We are Investing in Solar rooftops at Rs. 7 and below per KWh as well as MW Scale Power Plants

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Barriers to Solar Financing in India

By Vedant Rathi

The Indian solar industry has grown about a hundredfold in the past four years, from 36 MW in March, 2010 to 2,600 MW in March, 2014. The Modi government has set an ambitious target of reaching a 100 GW installed capacity by 2022. As a developing nation, India faces many financing and policy barriers to reach this target. This blog addresses potential solutions to solar financing in India. 
What is the problem?

Like any other nation, commercial banks (both in the public and private sector) constitute a major source for financing for infrastructure projects, including renewables in India. Compared to the US or Europe, banks in India have high interest rates. For example, State Bank of India (SBI) and other national banks provide debt at interest rates of about 11% to 13%. Compared to this, international development banks like KfW and US Export-Import Bank and multilateral banks like Asian Development Bank and the International Finance Corporation provide funding at rates as low as 4%. Additionally, project developers have expressed concerns over insufficient debt tenors in India. Higher costs and inferior terms of debt in India may raise the cost of renewable energy by 24-32% compared to similar projects financed in the US or Europe. High inflation, growth, intense competition (even outside of renewable energy) to get investments, and inherent risks of a developing nation are all factors that contribute to high interest rates in India.

What are the potential solutions?

This blog discusses a few potential solutions to obtain low-cost capital for solar projects. While this is not an exhaustive list, the author has focused on solutions that have been successfully implemented in other countries and thus have a proven track record.

1. Government Loan Guarantee Program – The Department of Energy (DOE) in the U.S. offers loan guarantee programs for early stage renewable projects without capital. Through this program the DOE ensures that if the renewable energy manufacturing or generation project defaults on its loans, the DOE will repay the outstanding balance. The Indian Ministry of Finance approved a program that would provide a guarantee of up to 20 percent of the debt financing of projects in the power sector, including projects in renewable energy. The guarantee allows projects to attain a higher credit rating, thus broadening the investor pool to include pension funds and insurance companies, and lowering interest rates.

2. National Development Banks/Funds – The National Clean Energy Fund (NCEF) was announced in FY 2011 to encourage renewable energy generation in India. The Indian Renewable Energy Development Agency (IREDA) in collaboration with the NCEF announced a refinancing scheme under which as much as 30% of the clean energy loans issued by commercial banks could be refinanced at 2%. The refinancing is subject to the condition that the interest rate from the lending institution does not exceed 5% per annum. This limits access to low-cost financing given that solar projects borrowing from national banks are generally paying an interest of 11%-13% per annum. As of June 2014, the NCEF has allocated just over 1% of the available funds to the Ministry of New and Renewable Energy (MNRE). For NCEF to be truly effective and widely accessible, limiting factors on interest rates need to be relaxed.

            Brazil has a similar growth and financing environment to India. The Brazil National Development Bank (BNDES) is a great example of an institution that has been successfully and consistently offering low-cost, long-term, financing solutions to renewable energy projects. In 2012, BNDES offered a 15-year interest rate of 2.5% which is less than a third of Brazil’s benchmark interest rate. BNDES has exclusive access to low-cost, risk-free funding from a workers’ welfare fund (FAT). According to a 2012 study by Deutsche Bank Climate Change Advisors, the availability of BNDES loans cut renewable energy costs in Brazil by as much as one fifth.   

3. Green Bonds – Green Bonds were first issued by the European Investment Bank in June 2007. Green Bonds are similar to any other asset-backed bond expect that they are used to finance green projects. A green project may include any project related to renewable energy, energy efficiency, or sustainable land use. Green Bonds can be issued by national/state governments, local municipalities, banks, and international financial institutions. The National or State governments may offer low-cost, long-tenured funds by using Green Bonds. The Climate Bonds Initiative Study indicates that in 2014, $36.6 billion worth of Green Bonds were issued. A recent study indicates that clean energy costs may go down by one-fourth if India would issue its Green Bonds.

4. Infrastructure Debt Funds (IDFs) – As tradable instruments that are attractive to domestic and international long-term investors, IDFs can act as vehicles to refinance existing debt for infrastructure companies at more favorable terms. In 2011, the Reserve Bank of India (RBI) issued guidelines for the operation of new IDFs, structured either as mutual funds or companies, but they have not yet been used for renewable energy projects in India. In the recent budget, a National Investment and Infrastructure Fund (NIIF) with an annual flow of US$3.2 billion was announced. This will help raise investments as equity in infrastructure finance companies which can further fund the renewable projects at competitive pricing. A central authority like IREDA or Solar Energy Corporation of India (SECI) with a high credit rating is well-positioned to successfully utilize NIIF to not only refinance existing debts low-costs but also provide low-cost capital to new projects.

In addition to facilitating low-cost finance, other potential options like tapping into public equity markets by forming solar yieldcos and encouraging foreign investment by developing new PPA structures to minimize forex risks can boost the solar industry in India. The solar market is upbeat and such suitable financial policies present a great opportunity to make hay while the sun shines.

The author would like to thank Andrew Gilligan from Sol Systems LLC and Michael Kline from The Brattle Group for their inputs.

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This solar policy shall be applicable for the following solar projects set up within the state-
1) Solar Power Projects (SPPs)
a) Grid connected solar power projects based on both Photo Voltaic (PV) as well as Solar Thermal technologies
Projects set up for sale of power to TSDISCOMS
Projects set up for sale of power to third parties within the state
b) Projects set-up for captive generation/ group captive generation (including those funded and owned by developers).
2) Solar Roof-top Projects (SRPs) ( Grid connected and off grid ) – This includes projects which are funded and owned by developers
3) Off grid applications
4) Any other project which is established based on MNRE/GOI Schemes as amended from time to time.
5) Solar parks

For availing benefits under this policy, power generated from any of the above modes, has to be consumed within the state.

The consumers are free to choose either net or gross meter option for sale of power to the DISCOMs under this policy. The tariff applicable for units generated under gross metering at 11 KV and below would be average cost of service of the DISCOM as determined by TSERC. The tariff applicable for units under net metering would be average pooled power purchase cost. Projects under both gross and net metering would be subject to monthly billing and settlement.

No distribution losses/charges shall be applicable for SRPs.

Transmission and Distribution charges for wheeling of power

The wheeling and transmission charges are exempted for captive use within the state. They will be charged as applicable for third party sale. The transmission and distribution losses however is fully applicable for both third party within the state as well as captive use within the state.

Power scheduling and Energy Banking

All SPPs shall be awarded must-run status that is injection from solar power projects shall be considered as deemed to be scheduled.

Banking of 100% of energy shall be permitted for all Captive and Open Access/ Scheduled consumers during all 12 months of the year. Banking charges shall be adjusted in kind @ 2% of the energy delivered at the point of drawl.

The banking year shall be from April to March. Banked units cannot be consumed/redeemed in the peak months (Feb to June) and in the peak hours (6 pm to 10 pm). The provisions on banking pertaining to drawal restrictions shall be reviewed based on the power supply position of the State.

For captive/ third party sale, energy injected into the grid from date of synchronization to open access approval date will be considered as deemed energy banked.

The unutilized banked energy shall be considered as deemed purchase by DISCOM(s) at average pooled power purchase cost as determined by TSERC for the year.

For Sale to DISCOMS, Energy injected into the grid from date of synchronization to Commercial Operation Date (COD) will be purchased by the DISCOMS at the first year tariff of the project, as per the provisions of the PPA with DISCOMS.

Electricity Duty

Electricity duty shall be exempted for captive consumption, sale to DISCOMS and third party sale in respect of all SPPs set up within the state. Also, Electricity duty will be waived for the new manufacturing facilities and ancillaries of the Solar Power Projects.

Cross subsidy Surcharge

For SPP located within the state and selling power to third parties within the state, 100% exemption shall be provided on the cross subsidy surcharge as determined by TSERC for five years from the date of commissioning of the SPP.

Click here for the Telangana State Solar Power Policy

Posted in DISCOM, Government, Grid Connected, Grid Interactive Distributed Solar Energy Systems, India, Net Metering, Power Generation, Renewables, Residential, Rooftop, Solar, Solar Parks, Solar Policy, Solar Pumps, Telangana, Telangana, Transmission and Distribution | Tagged , , , , , , , , , , , , , , , , , , , , , , , , ,

PSERC regulations for Grid Connected Rooftop Solar Photo Voltaic (SPV) Systems based on Net Metering

Punjab State Electricity Regulatory Commission
The 7th May, 2015
No.PSERC/Secy./Regu. 101 – In exercise of powers conferred under Section 181 read with Section 61 and 86(1)(e) of the Electricity Act, 2003 (Act 36 of 2003) and all other powers enabling it in this behalf, the Punjab State Electricity Regulatory Commission hereby makes the following regulations for Grid Connected Rooftop Solar Photo Voltaic (SPV) Systems based on Net Metering.

Any consumer in the area of supply of distribution licensee may install rooftop solar system under net metering arrangement which

a) shall be of minimum 1 kWp & upto 1 MWp (AC side) capacity with or without battery back up support
b) shall be located in the consumer premises
c) shall interconnect and operate safely in parallel with the distribution licensee network

Eligible consumer and individual project capacity

6.1 All eligible consumers of electricity in the area of the supply of distribution licensee can participate in the solar rooftop net metering arrangement subject to target capacity.
6.2 The maximum capacity of rooftop solar system shall not exceed 80% of the sanctioned load (kW) or contract demand of the consumer (in kVA converted to kW by using a power factor of 0.9):
Provided that the installed capacity shall not be less than 1 kWp and shall not exceed 1MWp (AC side) for a single eligible consumer:
Provided further that a variation in the rated capacity of the system within a range of five percent shall be allowed.

10.1 The metering system shall be as per CEA (Installation and Operation of Meters) Regulations, 2006, as amended from time to time.
10.2 The solar meter (a unidirectional meter) is required to be installed as an integral part of the net metering system at the point at which the electricity is generated by Solar Energy System and delivered to the main panel.
10.3 The net metering equipment (Bi-directional meters) and the Solar meter (unidirectional) as per CEA Regulations shall be installed and maintained by the distribution licensee at the cost of the eligible consumer:
Provided the eligible consumer may procure the net meter/solar meter and present the same to the distribution licensee for testing and installation as per Regulation 21.2 of the Supply Code. No meter rental shall be charged from the consumer. In case meters are provided by the distribution licensee, consumer shall be liable to pay meter rental as approved by the Commission. The location of the meter shall be as per CEA Metering Regulation.
10.4 The installed meters shall be jointly inspected and thereafter sealed by the distribution licensee in the presence of the consumer as per the procedure laid down in Supply Code:
Provided that in case the eligible consumer is under the ambit of TOD Tariff, the meter compliant of recording time of day consumption/generation shall be installed.
10.5 The meter reading taken by the distribution licensee shall form the basis of commercial settlement.

The eligibility for issuance of renewable energy certificate shall be as per the eligibility criteria specified under Central Electricity Regulatory Commission

Click Here PSERC-Secy-Regulations-101_Net Metering May 2015

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Biomass Tariff for existing Plants set up to 2008 as per Government of Rajasthan and Government of India Policies

Tariff for electricity supply to the distribution licensee by Biomass power plants, for which Power Purchase Agreements (PPA) have been executed under GoR Policy of 1999 and commissioned before 30.09.2008 shall be as under:

Sr. No. Renewable  Energy  Generation during the year Tariff in Rs. Per kWh for plants under GoR policy of 11.3.99
1 1998-99 2.7500
2 1999-00 2.8875
3 2000-01 3.0319
4 2001-02 3.1835
5 2002-03 3.3426
6 2003-04 3.5098
7 2004-05 3.6853
8 2005-06 3.8695
9 2006-07 4.0630
10 2007-08 4.2662
11 2008-09 4.4795
12 2009-10 4.7034
13 2010-11 4.9386
14 2011-12 5.1855
15 2012-13 5.4448
16 2013-14 5.7171
17 2014-15 6.0029
18 2015-16 6.3030
19 2016-17 6.6182
20 2017-18 6.9491
21 2018-19 7.2966

Tariff for Plants under the REC mechanism

In case a Biomass , Biogas or Biomass Gasifier generator desires to switch over from the REC mechanism to preferential tariff mechanism under regulation 12(2) of RERC (Renewable Energy Certificate  and  Renewable  Purchase  Obligation Compliance Framework) Regulations, 2010, and if the Discom agrees to purchase considering the scope to accommodate the same in RPO target, the levellised tariff determined in accordance with these Regulations for sale to Distribution Licensee in respect of the year in which the plant was commissioned, shall be applicable. However, in case purchase by the Discom in the same year in which such plants have been commissioned has been at a rate lower than the levelised tariff determined for that year, the lowest rate of such purchase would be applicable. The same principle would be applicable to the plants commissioned during the previous MYT Control Period ending on 31.03.2015.

Click here for the full order

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Delhi discoms draw elaborate plans to promote solar power

NEW DELHI: Realising the potential of solar energy, the three private power distribution companies in the city have drawn up elaborate plans to encourage domestic consumers to set up rooftop solar panels and earn money by selling the electricity to them.

Reliance Infra-backed two BSES discoms, which already energised six rooftop solar ‘net metering’ projects, have decided to aggressively promote solar power across its area of operation and appointed team of experts to work on the initiative.

A study by the Tata Power Delhi Distribution Ltd (TPDDL) has found that it could support generation of more than 400 MW of rooftop solar power through the company’s commercial and industrial consumers in North and North West Delhi.

To promote solar energy in Delhi, TPDDL has already invited techno-commercial proposals from reputed organisations for implementation of solar projects of tentative value of Rs 120 crore in the current financial year.

The initiatives by the three discoms came almost six months after Delhi Electricity Regulatory Commission(DERC) had directed them to put in place infrastructure to allow domestic consumers to supply solar energy to transmission grid from their rooftop solar panels and earn money.

The DERC had told the discoms to upgrade their transmission networks so that people can sell excess power to them without any difficulty.

“We are focusing on encouraging people to go for generating solar power. We will promote it aggressively,” a top BSES official said.

The national capital has been facing severe power shortage during peak summer months and the power regulator is of the view that solar energy can bridge the gap between the demand and supply of electricity in the city. The power demand in the city has seen an annual increase of 8-10 per cent in the last few years.

“With this initiative, customers will have a chance to choose from traditional as well as conventional source of power. As a responsible power utility, we are working towards generating clean energy using solar power,” said TPDDL CEO Praveer Sinha.

Power department officials said under the solar power initiative, consumers will be able to sell solar power to the discom of the area from their homes, at the market rate or opt for adjusting their bills if they continue to draw electricity from the discom.

The BSES discoms are currently processing application by 50 consumers to set up net metering so that power generated from rooftop solar panels can be linked to the grid.

Last year, the DERC set a target of generating around 100 MW of solar energy in the first two years of launching the initiative.

The DERC has already issued detailed instructions to the power distribution companies regarding installation of metering devices that can record supply of solar energy to the transmission grid as well consumption by the owner of the solar panels as well as price of solar power to be paid to the consumer.

Any consumer having own solar energy generation unit, will be able to either supply directly to the grid or use it partially.

The power supplied by the consumer to the grid during non-peak hours can be drawn back whenever it is required by the consumer.

For implementation of the ambitious project, the DERC last year had come out with Net Metering Regulations elaborating minimum transformer level capacity that must be offered for connectivity.

The power demand in the city has been increasing at a rate of around eight per cent in the last few years and it had touched an all time high of 5,925 last summer.

Delhi’s power generation plants produce around 1,000 MW daily and the city relies heavily on supplies from central and state government-run generation plants in Uttar Pradesh, West Bengal and Himachal.

The BSES discoms supply power in 70 per cent areas of the city while TPDDL distributes power in around 25 per cent areas while New Delhi Municipal Corporation supplies power in Lutyens’ Bungalow Zone.

According to official figures, around 80-90 per cent of total revenue of discoms goes into purchasing power from central and state government owned entities through long term power purchase agreement at rates determined by the central and state regulators.

The experts said discoms’ cost of buying power from generating companies has increased by around 300 per cent in the last two years while the power tariff, in the corresponding period, has risen by around 70 per cent.

Source: ET

Posted in DERC, Government, Grid Interactive Distributed Solar Energy Systems, Grid Storage, India, Micro Grid, Mini Grid, New Delhi, News, Power Generation, PV, Residential, Rooftop, Solar, Transmission and Distribution | Tagged , , , , , , , , , , , , , , , ,

Why Tesla’s Powerwall is a gamechanger for India

(The Tesla Powerwall is a…)

Last week’s announcement by serial entrepreneur Elon Musk‘s car company Tesla to launch a home battery that charges on solar power, is in many ways a step that could result in a large scale uptake of a sustainable source of energy. ET explains what the Powerwall is how this could be a game changer.

What is Tesla Powerwall?

The Tesla Powerwall is a big home battery made of lithiumion and charges on solar energy. The batteries come in two variants, costing $3500 and $3,000, and are capable of storing 10 kwh and 7 kwh of energy respectively. To put this in perspective, a 1-kilowatt heater can run for ten hours with 10kWh of energy. These batteries are housed in a well-designed package and you can hang them on a wall. It’s about 4 feet by 7 feet and has a width of about 7 inches. The price, is also a third of such batteries available in the market.

What problem does it solve?

The batteries are primed for home use, where typically more electricity is consumed during peak hours in the morning and evening. By storing the electricity generated during the day, the peak hour demand can be met with ease. Tesla has also announced a scalable Powerpack which it intends to sell to power utilities and corporations.

Solar power works if panels and batteries are affordable. Cost of panels are already falling, thanks largely to China. If battery prices are also on the way down, one can expect a lot of action in the domain. India has an ambitious solar energy plan, which will generate huge orders that will lead to economies of scale, helping solar energy reach ‘grid parity’ or the point where it costs the same as thermal power.

Can it be a game changer for India?

If successful, the battery will be a game changer in India’s standby power sector, which burns diesel. Diesel generators add up to an estimated 60,000 mw, or the combined capacity of 15 ultra mega power plants. These are essential for malls, telecom towers, hospitals etc because a power cut can cripple operations. For residential areas, reliable low-cost storage can help consumers get off the grid, as is already happening in some Western countries. In far-flung areas, such batteries will support setting up of microgrids in hamlets. In hilly areas, where one needs light more than fans, such technology, along with use of energy-efficient LED bulbs can power homes at a small cost.

Source: ET

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Air Pollution now a Modi Government Priority

Barely 16 miles from central Delhi, a 40-year-old coal-fired power plant run by NTPC Ltd. stands testament to the bargain struck by India’s capital city: The world’s dirtiest air for electricity.

The state-owned utility is now seeking to cut emissions across its facilities in India, starting with its oldest — the one in Delhi. NTPC plans to spend 12 billion rupees ($189 million) annually on technology upgrades, a company official said, asking not to identified as the person isn’t authorized to speak on the subject.

“Their Badarpur plant is running way beyond its life,” said Chandra Bhushan, deputy director general at Centre for Science and Environment, a lobby group based in the city. “The result is its coal consumption is very high and so are the emissions.”

NTPC’s clean-up attempt is part of Prime Minister Narendra Modi’s $25 billion spending proposal to revamp aging utilities as he seeks to accelerate economic growth without further damaging the environment. Providing urgency to Modi’s plan is a World Health Organization report that shows India is home to 11 of the top 20 cities on the planet with the worst air quality.

Handkerchief Masks

New Delhi has the world’s highest levels of PM2.5 — tiny, toxic particles that lead to respiratory diseases, lung cancer and heart attacks. The city averaged 153 micrograms per cubic meter in 2013, WHO said in May 2014, citing government data. That’s 15 times more than the average annual exposure recommended by WHO.

Far outlasting its life by a good 15 years, the smokestacks of NTPC’s Badarpur plant spew a blackish-brown exhaust as residents in the neighborhood go about their business using handkerchiefs as masks to avoid breathing soot and fly ash.

“My eyes burn at times and I get headaches because of the coal dust,” said Sarla Devi, 34, a shopper at a market in front of the plant’s main gate, where a rusty truck waits to ferry fly ash to a disposal site. “I’ve become so used to this that it’s stopped bothering me, which isn’t good really.”

NTPC said in an e-mail response that the Badarpur plant meets emission norms of the Delhi Pollution Control Committee. The company rejected a request for a plant visit.

In the densely populated neighborhood, busy markets and petty shops flank narrow alleys that are strewn with fly ash dropping off tractors carrying the waste to the ash pond about three miles away from the 705-megawatt plant.

Badarpur is located off National Highway 2 that connects Delhi with Agra, the site of the Taj Mahal.

More Needed

Power Minister Piyush Goyal wants to change all this and make the surroundings fit enough to be picnic spots for families. His goal is to replace such plants with bigger, more modern ones, an exercise that will cost $25 billion, he told lawmakers in March.

“Retiring the old plants is a very small part of the solution,” said Debasish Mishra, a senior director at Deloitte Touche Tohmatsu India Pvt. in Mumbai. “The clean-up would require improving efficiency of not just power plants, but also coal mines and coal transportation. India has to adopt clean coal technologies and allow only large, utility scale power plants, which make optimum use of the fuel.”

Diesel Vehicles

Coal-fired plants aren’t the only cause of pollution in India. Old diesel vehicles that can pump out exhaust gases with 10 times the carcinogenic particles found in gasoline exhausts are also among the major causes.

NTPC’s focus is on environment, safety and technical upgrades, and the company is also exploring setting up new plants with “ultra-super critical” technology at some locations, the official familiar with the matter said.

The company has invited bids for modernization of two 210 megawatt units at Badarpur, while leaving the older three units of 95 megawatts each, the company said separately in an e-mail. It had invited bids for executing the upgrade by April 22, according to the e-mail. The smaller units are about 40 years old, while the two larger ones are about 36 years old.

The Central Electricity Authority, a unit of the power ministry which monitors operation and execution of power projects, prescribes the normal life a plant should be 25 years.

Lowest Score

The Centre for Science and Environment released a report in February, rating power plants on parameters such as energy efficiency, greenhouse gas emissions, water use and ash handling.

The report, a general indictment on India’s utilities, found six of NTPC’s facilities, including Badarpur, scoring among the lowest. The CSE, which said NTPC plants were “found to be heavily polluting and facing numerous complaints,” said its findings were based on data gathered from regulatory bodies, local communities and the media, as the company refused to answer its queries.

India depends on coal to meet 60 percent of its electricity needs, while the nuclear option is stuck in a debate over safety. Other fuels such as gas remain expensive. Modi plans renewable energy additions that will cost about $200 billion. Wind, solar and small hydro power plants will contribute to about 15 percent of India’s needs, twice the current amount, Goyal said in November.

Coal Consumption

NTPC’s Badarpur plant spent 4.83 rupees (7.6 cents) on coal to produce one kilowatt hour of power in the year ended March 31, the highest fuel cost among the 11 stations that supply electricity to India’s capital city, according to data available on the website of Tata Power Delhi Distribution Ltd., one of the electricity retailers in the city.

The cost at the plant rose 70 percent over the past three years, the data show, an indication coal consumption is rising as efficiency declines with age.

NTPC shares declined 1.2 percent to 150.50 rupees at the close in Mumbai on Tuesday. The stock has gained 32 percent in the past year, compared with a 22 percent increase in the benchmark S&P BSE Sensex.

“The way forward for NTPC is to plan bigger capacities, which will be more efficient in terms of fuel as well as cleaner,” Deven Choksey, managing director at Mumbai-based brokerage KR Choksey Shares & Securities Pvt., said by phone Monday. “There’s good reason to do this and I don’t see funds coming in the way. The company can manage debt at reasonable cost and also has the option to raise equity from the market.”

Source: Bloomberg 

Posted in Climate Change, Coal, Energy Efficiency, Fossil Fuel, Government, India, Ministry of Power, News, NTPC, Pollution, Power Generation, Prime Minister | Tagged , , , , , ,