wind force newsletter september, edition, 2012

NewsletterNewsletterSeptember’ 2012

Issue 11

www.windforce-management.com

Policy and Regulatory

2


Enabling High Efficiency and Reliable Wind Power Projects

1. KERC: Determination of Pool Cost for FY 2012-13

KERC has notified the pooled cost at Rs 2.60/ unit for FY 2012-13. The paisa 13/ unit

in the pooled cost from Rs 2.73/ unit shall be adjusted in the future bills in three

equal instalments by the ESCOMs.

2. TNERC: Determination of Pool Cost for FY 2012-13, 03.09.12

TNERC has notified the pooled cost at Rs 2.54/ unit for FY 2012-13. This rate shall

come into effect from the order issue date.

“'Pooled cost of power purchase' means the weighted average pooled price at

which the distribution licensee has purchased the electricity including cost of self

generation in the previous year from all the long-term energy suppliers, but

excluding those based on liquid fuel, purchase from traders, short-term purchases

and renewable energy sources.”

3. TNERC: New Wind Policy dated 31.07.2012

TNERC has issued new wind policy. Few of the key points discussed are as following:

Banking: The banking period commences on 1 April and ends on 31 March of the#$ #$

following year. The energy generated during April shall be adjusted against

consumption in April and the balance if any shall be reckoned as the banked energy.

The generation in May shall be first adjusted against the consumption in May. If the

consumption exceeds the generation during May, the energy available in the

banking shall be drawn to the required extent. If the consumption during May is less

than the generation during May, the balance shall be added to the banked energy.

This procedure shall be repeated every month.

Unutilized energy as on 31 March every year may be en-cashed at the rate of 75%#$

of the relevant purchase tariff. As and when the distribution licensee enforces

restriction and control measures and such measures restrict the WEGs to consume

their power in any manner, the unutilized energy at the end of the banking period

may be en-cashed at full value of the relevant tariff as sale to the licensee.

With regard to WEGs availing REC, one month adjustment period is allowed as

permitted for conventional power. The unutilized energy will get lapsed as in the

case of conventional power. As and when the Commission's ABT order comes into

force, the adjustment will be regulated by the said order.

WinDForce Achievements

WinDForce, as an Owner's Engineer,

has successfully implemented three

different wind projects in Maharashtra of

25.5MW, 26.2MW and 7.5MW capacities

in Q2 Fy13

It also carried out Technical due diligence

of around 170 MW and WRA for around

200 MW during this period.

3



Transmission charges, wheeling charges and line losses: As a promotional

measure, under section 86(1) (e) of the Electricity Act, the Commission has decided

to fix 40% of the transmission charges and 40% of the wheeling charges as

applicable to the conventional power to the Wind power. Apart from these charges,

the Wind Energy Generators shall have to bear the actual line losses in kind as

specified in the respective orders of the Commission and amended from time to

time.

For the Wind Energy Generators availing RECs, normal transmission charges,

wheeling charges and line losses shall be applicable.

Cross subsidy surcharge: The Commission in its last tariff order has ordered to levy

50% of the cross subsidy surcharge for third party open access consumers.

Commission decides to adopt the same in this tariff order also.

Deemed demand benefit: Commission decides to withdraw the deemed demand

concept followed so far. The Commission also observes that such deemed demand

concept is not prevalent in many other states in India

Wind energy tariff: The tariff is fixed at Rs. 3.51 per unit for the period up to 31 July#$

2014. The wind mills commissioned on or after the date of issue of this order shall

be eligible for this tariff. The wind mills commissioned prior to 15 May 2006 shall$%

be eligible for a tariff of Rs 2.75 per unit. The wind mills commissioned between 15$%

May2006 and 18 September 2008 shall be eligible for a tariff of Rs 2.90 per unit.$%

The wind mills commissioned between 19 September 2008 to the date of this$%

order shall be eligible for a tariff of Rs 3.39 per unit.

4. GERC: Determination of tariff for procurement of power from Wind Power

Projects in Gujarat

GERC has issued new tariff order for Wind Projects. Key highlights are following:

Control Period: from 11 August 2012 to 31 March 2016$% #$

Useful Life: 25 years

Tariff Period: 25 years

Merit Order Dispatch: The wind power plants irrespective of plant capacity shall be

treated as 'MUST RUN' power plants and shall not be subjected to merit order

dispatch principles.

Metering Point: The metering point will be at the 66kV pooling substation located

at the wind farm site.

Interconnection Point: The interconnection point will be the point of connection at

the nearest GETCO substation. In case of any dispute on interconnection point,

provisions of the Grid Code shall prevail.

Subsidy and Incentive by the Central/State Government: If the Government of

India announces the GBI scheme during the new control period starting from 11$%

August 2012, the Commission shall take a view on GBI after studying the features of

the scheme.

4



Tariff Determination:

Transmission and Wheeling Charges: Wind Power Projects availing Open Access

for third party sale shall be liable to pay Open Access charges and losses as

applicable to normal Open Access Consumers.In case of the wind energy

Generators opting for wheeling of power for own use, the Commission decides to

allow lower transmission and wheeling charges and losses in line with the Govt. of

Gujarat Amended Wind Power Policy dated 13 January 2009:$%

� Wheeling of power to consumption site at –66 KV voltage level and above

o Intra State shall be allowed on payment of transmission charges and

transmission losses applicable to normal Open Access Consumer

� Wheeling of power to consumption site voltage level –below 66 KV

o If more than 1 WTG transmission charges, applicable to normal Open Access

Consumer & transmission and wheeling losses @ 10% of the Energy Fed

to grid

o If only 1 WTG transmission charges, applicable to normal Open Access

& transmission and wheeling losses @ 7% of the Energy Fed to gridConsumer

Wind Energy Generator owner, who desires to to more than twowheel electricity

locations, shall pay on energy fed into the grid to the Distribution5 paisa per unit

Company concerned in whose area power is consumed in addition to the above

mentioned transmission charges and losses, as applicable.The wind power projects

availing open access for captive use/third-party sale and willing to register under

REC mechanism shall be governed as per CERC REC Regulations in force.

Cross Subsidy Surcharge: exemption from cross subsidy surcharge on OA

transactions of wind energy not availing REC benefit as a promotional measure

during the new control period starting from 11 August 2012.Cross subsidy

surcharge will be applicable in the case of third party sale availing REC benefit.

Energy Metering: Wind power project developers should install ABT compliant

meters at the point of metering. The project developers will have to install Remote

Transmitting Unit (RTU) for transferring the real time data to SLDC for its monitoring

purpose.

Pricing of Reactive Power:

� For the drawl of reactive energy at 10% or less of the net energy exported – 10

paise/kVARh

� For the drawl of reactive energy at more than 10% of the net active energy

exported – 25 paise/kVARh

Parameters for the new control period starting from 11th August 2012

Gross Teriff Rs. 4.61 kWh

Depreciation Benefit Rs. 0.38 kWh

Net Teriff Rs. 4.23 kWh

5



Banking: WEGs opting for captive use of the energy generated shall be eligible to

get set off against the energy generated during peak and normal hours as specified

by the Commission in the tariff orders. The WEGs are eligible for one month

banking for the electricity generated during the same calendar month. However,

they are eligible to utilize the same during the month in proportion to the energy

generated during peak and normal hour period. The banking facility shall not be

available for third-party sale of wind energy.

In case of wind power projects availing OA for captive use / third party sale but not

opting for REC, the surplus power after set off will be purchased by the distribution

licensee at the rate of 85% of the tariff determined by the Commission in this order.

In case of wind power projects availing OA for captive use / third-party sale and

opting for REC, the surplus power after set off will be purchased by the distribution

licensee at Average Power Procurement Cost (APPC) applicable for that year.

Scheduling of Wind Power: For the purpose of energy accounting and facilitating

RRF mechanism, each WEG shall have to provide ABT compliant meters and GEDA

shall confirm the same while issuing the commissioning certificate.

5. RERC: Announcement of Retail tariff for 2012-13

RERC has announced Retail tariff for 2012-13:

In the petition filed against RERC, the petitioners have neither provided data

required under the Regulations for calculation of wheeling charges nor any specific

difficulty encountered in furnishing the same has been explained. Further,

justification of methodology adopted for calculating the wheeling charges as

proposed in the petition has also not been furnished. In view of the above, the

Commission was not in a position to proceed further on the proposal of DISCOMs

regarding determination of wheeling charges and losses at various voltage levels

and directs them to file a fresh petition for determination of wheeling charges for

2012-13. Till then wheeling charges and losses, being charged presently, shall

continue to be charged.

Type of Industries Existing Tariff New Tariff

Medium Industries 4.75 5.25

Large Industries 5.00 5.50

5.90 6.25Non Domestic

6



6. Maharashtra Tariff Order Dated 16.08.12: Electricity Retail Tariff Of MSEDCL

Maharashtra State Electricity Distribution Company Limited (MSEDCL) has

announced new tariff for 2012-13 which is as follows:

This increase in tariff has further strengthened feasibility of Open Access (third

party/ captive) arrangement in case of Wind Power Projects.

7. RERC: Wind tariff for 2012-13

Rajasthan has announced Wind tariff for 2012-13, which is as under:

WinDForce Esteemed Clients

Hindustan Zinc Limited, NSL Renewable,

Techno Electric, Bhilwara Energy Limited,

KSK Wind, Green Infra, Avigo Capital,

Olympus Capital, PTC India, Auro Mira,

MSPL, TVS Energy, Indian Energy,

Reliance Power, CRISIL, IFCI Limited,

Oswal Woolen Mills Limited, Ushdev

Power Holdings, Bharat Light and

Power,RSPL Ltd. (Ghari Detergent),

Modelama Exports Ltd, Tata Power, L & T

Infra, Kiran Gems, Dharmanandan

Diamonds, Shah Promoters, Fena (P) Ltd.,

Bhabani Pigments, Panama Group,

Kandla Port Trust etc.

Supply Voltage Wheeling charges (Rs./kwh) Wheeling Losses (%)

132KV 0.01 0.00%

33 KV 0.11 3.80%

0.32 12.60%11 KV

HT-I - Express Feeders 7.01 190

HT-I - Non Express Feeders 6.33 190

HT-I - Seasonal Category 7.79 190

Sr.

No. Particulars

Tariff (Rs/kWh) if higher

depreciation benefit is

not availed

Tariff (Rs/kWh) if higher

depreciation benefit is

availed

1Wind Power Plants located in Jaisalmer,

Jodhpur & Barmer districts 5.18 4.89

2

Wind Power Plants located in districts

other than Jaisalmer, Jodhpur & Barmer

districts.

5.44 5.13

KV Level Wheeling Charges (Rs/kWh) Wheeling Loss (%)

Existing New Existing New

LT 0.36 1.03 14% 12.5%

11/ 22 KV 0.21 0.60 9% 9%

33 KV 0.04 0.11 6% 6%

Express Feeders 8.21 190

Non-express feeders 7.65 190

Express Feeders 10.45 190

Non-express feeders 9.83 190

HT I - Industry

HT IX - Educational Institute and Hospitals

HT II – Commercial

Category MSEDCL

Energy Charge (Rs/kWh) Demand Charge (Rs/kva/month)

7



However from FY 2013-14 onwards, Rajasthan has proposed tariff based

competitive bidding for development of Wind Power Projects.

The target under this category for the year 2013-14, 2014-15 and 2015-16 will be as

follows:

Wind power plants for direct sale of power to DISCOMs of Rajasthan for the years

2013-14 onwards, the Power Purchase Agreement will be executed between

DISCOMs of Rajasthan and successful bidders as per the provisions of bid

documents on the tariff arrived at by the process of competitive bidding.

8. Madhya Pradesh: New Wind Energy policy 2012 targets 1200 MW Power

Generation

Power selling:

The developers can sell entire power produced as independent power producer or

surplus power as captive power producer to third party consumers or willing

distribution companies or power trading companies in accordance to the rules of

the Madhya Pradesh Electricity Regulatory Commission (MPERC). Madhya Pradesh

Power Trading Company Limited (MPPTCL) will have the first right to purchase the

power produced at any project site set up on government land or any part of it. The

developers have to obtain all clearances and permissions before signing the power

purchase agreement.

Power generated from the wind energy projects will be sold in accordance to the

rate decided by the MPERC. The tariff fixed by the Central government through

transparent auctioning and not more than MPERC's rates will be acceptable to the

commission. If any unit uses reactive power in the project, it is liable to pay fees to

MPERC. The developers can also sell power through REC trading.

General provisions:

The developers should ensure that a minimum 20 per cent of the capacity

utilisation factor is achieved within three years from the date of commencement of

commercial operation, failing which the project may be cancelled. The developers

should always follow the rules and guidelines of the Union Ministry of New and

Renewable Energy and that of the state. They should also adhere to the recent

Year 2013-14 2014-15 2015-16

Wind power plants to be set up for direct sale to Discome of Rajasthan 300MW 400MW 500MW

8



1. No power cess will be levied on the consumed electricity produced at the wind

power projects.

2. All the projects will get the status of industry and will receive facilities under the

industry development policy of the state government. In case of any conflict

between the two, the provision of the current policy will prevail.

3. Industrial consumers of the electricity produced at the wind power projects will

also receive benefits as laid down by the MPERC. In case of sale of power on

contractual demand, the third party will be given the benefit of proportionate

deduction.

4. Projects supplying for captive consumption or third party sell are exempted from

electricity fee for 10 years.

5. In case of consumption of self or sell to third party, the facility of wheeling of

power will be available in accordance to the rates of the MPERC. In case of third

party sell of power to a distribution company based in the state, the distribution

company will be entitled to willing grant at a rate of 4 per cent.

6. Storage permission for entire generated power in every financial year will be

granted in condition of:

(a) corroboration of stored energy statistics by state distribution company or

state power trading company. The developers will have to pay 2 per cent of

stored energy as storage fee to these entities.

(b) Restoration of the stored energy will have to be in accordance to the state

regulatory commission's renewable policy passed in 2010.

(c) In case of surplus energy at the end of a financial year, the state distribution

company or state power trading company will buy it in accordance to the rules

of the state regulatory commission.

7. The developers will receive carbon credit or similar incentives for wind power

projects in accordance to the provisions of the state regulatory commission.

Incentives

9



8. The projects with capacity of up to 15 MW can evacuate power to nearby 33/11

KV sub-station on a line of 33 KV. If the developer is evacuating power to any such

point, the sub-station will be exempted from intermittent supply of power.

9. The wind power systems will be exempted from VAT or entry tax by virtue of the

official gazette.

10. A project certification and implementation board under the chairmanship of

chief secretary has been formed to look into the barriers in smooth

implementation of the projects and interdepartmental coordination. Any issue

related to the same can be presented before the board.

Highlights of the Policy

�No cess on power supply from wind power projects

�Electricity duty exemption for a period of 10 years (Captive & Third party sale)

�Benefit of Industry status (under state's Industrial Promotion Policy)

�Wheeling charge grant - 4 per cent in case of third-party sale within the state

�Third-party sale is allowed

�VAT/ Entry tax exemption

�100 per cent banking of energy permitted

What's New

1. States allowed to buy Renewable Energy Certificates (RECs) from private

players

States will now be able to buy RECs to make up for a portion of their mandatory

renewable energy purchases from entrepreneurs who produce power and operate

in rural areas. Forum of Regulators (FoR) has approved this proposal. It will

encourage the expansion of renewable energy projects operating in rural India. FoR

decision is a great move. The establishment of 'off-grid' projects is important both

for reducing the burden on the grid as well as to ensure that rural areas have access

to electricity. Most of these projects are small and operate in remote areas,

renewable energy is generally the preferred choice. However, since it has limited

business potential due to the low paying power of villages, the decision to allow

them to sell RECs in the power market is expected to make them viable.

Under the , the CERC will incorporate two models for bringing in off-gridnew policy

players into the system:

1. The entrepreneur will continue to sell power at mutually agreed prices and will

be free to sell RECs on its own at the power exchange to earn extra.

2. The entrepreneur becomes a franchisee of a DISCOM already operating in the

state and supplies to the rural consumer at rates determined by the state

electricity regulatory commission. The DISCOM covers its cost of production and

in return, use the power generated to fulfil its Renewable Purchase Obligation.

WinDForce Esteemed Clients

Hindustan Zinc Limited, NSL Renewable,

Techno Electric, Bhilwara Energy Limited,

KSK Wind, Green Infra, Avigo Capital,

Olympus Capital, PTC India, Auro Mira,

MSPL, TVS Energy, Indian Energy,

Reliance Power, CRISIL, IFCI Limited,

Oswal Woolen Mills Limited, Ushdev

Power Holdings, Bharat Light and Power,

RSPL Ltd. (Ghari Detergent), Modelama

Exports Ltd, Tata Power, L & T Infra, Kiran

Gems, Dharmanandan Diamonds, Shah

Promoters, Fena (P) Ltd., Bhabani

Pigments, Panama Group, Kandla Port

Trust etc.

10



The regulators are now focusing on amending its existing REC regulations to

incorporate off-grid players and to introduce regulations to make the process of

selling RECs easier for the entrepreneur. finding traders,They are also working on

so that the entrepreneurs themselves don't have to come to the power exchange

every time to sell. They are also looking at a net based system,”

Total Accredited = 1974.26 MW – Wind Specific

Total Registered = 1777.58 MW – Wind Specific

Total Issued = 28,02,717 RECs

Total Redeemed = 19,25,107 RECs

Total Inventory = 8,77,602 RECs

In August'12 trading session more than 2,50,000 RECs were traded at an average

rate @ Rs 1500/ MWh. In this trading session the volume of traded RECs was

maximum till date but there was excess supply of RECs in the market more than

50% of the RECs were left untraded. Moreover the RECs were traded at the floor

price. This trading session has led to some lose of confidence among the

stakeholders. For the continuous growth of REC Market, it is very necessary that the

entities which have not matched their RPO in FY12 must be penalized ASAP

otherwise other entities which are following the RPO shall start deviating.

At various public forums, the investors have expressed their concern on the

bankability of REC based Wind Projects primarily because of short (5 years) control

period (currently upto 2017 only) & the enforceability of RPO. The Government

representatives have indirectly indicated that these issues are being taken care of

and soon new order to address these issues shall come.

REC Update (till 20.09.12)

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

MCV FY12 260 14,002 15,902 14,668 22,096 41,385 92,303 96,154 1,05,942 1,65,460 1,90,482 1,92,354

MCV FY13 62,277 1,53,125 2 23 164, , 1,47,369 2,48,168

MCP FY12 1,500 1,500 1,505 1,555 1,800 2,300 2,700 2,900 2,950 3,051 3,066 2,900

MCP FY13 2,201 2,402 2,402 2,000 1,500

xx

x

x

x

x

x

REC Trading

0

2,00000

25,0000

3,00000

1,50000

5,0000

1,00000

(Rs/

RE

C)

MCP & MCV

3,500

3,000

2,500

2,000

1,500

1,000

5,00

0

-

-

-

-

-

-

-

-

11



In light of above, recently Indian court ordered to few of the big corporate to Pay Fines

on failing to meet Renewable Purchase Obligations. The liabilities on these companies

are in the range of INR 900 million.

The companies argued that the State Regulatory Commission was acting beyond its

powers and that its order for them to buy clean power or face fines was a violation of

India's 2003 Electricity Act and of the constitution. The companies said that as

independent power plants without distribution licenses, they should be exempt from

the targets. In their ruling, the judges said that the companies misconstrued legal

provisions. The renewable targets are lawful and the state regulator has the authority

to enforce them. The writ petitions filed by the companies were dismissed, ordering the

companies to pay their fines immediately.

Corporate Office

WinDForce Management Services Pvt. Ltd.

5 Floor, Universal Trade Towerth

Gurgaon - Sohna Road

Gurgaon - 122001, Haryana

Tel: +91 124 6653100

Fax: +91 124 6653200

Web: www.windforce-management.com

Contact Us

Kindly write to us if you have any comments on this Newsletter. Your valuable

feedback on this would motivate and help us in improving the quality and enriching

the content. We are eagerly waiting for your kind response to the articles presented in

this Newsletter.

Rupesh Singh

Mob: +91 96507 58884

E-mail: [email protected]

A WinDForce Publication

Disclaimer - This Newsletter has been compiled by WinDForce Management Services Private Limited

for circulation among the stakeholders in the energy market. Though the contents of this bulletin are

correct to the best of our knowledge, WinDForce does not vouch for their accuracy.


wind force newsletter september, edition, 2012

Documents