Policy & regulation
MNRE has given the go-ahead for the 2nd phase of the Central Public Sector Undertakings (CPSU) Scheme under which 12 GW of solar power projects will be setup by public entities. VGF maximum of INR 7 lakh/ MW will be provided. All solar cells and modules used in projects developed under the program would have to be manufactured in India and the power generated would be supplied either directly to the public entities or via power distribution companies for a maximum Rs3.50/kWh.
MERC issued 1st Amendment to Distribution Open Access (DOA) Regulations and Transmission Open Access Regulations (TOA). The summary of the proposed amendments is:
- Consumers intending to have Roof-Top Solar Photo Voltaic Systems can simultaneously avail open access under these Regulations subject to condition that in such cases, the credit for solar generation shall be adjusted on Gross metering basis for such period for which open access is availed by the Consumer.
- Long term open access period changed from ‘exceeding 12 years’ to ‘exceeding 7 years’.
- In order to discourage repeated short term open access (STOA) transactions, the applicable STOA transmission charges will be increased by a multiplication factor of 1.25, 1.5 and 2.0 respectively for every 2nd, 3rd and 4th STOA transaction during financial year beyond which the transmission charges for STOA shall be twice the approved STOA transmission charges.
- For renewable energy based MTOA and LTOA transactions, the applicable transmission charges will be twice the STOA transaction.
- The priority for adjustment of energy drawl by an open access consumer from different sources shall be- Renewable Energy Generators, Captive Generating Plant, Banked Energy, Long term Bilateral purchase, Medium term open access, Short term inter-State open access including power exchange transactions, Short term intra – State Open access, Distribution Licensee
- Banking period reduced from 1 year to 1 month. Provided further that the energy banked during peak TOD slots may also be drawn during off-peak TOD slots, but the energy banked during off-peak TOD slots may not be drawn during peak TOD slots.
- The unutilised banked energy at the end of the month is also limited to 10% of the actual total generation by RE generator in such month
Five new tenders totalling, 5.2 GW were issued in June 2019 by SECI and NTPC.
|Tender Name||Date of RFP Issue||Segment||Ceiling tariff||Other details||Last date of Bid submission|
|SECI, 1800 MW, Wind ISTS, Tranche VIII||26 June 2019||Wind||INR 2.85/ unit||EMD- INR 6 lac/ MW Minimum project capacity- 50 MW||26 July 2019|
|NTPC, 1 GW, EPC, CPSU Phase II, Tranche 1||5 June 2019||Solar||INR 3.5/ unit (exclusive of any other third-party charge like wheeling, transmission charges and losses, and the likes)||Minimum project capacity- 50 MW||15 July 2019|
|SECI, 1,200 MW, ISTS Solar PV||29 June 2019||Solar||INR2.65/ unit||EMD- INR4 lac/ MW Financial closure- 12 months from PPA COD- 18 months from PPA Min project capacity 20 MW||July 31, 2019|
|SECI, 1,200 MW, ISTS solar, MP||29 June 2019||Solar||INR2.65/ unit||EMD- INR4 lac/ MW Financial closure- 12 months from PPA, COD- 18 months from PPA, Min project capacity 20 MW||August 9, 2019|
The projects under the latest RfS issued by SECI will be developed on a Build-Own-Operate (BOO) basis. And, the power generated from these projects shall be solely used for self-use or use by Government/Government entities, either directly or through Discoms on payment of mutually agreed usages charges of not more than Rs 3.50/kWh.
The nodal agency has made the following key amendments to the RfS:
- Each bidder will now have to submit a fixed bid processing fee of Rs 5 lakh (+GST) for each response to the RfS, unlike the previous provision which varied processing fee between Rs 3 and 10 lakhs based on the project capacity.
- The minimum capacity allocated to a bidder shall be 1 MW (10 MW earlier) and the maximum allocation to a single bidder shall be 2000 MW. The SPDs shall demonstrate the awarded allocation to SECI, prior to disbursement of the second tranche of VGF.
- As per the provision of the earlier RfS, the projects can be located anywhere in India. However, it has been clarified that the projects may be implemented as ground-mounted or rooftop-mounted or floating or canal top/canal bank, etc., or a combination thereof, as per the requirements of the SPD.
About 1.97 GW of solar projects were awarded by SECI and UPNEDA in June 2019
SECI, 750 MW, Solar, Tranche II, Rajasthan, June 2019
|Company name||Awarded capacity (MW)||Tariff (INR/ unit)|
|Hero Future Energies||250||2.5|
Only 680 MW of solar PV capacity will be awarded under this tender as the techno-commercial bids aggregating 850 MW were qualified, and therefore, 80% of that has to be awarded.
UPNEDA, 500 MW, Solar, June 2019
|Company name||Awarded capacity (MW)||Tariff (INR/ unit)|
Tender was undersubscribed and only 90 MW were allotted
SECI, 1,200 MW ISTS Solar, tranche IV
|Company name||Awarded capacity (MW)||Tariff (INR/ unit)|
|Ayana (CDC Group)||300||2.54|
- SECI cancelled the 3 GW of interstate transmission system (ISTS)-connected solar projects linked with 1.5 GW of solar manufacturing component tender which it had initially floated in January 2019.
- SECI also cancelled 97.5 MWp Grid Connected Rooftop Solar PV System Scheme for Government Buildings in different States/ Union Territories of India under CAPEX/ RESCO model.
RE Installation trends- State wise, as of May 31, 2019
|Small Hydro Power||Wind||Bio Power||Utility scale solar||Roof Top solar||Total|
|10||Jammu & Kashmir||180||8||7||195|
|30||Andaman & Nicobar||5||8||4||17|
|32||Dadar & Nagar Haveli||2||3||5|
|33||Daman & Diu||10||5||15|
Source: MNRE, JMK Research
ReNew Power, the Indian renewable energy project developer, has announced raising $300 million through a rights issue. A rights issue is when a company issues its existing shareholders a right to buy additional shares in the company. According to the press statement, Goldman Sachs, Abu Dhabi Investment Authority (ADIA), and Canada Pension Plan Investment Board (CPPIB) have subscribed to the issue with each of the shareholders infusing $100 million into it
Kalpataru Power Transmission (KPTL) entered into binding agreements with CLP India to sell stake in three of its power transmission assets — Kalpataru Satpura Transco (KSTPL), Alipurduar Transmission (ATL) and Kohima Mariani Transmission (KMTL) — for an estimated enterprise value of Rs 3,275 crore. This transaction marks the entry of CLP India into the power transmission business.
Other important news
Finance minister Nirmala Sitharaman, in her first budget speech, also announced a scheme to invite global companies through transparent competitive bidding to set up mega manufacturing plants in technology areas such as semi-conductor fabrication, solar photovoltaic cells, lithium storage batteries and solar electric charging infrastructure, and provide investment-linked exemptions under Section 35 AD of the Income Tax Act, and other indirect tax benefits.
The Government of India has announced that it is ready with a scheme to auction power purchase agreements (PPAs) linked with coal supplies from Coal India Limited (CIL). In the proposed auction scheme the bidders will be informed in advance about the availability of coal supply from the various CIL subsidiaries and mines. Depending on these inputs, tariff-based competitive bids would be invited from interested companies. The bids will be invited for 2,500MW of power supply capacity for three years.
RK Singh, Union Minister of State for Power and New & Renewable Energy has announced the approval of a proposal to make it mandatory for distribution licensees to open and maintain adequate Letter of Credit (LC) as payment security mechanism under power purchase agreements. PPAs have the provision to maintain an adequate payment security mechanism primarily in the form of LCs by the distribution licensees/procurers of power.
State to cancel 21 wind PPAs, a 600 MW Siemens Gamesa hybrid project, Axis Energy hybrid project, energy storage projects and 600 MW of schedulable power. The decisions also include plans to cancel land allotted at Anantapur to sovereign wealth funds GIC Holdings Pte Ltd and Abu Dhabi Investment Authority promoted Greenko Group’ solar-wind hybrid project.
Long regarded as a solar pioneer, the state has now announced grand plans to shoulder the burden of 17% of the nation’s clean energy ambition as India races to install 175 GW of clean energy capacity in just three-and-a-half years.
According to the terms of the PPA, Acme signed with NTPC, the output was meant for Telangana, and the tariff, trading margin and contracted capacity had to be approved by the Telangana State Regulatory Commission (TSERC) within two months of signing the PPA, failing which it would stand terminated. Telangana was expected to procure the power from NTPC. The two-month deadline has lapsed and Acme has not received confirmation from NTPC about the approval of such tariff.
Coal may account for 50% of India’s power generation in 2030 despite a boom in solar and wind energy projects, according to analysis by the country’s power-planning body CEA. Share of Solar is expected to be 23% and wind to be 12% by 2030.
Out of the total 156 plants/units for which we could obtain the status, 66 claimed that they complied with the water consumption limits, while 30 admitted that they were non-compliant. For another 46 plants, either data was not available, or replies were ambiguous or the plants were closed.
In last few months, it can be seen that there are regressive net metering orders/ regulations from state governments in certain key high potential rooftop solar states. Uttar Pradesh, Tamil Nadu, Rajasthan and Maharashtra are the key states which have taken such measures. In Uttar Pradesh, wherein under new net metering regulations, issued in Jan 2019, net metering is not available for connections for commercial, industrial and public buildings. They can only opt for gross metering. Net metering will be only available to residential consumers with system size ranging from 1 kW to 2 MW. Excess electricity will be adjusted at fixed price of INR 2/ unit which is much lesser than current APPC rates as well. Also it is still not clear if old systems having net metering connections will be exempted from these new regulations or not.
In another recent order issued in March 2019, Tamil Nadu Electricity Regulatory Commission (TNERC) allowed net metering connections only for LT consumer category. The existing consumers under net metering scheme shall continue to be governed by its 2013 regulation only. Surplus electricity will also be adjusted at 75% of the pooled cost of power purchase notified by the Commission for the respective financial year in the orders issued on pooled cost of power purchase under Renewable Energy Power Purchase Obligations, 2010 or 75% of last feed in tariff determined by the Commission or 75% of tariff discovered in latest bidding whichever is less.
Rajasthan also recently reduced banking period from 1 year to 1 month for rooftop systems. This change has put viability of several systems, particularly those installed on educational institutions, in doubt as most of these systems need banking facility during holiday period/ non operative periods on regular basis. Residential projects are out of this stringent mechanism however their share in the total rooftop market is just miniscule.
Recently, in a petition Maharashtra State Electricity Distribution Company (MSEDCL) also proposed to shift from net metering to gross metering. To discourage net metering connections, it has also proposed to start levying wheeling charges on rooftop solar plants.
Table 1.1: Net metering regulations summary across key states (as of June 30, 2019)
|State||Metering arrangement||Eligibility||DTR capacity||Excess electricity||Exemptions|
|Delhi||Net metering||1 kW- 1 MW Maximum plant size <100% of sanctioned Load||15%||To be adjusted at end of FY at APPC||Banking, wheeling & cross subsidy surcharge|
|Andhra Pradesh||Net metering as well as Gross metering||Capacity <= 1MW||60% at LT level and 100% at HT level||To be adjusted at average cost of supply||Distribution losses and charges|
|Uttar Pradesh||Net metering only for residential consumers. Others can opt for gross metering||1 kW- 2 MW||75%||Adjusted at INR 2/ unit||Exemption from wheeling & cross subsidy surcharge if applicable Electricity duty for ten years shall be exempted for sale to Distribution licensee, captive consumption and third party sale for projects set up within the state|
|Tamil Nadu||Net metering only applicable to LT consumers (From Mar 25, 2019 onwards)||Capacity: 1 kW – 1 MW Maximum plant size < 100% sanctioned load||90%||Excess energy to be paid at 75% of APPC, 75% of last FIT determined by commission or 75% of tariff discovered in latest bidding, whichever is less||Consumer category solar will have electricity tax exemption of two years|
|Maharashtra||Net metering||Capacity < 1MW (with a variation of 5%)||40%||To be adjusted at end of FY at APPC||Banking, wheeling & cross subsidy charges|
|Gujarat||Net metering as well as Gross metering||Capacity < 1 MW Maximum plant size < 50% of sanctioned load||65%||To be adjusted at end of FY at APPC||Transmission charge, transmission loss, wheeling charge, wheeling loss, cross subsidy surcharge, electricity duty|
|Karnataka||Net metering as well as Gross metering||Maximum plant size < 150% of sanctioned load Limits of solar systems: Up to 1MW for HT consumers, Up to 50 kW for 3 phase LT consumers||80%||To be adjusted at end of FY at APPC||Wheeling, banking, cross subsidy charges if applicable, Value Added Tax (VAT)|
|Rajasthan||Net metering||Capacity: 1 kW – 1MW Maximum size < 80% of sanctioned load||30%||To be adjusted at end of FY at APPC||Banking, wheeling & cross subsidy charges|
|Telangana||Net metering as well as Gross metering||Capacity < 1MW Maximum size for commercial, industrial < 80% of sanctioned load For residential and government 100% of sanctioned load||50%||Half yearly settlement (June & December) Any unadjusted electricity credits shall be paid as per the rates notified by TSERC||Distribution losses and charges, electricity duty, cross subsidy surcharge, VAT|
|Haryana||Net metering only||Capacity < 1MW||15%||To be adjusted at end of FY||Banking, wheeling & cross subsidy charges|
|Chhattisgarh||Net metering only||50 kW – 1 MW||40%||To be adjusted at end of FY at the rates notified by CSERC||NA|
|Madhya Pradesh||Net metering as well as Gross metering||Upto 2 MW||15%||To be adjusted at end of FY at APPC||Banking, wheeling, cross-subsidy surcharges & electricity duty, no liability of property tax, exempted from VAT and entry tax|
Source: SERC’s website, JMK Research