A Thirumoorthy, our Technical Consultant who
was formerly Superintending Engineer of TANGEDCO, were
nominated to make the presentation on behalf of the Association
at SRPC. I am glad to inform that not only was the presentation
by IWPA representatives were well received, but also a follow-up
meeting has been scheduled on November 12, 2014.
SRPC have in their website welcomed this proposal of IWPA in
expanding the area of Tamil Nadu control area to a larger area as
operated by SRPC. This will ensure that the burden of UI levies
borne by one host State will be avoided. The process of avoiding
UI charges resulted in frequent backing down for loss of wind
energy.
The forecasting and scheduling mechanism based on the
measurement of real time wind generation data in Tamil Nadu and
synthesizing it with historical and meteorological data of the day
will provide the inputs to the SLDC for forecasting and scheduling.
This could be achieved by putting up energy meters with SIM
cards which will relay real time wind generation data from all
110 pooling Sub Station in Tamil Nadu. We have explained this
concept earlier to TNEB who are seized of the necessity of having
a forecasting mechanism and we hope that TNEB before long will
issue an order to IWPA for the setting up of WEIF. This project after
its successful implementation in Tamil Nadu will be replicated in
other States.
On October 16, 2014 IWPA had conducted an EGM at Mumbai
wherein the amendments to the Bye-laws were approved to
accommodate the small wind manufacturers / investors and
all those associated with it. The role of IWPA will expand in
the coming years and your Association will gladly shoulder the
additional responsibilities.
On October 17, 2014, a team of
experts from USAID had made
a presentation at TEDA office in
Chennai to TNEB & IWPA regarding
integration of wind energy in the grid. The discussion inter-alia
revolved around the concept of maximum flexibility in integration
of Renewable Energy into the grid. I had the opportunity to
interact with these officials and highlighted some of the issues
we are facing and found them to be very informative and helpful.
Later in the day i.e. on October 17, 2014 I had the opportunity
of meeting our new Joint Secretary MNRE in Chennai at NIWE
(C-WET) and had discussions which were fruitful. It is heartening
to note that our new Joint Secretary, Ms. Varsha Joshi IAS is
passionate about promoting green energy and is positively inclined
to our suggestions for growth of Wind sector.
The TNERC has invited our comments and suggestions regarding
the Comprehensive Wind Tariff Order. In this connection we had
issued a circular to all our members. A few have responded and
we are in the process of submitting IWPA’s comments.
On October 28, 2014, the Hon’ble Minister for Renewable Energy,
Shri Piyush Goyal has convened a meeting at MNRE for discussion
with all the Associations of Wind Energy. Our Honorary Secretary,
Shri Chetan Mehra would represent IWPA at the meeting. Our
Northern Regional Council office bearers and the Secretary
General will also be present in that meeting. We will keep you
posted of the developments.
A concept note is being prepared which contains the various
issues to be discussed with the Minister and also the issues to
be taken up by the MNRE regarding the amendments to the
Electricity Act and matters to be pursued by MNRE with other
regulatory bodies which will ensure a smoother integration of the
renewable energy.
October 2014 has witnessed a lot of activities all aimed at
integrating wind energy into the grid.
May the good times for our fraternity prevail.
With best wishes and regards
For Indian Wind Power Association
Prof. (Dr.) K Kasthurirangaian
Chairman
3
Prof. Dr. K Kasthurirangaian, Chairman, IWPA in discussion with Ms. Varsha Joshi IAS, Joint Secretary, MNRE.
Shri Dilip Nigam, Director - MNRE and Dr. S Gomathinayagam, Director General, NIWE (C-WET) were also present in the discussion.
Chairman in discussion with the team from USAID
4
Proceeding of the 4th AGM held at at Babasaheb Dahanukar Hall,
Maharashtra Chamber of Commerce, Kala Ghoda, Mumbai
The Fourth Annual General Meeting of the Maharashtra State
Council of the Indian Wind Power Association was conducted at
Babasaheb Dahanukar Hall, Kala Ghoda, Mumbai.
1. Members attended:
33 members attended the meeting.
2. Welcoming the Members:
Shri Chetan Mehra, Honorary Secretary, IWPA welcomed the
members.
President’s report is given below:
Chairman, Prof. Dr. K Kasthuriangaian, Office bearers of
IWPA, Chennai, Fellow Members of MSC, Developers and
Friends
As the President of IWPA, Maharashtra Chapter, I am
extending a hearty welcome to all of you to the AGM of the
Maharashtra State Council being held today.
Maharashtra has only yesterday cast their votes for electing
a new dispensation in the State. The Association extends its
best wishes to the new Government which will be taking over
in a few days based on the people’s mandate.
It is only natural for me to wish the prospective Government
well. A new Government always brings in new developments.
Our industry whose fortunes depend not only on the
benevolence of nature, in the form of abundant wind, also
relies on the basic policies of the Government of the day for
renewable energy and wind power in particular.
The new Government at the centre has already taken a
positive approach as far as policies with respect to renewable
energy is concerned setting in a slew of reforms including
the much awaited GBI and reinstatement of accelerated
depreciation.
Shri Chetan Mehra, Honorary Secretary welcoming the gathering
3. Report on Activities of the MSC:
Shri G N Kamath, President of the Maharashtra State Council
had submitted a brief report on the activities taken up by the
NRC during the year.
In this context MSC would like to express our heartfelt thanks
to our Chairman for steadfastly pursuing the case with the
various ministries and departments for the reinstatement of
accelerated depreciation. AD was a single point driver for
many small time developers to venture into Wind Energy
and introduction of the same commencing this financial year
should generate more interest in the investor community. The
introduction of AD is no mean task and the team headed by
our Chairman deserves to be congratulated.
The State of Maharashtra has clocked in an installed
capacity of 4,087 MW of Wind Power installations as on
August 2014 which has put Maharashtra in the third position
in the India Wind Power map. No doubt the investment in
the Wind Power in the State was generated on account of the
high tariff of Rs. 5.7 per unit and the reasonably good Wind
Power potential at various sites.
Shri G N Kamath, President IWPA MSC, presenting a report on the
activities during the year
However, this potential has not been fully exploited owing
to latent doubts in investor’s minds about the attitude of
the host utility MSEDCL in developing Wind Power and
implementation of the orders of the regulatory commission
in letter and spirit. Commercial circulars are very often
issued by them which are not in sync with the orders of
MERC and create impediments in the development of Wind
5
Power particularly for sale under open access and captive
consumption. This discourages potential investors from
pursuing new investments in wind power.
In the secretary’s report that follows we will highlight the
issues faced by developers mainly pertaining to MSEDCL
and the action taken by your association in resolving these
after representation to MERC.
I would now like to touch upon the current and future scenario
for the wind industry and the roadblocks for rapid expansion
Capacity additions in FY 2014 was only 2076 MW out of
which 1074 MW (over 50%) was in Maharashtra alone due
to an attractive tariff policy. The performance is dismal if we
exclude Maharashtra.
Let us explore what is ailing the WIND sector today
Impediments in
development.
the
rapid
expansion
of
wind
power
±± Impediments can be broadly classified under
±± Policy issues, financial issues and implementation
issues.
Policy Issues
±± Unfavourable open access terms for wind power
generation.
±± Tendency to equate infirm wind energy with conventional
power.
±± Imposition of scheduling and forecasting for new wind
projects.
±± The preferential tariff announced in different states is
not uniform across the states
Financial Issues
±± General slow down in the Indian as well as world
economy.
±± India continues to battle with high inflation and high
interest rates.
±± Cost of wind energy is heavily dependent on the interest
rate since there is no variable cost and financing cost is
the major cost driver.
±± This has reduced the viability of many potential wind
projects.
Implementation Issues
±± Utilities have been deferring payment to wind projects
on one pretext or another.
±± They are actively discouraging and even opposing open
access for sale to industrial consumers
6
±± In general utilities try and put various hurdles in
implementing established rules and procedures with
grave consequences to the finances of the wind project
investor.
±± Lack of response from utilities to procure REC to
fulfil their RPO obligation is the major constraint in
recognizing REC revenues. CERC is now considering
reduction of REC issuances instead of enforcing RPO.
Near and long term future for wind power.
±± The near term future looks discouraging for
investment in wind energy, owing to various policy and
implementation issues.
±± However the long term outlook is still optimistic owing to
the global pressures on combating climate change and
India’s commitment under the National Action Plan for
climate change.
±± The investment climate in India is getting optimistic
with the new Government at the centre
±± Going forward, Inflation and interest rate scenario
appears to be getting under control
±± Over the long term price of fossil fuels will continue
to rise and availability will be uncertain resulting in
substantial increase in the price of conventional power
±± Wind power while showing some marginal increase
in cost will not increase in the same proportion as
conventional power accelerating achievement of grid
parity.
±± This will attract massive investments in wind power and
fuel the growth of the wind sector.
±± The problem of integrating infirm wind energy into the
grid at high penetration levels remains and will need a
technological breakthrough.
Your association is acutely aware of the current problems and
is pro-actively taking up the issues and lobbying at all relevant
forums for redressal as early as possible. Some of the issues have
been resolved and others are being actively pursued.
The State Council incurs expenses on the legal and other matters
While every effort is made to collect contributions from affected
members, we often find this difficult since a majority of the
members with small investments do not contribute. Only a handful
of members with large installations participate by way of both
financial and technical/legal inputs. It was therefore decided that
the Council obtains its share from the head office income from
subscription and membership fees by developers of MSE. During
the year we were able to get an amount of Rs. 6.00 Lacs from
IWPA Chennai for bridging the gap from Income and Expenditure
on the legal front.
It is my earnest request to the members to take more active
interest in the activities for ensuring a rapid development of the
wind industry.
4. Election of the Office Bearers and Council Members:
The following seven members have been elected.
1.
Shri Arvind Prasad, Director,
International Ltd. Mumbai
2.
Shri Ashish Tiwari, Director (Operations), Energon Power
Resources Private Limited, Bangalore
3.
Shri Lalith Prakash, Chief Operating Officer, IL&FS Wind
Power Services Limited, Mumbai
4.
Shri Prakash Shinde, Asst. Manager, B F Utilities, Bharat
Forge
5.
Shri Rahul Hirve, Manager (Wind Resources Analysis), The
Tata Power Co. Ltd., Mumbai
Shri S Gnanasekharan, Secretary General, announcing the results
6.
Shri Chintan Shah, Vice President & Head (Strategic
Business Development) Suzlon Energy Ltd., Pune
The Election results of the Council Members for Maharashtra State
7.
Shri Avinash P Rao, Vice President - Business Development
(Renewable Energy) CLP India Ltd., Mumbai
Council were announced by Shri S Gnanasekharan, Secretary
General, IWPA. The names of the candidates who were elected
are given below:
(Operations),
Ushdev
All the above State Council members will hold office for a period
of three years.
The full complement of the MSC Office Bearers and Council Members are as follows:
Sl.
No.
Name
Company
Designation
Post in IWPA MSC
1
Shri G N Kamath
Karma Energy Ltd.
Managing Director
President
2
Shri C L Kale
Savita Oil Ltd.
President
3
Shri Arvind Prasad
Ushdev Power Holdings
Managing Director
Secretary
4
Shri Avinash P Rao
CLP India
Deputy General Manager
Treasurer
5
Shri Ashish Tiwari
Energon Power Resources Pvt. Ltd.
Director (Operations)
Council Member
6
Shri Chintan Shah
Suzlon Energy Ltd.
Vice President
Council Member
7
Shri Hari Asnani
Inox Wind
General Manager (Marketing)
Council Member
8
Shri Lalith Prakash
IL&FS Wind Power Service
Chief Operating Officer
Council Member
9
Shri Pradeep Gupta
Powerica Limited
Head (Wind Energy)
Council Member
10
Shri Prakash Shinde
B F Utilities
Asst. Manager
Council Member
11
Shri Pratap B Salunkhe
Sai Windfra Projects
CMD
Council Member
12
Shri Rahul Hirve
The Tata Power Co. Ltd.
Manager (Wind Resource Analysis)
Council Member
13
Shri Ranjeet Narain Mane
Wind World India
Council Member
14
Shri Sushant Kumar Sinha
Hindustan Zinc Ltd., Namdarbar
Council Member
Vice President
5. Shri C L Kale, Vice President, Maharashtra State Council proposed the Vote of Thanks.
7
Honorary Secretary Shri Chetan Mehra greeting the elected members
Shri Arvind Prasad, Secretary, IWPA MSC addressing the gathering
Shri C L Kale, Vice President, proposing the “Vote of thanks”
NCM in Session
Section of the Audience
8
9
SRPC's Letter regarding Wind Integration
10
Annexure - I
Annexure - I
11
Annexure - II
Annexure - II
12
Annexure - III
Annexure - III
Grid Impact of Wind Power Variability
SRPC, Secretariat
Average MW Day Wise
Wind Variation- Sample Data- 57.5 MW I.C
Set of Guideline For Secure Grid Operation
Governor Mode of Operation
Load Forecasting
Wind Forecasting
Ancillary Services/Dispatch able Hydro/Pumped Storage
If all these are in place then system operator Will left with Only to
manage With Error
Observation
±± Wind Power Variability is Low at Fast Time Frame and
Increase Progressively Longer Time Frame.
Impact on Grid Due to Wind Variability
Frequency
Tie Line Flow
Tie Line Flow Not
50.05 - 49.9 Hz
to be More Than
(IEGC)
ATC (Congestion
Management)
Deviation
Deviation Not to Be
more than 150 MW
or 12% (Deviation
Settlement
Mechanism / IEGC)
Numbers are Non – Negotiable, mandatory for Secured, reliable
Grid Operation
±± In Southern Region High Wind Season is Coupled with Low
Demand Season.
±± Other than un predictability the issue is Surplus Wind in Host
State.
±± Higher Penetration of Wind Energy Increased Cost of
Operation
The Loss
±± Anticipated Energy from Wind which could have been used
– 1.7 to 2.3 Billion Units/Year.
±± Under Utilized Transmission Corridor Due to Non Availability
of Wind/Load Forecasted Data
13
Recommendation
Insulation of Host State of the deviations
±± Wind Forecasting – To Know what is available.
±± Load Forecasting- To Know what can be sold outside.
±± RGMO/FGMO.
The Problem
±± Error In Forecasting
a) Operational Impact. (SLDC)
b) Commercial Impact. (Wind Farm Owner)
The WEGs could be considered as
separate control area .
Host state does not have to manage the
wind deviations. If wind generation is less
it can draw from the grid to make the
deficit. If wind generation is more it will
draw less from the grid.
IWPA suggestion “150 MW or 30% of peak wind penetration
in the SLDC area, whichever is higher”
This may be difficult to implement as wind season is limited
to 3-4 months
30 % of 4000 MW works out to 1200 MW.
The deviations would be absorbed
by the grid
Insulation of Host State of the deviations
±± Earlier Case
Planned State Demand = Internal Generation + Wind
Variations of 1200 MW cannot be absorbed by the grid
Variations on account of wind variations are only to be absorbed
Generation (Anticipated) + Drawl from ISTS
Actual State Demand = Internal Generation+ Actual
Deficit Wind Generation + Drawl from ISTS Action by State
For this we require
Real time data
availability
Forecast of wind
generation
Now we have to
manage the =
Schedules error
Maximise scheduling of Renewables
WEGs/Forecaster gives its generation schedule
**
Increase in Internal Generation (to maintain its demand)
**
Go for load shedding (demand would decrease)
±± Suggested Case (Wind as separate control area)
Planned State Demand = Internal Generation+ Scheduled
Wind
Generation + Drawl from ISTS
Host state could schedule full or accept
partial schedule
Balance could be offered to
other states of the same region
(subject to ATC availability)
Balance could be offered to
other states of other regions
(subject to ATC availability)
If there are no takers it can be scheduled
to states not meeting RPO (predefined)
(subject to ATC availability) or to all the
states (predefined principle subject to
ATC availability)
14
Actual State Demand = Internal Generation + Scheduled
Wind
Generation + Increased Drawl from ISTS Action by State
**
Increase in drawl from ISTS ( by Actual‐ Scheduled
Wind Generation)
**
No need to change its internal generation
**
No need to go for load shedding
**
Deviations are absorbed by the grid
**
The bigger grid would be able to absorb the deviation
(which is being done by small control area presently)
Deficit generation by WEGs wrt Schedule
This would lead to a situation of deficit in
generation wrt load which in turn would
reflect in frequency (Deviation rates
Incentive/Disincentive for Accurate Forecast
Accurate Forecast could rewarded with
incentive Maximum at 0 % error with 0
at +/- 30 % error
would go up).
As deviations rate go up the states would
try y to increase its generation to bring
Progressive increase in Disincentive
beyond +/- 30%
down the Deviation Rates and also avoid
violation messages. The deficit gets
socialized.
This would help in more accurate forecast
Payments WEGs receive as per actual.
The states taking power from WEGs pay
for the balance (Schedule – Actuals) to
Pool Account at WEGs rate (weighted)
Surplus generation by WEGs wrt Schedule
IWPA suggestion “Relaxing tight Frequency band of
49.9 to 50.05 Hz”
Frequency Band is likely to be further tightened
This would lead to a situation of surplus in
generation wrt load which in turn would
reflect in frequency (Deviation rates
would come down).
As deviations rate comes down the states
would try to decrease its generation to
Developed countries have a further tight frequency range
Objective is to ensure that all renewable generation is
evacuated.
absorb cheaper power . The surplus gets
socialized.
More stress is required on evacuation and not on frequency
Payments WEGs receive as per schedule
from states. WEGs get the balance from
Way forward
to Pool Account at WEGs rate (Weighted)
Deviations by WEGs beyond +/- 30%
WEGs receive lesser of Deviation
rate or Weighted Rate
WEGs pay higher of Deviation
Rate or Weighted Rate
15
Annexure - IV
Annexure - IV
October 11, 2014
Shri S R Bhat
Member Secretary
Southern Regional Power Committee, Central Electricity Authority
No. 29 Race Course Cross Road, Bangalore-560 009
Sub : IWPA’s Submission to SRPC meeting on 16.10.2014
Ref : Your Circular No SRPC/SE-II/2014 dated 24.09.2014
Sir
It was a pleasant occasion when come across your above mentioned circular regarding the SRPC Meeting to be held on October 16, 2014
on Wind Energy integration. We are glad to note that you propose to discuss matters regarding integration of wind energy in the grid and
appreciate that you are already seized of the various issues needing urgent attention.
We are aware that it is an internal correspondence, but as it was available in the public domain, being a stakeholder, we offer our
suggestions and inputs which could serve as additional inputs to the proposed discussion.
We, the Indian Wind Power Association (IWPA), are a representative body of 1,300 members comprising of wind generators and wind
power consumers throughout India. Two of our National Council office bearers are also the office bearers viz. Vice-President and Treasurer
in WWEA (World Wind Energy Association) at Bonn, Germany. Recently Andhra Pradesh constituted a Committee to formulate a policy on
wind, wherein all the five non-governmental members are office bearers from the IWPA State / National Council.
As rightly observed by SRPC that with a wind energy penetration as high as 4,289 MW coupled with an intra-day variation of 2,000 MW,
the allowable variation of 150 MW is inadequate and this is further aggravated with the tight frequency band of 49.9 to 50.05. This
situation have an impact on evacuation resulting in poor utilization of this gift of nature to mankind.
Your positive approach that wind is to be treated as pooled common energy and that the host State should not be penalized for having
natural resources, is laudable. In India, only seven States are blessed with good wind potential and if wind is to be harnessed to its full
potential then these seven states should be given all the support. We are glad that SRPC is trying to evolve a comprehensive policy
framework for integrating wind.
The provisions of the Electricity Act and the various regulations notified by the CERC and SERCs also lay emphasis on promoting the
generation from renewable sources. If we have to effectuate the letter of the law and the intent of various enactments, We need to meet
the targets for increasing the share of generation from renewable sources, reduce the utilization of fossil fuel and move towards a clean
environment then we will have to collectively address the various issues that deter the wind rich states from optimally harnessing the
power of wind.
Today, the investors’ confidence is eroded as a result of severe grid back down during the peak wind season in Tamil Nadu. We apprehend
that this phenomenon which has a cascading negative effect upon the development of Renewable energy sector will be further aggravated
unless urgent cohesive policy measures are taken.
16
In Tamil Nadu, a large number of wind generators were backed down even though the grid frequency was below the lower limit 49.90 Hz
presumably because regulations do not allow any injection more than 150 MW irrespective of the frequency. With a peak wind generation
of 4,300 MW in Tamil Nadu having an intra-day variation of 2,000 MW the grid operators of Tamil Nadu are to use all their skills and the
latest available technologies to manage the grid in order to prevent being penalized for any deviations. A forecasting mechanism needs to
be put in place. We have even volunteered to set up the facility with all the hardware and software at our cost which will be wholly owned
and operated by the SLDC viz. TANGEDCO. We have not yet got the permission to go ahead.
It is our suggestion that SRPC should take the responsibility of handling wind energy including forecasting and scheduling in Tamil Nadu
also. By doing so, the aberration of penalizing the host State could be avoided and moreover, SRLDC will be in a better position to easily
absorb a variability of 2,000 MW of wind rather than when restricting it only to only one State.
Alternatively, the following factors can be considered while submitting your recommendation
1.
Increase 150 MW limit on unscheduled variation for wind and install forecasting mechanism
2.
Relax tight band frequency of 49.9 to 50.05
3.
Avoid Host State being penalized and reward better evacuation
4.
Enable Inter State sale of Wind Energy
1.
Increase 150 MW limit on unscheduled variation for wind and install forecasting mechanism:
Integration of the Southern Grid with the rest of the country, will result in handling 144 GW for One Nation, One frequency, One set of
rules for all 29 States LDC’s / Regional LDC / National LDC. This will ensure uniformity and instill a sense of pride and responsibility
in all the load dispatch centres for ensuring the quality and fail safe maintenance of the frequency. So forecasting and scheduling of
the power injected, be it thermal, hydel or Renewables becomes inevitable and cannot be compromised.
During the windy months in Tamil Nadu the wind power in the energy mix is as high as 34%. This viewed in the context of a high
intra-day variation of 2,000 MW, definitely calls for the setting up of a Forecasting & Scheduling mechanism which will help the
SRLDC / SLDC to know fairly accurately on a real time basis as to how much of Wind Energy is being generated in SRLDC / SLDC
area at every point in time.
We want to set right as early as possible to avoid losses in evacuation which amounted to more than 2.4 Billion units in 2013-14 and
1.3 Billion units up to September 2014.
Our proposal to TNEB requesting permission to set up the WEIF (Wind Energy Integration Facility) is enclosed, the contents of which
are self explanatory. This is in line with the Renewable Energy Management Centre (REMC) suggested by CEA. If SRPC accepts and
grants permission to IWPA, possibly in 8 months from zero date well before the next Wind Season, basic infrastructure would be
ready in Tamil Nadu.
The installation of interactive meters, servers / e-cloud arrangement at SRLDC / SLDC for synthesizing data received from all pooling
stations into one, with data displayed on a monitor set in the premises of the grid manager in SRLDC / SLDC would provide real time
wind generation all over the State. Based on real time generation, either NIWE (C-WET) or SRLDC or a reputed forecaster would also
simultaneously display forecast of wind energy the next 15 minutes, 1 hour ahead or 24 hours ahead on the same monitor. This will
enable the Grid manager at SRLDC / SLDC to safely schedule Wind Energy like any other firm and predictable source for example,
thermal energy.
We need not reinvent the wheel. IWPA can arrange for the SRLDC / SLDC officials, a field trip to Denmark and Germany, who are
pioneers at forecasting and scheduling wind energy. We will learn from the experts.
Once such grid infrastructure up gradation is done say in Tamil Nadu, it could be replicated across the country. Experts opine that
initially the variation in the forecasting may be around 30% (when done for the entire State) but the accuracy will increase with the
passage of time as the SRLDC / SLDC officials gain experience.
Under Section 107 of the Electricity Act, MOP, MNRE, APTEL, CERC or SRPC can issue direction to State utilities to install REMC
or WEIF or such equivalent in a time bound manner.
In view of the foregoing, the SRPC or CERC or any competent authority may fix the variability limit of injection over scheduled energy
to be “150 MW or 30% of peak wind penetration in the SLDC area, whichever is higher”. Therefore, the current allowable variation
needs to be amended forthwith as suggested.
17
2.
Relaxing Tight band frequency of 49.9 to 50.05:
System frequency control is a key concern for all. We would like to bring to your notice that thermal generators who are best placed
to assist in frequency control through Automate Generation Control mechanism are not fulfilling their mandate. There are instances
of State and Central generators who are not equipped with the requisite mechanism. Until such time, wind generators are enabled to
play a role in frequency control, it should be mandated that the thermal generators should comply with their mandated requirements.
Moreover, the frequency variation band should be broadened to its earlier scale of 49.7 – 50.2 Hz to harness wind better. We would
like to highlight that the grid operation was stable when the upper limit of the bandwidth was 50.2 Hz until a few months back. We
request the SRPC to kindly consider this and recommend to CERC for relaxation.
3.
Avoid Host State being penalized
Though only seven States which are geographically located on the Western side of India get good amount of powerful South Westerly
Trade Winds from May to September, the Wind Energy generated is used by all in the country. These States have to draw investors
by investing heavily in creating infrastructure for evacuating wind energy without the proper tools for forecasting and scheduling. And
after taking all these troubles, they get penalized for fluctuations in injection. A level playing field has to be evolved for generators
and utility in the host States. They should not be punished but instead be rewarded. A mechanism for settlement of over/under drawl
of power arising out of over/under injection of power from renewable sources in a manner that the Host States do not suffer any
financial losses need to be evolved.
The costs of such variation can be socialized using surplus funds like UI fund, instead of asking the host states to pay for it. In fact, if
the host state exceeds 150 MW limit of injection arising out of variation in wind , then they not only have to forego revenue realization
of this surplus injection but also need to pay penalty for such excess injection which is contrary to the objects of the Electricity Act
and Regulations. This could have an adverse impact in capacity additions in the long run as investors will shy away from making
investments if they are not sure of the grid availability. Further, we welcome CERC proposal to reward States with REC for evacuating
more than their RPO obligations.
We also have a peculiar situation – WEGs are backed down in one state by the SLDC claiming that it is due to technical constraints
like the MW variation limit etc., while load shedding is resorted to in the neighbouring State, due to shortage of power. The present
regulations do not provide for handling such situations – one state suddenly has surplus generation and the other is in shortage
without any commercial implication to the host state. Similarly, whenever wind generation gets better than the estimates during a
given time, considering the national interest, thermal or other fossil fuel based high cost sources of power in the other states or non
irrigation based hydel generating stations shall be backed down and wind power can be allowed to be drawn instead by that state.
This will ensure effective implementation the “Must Run” status for wind energy.
4.
Inter State sale of Wind Energy
Commercialization so far not attempted. MNRE, MOF and Power grid should create the necessary infrastructure and a green
energy exchange should be available for sale of RE. Increased wind generation should be encouraged by way of building requisite
interconnections. Since not all States are blessed with wind potential, such inter-State trading may help in utilizing wind resources
optimally and in maintaining optimum system performance. We also understand that there are various efforts are afoot to address
the concerns of large scale integration of Renewables.
We thank you for allowing us to make this representation to you. It would be our added pleasure if some of our following members
who are experts on the subject are also invited to participate and contribute in the discussions on the 16th October 2014.
Encl: as above
1.
Mr. M.P. Ramesh (Former Executive Director of CWET), President,WRD & Technology,
WindWorld India Ltd, Bangalore. Mobile: 94490 62818
Email – mp.ramesh@windworldindia.com
2.
Mr. A.D. Thirumoorthy (Former Superintending Engineer of TANGEDCO) Now,
Renewable Energy Consultant. Mobile: 99655 49894. Email - adtmoorthy@gmail.com
3.
Mr. Manmathan (Technical Manager of Wind Farm of Premier Mills Group)
Mobile: 9361360011. Email - manmathann@premill.in
18
Thanking you
Yours Sincerely
For Indian Wind Power Association
Prof. Dr. K Kasthurirangaian
Chairman
Annexure - IV
Annexure - IV
INDIAN WIND POWER ASSOCIATION
(Formerly Wind Power Producers Association)
Door No. E, 6th Floor, Tower - I, Shakthi Towers
No. 766, Anna Salai, Chennai - 600 002.
PH : 044 - 4550 4036 Fax : 044 - 4550 4281
E-mail : chairmaniwpa@windpro.org
Prof. Dr. K. KASTHURIRANGAIAN
Chairman
603- 'C' Block, Pioneer Complex.
1075, Avinashi Road,
Coimbatore - 641 018 INDIA
Phone:91 - 422 - 6585908, 6586908
Fax :91 - 422 - 2248408
E-mail:office@rsmautokast.com
Thiru K Gnanadesikan, I.A.S.
Chairman cum Managing Director,
Tamilnadu Electricity Board, Chennai - 600 002.
Respected Sir
Sub: Request to order for immediate establishment of WEIF (Wind
Energy Integration Facility) Under SLDC in TNEB Chennai to
enable full evacuation of wind energy from May 2014 onwards.
Please accept our thanks for having come out with positive
thoughts when we submitted our proposal on February 13, 2014,
for the establishment of a navigational aid like Wind Energy
Integration Facility (WEIF) under SLDC as a TNEB Project which
will bring online information from forecasts to aid in decision
making by the grid managers.
As you are well aware, wind being nature related, is subject to
yearly climatic variations, though periodic nature of South West
Monsoon and its intensity more or less remain. We had given
historic average wind data for the months from June to September
along with our earlier above cited letter. Current generation data
and weather data combined with historical data can give near
accurate forecast of wind generation. WEIF working under SLDC
will go on collecting generation data from all 100 and odd pooling
wind sub stations in Tamil Nadu online.
"In addition to the near online visibility, forecasting services with
embed meteorological data and historical data will be integrated
to produce hour ahead, day ahead forecasts of wind generation
on a continuous basis or the way SLDC needs. With these two
inputs the grid managers will be in a position to manage wind
power inputs on the grid with ease and accuracy. SLDC can make
Scheduling accordingly. In order to facilitate the operations at your
request, IWPA will place trained engineering staff to assist grid
managers on a continuous basis, at their disposal"
This involves TNEB & IWPA Coordinated working in the setting
up at each wind pooling substation out-flowing wind energy meter
data of the substation to continuously transmit live wind generation
data to WEIF (also to set up such metering capability in those
substations where it is not available), set up a server at SLDC
that would receive online wind generation data and consolidate
the same to one figure. Continuous supply of daily meteorological
data to WEIF by a reliable supplier will be arranged by IWPA,
and historical data (13 years average) will also be supplied. The
required personnel, necessary hardware and software will also be
provided by IWPA. The WEIF working under SLDC will be owned
by TNEB and work under TNEB control.
WEIF will have to be set up before the start of 2014 wind season
which is most likely to start around 1st of May. We have only 55
days left to make this setup. We request you, Sir, to accord your
approval for the establishment of WEIF as a TNEB project with
the necessary hardware, software and personnel made available
by IWPA. This is to mean that there will not be any charging of
fees by MRT or any other TNEB bodies on IWPA for setting up or
functioning of this project, but extend full cooperation for setting
up WEIF time bound before first of May 2014.
We look for your early orders, considering the short time available
before May 1st, the large volume of work to be completed before
WEIF will be available as a working proposition before the onset
of Westerly Winds. We request grant of easy access to IWPA
Chief Technical Advisor to meet SLDC, CE (NCES) and other
officials, learn their needs and proceed accordingly. Please feel
free to call us for any clarification in this regard.
Thanking you in anticipation
For Indian Wind Power Association
Prof. Dr. K. Kasthurirangaian
Chairman
19
20
21
Follow-up Letter to SRPC
Mr. S R Bhat
Member Secretary, Southern Regional Power Committee
Central Electricity Authority
No. 29, Race Course Cross Road, Bangalore - 560 009
October 25, 2014
Sub: Wind Integration meeting of SRPC posted for 12.11.2014
Ref : Your Circular No SRPC/SE-II/2014 dated 16.10.2014
Dear Sir,
At the outset, we thank SRPC and especially the member secretary
for permitting IWPA representatives to put forth our views to the
SRPC on 16.10.2014. We also thank the SRPC for recognizing
the wind power generation from Tamil Nadu as a pooled, national,
green power asset and the initiative taken by SRPC to try to absorb
all the wind power generated as from separate wind control area
handled by SRPC.
We went through the proposal posted on website by the SRPC
and comments offered by other constituent members.
In the matter of deviation settlement mechanism, we suggest it
be accounted as per the existing regulations and maintained as
separate account. The settlement could be facilitated through the
RRF fund. On establishing the reasonable accuracy of forecasting
and scheduling, the commercial implication could be revisited
after a year and passed on to the wind energy generator at the
year end. On account of deviation settlement, we suggest to have
a fixed rate rather than UI rate. The fixed rate could be arrived for
reasonably compensating the host state and the wind generators.
As per the presentation of the SRPC, we are agreeable for the non
negotiable parameters of frequency band width and congestion
management criteria.
We request SRPC to accept our request and direct all the stake
holders suitably to enable IWPA to establish WEIF in to the system
at the earliest.
We are happy to note the suggestion of SRPC that host state
to the insulated from the wind variation and that the host state
not to be penalised for the deviation. We are agreeable for the
SRPC’s suggestion that “wind energy generators” (WEGs) could
be considered as a separate control area and that the deviations
would be absorbed by the large Regional grid which has better
capability of absorbing the variation.
On the question of trading the surplus wind generation in the
months of June to September, We had discussions with Traders
operating on power exchanges and came to understand the power
is very much saleable during these months either partly or wholly.
It is also swappable / bankable for return during November – April
depending upon the needs of the host States.
For separating the WEG and to make it as a separate control area,
forecasting would be a pre-requisite for proper scheduling. For
forecasting to happen, real time generation data, metrological data
and historical data are required. IWPA suggests that necessary
hardware, software for forecasting, collecting the real time
generation data using sim cards, acquiring metrological data and
making available to forecasting data to all stake holders will be
facilitated by IWPA. We also suggest that the (WEIF) wind energy
integration facility and forecasting and scheduling be handled by
SRLDC and the operational cost to be socialised.
22
We will be thankful if our representatives are permitted to be
present to offer any clarification on 12th November 2014 at the
meet.
Thanking you,
With Best Wishes & Regards,
For Indian Wind Power Association
Prof. Dr. K Kasthurirangaian
Chairman
Extra Ordinary General Meeting held at Mumbai on October 16, 2014
The Extra Ordinary Meeting was held on October 16, 2014 at Mumbai. 33 members attended the EGM.
Shri Chetan Mehra, Honorary Secretary welcomed the gathering. Shri Mehra narrated the brief history IWPA and its role played in
protecting the interest of its members. This is evidenced by the number of court cases in many States in India. Shri Mehra impressed on
the need to change the Association’s Bye-Laws to keep pace with the development that is taking place in the Wind Sector. He then invited
the Secretary General to present the details of amendments for discussion and passing.
The Secretary General read out the changes to be made in the Byelaws.
Change - I (Bye-Laws) - NEW
(ADMISSION FEE AND ANNUAL SUBSCRIPTION)
EXISTING
AMENDMENT
Clause
No.
Existing Clause
Clause
No.
Version as amended
Nil
No existing Clause
3 a) 8.
Small Wind mill manufacturers, users & all connected with it.
Proposed by: Shri C L Kale, President, Savita Oil Ltd. Mumbai
Seconded by : Shri G N Kamath, Managing Director,
The change was unanimously adopted by members
Karma Energy Limited, Mumbai
Change - II (Bye-Laws) (ADMISSION FEE AND ANNUAL SUBSCRIPTION)
3 a) 7. Associate Members
EXISTING
Clause
No.
3 a) 7
Existing Clause
AMENDMENT
Clause
No.
Version as amended
“A new category of members ‘Associate Members’ will 3 a) 7. “A new category of members ‘Associate Members’ will
be included to the category of members. This category
be included to the category of members. This category
will not own windmills at the time of joining as associate
will not own windmills at the time of joining as associate
Members, but will have sanction from Government for
Members, but will have sanction from Government for
putting up specific MW and will commission their wind
putting up specific MW and will commission their wind
generators at a later date. They have to pay the admission
generators at a later date. They have to pay the admission
fee as is applied for other category of members and their
fee as is applied for other category of members and
subscription will be worked out on the basis of their
their subscription will be worked out on the basis of
their sanctioned MW load. Such members cannot be
sanctioned MW load. Such members cannot be Office
Office Bearers and National Council Members or State
Bearers of the National Council but they can become
State Council Members and can also hold Office Bearers
Council Members but they will have voting rights. They
will become generating members once they commission
position (subject to ratification by the National Council) and
they will have voting rights. They will become generating
their wind generators”.
members once they commission their wind generators”
Proposed by: Dr. R Venkatesh, President, EPCOS India Pvt. Pune
Seconded by: Shri Arvind Prasad, Managing Director,
The change was unanimously adopted by members
Ushdev Power Holdings, Mumbai
Change - III (Bye-Laws) - NEW (NATIONAL COUNCIL: Para 6 h)
EXISTING
AMENDMENT
Clause No.
Existing Clause
Clause
No.
Nil
No existing Clause
6 h).
Version as amended
Only one representative in the National Council and or State
Council for a single membership.
Proposed by: Shri Prakash Shinde, Department Manager
Seconded by:Shri Lalith Prakash, IL&FS Wind Power Service,
B F Utilities Ltd., Pune
Chief Operating Officer, Mumbai
The change was discussed and adopted by members
23
IWPA's comments on TNERC's Consultative Paper on Comprehensive Wind Tariff
The Secretary
Tamil Nadu Electricity Regulatory Commission
19 A, Rukmani Lakshmipathy Salai, Egmore, Chennai - 600 008
October 25, 2014
Sub: Consultative Paper on Comprehensive Tariff Order on Wind Energy issued by TNERC – Comments – Hereby Submitted
Dear Sir
We the Indian Wind Power Association (IWPA) 1300 member Strong Association of investors, generators and consumers of Wind Energy
operate 11,287 MW of Wind Energy generators of India in around Seven States of India.
At the outset, it is submitted that the Hon’ble Commission had decided the tariff for wind energy projects earlier vide Order dated
31.7.2012 which was valid for a period of 2 years. The Order dated 31.7.2012 was challenged before the Hon’ble Appellate Tribunal for
Electricity (hereinafter ‘APTEL’) on various aspects by filing Appeals No. 197, 198, 200, 201 & 208 of 2012 and Appeal No. 6 of 2013.
The APTEL by Judgment dated 24.5.2013 set aside the Order dated 31.7.2012 and remanded the matter to this Hon’ble Commission,
inter-alia directing as under- Quote:
“170. Summary of Our Findings
i)
Circulation of Consultative Paper prior to issuing the tariff order: No prejudice has been caused by non-circulation of Consultative
Paper regarding determination of tariff of wind energy generators for procurement of power by the distribution licensee as the base
for this proceeding was the last tariff order. All the stake-holders had given their suggestions for either retaining or modifying the
various norms decided in the earlier tariff order and the State Commission after giving them an opportunity of hearing and after
considering their suggestions and objections on the various components of tariff has finally determined the tariff. However, regarding
the some issues relating to the transmission and wheeling of energy from wind generators for captive use and third party sale, the
State Commission has introduced new method for determination of charges as well as the mode for recovery of charges and revised
the charges substantially, Hence, we feel that the State Commission should have circulated a Consultative Paper on these issues.
All these issues have been specifically challenged by the Appellants in these Appeals. At this stage, when the State Commission has
already given its findings and given its own reasons for the same, Circulation of a Consultative Paper by the State Commission and
de-novo hearing of the case would not be necessary. However, after considering the submissions of the parties on some specific
issues, we have given our findings and remanded the matter to the State Commission for reconsideration of those issues where we
felt that the Appellants have to be heard by the State Commission.
ii)
Applicability of Tariff order: The Tariff of the wind energy generators for procurement of energy by the distribution licensee would
apply prospectively i.e. w.e.f. 1.8.2012 for the projects which are commissioned and entered into PPA on or after 1.8.2012. For wind
energy generators who have entered into PPAs for sale of power to the distribution licensees prior to 1.8.2012, the then prevailing
tariff would be applicable. However, the transmission and wheeling charges for wind energy wheeled for captive use or third party
sale irrespective of date of wheeling agreement, the rate as decided in the impugned order will be applicable w.e.f. 1.8.2012.
iii) Capital cost: We confirm the order of the State Commission regarding Capital cost.
iv) Return on Equity: We do not find any infirmity in the findings of the State Commission.
24
v) Annual Maintenance Contract Charges and Insurance
Charges: We direct the State Commission to allow the same
O&M charges and insurance charges as a percentage of
Capital Cost as decided in the previous tariff order dated
20.3.2009.
vi) Plant Load Factor/Capacity Utilization Factor: We are not
inclined to allow any reduction in Capacity Utilization Factor
on account of loss of generation due to grid problems.
However, we have given directions to the State Commission,
TANGEDCO and TANTRANSCO in paragraph 114 for
augmentation of transmission and distribution system to
avert loss of generation at Wind Energy Generators due to
inadequate power evacuation infrastructure.
vii) Time Value of Money: This issue is decided in favour of the
Appellants in terms of this Tribunal’s findings in judgment
dated 18.12.2007 in Appeal No. 205 and 235 of 2006.
viii) Recovery of Transmission Charges on the basis of Plant Load
Factor: This issue is decided as against the Appellants in
terms of our findings in judgment dated 4.2.2013 in Appeal
No. 102 of 2012.
ix) Abnormal Rise of Banking Charges: The findings of the
State Commission on this issue are set aside. The State
Commission is directed to reconsider the computation of
the charges after hearing the stake-holdings and decide the
issue afresh keeping in view the observations made by this
Tribunal in Appeal No. 98 of 2010.
x)
Levy of transmission charges and transmission loss: Levy of
a single transmission and wheeling charges is not possible
after unbundling of the erstwhile Electricity Board. The State
Commission has determined the transmission charges for
TANTRANSCO and wheeling charges for TANGEDCO by the
its orders 1 of 2012 and 2 of 2012 respectively. When the
captive users of wind energy do not pay the full transmission
charges, wheeling charges and losses, the burden of the
same falls on the consumers of the distribution licensees
and other open access customers/consumers. No doubt the
wind energy has to be promoted but the promotion has to be
balanced with the interest of the consumers of the distribution
licensees. The State Commission has balanced the interest
of both by charging only 40% of the normal transmission
and wheeling charges and recovering the actual losses fully
from the wind energy generators supplying energy for captive
use or third party sale.
xi) Scheduling& System Operation Charges: We do not find any
infirmity in the order of the State Commission in deciding
the Scheduling & System Operation Charges payable by the
Appellants.
xii) Deemed Demand Charges: We set aside the order of the
State Commission and remand the matter to the State
Commission for reconsideration after giving opportunity to all
the persons concerned and in the light of the earlier tariff
orders.
xiii) Encashment or lapsed Units by REC Captive users: The
findings of the State Commission on this issue are set aside
and the matter is remanded back to the State Commission
with directions to hear all the parties concerned and decide
the issue in the light of the judgment rendered by this
Tribunal in Appeal No. 45 and 91 of 2012.
171.Accordingly, the Appeal is allowed in part as indicated above.
The Registry shall forward a copy of this judgment to all the
State/Joint Commissions and the Central Commissions for
necessary action as directed under paragraphs 64 and 169
above. The State Commission is directed to comply with
our directions and pass the consequential orders on the
specified issues after hearing the parties and after allowing
the parties to furnish the materials. There is no order as to
costs. “Unquote:
Therefore, the APTEL by the Judgment dated 24.05.2013 has
remanded the matter with certain directions to the Hon’ble
Commission. It is respectfully submitted that the Hon’ble
Commission needs to first comply with the directions issued
in the above Judgment since the tariff terms and conditions
which had been decided by the Hon’ble Commission have
been set aside with specific directions to the Hon’ble
Commission.
There is no doubt that the present tariff is being proposed
prospectively after the expiry of the extended control period
of the earlier tariff order on which APTEL had passed the
orders. However, it cannot be that the Hon’ble Commission
can on any tariff term and condition take a divergent view
on what has been remanded by the Hon’ble APTEL. The
Hon’ble Commission needs to first comply with the remand
Order and thereafter initiate the process for determination
of tariff.
In the above background, the submission on the specific tariff
terms and conditions is as under-
1)PLF/CUF:
On this issue, the APTEL had ordered the TANGEDCO and
TANTRANSCO to appropriately augment the transmission
and distribution system to avoid loss of generation due to
inadequate power evacuation infrastructure from wind energy
projects. TANGEDCO and TANTRANSCO are also directed to
file an affidavit in this regard before the State Commission
indicating the extent of the problem, identification of weak
areas in transmission system affecting evacuation from wind
generators, remedial measures proposed and schedule of
implementation of the preventive measures within three
months from the date of this Judgment. The Hon’ble
Commission was directed to consider those details contained
in the said Affidavit and pass appropriate order after hearing
the parties on this issue.
25
Though the Judgment was given by the APTEL on
24.5.2013, even after 17 months neither TANGEDCO nor
TANTRANSCO have acted as per the direction of APTEL.
Further, without complying with the above directions, the
Hon’ble Commission in the present wind energy consultative
paper dated 25.9.2014 has proposed that ‘’the Connectivity
and power evacuation system shall be provided as per the
Act/Codes/Regulations/Orders in force”.
It is respectfully submitted that this is a reiteration of what
the Hon’ble Commission has held in the Order dated
31.7.2012 and which has been specifically set aside by the
APTEL. it cannot be that an aspect decided by the Hon’ble
Commission has been set aside with specific directions and
without complying with the same, the PLF and CUF is being
proposed to be retained at 27.15% without adverting to or
complying with the directions of the APTEL in the Judgment
dated 24.5.2013. Merely because tariff determination
proposed for the next control period as an independent
exercise does not mean that the directions issued by APTEL
can be ignored while deciding such tariff.
It is respectfully submitted that even in 2012, the APTEL had
directed the TANTRANSCO / TANGEDCO to augment their
transmission and distribution system which has admittedly
not been done and even in 2014, without doing the same,
the PLF / CUF is proposed at 27.15 %.
2) Abnormal rise of banking charges:
The APTEL set aside the Order dated 31.7.2012 on this
issue and directed the Hon’ble Commission to reconsider
the computation of this manifold increase in the banking
charges than the charges in the earlier orders after hearing
the stakeholders and issue a fresh order on this issue. This
re-computation needs to be done before taking any decision
on the banking charges for the next control period.
3) Deemed Demand:
APTEL has set aside the order of the State Commission
and remanded the matter for reconsideration after giving
opportunity to all the stakeholders.
4) Encashment of Lapsed units for REC captive
users:
APTEL set aside the order of the State Commission and
remanded the matter for reconsideration after giving
opportunity to all the stakeholders and decide the issues in
the light of judgments rendered by the Tribunal in Appeal
No. 45 & 91 of 2012.
On the last three issues of Deemed Demand Charges,
Abnormal rise in banking charges and Encashment of lapsed
units for REC captive users, the Hon’ble Commission has
simply stated that ‘’the hearing on the above matters are
26
yet to be completed by the Commission’’. It is respectfully
submitted that no hearing at all has taken place on the above
issues even though the APTEL had issued directions to reconsider these aspects after hearing all the stakeholders.
Without even commencing the due legal process, as provided
for in Sec. 64 of the Act, discussing those issues again in the
present consultative paper following the very same or even
more stringent approach that have been set aside by Hon’ble
APTEL which could have severe adversities to one of the
stakeholders, viz., WEGs, under the pretext that ‘every order
is an independent order’ is not legally tenable.
The Hon’ble Commission as a statutory body is to follow
judicial discipline and to decide on the issues with their
rulings in the light of APTEL judgments and then come
up with the consultative paper with objectives and reasons
therein.
Without prejudice to seek legal remedy at the appropriate
forum, we give our views and suggestions on the consultative
paper on the Wind Energy Tariff Order.
Bringing in the concept of time value of money
into the calculations
We note that the Commission has cited the stay order issued by the
Honorable Supreme Court on 3rd March 2008 and has continued
with the cost plus, single part average tariff determination.
We would like to request the Commission to re-consider its
approach and use the time value of money calculations for
determining the tariff as it deals with factors projected 25 years
ahead. This would also provide a boost to the wind industry by
raising the tariff to Rs. 4.50/unit. All WEG machines installed on
the date of issue of new tariff order also to get new tariff.
Tariff Components:
Capital Cost: Based on the present market conditions,
Rs. 7 Cr / MW should be considered taking in to account the
high land cost, long distance of transmission lines and payment
of IDC or the cost of setting up the substation. There has been an
all round increase in the cost of inputs leading to increase in the
CAPEX. Besides, with lands and evacuation not being available
in high wind zones, the only option available is to move to low
wind zones where only the modern day machines with higher hub
heights would only be suitable for getting a reasonable PLF. Such
higher hub heights add to the CAPEX. Hence it is suggested that
the CAPEX be considered as Rs 7 Crore per MW.
Capacity Utilization Factor:
As has been mentioned in the earlier point, the installations
are possible only in low wind zones as all high wind zones are
exploited mostly. PLF in low wind zones are low and hence we
request the Hon'ble Commission to consider only 25% as PLF
when the generation is evacuated in full.
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27
Operation and Maintenance Expenses:
Due to escalation in employee cost and other allied expenses,
1.1% on 85% of capital investment shall be enhanced to 3%
and 0.22% on 15% may be increased to 1% on 15% with an
escalation of 5% from the second year onwards.
Rate of Interest:
The rate of 13% offered by the Financial Institutions may be
considered.
Life of Plant and Machinery:
The life of the plant and machinery should be retained as 20 years.
Interest and components of Working Capital:
13.5% should be considered in the present conditions.
Depreciation:
Considering the Life period of 20 years, 90% of the initial value
will translate into a rate of 4.5% per annum. Hence, 4.5% should
be adopted.
Tariff:
Levellised method shall be adopted for 20 years for fixation of
tariff.
The Commission has issued a table comparing the wind tariff
across different states and at the Central level
Forum
Tariff (INR/unit)
We therefore request the commission to consider the concept of
deemed generation for backing down of wind by TANTRANSCO /
TANGEDCO. This accountability should be brought in to ensure
that wind generators are not unfairly backed down.
Other issues
Quantum of Wind Energy purchase by the (DL) Distribution Licensee
DL shall purchase the wind energy generated without any
restrictions as the provisions of the Electricity Act mandate
promotion of energy generation from renewable sources. Hence
the proposal to seek the approval of the commission for purchase
of wind power in excess of their RPO may be dispensed with.
Further, the proposed draft amendment published by CERC
entitling the DISCOMs to claim REC in respect of renewable
power purchased by DISCOMs in excess of applicable RPO would
become an incentive for TANGEDCO as they can also claim REC
in respect of surplus, if any
CDM benefits:
DL has no role to play in getting the CDM benefit by the
Generators. CDM benefits need not be shared with the DL.
Further, all expenses incurred for registration of CDM is borne by
the generator.
Billing and Payments:
Distribution Licensee has to make payment within 30 days. Any
delayed payment beyond 30 days, the Distribution Licensee
should pay interest at the same rate charged by them from the
consumers.
CERC
3.96 to 6.34
GERC
4.23
RERC
4.89 to 5.13 (AD considered)
Energy Purchase Agreement:
MERC
3.65 to 5.46 (AD considered)
Karnataka
4.20
The existing TNERC approved format of EPA should be adopted
which shall be valid for 20 years or the life term of the plant
It can be seen from the above that the tariff of Rs. 3.59 specified
for Tamil Nadu is much lower than that considered by other states.
Hence, it is submitted to the Commission that as Grade III wind
sites are only available for new installations, to consider Rs. 4.50
as a tariff for wind energy generators in Tamil Nadu.
Grid Availability Charges
Even though Grid Availability charges are collected, there were
severe backing down of wind energy.
1.
During FY 2011-12 – 25% grid drop during wind season.
2.
During FY 2012-13 – Grid Availability was good.
3.
During FY 2013-14 – Grid Drop ranging from 25% - 40%
during wind season
4.
During FY 2014-15 – Grid Drop ranging from 25% - 40%
during wind season.
28
Tariff Review Period/Control Period:
The tariff revision has to be made within the stipulated time
frame in consonance with the provisions of the Electricity Act/
Tariff Policy/Regulations/Orders in force. In some pretext or other,
the Commission should neither extend the control period nor
postpone the determination of tariff revision.
Cost of forecasting incurred by WEG
In the tariff fixation exercise, the cost incurred for forecasting and
scheduling is not considered by the Hon'ble Commission
As per the CERC regulations, generators who meet the criteria
stipulated for forecasting and scheduling the wind energy are
required to do the same and incur additional cost in doing that.
This works out to approximately Rs. 2 lacs per MW and the same
shall be considered while determining the tariff.
Issues related to Open Access
Connectivity and Power evacuation:
Open access charges and Line losses:
The directions given by APTEL in its order dated 24.05.2013 shall
be complied with immediately.
We request the Commission to adopt the existing System Operating
Charges of Rs. 600 for 2 MW, A proportionate to the installed
capacity of WEGs. We request the Commission to adopt 20%
instead of 40% in each of transmission and wheeling charges.
This recovery should be based on the units injected into the Grid
for both non-REC and REC machines, and not on MW capacity of
installation considering the rampant back down of WEGs during
both Peak season and non-peak season.
Cross Subsidy surcharge:
In consonance with the provisions of the Electricity Act, 2003,
the cross subsidy surcharge shall be made NIL for promotion of
renewable energy sources.
Energy Accounting and Billing Procedure:
Slot wise adjustment shall be adapted to those category having
differential rates in the slots. When uniform rate is specified for
the categories of consumers, the monthly consumption shall be
adjusted against monthly generation irrespective of TOD. During
the period of R & C measures, the unutilized banked energy
may be sold at the rate of 100% of the tariff rate fixed by the
Commission.
If open access consumers are prevented from utilizing the energy
generated due to load shedding, etc., the unutilized banked
energy may be allowed to be consumed by extending the banking
period or sold at the rate of HT industrial energy tariff.
On account of R&C measures, scheduled and unscheduled load
shedding, Captive Consumers are unable to consume 51% of the
generation, deemed consumption may be taken into consideration
for arriving at 51% consumption norms.
Further, during the R&C measures including the load shedding
period, there shall not be any restriction for the consumption of
banked units.
Adjustment of wind units for captive consumption from the
generators installed during various periods / types should be
allowed as per the request of the captive consumer.
All the charges related to open access transmission should
be collected at the consumer end and may be transferred to
transmission company accordingly.
Energy Wheeling Agreement and Fees:
The existing TNERC approved EWA format should be continued.
Security Deposit:
Interest shall be payable to Open Access customer, i.e., generator
for the quantum of security deposit.
In the event of forced back down of WEGs by the entities, deemed
generation to the extent of CUF as adopted for preferential
tariff shall be compensated. This is crucial considering that the
investors would have a severe adverse financial impact if they are
not compensated at the FIT for the energy lost due to grid backing
down.
Banking period and charges:
The Commission shall continue with the banking period for one
year from 1st April to 31st March as is being followed now. The
computation of banking charges shall be done as directed by the
Hon’ble APTEL in the Appeal No. 197 of 2012 dated 24.05.2013,
as the manifold increase in banking charges determined by
TNERC in its order dt. 31.07.2012 was set aside in the above
judgment.
The statement furnished in this consultative paper is extracted as
below:
“Hence the DL has to back down lower cost generation also to
absorb the wind energy part of which will be treated as banked
energy. But during the non-wind season when the demand is more
and consequently cost of power is also high, the Captive users/
third party users will utilize the banked energy resulting in high
cost power purchase by the DL to service the banked energy”.
The above statement of TANGEDCO and Go TN and their
recommendation for withdrawal of banking provision during the last
WTO has been thoroughly discussed by the Hon’ble Commission
based on the inputs/opinion/views given by other stakeholders.
A legal position has been taken by the Hon’ble Commission to
continue the banking provision in the last WTO. In earlier order
dated 20.03.2009 also, the Commission continued the banking
for the WEGs. The decision of the Hon’ble Commission has been
upheld by the Hon’ble APTEL There is no change in the status
as on date.
Throughout the year (all the 365 days) TANGEDCO is facing
shortage of power. This is the reason for introduction of power
cut and R&C measures. If Hon’ble TNERC goes through the daily
statement of SLDC, it could well be established that not even a
single day Licensee had backed down low cost generation for the
sake of absorbing wind energy. If at all any surplus is available the
Licensee resorts to backing down of wind energy generation for
the reasons best known to them only, but continue to purchase
high cost power during that period.
Hon’ble CM of Tamil Nadu and Hon’ble Minister for Electricity
issued press statement on the value of wind energy generation
during the difficult summer period when the State was reeling
under severe power shortage. They even reiterated the usefulness
29
and contribution of wind energy generation to the Grid in addition
to generation from other sources. They issued statements for full
evacuation of wind energy. Despite getting full support from the
Government for total evacuation realizing the cost and benign
environmental advantages, the WEGs are being backed down
every day to accommodate the high cost power by TANGEDCO
even during acute power shortage period.
In spite of the above hardship to WEGs, the wind energy banked
is only accounted on paper but fully consumed in the area of the
Distribution Licensee. This usage of energy fetches a revenue to
the DL at Average Realization Rate in addition to banking charges.
Had this energy not banked and absorbed in the Grid, the DL shall
have to purchase high cost power. During the non-windy season
which happens during end Oct to Mar period, it could be seen
from the frequency distribution monthly demand curve of DL that
the overall demand is comparatively less than that during windy
season. The conclusion is the wind generation is high during the
high demand summer season and not the other way.
Hence, the proposal of the Commission in the consultative paper
to dispense with one year banking will not have any merit and it
is legally untenable.
The Commission’s findings in MP No. 42 of 2008 are extracted
below:
‘’This wind energy so banked by the generators during the difficult
months of May, June, July, August, September and October
2008 enabled the TNEB toward off load shedding and power cut
effectively. They came to the rescue of TNEB in difficult times.
The statistics of load shedding and the wind energy generated
during these months has been analysed by the Commission
before reaching the above conclusion. The Commission feels that
it is incumbent upon the TNEB to come to the rescue of the wind
energy captive users, if they choose to utilize their banked energy
now.
25. By all accounts, there is a strong case for a preferential
treatment of the banked wind energy captive users’’.
The above order of the Hon’ble Commission has also been upheld
by the Hon’ble APTEL in its judgment.
The contents of the consultative paper on this issue are contrary
to the Hon’ble Commission’s earlier findings as mentioned supra.
In the consultative paper, it is mentioned that there is a loss
accrued to the DL due to banking of wind energy. Whether this
had been correctly quantified at any point of time either by any
independent agency, or by DL or Hon’ble Commission itself?.
Without any specific data on this issue, how could it be concluded
as loss?. Commission suggested the difference between marginal
cost of power purchase of TANGEDCO and applicable wind tariff
as the banking charges.
We plead with the Hon’ble Commission to direct the DL to come
out with a clear cut statistical data month wise on the quantum of
30
high cost power purchased by TANGEDCO during the non-windy
season for the purposes of supplying banked units and month
wise quantum of purchase of high cost power by TANGEDCO
during the windy season (banking period). TANGEDCO may also
be directed to confirm the avoided cost of power purchase due to
banked units of wind energy during windy season with financial
gain to the DL. Had the WEGs been allowed full evacuation of
generation, DL could have gained more financially.
As already stated above, had this energy not banked and absorbed
in the grid DL shall have to purchase high cost power resulting in
high Marginal cost to DL. To avoid this high marginal cost, DL
absorbed the energy from WEG to meet their requirement to the
extent permitted by SLDC after resorting to backing down every
day. Even by absorbing such restricted generation from WEG as
permitted by SLDC, DL stands to gain only and not otherwise. This
is the reason for considering significantly lower generation from
wind in the provisional assessment by the Hon’ble Commission in
its recent suo-motu proceedings for determination of TANGEDCO
ARR. The concept of marginal cost arises here only during
high wind generation period. Therefore there is every reason,
justification, and logic to apply that concept here for calculating
the gains arising out of energy banked by WEGs as done by the
Financial Institutions to the deposits made with them. When the
fact is so, the proposal of the Hon'ble Commission to adopt more
stringent concept which could result in very high unreasonable
and unjustified banking charges, contrary to Hon'ble APTEL's
findings, has no merit, devoid of facts and legally untenable.
To bring out all facts, ground realities and factual status , we
request Hon’ble Commission to appoint an independent expert
committee with three members one from DL ,one from WEG and
other an experienced Renewable energy expert to assess this
issue in greater detail and come out with their findings.
The statement of the Commission that due to the extension of
banking facility the DL may accrue losses is only a perception not
backed by any arithmetical computation. A working made on the
wind banking worked out based on the data available in public
do mine has been given in the annexure. The same works out to
excess revenue of 75 Crores in the year 2014 -15 with the existing
retail tariff. With the proposed retail tariff, the excess revenue
works out to 198 Crores even for the low wind year.
Whether the banking charges proposed by the Commission is a
single fixed charge or will it vary monthly? Whether the proposal
in the consultative paper is in consonance with the directions of
the APTEL or it is abnormally high as compared to 94 paise / unit
determined in the previous WTO which itself was set aside by
APTEL since the concept of marginal cost is introduced?. In our
opinion there is neither transparency nor clarity in this concept
of banking charges. Hence, we submit that when there is no loss
for the TANGEDCO on account of banking, there is no question of
proposal of meeting of the difference between the marginal cost
and the applicable wind tariff.
31
As already stated in the first para for this issue, the judgment of
the APTEL on this issue may be complied with while determining
the banking charges.
Lapsed energy by REC captive users:
The principle of retaining the banked energy at the generator end
alone shall be ordered.
The TNERC (Renewable Energy Purchase
(Amendment) Regulations, 2011 provide as under:
Banking for REC Scheme:
Obligation)
‘’4. Amendment of Regulation 6 of the Principal Regulations:
Deemed Demand Charges:
Though not the regulations of the Commission recognize the
Deemed Demand concept applicability to OA consumers, Order
No. 2 dated 15.05.2006 and Order No. 4 dated 15.05.2006 of
the Hon’ble Commission recognize the Deemed Demand concept.
These orders discussed in detail on the applicability with reasons
therefore and determined the quantum. These orders have been
followed in subsequent Commission’s orders in 2009 as well. Only
in 2012 renewable tariff orders, the deemed demand concept
was withdrawn without calling for any views/comments from the
stakeholders. This was set aside by the Hon’ble APTEL in their
order dated 24.05.2013.
The Commission has not amended this concept of deemed
demand in the order 2 and 4 of 15.05.2006. In the absence of
amendment to those orders for withdrawal of deemed demand,
the concept of deemed demand shall prevail.
The statement of the Commission that Demand charge is meant
for the fixed charges incurred by the DL in providing infrastructure
and also incurring the capacity charges is totally misconceived
and incorrect in view of the fact that transmission and wheeling
charges are recovered based on the financial costs of infrastructure
and capacity charges.
Similarly, the statement of the Commission that the DL is providing
standby (Demand) and therefore demand charges are to be
collected is also misconceived and incorrect in view of the fact
that the cost of entire generation and purchase of power which
include the standby supply is factored in determination of retail
tariff.
Will it not tantamount to duplicate recovery if the Commission’s
view is accepted?. If not, what is the demand charges then?. We
request TANGEDCO through the Hon’ble Commission to clarify
with reasons whether the demand charge is a fixed charge or a
variable cost per unit or any other charge.
Therefore, withdrawal of deemed demand concept, introduced
by Order Nos. 2 & 4 of 15.05.2006 incorporating the objectives,
reasons and basis of the determination methodology, ignoring the
directions of APTEL , in the consultative paper is neither legally
tenable nor factually correct.
32
In the principal regulations, in regulation 6, in sub-regulation (1),
after clause (b), the following provisos shall be added, namely:
Provided that such a generating company having entered into a
power purchase agreement for sale of electricity at a preferential
tariff shall not, in case of premature termination of the agreement,
be eligible for participating in the Renewable Energy Certificate
(REC) scheme for a period of three years from the date of
termination of such agreement or till the scheduled date of expiry
of power purchase agreement whichever is earlier, in any order
or ruling is found to have been passed by the Commission or
a competent court against the generating company for material
breach of the terms and conditions of the said power purchase
agreement:
Provided further that a grid connected CGP based on renewable
energy sources shall be eligible for the entire energy generated
excluding auxiliary consumption from such plant but including
self consumption for participating in the REC scheme subject to
the condition that such CGP has not availed or does not propose
to avail any benefit in the form of concessional / promotional
transmission or wheeling charges, banking facility benefit and
waiver of electricity duty/tax:
Provided also that if such a CGP foregoes on its own, the benefits
of concessional / promotional transmission or wheeling charges,
banking facility benefit and waiver of electricity duty/tax, it shall
become eligible for participating in the REC scheme only after a
period of three years has elapsed from the date of foregoing such
benefits’’.
The Explanatory Memorandum to the above Notification states,
inter alia, as below:
‘’4. Regarding eligibility criteria for participating in the REC
mechanism, Commission retained the provisions made in the
CERC (Terms and conditions for recognition and issuance of
Renewable Energy Certificate for Renewable Energy Generation)
Regulations, 2010’’.
Now let us see The Central Electricity Regulatory Commission
(Terms and Conditions for recognition and issuance of Renewable
Energy Certificate for Renewable Energy Generation) (First
Amendment) Regulations, 2010, inter alia, provides as below:
‘’2. Amendment of Regulation 5 of principal regulations: The
following provisos shall be added at the end of the Sub-clause (c)
of Clause (1) of Regulation 5 of the principal regulations, namely:
“Provided that such a generating company having entered into a
power purchase agreement for sale of electricity at a preferential
tariff shall not, in case of premature termination of the agreement,
be eligible for participating in the Renewable Energy Certificate
(REC) scheme for a period of three years from the date of
termination of such agreement or till the scheduled date of expiry
of power purchase agreement whichever is earlier ,if any order or
ruling is found to have been passed by an Appropriate Commission
or a competent court against the generating company for material
breach of the terms and conditions of the said power purchase
agreement.
Provided further that a Captive Power Producer (CPP) based
on renewable energy sources shall be eligible for the entire
energy generated from such plant including self consumption for
participating in the REC scheme subject to the condition that such
CPP has not availed or does not propose to avail any benefit in
the form of concessional / promotional transmission or wheeling
charges, banking facility benefit and waiver of electricity duty.
Provided also that if such a CPP forgoes on its own, the benefits
of concessional transmission or wheeling charges, banking facility
benefit and waiver of electricity duty, it shall become eligible for
participating in the REC scheme only after a period of three years
has elapsed from the date of forgoing such benefits.
Provided also that the above mentioned condition for CPPs for
participating in the REC scheme shall not apply if the benefits
given to such CPPs in the form of concessional transmission or
wheeling charges, banking facility benefit and waiver of electricity
duty are withdrawn by the State Electricity Regulatory Commission
and/or the State Government.
The dispute, if any, on the question as to whether such
concessional / promotional benefits were availed by a CPP or not
shall be referred to the Appropriate Commission.
Explanation: For the purpose of this Regulation, the expression
‘banking facility benefit’ shall mean only such banking facility
whereby the CPP gets the benefit of utilizing the banked energy
at any time (including peak hours) even when it has injected into
grid during off peak hours’’.
It is pertinent to mention here that the facilities extended to wind
energy are because of its inherent characteristics of the source
of the energy i.e., wind. To deny a benefit that is extended to a
normal wind energy generator on the ground that REC benefits
are availed is neither logical nor the intention of the REC scheme.
The intention and approach behind the evolution of the REC
scheme was only to ensure that a wind energy generator availing
REC benefits was not enjoying dual benefits by availing both REC
and other concessions that are normally extended to wind energy.
It was only to ensure that dual benefits were not enjoyed, CERC
in the REC regulations mandated that no concessions in respect
of transmission / wheeling charges and electricity duty should be
availed in order to claim REC. To be eligible for claiming REC
benefit, in the very same regulations, CERC had allowed availing
banking facility benefit subject to fulfilment of condition pertaining
to slot to slot adjustment.
This position has been upheld by the Hon’ble APTEL in their
judgments in the Appeal Nos. 45 and 91 of 2012 that banking shall
be permitted for REC machines subject to payment of applicable
banking charges as determined by the State Commission from
time to time.
In line with the TNERC regulations and APTEL judgments on
the above matter, WEGs commissioned under REC scheme are
eligible for one year banking subject to payment of applicable
banking charges and slot to slot adjustment of units.
As mentioned supra, earlier TNERC order dated 31.07.2012 was
set aside by the APTEL with a direction to hear all the parties
concerned and decide in the light of its judgments in Appeal
Nos. 45 & 91 of 2012.
The judgment of the APTEL on this issue may be complied with
by extending one year banking to machines commissioned under
REC scheme,.
Encashment of unutilized energy by REC captive
users:
Presently, the unutilized banked energy at the end of financial
year is paid at the 100% of the FIT when R and C measures
are in force and at 75% of FIT otherwise. Similarly, the unutilized
banked energy at the end of the financial year in respect of
machines commissioned under REC scheme be paid at APPC
rates, as applicable to for sale to utility.
Harmonics: For providing adequate filtering mechanism to limit
the harmonics within the stipulated norms in order to comply
with the CEA (Technical Standards for connectivity of Distributed
Generation Resources) Regulations, 2013, the time limit of three
months suggested in the consultative paper is insufficient as it
involves additional expenditure and time consuming process. As
more no. of existing smaller capacity WEGs are to be provided
with suitable harmonic filters, at least 24 months time may be
allowed.
33
Others:
O&M charges levied by TANGEDCO
Non Compliance of TNERC Direction:
While TANGEDCO and TANTRANSCO have been including all
the costs incurred by them for maintaining the substations and
is included in the ARR for determination of respective tariff, it is
not correct to levy a O&M charges on WEGs alone by TANGEDCO
contravening the regulations of the Hon’ble Commission. This is
being levied on the installations of both Sale to Board category and
Captive use. Hon’ble Commission should hence give a direction
to TANGEDCO not to recover the O&M charges from WEGs as
Hon’ble Commission has not approved such a levy Presently, this
is being recovered at Rs 1,85,220 per MW per annum.
The commission in the previous tariff order directed TANGEDCO
to publish the wind energy generation details in its website on
monthly basis. However, the same has not been complied so far
by TANGEDCO. We request commission to view the same seriously
and direct the TANGEDCO accordingly.
It is also submitted that the Hon’ble Commission has considered
this as a cost while determining the Preferential tariff nor has it
considered this recovery while fixing tariff for transmission and
wheeling charges for WEGs. Hence it is very clear that this
recovery is not made with the approval of the commission and
TANGEDCO should be directed not to recover this.
We request the Hon’ble Commission to favourably consider our
above submissions and determine a reasonable and viable wind
tariff.
Thanking you,
With Best Wishes & Regards,
For Indian Wind Power Association,
Prof. Dr. K Kasthurirangaian
Chairman
Enclosure: Workings of Banking Revenue
Revathi Power Transmission is the one of the excellent
Service sector for all type of Wind Mill Gear Box more than 10 years.
We are having all type of Pinion and Gears in ready condition for Gear box Service at any time.
“We, The key power for generating power from wind”
Revathi Power Transmission
99/2A, School Road, Chinnavedampatti, Coimbatore - 641049.
Cell No. : 98422-33586 Off No. : 0422-2533587
E-Mail : revathigears@yahoo.com
34
IWPA Comments - Workings - TNERC's Comprehensive Wind Tariff Order
WORKINGS - TNEB - EXCESS REVENUE FROM WIND BANKING
2014 - 15 (with existing Tariff)
Rs.
in MU /
Rate
Crores
MW
Details
I
2014 - 15 (with proposed tariff)
Rs.
in MU /
Rate
Crores
MW
Captive Generators - Revenue from Banking
a)
b)
c)
a)
c)
A - TANGEDCO EXPENDITURE:
TANGEDCO - Purchase from Nov to Mar for supply to
wind mills banked users*
TANGEDCO - Payment for the lapsed units after Mar to
Wind Generators
Total expenses to TANGEDCO for banked units
B - TANGEDCO INCOME##:
TANGEDCO sold / realised from consumers from Apr to
Oct ( 7 months)
Total income of TANGEDCO on Banked Units
Net Profit to TANGEDCO on account of banking facility
565
4.94
279
565
4.94
279
126
3.12
39
126
3.12
39
318
691
394
691
394
75
691
691
691
5.70
691
318
7.48
517
517
198
*Average Purchase rate - as reported in the ARR summary by commission in page no. 23. This cost will be still lower if planned properly
##
TANGEDCO income - Energy charges for HT consumers
Generation Details
2014 - 2015 in Million Units
1
April to October Generation
7828
2
November - March Generation
1112
3
Total Generation Including Sale to the Board
8940
4
Sale to board generation - 50% of total generation
4470
5
Captive Consumption Used April - October
3779
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35
TELANGANA STATE ISSUES
GOVERNMENT OF TELANGANA
ABSTRACT
TS-ENERGY DEPARTMENT - Telangana State Electricity Regulatory Commission (TSERC) - Appointment of Chairman
and two Members for Telangana State Electricity Regulatory Commission - Notification - Orders - Issued
ENERGY (BUDGET) DEPARTMENT
G.O.MS.No.13.
Dated. 22-10-2014.
Read the following:
1. A.P Reorganization Act, 2014.
2. The Electricity Act, 2003.
3. G.O.Ms.No.3, Energy (Budget) Department, Dt.26-07-2014.
4. G.O.Ms.No.4, Energy (Budget) Department, Dt.31-07-2014.
ORDER:
The following Notification will be published in the Extra-ordinary issue of the Telangana Gazette dated:22-10-2014.
NOTIFICATION
In exercise of the powers conferred under Section 84 of the Electricity Act, 2003 (Act No.36 of 2003) and the
provisions contained in G.O.Ms.No.3, Energy (Budget) Department, dt.26.07.2014, the Government of Telangana
hereby appoint the following officers as Chairman and Members to the Telangana State Electricity Regulatory
Commission (TSERC) for a term of Five Years with effect from the date they enters upon their office or till they
attain the age of 65 years whichever is earlier.
1.
Sri Ismail Ali Khan, presently working as Member
in the Bihar Electricity Regulatory Commission
...........Chairman
2.
Sri H. Srinivasulu, Retired as Commissioner of Income Tax (IRS)
...........Member (Finance)
3.
Sri L. Manohar Reddy, Director (Tariff) in APERC ...........Member (Technical)
(BY ORDER AND IN THE NAME OF THE GOVERNOR OF TELANGANA
Dr. S.K. JOSHI,
Principal Secretary to Government (FAC)
36
KSEB Sub-stations to be GPS-enabled
THIRUVANANTHAPURAM : Now, the Global Positioning System
(GPS) is to play a role in keeping the transmission network of
the Kerala State Electricity Board (KSEB) safe.
The bigger electrical sub-stations in the state will soon be
deployed with GPS to enable precision fault-identification in the
event of grid disturbances, KSEB officials said.
The decision comes as part of several protection measures
adopted by the Central Electricity Authority (CEA) following
the power outages which hit north India in July 2012 and a
subsequent order issued by the Central Electricity Regulatory
Commission (CERC).
Using GPS, KSEB will able to synchronise the internal clocks in
its control and protection units and other equipment which will
help to precisely identify faults in the system, K Vikraman Nair,
Director, (Transmission and System Operation) KSEB, said.
“This is relevant in situations such as a grid collapse or
disturbances in the grid. There would be a sequence of
trippings in the system in such situations.
“In analysing what went wrong, it would be important to isolate
the root cause. Time synchronisation is of utmost importance
for that,’’ he said.
All 220 kV sub-stations and above will be GPS-enabled as part
of the decision which received the nod of the KSEB director
board earlier this month.
The power outages on July 30 and 31, 2012, had hit 22 states
in north, east and north-eastern India after the grids collapsed.
South Indian states escaped relatively unscathed because the
southern grid was not synchronised with the national grid at
the time.
Following the outages, the CEA had launched a safety audit of
protection systems in the transmission facilities in all states to
prevent an encore. In January 2014, the southern grid also was
linked to the national grid.
Source: The New Indian Express, dated 24.10.2014
37
Andhra Pradesh State Issue
Study Report for Determination of Fixed Cost Norms for Non Conventional Energy Sources (Wind Projects)
Introductory Note
This study report has been done by KPMG for Andhra Pradesh
Electricity Regulatory Commission for determination of Fixed
cost norms for Wind Energy Generation projects in the erstwhile
Andhra Pradesh state for the future. This exercise was done over
the period January, 2014 to July, 2014 and the recommendations
on the adoption of fixed cost norms for Wind Energy Generation
projects have been documented in the study report.
1.Background
Government of India (GoI) formulated a policy framework in
FY 1993-94 for promotion of generating capacity from NonConventional Energy (NCE) sources with the objective of
conserving fossil fuels and to reduce environmental pollution
arising out of the emissions following the combustion of fossil
fuels. The NCE sources consisted of the following
±± Biomass based Power Projects
±± Bagasse based cogeneration Power Projects
±± Industrial Waste to Energy Projects
±± Municipal Waste to Energy Projects
±± Mini Hydel Projects
±± Wind Electricity Generation Projects
The policy framework provided incentives and facilities for
promoting capacity addition through NCE sources. Among
other parameters under the policy framework, the tariff
payable for power from the NCE sources was predetermined
in 1993-94 to take effect from 01-04-1994 with escalation
year-on-year.
This policy framework had set a tariff of Rs. 2.25/Unit for
wind power for FY 1994-95. An annual escalation of 5% was
allowed on this tariff. The wind developers were paid at this
tariff till March 2004.
APERC directed APTRANSCO and NEDCAP to file tariff
proposals for tariffs and incentives for various categories of
NCE projects to be applicable from 01 April 2004. APERC
while determining the tariff for NCE sources was guided by
the following principles of The Electricity Act, 2003
±± Section 86 (1) (e) of the Electricity Act, 2003 provides
that State Regulatory Commission would promote
renewable and NCE sources.
±± Section 86 (1) (a) of the Electricity Act, 2003 empowers
the State Commission to fix the tariff for generating
stations in the State.
38
APERC analysed the proposals submitted by APTRANSCO
and NEDCAP, considered the environmental benefits from
NCE sources and determined the tariff for NCE sources in
its March 2004 order.
APERC in its March 2004 order stated that “The Commission
likes to retain the base unit price of Rs. 2.25 as on 1.4.1994
and the escalation index of 5% p.a. But, the escalation would
be simple and not compounded every year. In other words,
the base price as on 01-04-2004 will be Rs. 3.37/kWh. As
these projects have no variable expenses and negligible
increase in maintenance cost, the tariff will be frozen for
a period of five years, to be reviewed however, thereafter”.
The order also stated that a further review of the individual
projects will be undertaken on completion of 10 years of the
project.
Subsequently, APERC in its March 2009 order after
considering the views of all stakeholders decided to continue
with the tariff of Rs. 3.37/Unit for Wind based power projects
for the five year period 01 April 2009 to 31 March 2013.
Most of the wind projects in the state have already crossed
their 10th year of operation and there is a need to determine
the tariff for these wind projects for remaining life of the
project. Hence, APERC has undertaken this exercise for
determination of tariff for wind projects for the remaining life
of the project life.
This study report looks at performance of wind projects and
suggests suitable tariff options.
2. Performance analysis of existing Wind power projects
Andhra Pradesh is blessed with good wind potential. The
total wind potential in the state is nearly 6000 MW. Ministry
of Non-Conventional Energy Sources in order to encourage
wind power projects had decided on a tariff of Rs. 2.25/
Unit for FY 1994-95 with an annual escalation of 5%. The
following mentioned points encouraged wind developers to
install wind power projects in Andhra Pradesh
±± Accelerated depreciation up to 80% of the project cost
was allowed in its first year of operation
±± Andhra Pradesh Government granted capital subsidy to
wind developers to the extent of 20% of project cost
subject to a ceiling of Rs. 25 lakhs.
±± Government land was given on lease for a period of 20
years out of which first 5 years were rent free
The above mentioned steps encouraged a lot of wind players
to set up wind projects in Andhra Pradesh. Currently, the
total installed capacity of wind power in Andhra Pradesh is
around 700 MW.
As most of the wind projects were set up before FY 2008-09
and hence for such wind players, tariff was not determined
as per any norms. The wind players were being paid a tariff
of Rs. 3.37/Unit from 01 April 2004. It has been argued by
wind developers that tariff has not been computed based
on particular norms and tariff fixed is too low. Low PLF of
wind plants (Average ~14%) has along with high costs of
operation has further worsened the situation for wind power
developers.
A sample of wind power players – Nile, Weizmann and
ILFS were selected for the performance analysis. Some of
the wind players had consolidated balance sheet for varied
businesses apart from wind power generation and hence
performance analysis of such wind players was not done.
The following table summarises a comparative analysis of the
wind players
Table 1 : Comparative analysis of Wind players
for the period FY 04-05 to FY 12-131
Parameter
Nile
Weizmann
ILFS
Capacity (MW)
2
8
6.5
Capital Cost
(Rs. Lakh/MW)
370
450
483
CUF (%)
12-16%
9-12%
10-14%
Debt (Rs. Lakh/ MW)
No Loan
taken
337
No Loan
taken
0
0
0
8-17
8-19
13-28
Outstanding Debt at the
end of 10 years (Rs. Cr.)
O&M Expenses
(Rs. Lakh/MW)*
It can be seen that capital cost of the project varied from
Rs. 370-480 Lakh/MW. Government of Andhra Pradesh
had given a capital subsidy of Rs. 25 Lakh to wind players
effectively reducing their capital cost infusion by 6.25%.
Most of the projects have been funded completely by equity
indicating the strong financial health of the wind players.
The average interest rate of the term loans taken by the wind
players is around 12% which was the prevailing market rate.
The CUF of wind players was in the range of 12-16% which
was on the lower side.
It can be observed that some parameters like Capital Cost,
Interest on term loans have already been incurred by wind
players while a lot of wind players have funded the capital
1
Annual accounts
cost requirement from equity. It can be ascertained that
performance of wind players on all operational parameters is
good except the CUF.
3. Tariff proposal filed by APCPDCL on wind tariff
Central Power Distribution Company of Andhra Pradesh
Limited (APCPDCL) had filed for tariff proposals for
determination of tariff of wind plants on completion of 10th
year of operation till the life of the project.
APCPDCL had assumed the following norms for computation
of tariff for wind projects
Table 2 : Norms proposed by APCPDCL for wind tariff
APERC June 2013 Order
(Based on APTEL norms)
Units
Project Life
Years
20
Capital Cost
Rs. Cr/
MW
4.0
CUF
%
20%
O&M expenses % of
(1st year of
Capital
Cost
operation)
1% of Capital cost
O&M Annual
escalation
%
4%
Debt: Equity
Ratio
Ratio
70:30
Depreciation
%
7.84% (Till accumulated
Dep>70%) Remaining
depreciated equally over
remaining project life
Interest on
Debt
%
14%
ROE
%
14%
Interest on
Working
Capital
%
12% (1 month O&M,
1 month receivable)
The initial tariff as per MNES guidelines of Rs. 2.25/Unit
and revised tariff as per APERC 2004 and 2009 order of Rs.
3.37/Unit were not computed based on any norms.
APCPDCL has considered that entire loan is repaid by the
end of 10th year and also allowed for 70% of depreciation in
the first 9 years of operation. Hence, no interest cost and very
low depreciation cost has been considered by APCPDCL for
computation of tariff. APCPDCL as per the following norms
had computed a tariff of Rs. 1.43/Unit for wind projects on
completion of their 10th year of operation till the life of the
project. This approach of computing tariff based on norms
midwaylife of project is not fair either to wind players or the
Distribution licensee and is always open to debate from both
sides.
39
4 Wind tariff fixed by other SERCs
It can be observed that the above mentioned SERCs have
The other State Electricity Regulatory Commissions (SERCs)
have also set the tariff for wind players from 11th year
onwards. Most of the SERCs have followed the approach of
not computing a norm based tariff midway life of the project.
The following table lists down the tariff fixed by other SERCs.
Table 3: Wind tariff determined by SERCs
SERC
Tariff Structure
followed after
completion of 10
years
Basis for arriving at
Tariff
MERC
(Maharashtra)
Followed the MNES
guidelines- Tariff at
the end of 10th year
to be continued for
next 3 years, and
5% increase every
year for the next 7
years.
TNERC
(Tamil Nadu)
Followed the MNES
guidelines for first
5 years to arrive at
a tariff of Rs. 2.70/
unit. Thereafter flat
tariff of Rs. 2.70/
unit for next 5 yrs.
Later, tariff fixed
at Rs. 2.75/unit
for wind plants
established
prior
to the date of tariff
order (15/05/2006)
Tariff after 10 years
determined on the
basis of parameters
fixed
by
the
Commission.
Order dated 11th
December
2009
stated that tenth
year tariff would
be applicable for
the next ten years
without escalation
for all projects which
have completed ten
years of operation.
After
completion
of 10 years debt
servicing will have
been fully met and
the only increase
(marginal)
would
be in respect of O
& M expenses, but
at the same time
the opportunity cost
of the power would
have gone up.
KERC
(Karnataka)
allowed for an escalation on the MNES tariff for only a
specific period of time and allowed for a flat tariff thereafter.
This approach was followed by SERCs as there were no
norms which were followed while setting the MNES tariff of
Rs. 2.25/Unit.
5 Conclusion
This study report analyses the tariff setting history for
wind projects in Andhra Pradesh. The base tariff set by
MNES in FY 1994-95 to promote energy generation from
NCE sources. Apart from this, incentives like Accelerated
Depreciation, Capital Subsidy etc. resulted in wind players
adding significant capacity in Andhra Pradesh in mid and
late 1990s. Wind developers who are due for tariff revision
post the completion of 10th year of operation have argued
that their plants have been operating at a low CUF and
the tariff is not remunerative. Hence, tariff from 11th year
onwards should be determined in a way that these wind
projects do not suffer losses.
A performance analysis of sample wind players was
covered. Most of the wind players have funded their projects
through equity which means they had no debt and interest
repayment costs. Wind players faced the issue of low CUF
(Average 14%).
The proposal for wind tariff filed by APCPDCL was analysed
in detail. APCPDCL had filed wind tariff proposal considering
some norms and assuming the repayment of debt and
interest costs by the end of 10th year. Though the MNES tariff
was not determined based on any norms, APCPDCL had
proposed a tariff of Rs. 1.43/Unit from 11th year onwards.
Other SERCs had fixed tariff for wind projects without
following the normative approach.
It can be concluded that determining a norm based tariff
midway through the life of project is not a correct way as the
first 10 year tariff has already been paid to wind developers
based on some benchmark price. A norm based tariff would
not be fair to either developer or the Distribution licensee.
Hence, the benchmark tariff approach should be followed
to fix the tariff for existing wind plants from 11th year till
completion of project life.
"Printed by R R Bharath, published by S Gnanasekharan, on behalf of Indian Wind Power Association and printed at Ace Data
Prinexcel Private Limited, 3/304 F (SF No. 676 / 4B), Kulathur Road, off NH 47 By-pass Road, Nellambur, Coimbatore - 641 062
and published at Indian Wind Power Association, Door E, 6th Floor, Tower - I, Shakti Towers, No. 766, Anna Salai, Chennai - 600 002.
Editor : Dr. Jami Hossain"
40
October 2014
Date of Publishing : 27.10.2014
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