Implementation of solar projects likely to gather pace, says MNRE Secretary...

 

The Union Ministry of New and Renewable Energy expects the pace of implementation of solar energy projects in the country to gather pace as more States encourage their implementation and chip in with subsidies.

“While encouraging establishment of solar energy units providing subsidies may be good in the initial years, this may not be the best way to encourage the growth of the sector,” Ratan P. Watal, Secretary, MNRE, Government of India, said.

Speaking at a meeting on solar water heating systems organised by MNRE here, he said the country has made big strides in a little over three years after launching the Jawaharlal Nehru National Solar Mission (JNNSM) and hoped that the pace of implementation will accelerate as more States take up the task of encouraging setting up of solar photovoltaic projects.

Climate change mission

Referring to the country’s larger climate change mission wherein the JNNSM fits in, he said the total renewable energy installed capacity works out to about 13 per cent (about 28,000 MW), contributing to about 6 per cent of the country’s energy. It is proposed to increase its contribution by about 6-9 per cent and take it up to 12-15 per cent of overall energy mix in the country by 2020.

Watal said the climate change is impacting us in many ways and it is expected that the water level in the sea will go up by about six inches. When this happens, it is likely to submerge 1000s of islands in the Indian Ocean and Bay of Bengal.

With solar water heaters (geysers) as major power consumers after air-conditioners, he said States need to focus on encouraging and replacing them with solar water heaters as they pay back within few years.

Tarun Kapoor, Joint Secretary, MNRE, said implementation of solar water heaters has picked up in Maharashtra and Karnataka but other States are yet to pick up in spite of subsidies. He felt Government facilitation holds the key to its effective implementation.

M.Sahoo, Special Chief Secretary, Energy, Government of Andhra Pradesh, said, “It is surprising to note that implementation of solar projects have still not picked up in Andhra Pradesh in spite of various incentives and encouragement given by the State.” He hoped their implementation would improve.

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INDIA’S GUJARAT TO APPEAL REJECTION OF SOLAR-TARIFF CUT...

 

Gujarat, India’s biggest solar power-producing state, plans to file an appeal with regulators on their decision to reject a tariff cut for photovoltaic plants.

The Gujarat Electricity Regulatory Commission will hear the appeal on Nov. 11, said Hemant Sahai, a lawyer representing solar developers that are fighting the state’s attempts to reduce the rate paid for power produced by their plants.

Gujarat Urja Vikas Nigam Ltd., the state power purchaser, filed a petition in May seeking to lower the tariff for solar power by 28 percent, citing the excessive profits earned by plant owners. The regulatory commission rejected the petition in August, saying GUVNL cannot alter the terms of the contract retrospectively.

GUVNL signed 88 contracts for a total of 971.5 megawatts of solar capacity with developers, including Moser Baer India Ltd., Adani Enterprises Ltd., Tata Power Co. and Welspun Energy Ltd., starting 2010.

Raj Gopal, managing director at GUVNL, was unavailable when called at his office today and didn’t respond to an e-mail seeking comment.

To contact the reporter on this story: Natalie Obiko Pearson in Mumbai at npearson7@bloomberg.net

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Work in DVC's Raghunathpur project to resume soon: Partha Chatterjee...

 

West Bengal industry minister Partha Chatterjee said, the state government expected work in DVC's Rs 10,000 crore second phase of Raghunathpur thermal power plant in Purulia to resume in a day or two.

"We had a meeting with the DVC chairman R N Sen and local residents and discussed the contentious issues. We think construction work will resume in a day or two," Chatterjee said here, barely two days after the Damodar Valley Corporation (DVC) issued a letter threatening to shift the project from the state.

Sen, who was present in the meeting, said the discussions were fruitful and DVC had no intentions to shift the project from the state.

DVC had written to the Purulia district magistrate stating all facts about the delay in implementing the project and said, if necessary action was not taken by the state administration, the company would be left with no other option than to shift the Rs 10,000 crore project from Raghunathpur.

Chatterjee said there were some eight demands of the villagers, of which around four could be met easily.

He also offered an alternate route for the main water supply pipeline to the project, if the present route posed problems with the villagers.

DVC has not been able to commence generation from the first phase of the 1200 MW (600 MW X 2) project due to lack of water and ash pond.

"Construction of the second phase of the 1320 MW (660 MW X 2) project cannot commence unless we excavate 20 lakh cubic feet of soil and complete the ash pond, but we are unable to work due to ongoing agitations," DVC officials said.

The villagers' representatives had blamed DVC for not carrying out adequate CSR activities in the area.

DVC could not progress with the 10 km water supply pipeline as it was forcibly stopped by local residents since October 21 and for the ash pond since June.

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Panel recommends green clearance to Sasan Power's coal block...

 

A high-level panel has recommended environment clearance to Chhatrasal coal mine in Madhya Pradesh alloted to Sasan Power Ltd, but with some conditions.

The Expert Appraisal Committee (EAC) of the Environment Ministry after deliberations recommended the project for environment clearance, but with certain conditions, according to an official document.

The riders includes submission of a report on corporate social responsibility (CSR) implementation and resettlement and rehabilitation (RR) done so far, taking requisite clearances from other appropriate agencies and implementation of assurances by the project proponent given during the public hearing.

The block having coal reserves of about 150 million tonnes was allocated to Sasan Power Ltd, a special purpose vehicle of Reliance Power which is executing the Sasan ultra mega power project. The mine has a peak-rated capacity of five million tonnes per annum.

The document further said the proposal was last considered in the EAC meeting held in 2010 and was recommended for environment clearances.

As per the Environment Ministry's Office Memorandum in 2011, wherein the competent authority has approved the grant of environmental clearance, the proponent will submit the stage-1 FC (Forest Clearance) within 12 months, which may be extended to 18 months in exceptional circumstances.

"The EC will be issued only after the Stage-1 FC submitted by the proponent....FC has been granted on November 23, 2012. Keeping the FC and these OMs(Office Memorandum) in view, the proposal was referred to the EAC for taking a view," the document said.

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Worst might be behind for power sector: Feedback Infra

 

Most analysts believe that the power sector is showing signs of revival. Vinayak Chatterjee, Chairman, Feedback Infra says there are three major reasons behind it. One, there is revival in new power plants' business, which means orders for constructions and capital goods. Two, all leading discoms have increased tariffs and even on financial restructuring - many of the front-line states have actually succeeded in placing their state government guaranteed bonds for discom bailouts. Finally, there is news that the government may allow coal as a pass-through for older projects, make arrangements for imports and reset the power tariffs of Tata Power, Mundra. All this combined will give a big push to the sector, he says.

He also spoke about BHEL and the core sector at length. He does not think orders have dried up completely in the core sector.

Below is the verbatim transcript of Vinayak Chatterjee's interview on CNBC-TV18.

Q: Of late while we have seen some of the stocks in the power sector do well, but quite clearly the investment is still lacking. By when do you see any kind of turnaround in this particular space?

A: As you have rightly said the power sector is showing signs of a turnaround. Most analysts covering this sector are using the phrase that the worst is behind us and there are good reasons for that. Few things have happened simultaneously. One, there is revival in the new power plants' business, which means orders for constructions and capital goods. There are two Ultra Mega Power Projects (UMPP) for which the bids are out; another two are planned. There are states like Rajasthan, Madhya Pradesh and Tamil Nadu that are putting out state bids for new power plants, so there is eager anticipation from the capital goods sector that the orders from all of this will soon start impacting their order books positively. Point two, India has 54 distribution companies (discoms). Out of these the leading ones are doing two things - one they have significantly increased tariffs. There are major steps at the local level to take hard decisions on transmission and distribution losses and the other issue is that even on financial restructuring many of the front-line states have actually succeeded in placing their state government guaranteed bonds for discom bailouts, what is called Financial Restructuring Plan (FRP) package in terms with the banks and are getting their financials in order which means that the discoms will soon be in a position to buy far more power than they have demonstrated in the last few months because of their own cash flow and liquidity problems. Finally the government's view on allowing coal as a pass-through for older projects and consistently revising the bids that are coming out now that universally makes fuel as a pass-through, including arrangements for imports and hopefully resetting the power tariffs of Tata Power , Mundra, etc. all these positive messages have come from the government and finally we are seeing green shoots of the solution to the gas problem where the Power Ministry has floated a cabinet note for discussions on gas pooling of both imported and domestic glass. If you see Power Grid and other people's performance on transmission there is a huge activity that has happened in terms of linking of various transmission grids and the big one that we are expecting now is the linkage of the southern grid around July 2014. When you add up all of this you will find that they all add up to increasing a positive mood in the power sector.

Q: The point you have made is actually quite concurrent with what Bharat Heavy Electricals ( BHEL ) said yesterday as well. Despite the first half being so dismal they have guided for a second half which will be better in terms of order inflows. Would that be what we could expect and if in case that is what will come through in the second half will margins be affected because of extreme amount of bidding between private and public companies for the selective number of orders that could come through?

A: Both your points are correct. The fact that most capital goods manufacturers are looking forward along with BHEL to a revival of the order book, thanks to the spate of new plants likely to come through is certainly in the air. I remember, BHEL's financial performance that is being widely commented in the space today, I have tracked this sector over many years and come to the conclusion that it takes about two years for a downturn to hit the profit and loss account of these companies because of the momentum of carry over orders. It is now after two years after the slowdown that the momentum of carry forward orders has actually come down and therefore you cannot book revenue on that account anymore and you are looking for fresh orders. BHEL is not anymore in an envious position - of being virtually a sole supplier to the capital goods in the power sector because over the years significant high quality capacity has come in, whether it is L&T-Mitsubishi, BGR-Hitachi or Bharat Forge with its joint venture partner and many others who are in the market to supply capital goods and all of them universally have order books which are stressed. So when these spate of orders come in you are right in your observation that margins are likely to be wafer thin and we will once again have to wait for a larger pipeline of orders to come once most people's order books are once again back to normal levels. In the present, yes it will be a dogfight and margins are going to be wafer thin, but then people are right now concerned about getting their cash flows and their factories and their shop flows back coming again. That is really the expectation.

Q: What about the core infrastructure space? You spoke about BHEL. What has really surprised market over the last three months is L&T and the kind of numbers that they came out with. What do you think is happening in the core infrastructure space?

A: In the core infrastructure space it is not that orders have dried up completely. L&T is a very well diversified company. L&T's overall figures are a mix of various issues which is capital goods, regular engineering projects and domestic and international. So it is diversified enough to be able to take shocks that may hit one sector or the other and I think L&T is better off than many other capital goods companies wherein everybody is expecting a revival. So far as core sector is concerned we have just finished the discussions on power, road sector I must say that the momentum that one had expected to pick up before or around Diwali has still not happened, because we were expecting National Highways Authority of India (NHAI) to issue around this time close to about 4,000 kilometers of projects half on Build-Operate-Transfer (BOT) and half on Engineering, Procurement and Construction (EPC) and a few on annuity, but these projects are still to come out and while inside information is that they are almost ready and off the shelf ready to hit the bidding stage, but we have still not seen it, if that happens which I am expecting to happen in the next one or two months you may actually see over and above power the road sector once again also powering the mood uptick. Other than that there are fairly largish construction projects that are coming out from the dedicated freight corridor west and the beginnings of it from the dedicated freight corridor east - there are railway projects, there are urban metro projects. So it is not that the sector has dried up completely. What we are witnessing really is a public expenditure driven construction-led revival. That really sums up the mood in the infrastructure segment.

 

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Solar Energy Corporation of India seeks license for power trading from CERC...

 

Sensing huge potential in Solar power production, the Solar Energy Corporation of India Limited (SECI) has applied for license for power trading with Central Electricity Regulatory Commission.

SECI managing director Rajendra Nimje said the PSU is authorised to sell power that will be produced under the proposed 750MW solar power projects under Phase-II Batch-I, recently announced by the Government.

"We see huge potential in Solar power production in the coming years. We have applied for license with the CERC. It is under process and expected to be in final stages within two months," Nimje told PTI.

Nimje was talking on the of a seminar on Solar Water Heating System organised by the Ministry of New and Renewable Energy in association with New and Renewable Energy Development Corporation of Andhra Pradesh (NREDCAP) Ltd and the Federation of Andhra Pradesh Chambers of Commerce and Industry (FAPCCI).

He said they have invited bid for the second phase of the 750MW Solar power projects and will have a pre-bid meeting on November 19.

The proposed scheme for solar projects would be implemented through the Solar Energy Corporation of India in association with NTPC Vidyut Vyapar Nigam Ltd.

Electricity generated from these plants would be purchased by Solar Energy Corp at a fixed-level tariff of Rs 5.45 per KWH for a period of 25 years.

The Government has allowed around 1600MW Solar power projects under the first phase under the Jawaharlal Nehru National Solar Mission (JNNSM) which has set a target, amongst others, for deployment of grid connected Solar power capacity of 20,000MW by 2022 to be achieved in three phases.

 

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Ashapani micro hydel project commissioned in Arunachal Pradesh...

 

The 2x30 kilo watt Ashapani micro hydel project has been commissioned in Chaglagam circle under remote Anjaw district of Arunachal Pradesh bordering China.

With the commissioning of the project recently, the long-awaited demand of the circle for total electrification of the remotest circle and its adjoining villages has been fulfilled, official sources said here today.

Meanwhile, the department has been working on another hydel project, 2x100 KW Kachopani project in the same circle which is expected to be completed by December, sources said.

Both the projects were funded under the Special Plan Assistance (SPA) of the Prime Minister's package.

"Each and every household is lighted up despite its remoteness as the micro hydel, a dream project of the circle, has at last succeeded. Inaccessibility and tough topography caused immense hurdles and it was tough for us to make the project functional," informed P Tripathi, Assistant Engineer of the Department based at Chaglagam.

The district has tremendous scope for hydel power generation due to various perennial streams and rivers. So, the Hydro Power department has been making all-out efforts to harness their potentials at various pockets of the circles in the district in order to make Anjaw a 'power house' district in next few years, Tripathi said.

A switch yard needed to be constructed to connect the power grid to supply in the power deficit districts including Lohit, Dibang and Lower Dibang Valley, Changlang and Tirap, he added.

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Introduction to Renewable Energy Certificate (REC) Mechanism...

 

What is Renewable Energy Certificate (REC) Mechanism?

Renewable Energy Certificate (REC) mechanism is a market based instrument to promote renewable energy and facilitate compliance for renewable purchase obligations (RPO) under inter-state transaction of RE generation. REC mechanism is aimed at addressing the mismatch between availability of RE resources in state and the requirement of the obligated entities to meet the renewable purchase obligation (RPO).

Renewable energy certificates (RECs) represent the green attribute of electricity generated from renewable energy sources. These attributes are unbundled from the physical electricity and the 2 products formed – the green attribute embodied in the certificate and the commodity electricity – may be sold or traded separately. In other words, REC represent that the amount of energy generated from renewable sources. RECs have now become the currency of renewable energy markets because of their flexibility and the fact that they are not subject to the geographic and physical limitations of commodity electricity.

Under this mechanism, cost of electricity generation from renewable energy sources is segregated in two parts (i) cost of electricity generation equivalent to conventional energy sources and (ii) the cost for environmental attributes. These environmental attributes can be exchanged in the form of Renewable Energy Certificates (REC). Thus, RE generators will have two options (i) either to sell the renewable energy at preferential tariff or ii) to sell electricity generation and environmental attributes associated with RE generations separately.

Categories of Certificates

Though India is having significant potential of RE sources, the contribution from Solar technologies was very low. The major reasons behind such low potential are nascent stage of development for solar technology and its very high cost compared to other RE technologies. Earlier there was no distinction between the solar and non-solar technology in so far as renewable energy source is concerned. There was no separate obligation for obligated utilities to buy power from solar. This emphasized the need for policy and regulatory measures required to promote solar technology. In this context it is necessary to have sustainable regulatory approach for such technology.

The Forum of Regulators in its report on “Policies on Renewables” had also recommended that in order to promote different RE sources and technologies, a part of RPO may be reserved for such RE sources in a nascent stage of development.

Thus, it was proposed that there will be two categories of certificates - one for electricity generation from solar technologies called solar certificates and another for electricity from other renewable energy technologies called non- solar certificates. Both these certificates will be mutually exclusive and cannot be exchanged. The solar certificate shall be sold to the obligated entities to enable them to meet their RPO for solar and non-solar certificate shall be sold to the obligated entities to enable them to meet obligation for purchase from RE sources other than solar.

Thus currently the Renewable Energy Certificates are having 2 categories:

1. Solar certificates; include both PV and CSP technologies.
2. Non-Solar certificates; include a basket of renewable energy technologies such as wind, biomass, biofuel cogeneration and small-hydro.

Eligibility of Certificates

The Ministry of New and Renewable Energy (MNRE), the nodal ministry for promotion and development of renewable energy in India, has identified and approved a number of renewable energy technologies such as Wind, small hydro, solar, biomass, bagasse based cogeneration, waste to energy etc.

The primary criteria for the entity to be eligible under this mechanism should be that the entity should be engaged in generation of electricity from MNRE approved RE sources and connected to the grid. In addition to this, the eligible entity should also fulfill specific criteria mentioned below to be eligible for registration under the REC mechanism at central agency.

§ The entity should not have any power purchase agreement to sell electricity at preferential tariff determined by the appropriate commission.

§ The agency should have obtained accreditation from State level agency.

§ The electricity generation by such generating company is sold either (i) to a distribution licensee at a price not exceeding the pooled cost of power purchase of such distribution licensee, or (ii) to any other licensee or through power exchange or to an open access consumer at a mutually agreed price.

The pooled cost of purchase considered under the criteria should be the weighted average pooled price at which the distribution licensee has purchased the electricity which includes the cost of self-generation, if any, in the previous year from all the energy suppliers, conventional and non-conventional, long term or short term.

Based on this, there are 3 categories of project that are eligible for REC:

1. Projects with a PPA with a DISCOM at a tariff equivalent to APPC of the DSICOM
2. Projects for captive consumption with no concession on transmission/wheeling, no banking facility benefit and no electricity duty waiver
3. Projects for sale of electricity to open access consumer/third party at a mutually agreed price

Denomination and issue of Certificates

Central agency would be issuing the REC certificates on the basis of units of electricity generated and injected in to the grid by the eligible entity.

Injection of the electricity by such entities would be based on the information furnished by the authorities constituted under the act to oversee scheduling and dispatch and energy accounting.

In case of entities which are not covered under the existing scheduling and dispatch procedures, issuance of the certificate would be based written communication of the concerned distribution licensee to the concerned State Load Dispatch Centre about the injection of electricity by the corresponding entity.

Each certificate would represent one megawatt hour (1 MWh) of electricity generated from renewable energy sources and injected into the grid.

Dealing in the certificates

The REC certificates can be exchanged only through the power exchange which have been approved by the Commission.

The certificate issued by the Central Agency would be placed in the power exchange for dealing as per the rules and bylaws of the power exchange.

Pricing of Certificates:

A “Renewable Energy Certificate” is a commodity representing the environmental attributes of a unit of renewable energy. As mentioned before, with the introduction of REC mechanism in India, RE based power projects (eligible under REC framework) will comprise of two components: Electricity component and RE attribute in the form of REC. The electricity component under the REC framework can be considered comparable to electricity generated from conventional sources. The renewable energy attribute of electricity generated from RE based projects will be valued separately in the form of REC price.

The price of REC will be as discovered in the power exchange, subject to the floor & forbearance prices determined by CERC. CERC has determined the floor & forbearance price after analysing the sate wise average power purchase cost and the tariff for RE sources determined by the appropriate commission. The forbearance price has been computed in way to not only ensure optimum incentive for the RE technologies but also save the obligated entities purchasing RECs at unrealistic high price. It is should be noted that the REC purchase expense for meeting compliance by distribution licensees should be treated as ‘pass through’ expense in the Annual Revenue Requirement.

Considering the two types of certificates Commission has fixed the separate forbearance price for solar and non-solar REC separately after consultation with Central Agency and the forum of Regulators in the following manner.

Non-Solar floor price

• Difference between the project viability requirement and APPC for different RE technologies across states is taken out in Rs/kWh
• These are arranged in ascending order
• The expected RE generation in a particular state is mapped with the respective difference calculated
• The price at which the target RE generation (of 70000 MUs) is realized is taken as the floor price
• This price which we got from the difference is then rounded off to arrive at the floor price

Non-Solar forbearance price

• The highest difference between the Costs of Generation (RE Tariff) and the APPC has been specified as the forbearance price for non–solar technologies.
• The highest difference has been rounded off to the next hundred’s to arrive at the forbearance price

Solar Floor price

• The difference between the minimum requirement for project viability of Solar PV/Thermal and respective state APPC of previous year (2011-12) is taken out and the highest value among these is considered as floor price.
• The project viability approach covers the cost required to meet viability parameters including O&M, interest, principal repayment etc.

Solar Forbearance price

• This has been derived based on the highest difference between the Solar PV/Thermal tariff for 2011-12 and the APPC of 2011-12 across states.
• The highest difference in price has been rounded off to the next hundred’s (or next ten’s in case of unit price), to arrive at the forbearance price.

History of the Floor & Forbearance prices determined by CERC

Price	Jun 1, 2010 – Mar 31, 2012		Apr1, 2012 – Mar 31, 2017
	Non-Solar REC (Rs/MWh)	Solar REC (Rs/MWh)	Non-Solar REC (Rs/MWh)	Solar REC (Rs/MWh)
Forbearance	3900	17000	3300	13400
Floor	1500	12000	1500	9300

Validity of Certificates

Eligible entity should apply for Certificates within six (6) months (earlier it was 3 months) after corresponding generation from the eligible RE projects.

Also the certificate would be valid for 720 days (earlier it was 365 days) from the date of issuance of such certificate.

Operational Framework of REC Mechanism

Step 1. Accreditation

Through this process State Nodal Agency (SNA) authorizes or endorses the RE Generator and recommends it for registration.

• Eligible Generator can get accredited not before 6 months prior to the proposed date of commissioning.
• Accreditation Certificate valid for 5 years from the date of accreditation.
• Separate applications for separate RE generation projects
• Minimum capacity of RE generation project to be 250 kW.

Step 2. Registration

Through this process, NLDC (Central Agency) registers their Generator as ‘Eligible Entity’ for its RE Generation Project.

• Eligible Generator can get registered not before 3 months prior to the proposed date of commissioning.
• Registration can only be done after receipt of the ‘Certificate of Accreditation’ for the RE Generation Project from the concerned State Agency.
• Registration is valid for 5 years from the date of Registration.

Step 3. Issuance of REC

• The electricity generated from RE project is injected into the grid and sold to either a distribution licensee or open access consumer with whom it has contract or sold through the power exchange. The metering of quantum of Renewable Energy injected into the grid is approved by or recorded through energy accounting by SLDC.
• Eligible RE Generator to apply to NLDC to issue the RE certificates equivalent to the amount of electricity injected into the grid as certified by the SLDC. The application to be filed within three months from the date of renewable energy generated.
• Application can be made on a fortnightly basis, i.e., on the 1st day of the month or on 15th day of the month.
• NLDC to issue RECs to Eligible RE Generator within 15 days as per SLDC and State Agency’s generation report.
• RECs to be sold within 720 days of issuance or else they will lapse.

Step 4. REC Trading at Exchange Platform

Once the RECs are issued to the RE Generator (Eligible Entity), sale/purchase of RECs amongst Eligible RE Generators and Obligated entities to be undertaken only through Power Exchanges.

• Trading through Closed double-sided auction on the last Wednesday of every month.
• Call of bids from 13:00 Hrs to 15:00 Hrs on the auction day(T-day).
• PXs to intimates details of maximum sale bids placed by each Eligible RE Generator to NLDC by 15:30 Hrs .
• NLDC to check availability of RECs with the eligible entity by 16:00 Hrs.
• Post-confirmation from NLDC, PXs to determine Market Clearing Price and Market Clearing Volume and send the details final cleared trades to NLDC for extinguishing of RECs sold in the records of NLDC by 17:00 Hrs.

Step 5. Surrender/Redeeming of RECs

The Obligated Entities purchase RECs through PXs and to surrender to SERC or other agency as specified by SERCs as to meet their RPO. NLDC (REC Registry) to maintain record of RECs sold and purchased.

Step 6. Compliance Reporting

Compliance Auditors to monitor and report the compliance of REC Regulations.

Roles and Responsibilities of Various Institutions

1. Ministry of New and Renewable Energy (MNRE)

MNRE, being the nodal agency for promotion of renewable energy in the country is primarily expected to facilitate the development of REC mechanism in India. Some of the activities which MNRE is expected to perform are listed below:

• To facilitate development of REC mechanism
• To provide support as desired by Forum of Regulators
• To approve technologies eligible for participation in REC Mechanism
• To assist SERCs in implementation of generation accreditation process
• To ensure that any future incentive mechanism for promotion of RE is compatible with the REC Mechanism

2. Forum of Regulators (FOR)

FOR is expected to evolve consensus on following issues:

• Standard Regulations under Section 86(1)(e) incorporating REC covering:
• Institutional structure for REC Mechanism
• Operating Framework for REC Mechanism
• Methodology for pricing of electricity component
• Methodology for pricing of REC component
• Enforcement Principles for non-compliance of RPO
• Generation accreditation process
• Structure & Rules of the Monitoring Committee
• Development of standard methodology for energy accounting process
• Assessment of market for REC
• Review and comment on the Regulations developed by the CERC for REC Registry and REC Exchange Platform
• Periodic review of the development and implementation of REC mechanism
• Seek inputs from time to time from the MNRE and other stakeholders
• Resolve any issue which may crop up during implementation in any State

3. Central Electricity Regulatory Commission (CERC)

CERC is expected to develop and implement:

• Institutional and Regulatory Mechanism for REC Registry
• Regulation for REC Exchange Platform
• Principles for determination of tariff for RE Technologies which may be used by SERCs for determination of pricing of RE in the State
• Develop criteria for eligibility of RE technologies for inclusion in REC mechanism in consultation with MNRE and FOR
• Approve RE technologies for inclusion in REC mechanism, in consultation with MNRE

4. State Electricity Regulatory Commissions (SERCs)

SERCs will carry out following activities:

• Adopt Standard Regulation developed by FOR after taking into account state specific issues
• Determination of RE Technology specific tariffs
• Determine the Tariff Rate for procurement of electricity component of RE
• Specify the RPS percentage and eligibility for RE procurement
• Specify enforcement mechanism for different Stakeholders for non-compliance
• Amend State Grid code to enable SLDC to take up energy accounting
• Amend Regulations under Section 86(1)(b) to account for acquisition of RECs
• Adopt with suitable modifications, regulations for monitoring committees
• Design Contractual framework between SLDC/ Distribution Company, RE Generator and Monitoring Committee for energy accounting
• Design Contractual framework between SLDC/ Distribution Company, Obligated entities and Monitoring Committee for energy accounting

5. State Load Dispatch Centre (SLDC)

Energy Accounting would be the backbone of the proposed REC mechanism and the mandate for this important task under the Act is with SLDC. SLDCs to undertake following functions:

• Accounting of renewable energy fed into the grid (electricity generated)
• Accounting of renewable energy procurement by the Obligated Entities
• Issuance of power generation certificate to REC registry
• Accounting of total energy procurement by all obligated entities

6. Monitoring Committee

The Monitoring Committee is expected to undertake following activities:

• The Primary Responsibility of the Monitoring Committee would be to monitor the compliance of the RPO by all obligated entities.
• Accreditation of eligible RE generators in the State
• Act as a repository of all information pertaining to renewable energy in the State
• Maintain database of Obligated Entities in the State
• Monitoring the compliance of Market rules by all stakeholders
• Reporting of non-compliance, breach of rules to the concerned SERC
• Enter into tripartite agreement with SLDC/ Distribution Company & RE Generator for energy accounting
• Enter into tripartite agreement with SLDC/ Distribution Company, Obligated entities for energy accounting

7. REC Registry

The REC Registry will also have to perform following tasks:

• Registration of eligible RE generators
• Registration of REC buyers which could be any person, obligated entity, trader or individual buyer who wishes to buy RECs to be carbon neutral
• Issuance of RECs to RE generators
• Redemption of RECs on receipt of redemption request
• Track transactions involving sell and purchase of RECs
• Provide requisite information to Monitoring Committee of each State on redemption of RECs by buyers
• Automatically redeem RECs if the life of the RECs is over

8. REC Exchange Platform

REC Exchange Platform is expected to provide REC buyers and sellers a fair and transparent platform for sell and purchase of REC. REC Exchange Platform is expected to undertake the following tasks:

• Development of hardware and software in accordance with CERC Regulations
• Facilitate exchange of RECs amongst interested parties in accordance with CERC Regulations
• Periodic reporting to the CERC regarding REC trades
• Recovery of costs from participants on the Platform

Summary/Salient Features of REC Mechanism

Parameter	Description
Objectives	Effective implementation of Renewable Purchase Obligation Increased flexibility for participants Overcome geographical constraints Reduce transaction costs for RE transactions Enforcement of penalty mechanism Create competition among different RE technologies Development of all-encompassing incentive mechanism Reduce risks for local distributor by limiting its liability to energy purchase
REC Categories	Solar & Non-Solar RECs
Denomination	1 REC = 1 MWh
Shelf life of REC	720 days
REC issuing authority	NLDC shall issue REC to generator based on the energy injection report prepared by SLDC
Trading platform	Power exchange under the guidance of CERC
Transfer type	Single transfer only, repeated trade of the same certificate is not possible
Banking and borrowing	Not allowed
Trading calendar	Last Wednesday of the month
Trading period	1pm – 3pm on the day of auction
Trading methodology	Close bid double sided auction for each type of certificate separately
Penalty for non-compliance	Forbearance Price (may vary depending on SERC)
Minimum bid volume	1 certificate (equivalent to 1MWh of energy injected)

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Coal block rejection a blessing in disguise for Adani Power...

 

Gautam Adani, promoter of Adani Power Ltd, has a reason to relax, even as the power arm of his group of companies continues to make losses for an eighth straight quarter.

While a host of coal and power companies have come under fire from the Central Bureau of Investigation (CBI) for alleged involvement in the coal mine allocation scam, Adani Power has remained unaffected, so far.

It was allotted the Lohara West Extension block of the Wardha coal field in November 2007, to feed its proposed 3,300 Mw thermal power plant at Tiroda, in Maharashtra. Howeer, before any mining could begin the Union ministry of environment and forests (MoEF) rejected this, saying the project was within a ‘no-go’ area, being in the wildlife corridor for a tiger reserve.

The MoEF decision is now seen as a blessing in disguise for the Adanis.

“This helped APL avert any uncertainty of coal supplies arising from the controversy and court intervention. Also, this has helped the company to look for alternative sources and keep its focus on execution of the project,” said an analyst at an equity research house in Mumbai.

On the other hand, it has stretched the company’s finances. It has had to depend more on a temporary and costly tapering linkage from Coal India for Tiroda, a short-term one provided to power plants at an advancef stage of completion but where production from the allotted mine is yet to be achieved or the mine area is yet to be developed.

APL’s net loss widened to Rs 1,072 crore for this year’s second quarter, ended September.

“There is still negative sentiment about Adani Power. It is a relief for the company that it has not figured in the CBI’s investigation till now but then, there is a financial burden on it,” said an analyst at a leading broking house in Mumbai. Sources say the company has initiated a process to convert the tapering linkage to a long-term one.

“It has written to the ministry of coal for approval to so convert this into a long-term one from Coal India. APL is also exploring possibilities to explore and utilise coal in the mining area,” said a source. When asked, Adani officials did not respond to queries in this regard. Expressing concern about APL’s performance, JP Morgan’s Asia Pacific Equity Research has maintained an ‘underweight’ rating, saying no respite was visible.

The Tiroda plant is to be a 3,300 Mw (5x660 Mw) one, put up by Adani Power Maharashtra Ltd, a unit of APL.

The first two units of 660 Mw each were commissioned in 2012-13 and the current generation capacity is 1,980 Mw.

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Arguments heating up in Adani, Tata compensatory tariff cases...

 

Two months after the Deepak Parekh panel gave its report on the contentious issue of compensatory tariffs for Adani and Tata-owned power projects in Gujarat, an early resolution to the dispute with procurers remains elusive.

The outcome of the high-profile cases will be seen as a benchmark for contract renegotiation in future infrastructure investments, arguments by the two sides in the recent hearings in the Central Electricity Regulatory Commission (CERC), however, indicate a protracted legal battle lies ahead.

The procuring states, which thus so far maintained their views had not been adequately reflected in the panel report, have raised questions on the basis and the extent of compensation, its effective date and the components of the compensatory rate.

In their affidavits submitted to the regulator in the Adani case, Gujarat and Haryana asserted the compensation should be applicable from the date of CERC’s final order in the case. This was rejected as “baseless” by the company’s counsel, who insisted the date of commercial operation declaration  should be considered.

“The committee has recommended the recovery of historical losses from COD by prescribing the fuel adjustment formula as compensatory tariff. If the date of the final order of commission is considered, the purpose of granting relief will be defeated,” Adani’s counsel argued. He added it is a settled position of law that compensation is paid from the date of cause of action.

The states also raised questions on the use of the Indonesian coal price benchmark, Harga Batubara Acuan (HBA), to calculate the pricing of imported coal used by the company. Indonesian coal cannot be sourced at a price lower than the HBA. Adani’s counsel argued that HBA is the appropriate index as coal for the project is sourced from Indonesia and also because the current CERC escalation rates for imported coal do not take into account HBA.

Another issue being debated is whether the company should be compensated for the losses because of foreign exchange rate variation (FERV). The Haryana utilities argued that FERV should not be considered for calculation of compensation. According to the company, FERV is a key component of the fuel charge of the tariff.

“The cushion available to absorb forex fluctuation has been consumed by change in coal prices and the change in the source of coal,” Adani’s counsel argued. He asserted that both the Haryana and Gujarat bids were predominantly premised on domestic coal. Even the bid conditions did not allow quoting in dollar. However, due to change in the post-bid circumstances, the company was forced to shift to imported coal. The escalation in coal prices and the weakening rupee value later worsened the situation. He also invoked the draft of the bidding documents being finalised by the power ministry, which provide for passing on forex risk to procurers.

The regulator asked the company whether the petition would still have been filed if the imported coal price had remained unchanged but forex variation had occurred. To this, the company’s counsel replied that a petition of a different nature would have been filed.

The panel, headed by HDFC chairman Parekh, was set up to look into the issue of compensatory tariffs for imported coal- fired projects of Tata Power and Adani Power.

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CCEA likely to take up Power Grid FPO tomorrow...

 

The Cabinet Committee on Economic Affairs may today take up the Power Ministry's proposal for a follow-on public offer of state-run Power Grid Corporation, which is expected to mop up over Rs 7,500 crore.

According to sources, the proposal is likely to be considered during the CCEA meeting tomorrow.

The follow-on public offering (FPO) will comprise 13% fresh equity by the public sector company and 4% stake sale by the central government. The company will issue fresh 60.18 crore shares through the offer and a part of it would be reserved for the employees.

Meanwhile, the Department of Disinvestment has invited applications from merchant bankers for the proposed FPO.

The government proposes to dilute 4% stake, or 18.51 crore shares, out of its current 69.42% holding.

At current prices, the government could get over Rs 1,782 crore from the disinvestment, while the company would get over Rs 5,793 crore from the sale of fresh equity.

This would be the second follow-on offering from Power Grid, which sold a 10% stake along with a similar stake divested by the government in November 2010 at an issue price of Rs 90 a share.

The company hit the capital market with its initial public offering in October 2007.

Power Grid shares today were last traded at Rs 96.25 apiece, up 0.94% on the BSE. This values the entire company at Rs 44,561 crore.

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Bhutan asks India to expedite development of more hydro power projects...

 

Terming India as a 'partner', Bhutan today said it should expedite the development of a few more hydro projects in the next couple of years and invited Indian companies to explore the possibility of investments.

"What we are looking for in the next two to three years is to expedite the development of a few more hydro projects. Our expectations from India are a couple of things --interest expressed by Indian companies to come to Bhutan, the ongoing interest to exploit natural resources for our purposes," Sonam Kinga, chairperson of the National Council of Bhutan, told PTI.

He also said his country also expects Indian companies to come to Bhutan and also see India's interest in exploiting natural recources for their purposes.

The Chairman of the Bhutan's National Council said "this (hydro) is one project where irrespective of the size of both the country's economies, mutual benifits can be harnessed through cooperation and this is a very successful project".

"We also expect that once power is produced and since there is a guaranteed need for power in India, it will give us the impetus for an accelerated economic development and it will also contribute in small but meaningful ways to India's need for power," Kinga added.

Asked about the recent stopping of subsidy given to Bhutan by India on LPG and Kerosene and then restoring it, Kinga said he and the Bhutanese people do not believe that India had decided to take away the subsidy.

"It has been explained to us by the Indian Ambassador to Bhutan that the timing of the Bhutanese election and the end of the tenth five year plan coincided so much so that there was no continuity to begin the talk. It was not a removal (of subsidy) but the talk that needed to happen could not be possible since there was ongoing election and there was no government in place (in Bhutan)," Kinga said.

Asked about the recent Rs 1 billion grant provided by India to Bhutan for the new government's Economic Stimulus Plan (ESP) and India's commitment to provide Rs 5 billion to the Himalayan nation, outside the 11th Plan assistance, Kinga said it was a "generous act" by India.

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Sivasankaran's wind power firm WinWind hits IDBI with Rs 300-cr bad debt...

 

With WinWind, a Finland-based wind power company owned by Chennai-based billionaire C Sivasankaran, filing for bankruptcy, its lender IDBI Bank is staring at a loss of Rs 300 crore.

The company has filed for bankruptcy in Finland, after failing to repay ^300 million (Rs 2,500 crore) of debt to its lenders. The bankruptcy follows the $3-billion (assets) SIVA Group shutting its wireless telephony firm S Tel, following the Supreme Court cancelling 122 wireless telephony licences, including S-Tel’s, in February 2012. The company lost about Rs 1,800 crore on this account. Now, it is waiting the courts to clear the company so that it can sell its telecom assets to other players.

The company has also seen a slowdown in its commodity business in Africa and Southeast Asian nations.

For its woes, WinWind has blamed the current global uncertainty and the fall in demand in the wind energy sector. It said the drop in demand had made it difficult to develop the business, increase sales and record profitability.

IDBI Bank has an exposure of Rs 300 crore to the company. Sources in the company say the bank would be able to secure up to ^15 million euros (about Rs 125 crore) through the sale of WinWind’s wind power business.

When contacted, an official spokesperson of the group said, “The matter is before the court and administrator, pursuant to the decision taken by the WinWind board to file for voluntary bankruptcy. In view of this, we have no comments to offer and we will abide by the decision of the administrator.”

Timeline: C Sivasankaran’s journey

• 1986:     Sets up Sterling computers
• 1997:     Launches  Aircel to launch telecom services
• 2004:     Acquires 100% equity stake in Barista coffee chain from Turner Morrison, Tata; Sells  33% stake in Tamil Nadu Mercantile Bank
• 2006:     Sells Aircel to Maxis for $800 million
• 2007:     Sells Barista to Lavazza, buys 49% stake in Aambi valley; Buys WinWind in Finland
• 2010:     Sells Aambi Valley stake back to sahara
• 2011:     Accuses Maran brothers of forcing Siva group to sell Aircel to Maxis
• 2012:     SC cancels licenses of S-Tel, a small cell phone company
• 2013:     WinWind files for bankruptcy

In 1986, the reclusive Sivasankaran started with a small computer business. In time, he set up a pan-India wireless telephony company called Aircel. In the last decade, he bought and sold stake in Tamil Nadu Mercantile Bank, Aamby Valley in Lonavla and Barista Coffee.

In 2006, Sivasankaran sold his telecom company Aircel to Maxis of Malaysia. However, in 2011, before the Central Bureau of Investigation (CBI), he alleged he was pressurised by then telecom minister Dayanidhi Maran to sell the company to Maxis for $800 million. Currently, the CBI is probing the matter.

Sivasankaran owns four per cent stake in Tata Teleservices. Though he has hired a banker to sell the stake, he hasn’t found any takers.

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