Tapping potential of waste heat to power and energy conservation

By:

khare legal chambersadvocates

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• Existing Laws regarding Co-generation are confusing and are insufficient.

• Cogeneration from non-renewable sources of energy should also be encouraged.

• Need for compressive review of all law and policy regarding Co-Generation.

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Policy (Legislature) – Need to amend Electricity Act

• Section 86 (1) (e) - The Section as it stands as of now:

86.Functions of State Commissions. – (1) The State Commission shall discharge the following functions, namely:-

(e)Promote cogeneration and generation of electricity from renewable sources of energy by providing suitable measures for connectivity with the grid and sale of electricity to any person, and also specify, for purchase of electricity from such sources, a percentage of the total consumption of electricity in the area of a distribution licensee.”

• Amendment Proposed :

Option I:

(e)Promote and encourage cogeneration. Promote generation of electricity.......

Option II:

(e)Promote and encourage cogeneration irrespective of the source or fuel used and promote generation of electricity.........

Option III:

(e)Promote and encourage cogeneration alongside generation of electricity from renewable sources of energy

Century Rayon, Emami & Vedanta cases

• APTEL held that reference to co-gen at sec 86(1)e of the electricity act includes all co-gen power produced irrespective of the source of fuel.

• Thus, Co-Gen Power generating plants have been treated on par with plants producing power through renewable energy sources for the purposes of exemption from Renewable Energy Purchase Obligations.

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Regulatory (Implementation) – Renewable Purchase Obligations

• In Pursuance of the Electricity Act and the National Electricity Policy, the Central and State Electricity Regulators are entrusted with function to promote and Encourage Co-Generation.

• In accordance with the above duty, the State Regulators have imposed purchase obligations on distribution users, open access consumers and captive consumers to purchase renewable energy.

Co-Gen from Renewable Purchase Obligations

State (2013-2014) Solar (%) Non-Solar (%) (%)

Maharashtra 0.5 8.5 9

Rajasthan 0.5 8.5 9

Karnataka 0.25 7-10% (Depending upon

the type of Utilities)

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Himachal Pradesh 0.25 10 10.25

Orissa 0.20 5.80 6.00

Andhra Pradesh 0.25 4.75 5

Tamil Nadu 0.05 8.95 9

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Renewable Purchase Obligations

• 22 states fail to meet their Renewable Purchase Obligations. (Actual loss -18,300 million units)

• Worst performing states are - Delhi < 1% Maharashtra < 50% Punjab Andhra Pradesh Madhya Pradesh

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Ambuja Cements Vs Raj Electricity Regulatory Commission

• Rajasthan High Court – Captive, Open Access users liable to pay RPO penalties.

• Hindustan Zinc and Ambuja Cement may be liable to pay as much as 913 million rupees ($ 16.5 millions) based on power generation and consumption figures from their latest annual reports and penalty amounts at 3,300 and 13,400 for solar and non-solar respectively.

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Financial: Investment incentives

• Central Finance Assistance (CFA)

• Renewable Purchase Obligations (RPO)

• Preferential Tariff

Financial: Tariff Structure

• Preferential Tariff

In view of the high costs involved in generating electricity from renewable energy sources, the electricity generated from cogeneration should be eligible for a preferential Tariff.

• Cross Subsidy Surcharge

In view of the high generating costs of co-generation, the electricity generated from co-generation should be exempted from levy of cross subsidy surcharge (including sale to discoms, utilities).

Technology and Expertise

Co-Generation from all sources should be promoted and encouraged irrespective of source of fuel used.

khare legal chambersadvocates

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Mr. Abhishek H Khare9967539494

abhishek@kharelegalchambers.com