OPEN ACCESS. Forecasting Company of the Year & REC Trader of the Year August 2016 Volume - 64

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1 OPEN ACCESS Forecasting the Year & of August 20 Volume - 64

2 CONTENT From Management s Desk The main article this month reviews the draft regulations on Forecasting and Scheduling (F&S) in Andhra Pradesh. The F&S regulatory landscape is evolving very rapidly; AP has become the seventh state to release such APERC F& S regulations. Amongst the RE rich states or windy state as they are referred to in the industry, only Gujarat and Maharashtra are yet to formulate F&S regulations. As a result of the rapidly evolving regulations in the F&S space, most wind and solar generators have started to forecast their generation in earnest. REC Trade Results Other notable regulatory updates during the month include Chhattisgarh State Electricity Regulatory Commission (Intra-state ABT), HPERC RPO and its compliance regulation, Solar Tariff determination by JERC, Final policy for repowering of wind power projects and MPERC Co-generation of electricity from renewable sources. All of these are discussed in detail in the newsletter. RPO Table About REConnect This month trading saw marginal increase in the demand for both Solar and Non-Solar RECs as compared to last month. Compared to August 2015, demand was almost double this month. The total transaction value stood at 52 Crores in comparison to 40 Crores last month. We hope you will find this volume an insightful read, and as always, look forward to your feedback. -Team Reconnect

3 APERC Forecasting & Scheduling Analysis Analysis of on Forecasting and Scheduling of Wind and Solar Generating Stations at State level in Andhra Pradesh In the follow-up after the FOR - Model for the Intra State level projects, APERC has come out with a Draft on Forecasting & Scheduling for the Wind & Solar projects at Intra State level in Andhra Pradesh, based on the mechanism suggested F & S will be required by all wind & solar project. Deviation charges will be calculated on the basis of actual generation. Penalty is a fixed amount beyond the error range (10% in case of new projects, 15% in case of old projects) Settlement will be done through the QCA or Aggregator in the Model. Earlier Odisha, Madhya Pradesh, Karnataka, Tamil Nadu, Rajasthan, Jharkhand revisions will be allowed during the day, applicable from 4 th time-block onward. and Chhattisgarh had come out with their DSM on Forecasting & Scheduling of Wind & Solar. The last date for giving comments and suggestions is 30 th September. Executive Summary: Forecasting and scheduling will be mandatory for all the wind and solar generators connected to the AP State grid. Error will be calculated on the basis of Available Capacity (AvC), with 10 % tolerance for new projects and 15 % for old projects. The reference for old and new projects will be the date of finalization of this regulation. Settlement will be done through the Qualified Coordinating Agency or QCA, or the Aggregator while QCA will be treated as a state entity, registered with SLDC; the regulation doesn t clearly define the Aggregator and their scope. The QCA shall also de-pool the energy deviations as well as deviation charges to each generator in proportion to actual generated units for each time -block for each generator. Each Pooling Sub-station will have only one QCA who shall be single point of contact with SLDC for energy account, deviation settlement & coordination Page 1

4 APERC Forecasting & Scheduling Analysis and issuance of instructions for dispatch/ curtailment. SCADA & Telemetry data is to be mandatorily Error (%) = 100 X (Scheduled Generation Actual Generation) Available Capacity* provided to SLDC by the generators. SLDC shall formulate Data/information exchange requirements and protocols for the same. In case of Intra-State transmission, Penalty Mechanism for existing generators: The QCA or the generator will have to send a day ahead and week ahead forecast for each pooling or generating station. Settlement period for all Energy Accounts and DSM accounts will be on weekly basis. Provision of six months for existing wind and solar generators to comply with the regulation, from the In case of Intra-State transmission, Penalty Mechanism for new generators: date of publication of these regulations in the official gazette. QCA and RE Generators will be free to mutually decide professional fees for services rendered by QCA (in INR/MWh or MW; one time /annual). Detailed Mechanism defined for Deviation Settlement Page 2

5 Chhattisgarh State Electricity Regulatory Commission (Intra-state Availability Based Tariff and Deviation Settlement) s, 20 The Forum of Regulators (FoR) had come up with The primary objective is twofold: a) Facilitate large-scale grid integration of solar and wind generating stations, and b) maintaining grid stability and security. model regulations for forecasting and scheduling at the intra-state level last year. In line with that Chhattisgarh recently came up with its Intra-state deviation settlement. Executive Summary: The regulations will be applicable on all wind and solar generators with individual or combined capacity of 5MW and above that are connected to the state grid Deviation will be calculated on the basis of available capacity. The draft regulations are in-line in every aspect with the model F&S regulations released by FoR earlier. However, the model FoR regulations had proposed a 10% deviation band for new projects and 15% for existing projects. Chhattisgarh has proposed a 10% band for all projects for both Solar Highlights of the regulation are below: - All solar and wind generators connected to State grid have to provide day-ahead and week-ahead schedule Revisions can be made on a one-and-half hourly basis. Payment for generation shall be as per actual generation (this is different from the inter-state regulation, where payment is on the basis of scheduled generation). The deviation slab has been kept as (+/-) 10% for all generators at Intra-state level. Settlement calculation or Intra-state sale of power is as follows: and Wind. Detailed Analysis: Forum of Regulators have recently come up with model regulation for forecasting and scheduling and deviation settlement mechanism. New 2015 Error (%) = 100 X (Scheduled Generation Actual Generation) Available Capacity* Page 3

6 The regulation will be applicable to: In case of Intra-State transmission, Penalty Mechanism for wind/solar generators: The distribution licensee Any person consuming electricity procured from conventional sources through open access third party sale, A Captive Generating Plant with an installed capacity exceeding 5 MVA or above. The table below shows the Minimum Quantum of Purchase in percentage (%) from renewable sources (in terms of energy in kwh) of total consumption: The regulation can be accessed here. Himachal Pradesh Electricity Regulatory Commission (Renewable Power Purchase Obligation and its Compliance) s Sr. Year Non- Solar Solar RPO Total No. RPO % 2.75% 11.50% % 4.75% 14.25% The Ministry of Power (MoP) had recently declared % 6.75% 17.00% the national RPO trajectory. The order specifies the yearly RPO trajectory for both non-solar and solar power purchase from till On the basis of the MoP notification, Himachal Pradesh has notified its third amendment to the Renewable Power Purchase Obligation and its Compliance, regulations. The said obligations will be applicable on total consumption of electricity by an obligated entity, excluding consumption met from hydro electric sources of power. Analysis: The draft regulation proposes the following key changes: Page 4

7 RPO to be applied on co-generation power. Consumption from hydro sources to be excluded The graph below shows the total and type of energy consumption by the state of Himachal Pradesh. from calculation of RPO. RPO % is proposed to increase steeply from 11.50% in to 17% in inline with the MoP Trajectory. However, in effect the overall RPO of the HP will fall as 77% of the power consumed in the state comes from hydro sources. In year 2011, HPERC had come up with a ten year long RPO Trajectory ranging from 10% (including both solar & non solar) in to 19% in The commission now proposes to increase its RPO target in comparison to its earlier trajectory. However, in 20-17, RPO % is will be reduced. The graph given below gives a comparison between the MoP recent RPO Trajectory and HPERC s earlier RPO Trajectory: 18% % 14% 12% 10% 8% 6% 4% 2% 0% 0.25% 12% 13% RPO Trajectory Comparision 2.75% 8.75% 0.50% 0.75% 6.75% % 14% 9.50% 10.25% MoP Solar RPO MoP Non Solar RPO HPERC Solar RPO HPERC Non Solar RPO 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Source: CEA reports Almost 3/4th energy of the total consumption comes from the Hydro Power. As a result, the proposed exclusion of hydro power from RPO calculations is likely to result in significant reduction in overall RPO for the state. Further, since HP has a large proportion of power from small hydro station (which are considered RE power stations), RE consumption exceeds the RPO requirement. HPSEB is therefore entitled to get RECs for the excess. 4.72% 0.75% Installed Capacity (MW) 77% With exclusion of hydro power from RPO calculations, the excess RECs available to HPSEB are likely to increase manifold this may worsen the oversupply situation in the RECs markets % Coal Nuclear Hydro RES (MNRE) Installed Capacity (MW) Page 5

8 However, the notification of exclusion of hydro power from RPO calculations by MoP has been contested by some market participants. A recent article in Business Standard quoted a sector analyst According to the Electricity Act, 2003, total energy consumption includes hydro. A government order cannot supersede the Act. The regulation can be accessed here Solar PV Power Plant Solar Thermal Plant Generalized Tariff Roof Top Solar PV FY Tariff (Rs/kWh) With AD FY20-19 Tariff (Rs/kWh)With AD The CEA Report could be accessed here * 1Article titled Confusion reigns over renewable purchase obligations Business Standard Aug 22, 20 ( RERC has invited the comments and suggestions by 13 th September 20 on the same. The tariff proposed for FY -17 is much lower than the tariff of previous year in case of both Solar PV and Rooftop Solar PV, It RERC Draft Solar Tariff Policy for FY Rajasthan Electricity Regulatory Commission (RERC) recently proposed a levelized tariff under a draft regulation (RERC Terms & Conditions for Determination of Tariff for Renewable Energy Sources s, 20) issued for Solar power generators of the state. The graph below depicts the change in the tariff from the past year: can be said that the reason behind the reduction in the tariff of Solar PV is because of decreasing prices of Solar PV cells. The regulation can be accessed here. Policy for Repowering of the Wind Power Projects The Ministry of New & Renewable Energy in consultation with various stakeholders including the Industry and had come up with the Draft Policy for Repowering of the Wind Power the month of Page 6

9 March this year. Augmentation of transmission system from pooling After 4 months the Policy has been finalised with an objective to promote optimum utilization of wind station onwards to be carried out by the respective STU. energy resources by creating facilitative framework for repowering. Some of the key pints of the policy During the period of execution of repowering, wind are mentioned below: turbines would be exempted from not honoring the PPA for the non-availability. All the wind turbine generators with the capacity of 1MW or below would be eligible for repowering. Similarly, in case of repowering by captive user they The Policy offers incentives of an additional interest rate rebate of 0.25% over existing rebate available to the new wind projects by IREDA. will to be allowed to purchase power from grid during the period of execution of repowering. The Policy can be accessed here. Secondly through benefits like Accelerated Depreciation or GBI that would be made available to the repowering project. The power generated corresponding to average of last three years generation prior to repowering would continue to be procured on the terms of existing PPA. The remaining additional generation would either be purchased by Discoms at Feed-in-Tariff applicable in the State at the time of commissioning of the repowering project and/or allowed for third party sale. MPERC (Cogeneration and Generation of Electricity from Renewable Sources of Energy) MPERC recently ordered amendment for its Cogeneration & Generation of Electricity from Sources of Energy Renewable The new amendment has defined the minimum quantum of electricity to be procured by all the Obligated Entities from Co-generation from Renewable Sources of electricity expressed as % of their total annual procurement of Electrical Energy. Page 7

10 Analysis: MPERC has taken a proactive step by declaring the RPO in line with the National RPO Trajectory. As the Ministry of Power (MoP) declared the national RPO trajectory recently, all the states are expected to declare their RPO trajectory soon. The MPERC amendment has excluded the consumption met from hydro sources of power. The MPERC Draft can be accessed here. Also as per the NTP, the RPO which is applicable Other Regulatory updates of the month can be accessed here. on the fossil fuel based Cogeneration is not considered in the MPERC regulation. Double benefit is being given to co-generation units and Applicability of RPO on Fossil- fuel based co-generation plants. The graph given below depicts the MPERC RPO Trajectory MPERC RPO Trajectory Solar (%) Non Solar (%) Page 8

11 s largest REC Trading Company s first Green Energy Marketplace Regulatory Updates - August 20 For past trading history - CLICK HERE Non Solar Clearing ratio in exchange stood at 1.86% and 2.27%in IEX and PXIL respectively for Non Solar REC s. A total of 2, 58,891 RECs were traded as compared to 2, 35,007 RECs traded in July, an increase of 10%. Non Solar RECs ,38,29,226 1,32,81,006 1,31,77,050 1,35,46, Available Issued Redeemed ,18,392 2,32,881 3,92,095 1,114,319 2,90,457 1,61,858 4,51,138 4,17,426 May- Jun- Jul- Aug- Non Solar Clearing % 4.50% 4.00% 4.01% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 1.15% 1.50% 1.61% 1.91% 2.27% 1.86% IEX PXIL 0.50% 0.61% 0.00% May- Jun- Jul- Aug- For more details please visit our blog-post here. Page 9

12 s largest REC Trading Company s first Green Energy Marketplace Regulatory Updates - August 20 For past trading history - CLICK HERE Solar Clearing ratio stood good at 0.99% and 1.4% in IEX and PXIL respectively, with a marginal increase of 5% in total demand of Solar RECs as compared to last month. Solar RECs Solar Clearing % ,276,573 3,310,962 3,413,707 3,519, % 3.00% Availab le 2.50% 2.29% IEX Issued 2.00% PXIL ,87,049 1,34,242 1,52,066 25,652 1,26,205 57,757 20,083 51,015 May- Jun- Jul- Aug- Redee med 1.50% 1.00% 0.50% 0.00% 1.24% 1.17% 1.40% 0.61% 0.97% 1% 0.41% May- Jun- Jul- Aug Y-o-Y Graph % This month trading saw marginal increase in the demand for both Solar and Non-Solar RECs as compared to last month. Compared to August 2015, demand was almost double this month. The total transaction value stood at 52 Crores in comparison to 40 Crores last month. This month also saw significant fall in the total REC issuance with 40% reduction as compared to the NS REC TRADED S REC TRADED past month s total issuance. However, this is likely to be a temporary blip as RECs issuances are yet to catch up after the impact of CERC s 4th amend % ment to RECs regulations. The graph on the right is a Y-o-Y graph. 0 FY 15- (April to August) FY -17 (April to August) For more details please visit our blog-post here. Page 10

13 s largest REC Trading Company s first Green Energy Marketplace REC Project Status - As on 30th June,20 Registered Capacity MW Wind 2213 Bio-fuel Cogeneration 920 All figures in MW Projects Registered Source wise Biomass Solar PV 588 I 700 Small Hydro 291 Projects Registered State wise (MW) Reg. Capacity (MW) 1,085 1, Page 11

14 s largest REC Trading Company s first Green Energy Marketplace s RPO Table RPO Obligation (Non Solar) Andhra Pradesh 2.0 % 1.0 % Assam 6.75 % 0.25 % Arunachal Pradesh 6.80 % 0.20 % Bihar 3.25 % 1.25 % Chhattisgarh 6.25 % 2.75 % Delhi 8.65 % 0.35% Gujarat 8.25 % 1.75 % Haryana 2.75 % 1.00% Himachal Pradesh 8.75% 2.75% J&K 6.50% 1.00 % Jharkhand 3.00 % 1.00 % Karnataka % * 0.75 % * Kerala 4.5% 0.5% Madhya Pradesh 6.50% 1.25 % Maharashtra % 1.00 % Meghalaya 1.58 % 0.42 % Odisha 3.00 % 1.50 % Punjab 4.10% 1.30% Rajasthan Tamil Nadu 8.90 % 9.0 % 2.50% 2.50% Tripura 6.00 % 6.00% Uttarakhand 8.00% 1.5 % Uttar Pradesh 5.00 % 1.00 % West Bengal 4.80 % 0.20 % Goa & UTs 2.80 % 1.15 % Manipur 4.75 % 0.25 % Mizoram % 0.25 % Nagaland 7.75 % 0.25 % RPO Obligation ( Solar) BESCOM,MESCOM, CESC - 10 % %, HESCOM, GESCOM, Hukkeri Society - 7 % %. Status of - Final for all states except - Draft for Haryana and Telangana, Tripura & TN ( Draft Amendments of targets ) RPO on OA Users? - Yes for all states except West Bengal. Karnataka (5.00% RPO) - Yes (> 5MW). RPO on CPP? - Yes for all states except West Bengal. Gujarat, Odisha, Haryana, Bihar, Jharkhand, Tripura, Karnataka (5.00% RPO) - Yes (> 5MW). RPO Penalty? - Yes (REC max ) for all the states. West Bengal - Not Specified. Page 12

15 s largest REC Trading Company s first Green Energy Marketplace About REConnect Energy is s leading renewable energy trading company. We provide end-to-end services for projects in the Renewable Energy Certificate mechanism from contract structuring, advisory to monetization of RECs. We also work with power consumers to manage Renewable Purchase Obligation (RPO) liabilities, and develop and execute their energy sourcing strategy. We are a knowledge focused company that prides itself in providing premium services to our clients backed by in-depth research and analysis. REConnect is run by an experienced and professional team. The team consists of members with relevant experience of working at IEX, L&T, JP Morgan, Arthur Andersen and Gensol. Key members of the team are alumnus of IIT Bombay, Columbia University (an Ivy League university). For more details of services provided and profile of the team, please visit our website. Contact Details Bangalore: Vishal Pandya No. 2, Victor Mansion, 2nd floor, Kodihalli, Old Airport Road, HAL 2nd Stage (PO), Bangalore O : / 84 F : Chennai: Venkat Mutharasu ( ) # 18/1 (88), 2nd Floor, Aarya Gowda Road, West Mambalam, Chennai New Delhi: Vibhav Nuwal C 503, 5th Floor, Nirvana courtyard, Nirvana Country, Sector 50, Gurgaon O : F : Hyderabad: Rahul ( ) Mumbai: Ram Kumar ( ) 1013, 10th Floor, Micro (Haware) Infotech Park, Plot no., Sector-30A, Vashi, Navi Mumbai , Maharashtra,. Solar Market: Vibhav Nuwal Call: W: Renewable Purchase Obligation (RPO): Chetan Singh Adhikari ( ) Forecasting and Scheduling (F&S) Siddhartha P. ( ) Follow us on: Disclaimer: All the information presented in this newsletter is from publicly available sources. REConnect does not warrant the accuracy and completeness of information available and therefore will not be liable for any loss incurred. The content provided here is for the general informational purposes only. REConnect shall not be responsible for damages resulting from the use of any information in this newsletter. Readers are advised to make appropriate analysis and take appropriate advise before acting on the contents of this newsletter. Page 13