Project Report on. Comparative Study Of Solar Policies of Various States,SPO, RRF mechanism & Solar (PV) development path

Transcription

1 Project Report on Comparative Study Of Solar Policies of Various States,SPO, RRF mechanism & Solar (PV) development path The Tata Power Trading Company Limited Under the guidance of Mr. KUNDAN KUMAR Manager, TPTCL Submitted by SUMIT KUMAR DUBEY MBA (Power Management) Roll No 89 Sector-33, Faridabad , Haryana (Under the Ministry of Power, Govt. of India) August, 2013 Page i of 99

2 ACKNOWLEDGEMENT Apart from efforts of the person doing the project, the success of any project depends largely on the encouragements and guidelines of many others. I take this opportunity to express my gratitude to the people who have been instrumental in the successful completion of the project. I thank to Mr Rajendran Nair, Head-Admin and Corporate Affairs for giving me the opportunity to work on such an insightful project with such a renowned company. I would like to extend my thanks to my guide Mr. Kundan Kumar, for showing me the right path and approach towards the project. Special thanks to Mr. Neeraj Srivastava and Mr. Avanish Verma for their benevolent support. I would also like to thank all the staff members of TATA POWER TRADING COMPANY LIMITED. Without their insights and helpful thoughts, I would not have gained as much information as I have. Their help has sparked my interest even more. I feel deep sense of gratitude towards Mr.S.K.Chaudhary, Principal Director, CAMPS, my internal Project Guide Mrs. Karishma verma, Sr. Fellow, NPTI Mrs. Manju Mam, Director, NPTI, Mrs. Indu Maheshwari, Dy. Director, NPTI for arranging my internship at TPTCL and being a constant source of motivation and guidance throughout the course of my internship. I also extend my thanks to all the faculties and my batch mates in CAMPS (NPTI), for their support and guidance throughout the course of internship. I am grateful to my family who gave me the moral support in my times of difficulties. Thank you all for being there for me always. SUMIT KUMAR DUBEY ii P a g e

3 DECLARATION I, Sumit Kumar Dubey, Roll No 89 student of MBA (POWER MANAGEMENT) at National Power Training Institute, Faridabad hereby declare that the Summer Training Report entitled - Comparative Study Of Solar Policies of Various States,SPO, RRF mechanism & Solar (PV) development path is an original work and the same has not been submitted to any other Institute for the award of any other degree. A Seminar presentation of the training report was made on 2 nd September and the suggestions as approved by the faculty were duly incorporated. Presentation In charge Signature of the Candidate (Faculty) Countersigned Director/Principal of the Institute iii P a g e

4 CERTIFICATE iv P a g e

5 EXECUTIVE SUMMARY Sun is the ultimate source of energy and mankind has been harnessing Sun s energy ever since the dawn of civilization. In modern era electricity has become fundamental need of every human-being and the demand of it is rising by the day. Though fossil fuels are less cheaper way to generate electricity but the cost paid as degradation of environment is huge and at present moment the situation of our home planet has become very poor environmentally. Nations have acknowledged this threat and are now investing in renewable sources of energy to produce electricity. Major renewable sources are Hydro, Wind, Biomass and Solar. India is blessed with abundant solar energy and if harnessed efficiently, the country is capable of producing trillion-kilowatts of electricity. Solar energy is extremely beneficial as it is non-polluting and its generation can be decentralized. There is needto come together and take initiatives to create technologies for a greater use of these sources to combat climate change by reducing the emission of green house gases. This report starts by referring the provisions and important statements in the Indian federal legislative documents relating to solar technologies. Comparative study of rules, regulations, policies and tariff components related to solar technologies has been done of the states of India namely Gujarat, Orissa, Madhya-Pradesh, Rajasthan, Haryana, Bihar, Karnataka, Manipur and Maharashtra. Report further deals with Renewable Purchase Obligation (RPO). target set by the SERC for the distribution utility in the State & Renewable Energy Certificate (REC) mechanism. To enter into any field of interest with a new project it is very important to scrutinize and analyse the options available, SWOT analysis of solar technologies in the footsteps of a developer was carried out during the training and the same has been mentioned Report further deals with the RRF mechanism and its implication to solar industry in India. Pro s and Con s of state policies and regulations are mentioned from a developer s point of view after comparing them on the basis of parameters namely eligible producer, land allotment, operative period, sale of power and tariff, wheeling, banking of electricity, power, evacuation & grid interfacing and incentives v P a g e

6 Study about the future growth of the solar (pv) in various states and solar radiation pattern for the viability of solar project in the state. As solar radiation is important for the utilisation factor of the plant. Estimation of grid parity in India and its implication on solar power projects and various methods that can be adopted by solar generators for the selling of their power. Report further details the role of traders for the promotion of solar. vi P a g e

7 LIST OF ABBREVIATIONS AC AD CAC ALTERNATING CURRENT ACCELERATED DEPRECIATION CENTRAL ADVISORY COUNCIL CASE COMMISSION FOR ADDITIONAL SOURCES OF ENERGY CDM CEA CSDL CSP CTU CER CUF DC DNA DNES DNI DOE EB GENCOS GHG HCA IPP IREDA IRL IEGC JI JNNSM Kwh MoEF MSEDCL CLEAN DEVELOPMENT MECHANISM CENTRAL ELECTRICITY AUTHORITY CENTRAL DEPOSITORY SERVICES LIMITED CONCENTRATED SOLAR POWER CENTRAL TRANSMISSION UNIT CERTIFIED EMISSION REDUCTION CAPACITY UTILIZATION FACTOR DIRECT CURRENT DESIGNATED NATIONAL AUTHORITY DEPARTMENT OF NON-CONVENTIONAL ENERGY SOURCES DIRECT NORMAL IRRADIANCE DESIGNATED OPERATIONAL ENTITY EXECUTIVE BOARD GENERATING COMPANIES GREEN HOUSE GASES HOST COUNTRY APPROVAL INDEPENDENT POWER PRODUCER INDIAN RENEWABLE ENERGY DEVELOPMENT AGENCY INDIABULLS REALTECH LIMITED INDIAN ELECTRICITY GRID CODE JOINT IMPLEMENTATION JWAHARLAL NEHRU NATIONAL SOLAR MISSION KILLOWATT HOUR MINISTRY OF ENVIRONMENT AND FOREST MAHARASHTRA STATE ELECTRICITY DISTRIBUTION CO. LTD vii P a g e

8 MNES MNRE MoU MoP MVVNL MW MWh NBFC NCDMA NCR NSE NSM NRSE NSDL NLDC NEP NREL NTP NTPC NVVN PCN PDD PPA PV PEDA PPDL PSPCL RLDC ROE RPO REC MINISTRY OF NON-CONVENTIONAL ENERGY SOURCES MINISTRY OF NEW AND RENEWABLE ENERGY MEMORANDUM OF UNDERSTANDING MINISTRY OF POWER MADHYANCHAL VIDYUT VITRAN NIGAM LTD. MEGAWATT MEGAWATT HOUR NON-BANKING FINANCIAL COMPANIES NATIONAL CLEAN DEVELOPEMENT AUTHORITY NATIONAL CAPITAL REGION NATIONAL STOCK EXCHANGE NATIONAL SOLAR MISSION NEW AND RENEWABLE SOURCES OF ENERGY NATIONAL SECURITIES DEPOSITORY LIMITED NATIONAL LOAD DISPATCH CENTRE NATIONAL ELECTRICITY POLICY NATIONAL RENEWABLE ENERGY LABORATORY NATIONAL TARIFF POLICY NATIONAL THERMAL POWER CORPORATION NTPC VIDYUT NIGAM LIMITED PROJECT CONCEPT NOTE PROJECT DESIGN DOCUMET POWER PURCHASE AGREEMENT PHOTOVOLTAIC PUNJAB ENERGY DEVELOPMENT AGENCY POENA POWER DEVELOPMENT LIMITED PUNJAB STATE POWER CORPORATION LIMITED REGIONAL LOAD DISPATCH CENTRE RETURN ON EQUITY RENEWABLE PURCHASE OBLIGATION RENEWABLE ENERGY CERTIFICATE viii P a g e

9 SWOT SEB SEZ SPC SLDC UNFCCC STRENGTH, WEAKNESSES, OPPORTUNITIES & THREATS STATE ELECTRICTY BOARD SPECIAL ECONOMIC ZONE STATE POWER COMMISSION STATE LOAD DISPATCH CENTRE UNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE CHANGE ix P a g e

10 TABLE OF CONTENTS ACKNOWLEDGEMENT DECLARATION CERTIFICATE EXECUTIVE SUMMARY LIST OF ABBREVATIONS CONTENTS ii iii iv v vii x CHAPTER-1 INTRODUCTION 1.1 SOLAR ENERGY SOLAR TECHNOLOGIES SOLAR POWER OBJECTIVE & SCOPE SIGNIFICANCE ORGANISATION PROFILE 7 CHAPTER-2 LITERATURE SURVEY & SCENARIOS 2.1 LEGISLATION EVOLVEMENT ELECTRICITY ACT ELECTRICITY SUPPLY ACT ELECTRICITY REGULATORY COMMISSIONS ACT ELECTRICITY ACT NATIONAL ELECTRICITY POLICY 2005 (NEP) NATIONAL TARIFF POLICY 2006 (NTP) NATIONAL ACTION PLAN ON CLIMATE CHANGE INDIAN ELECTRICITY GRID CODE (IEGC) TARIFF REGULATIONS TARIFF REGULATIONS FOR RENEWABLE ENERGY GOVERNING INSTITUTIONS FUNCTIONS OF MNRE FUNCTIONS OF GOVERNMENT WORLD SCENARIO FUTURE PROSPECTS UNFCCC INDIAN SCENARIO FUTURE PROSPECTS 24 x P a g e

11 CHAPTER-3 STATE SOLAR POLICY ANALYSIS 3.1 STATES GUJARAT KARNATAKA MADHYA-PRADESH RAJASTHAN HARYANA BIHAR MIZORAM CHHATTISHGARH 58 CHAPTER-4 SPO OF VARIOUS STATE, STUDY ABOUT REC, RRF & SWOT ANALYSIS 4.1 SPO OF STATES REC RRF MECHANISM GRID PARITY OTHER OPTION FOR SPO FINDINGS & RECOMENDATION 87 BIBLIOGRAPHY 88 xi P a g e

12 CHAPTER-1 INTRODUCTION Electricity is one of the basic requirements for economic development. Every sector of the economy requires input of electricity. Since independence there has been a continuous growth in electric energy requirement which till date has been majorly satisfied by coal and will continue to remain the same in near future, but there has been a fast rise in technology based on renewable sources of energy, mainly Hydro, solar and wind, and their share in total energy mix has been increasing steadily. Hydro technology has matured over the period of time but solar is relatively in nascent stage and require R&D for continuous evolution. 1.1 SOLAR ENERGY Solar energy is the energy received in the form heat and radiations from sun. Mankind has been harnessing solar energy since ancient times using ever-evolving technologies. The Earth receives 174 petawatts (PW) of incoming solar radiation (isolation) at the upper atmosphere. Approximately 30% is reflected back to space while the rest is absorbed by clouds, oceans and land masses. The amount of solar energy reaching the surface of the planet is so vast that in one year it is about twice as much as will ever be obtained from all of the Earth's on renewable resources of coal, oil, natural gas, and mined uranium combined. Solar energy can be harnessed in different levels around the world. Depending on a geographical location the closer to the equator the more "potential" solar energy is available Fig. 1.1 Average insolation showing land area (small black dots) required to replace the world primary energy supply with solar electricity. 18 TW is 568 Exajoule (EJ) per year. Insolation for most people is from 150 to 300 W/m2 or 3.5 to 7.0 Page 1 of 99

13 1.1.1 SOLAR TECHNOLOGIES Solar technologies are broadly characterized as either passive or active depending on the way they capture, convert and distribute sunlight. Active solar techniques use photovoltaic panels, pumps, and fans to convert sunlight into useful outputs. Passive solar techniques include selecting materials with favourable thermal properties, designing spaces that naturally circulate air, and referencing the position of a building to the Sun. Active solar technologies increase the supply of energy and are considered supply side technologies, while passive solar technologies reduce the need for alternate resources and are generally considered demand side technologies CRYSTALLINE SOLAR PV SOLAR TECHNOLO GY THERMAL THIN FILM SOLAR CHIMNEY CSP STIRLING Parabolic Trought Solar tower 2 P a g e

14 1.1.2 SOLAR POWER Solar power is the conversion of sunlight into electricity, either directly using photovoltaics (PV), or indirectly using concentrated solar power (CSP) CONCENTRATED SOLAR POWER (CSP) Concentrated Solar Power (CSP) systems use lenses or mirrors and tracking systems to focus a large area of sunlight into a small beam. The concentrated heat is then used as a heat source for a conventional power plant. A wide range of concentrating technologies exists and themost developed are the parabolic trough, the concentrating linear Fresnel reflector, the Stirling dish and the solar power tower. Various techniques are used to track the Sun and focus light. In all of these systems a working fluid is heated by the concentrated sunlight, and is then used for power generation or energy storage. A parabolic trough consists of a linear parabolic reflector that concentrates light onto a receiver positioned along the reflector's focal line. The receiver is a tube positioned right above the middle of the parabolic mirror and is filled with a working fluid. The reflector is made to follow the Sun during the daylight hours by tracking along a single axis. Parabolic trough systems provide the best land-use factor of any solar technology. Commercial concentrated solar power plants were first developed in the 1980s. The 354 MW SEGS (Solar Energy Generating Systems) CSP installation is the largest solar power station in the world, located in the Mojave Desert of California PHOTOVOLTAICS A solar cell, or photovoltaic cell (PV), is a device that converts light into electric current using the photoelectric effect. The first solar cell was constructed by Charles Fritts in the 1880s. Solar cells produce direct current (DC) power, which fluctuates with the intensity of the irradiated light. This usually requires conversion to certain desired voltages or alternating current (AC), which requires the use of the inverters. Multiple solar cells are connected inside the modules. Modules are wired together to form arrays, then tied to inverter, which produces power with the desired voltage, and frequency/phase (when AC). Many residential systems 3 P a g e

15 are connected to the grid wherever available, especially in the developed countries with large markets. In these grid-connected PV systems, use of energy storages are optional. In certain applications such as satellites, lighthouses, or in developing countries, batteries or additional power generators are often added as back-ups, which forms stand-alone power systems. The 214 MW Charanka Solar Park (Gujarat) in India is the world s largest photovoltaic power station. The evolution of solar technology to current stage is the result of research that started in1800s. Crystalline silicon Polycrystalline silicon is also a key component of solar panel construction. Growth of the photovoltaic solar industry was limited by the supply of the polysilicon material. For the first time, in 2006, over half of the world's supply of polysilicon was being used for production of renewable electricity solar power panels. Only twelve factories were known to produce solar grade polysilicon in Modules are typically categorized as mono-crystalline or polycrystalline modules. Mono-crystalline silicon was higher priced and more efficient than multi-crystalline. This however changed and, in 2011, there was a large excess of production capacity of polysilicon. 4 P a g e

16 Thin film modules A thin-film solar cell (TFSC), also called a thin-film photovoltaic cell (TFPV), is a solar cell that is made by depositing one or more thin layers (thin film) of photovoltaic material on a substrate. The thickness range of such a layer is wide and varies from a few nanometres to tens of micrometers. 1.2 OBJECTIVE & SCOPE The objective of this project is to enhance power sector knowledge through industrial exposure in solar sector by interpreting, analyzing and presenting:- 1. Historical development of legislative framework. 2. Policies of states including Gujarat, Orissa, Haryana, Bihar, Madhya Pradesh, Rajasthan, Manipur and Delhi 3. Major Players (Developers and Suppliers). 4 Study about RPO,REC & RRF 5. SWOT analysis of solar development mechanism 6. Providing recommendations. 5 P a g e

17 1.3 SIGNIFICANCE The significance/usefulness of this project can be shown as:- 1. The report shall be useful in providing the necessary data for decision making in solar domain. 2. It shall enhance the knowledge of reader by providing in-depth view of energy and tariff policies. 3. The project shall provide a simple view of complex legislature thus making it easy to understand. 4. It provides compiled information, thus reader doesn t have to refer many documents. 5. It provides recommendations and findings which shall help making future plans 6 P a g e

18 1.4 ORGANISATIONAL PROFILE Tata Power Trading Company Limited is a wholly owned subsidiary of The Tata Power Company Limited. The Tata Power Company Limited is India's oldest and the largest integrated private sector power utility with an installed generation capacity of 8500 MW as on 31st March The Company has emerged as a pioneer in the Indian power sector, with a track record of performance, customer care and sustained growth. Tata Power has a presence in all areas of power sector viz. Generation (thermal, hydro, solar and wind), Transmission and Distribution. Tata Power Trading is the first company in India to be awarded a power trading license by Central Electricity Regulatory Commission on 9th June Tata Power Trading was incorporated on 31st December 2003 and registered as a Limited company on 16th February The Company has progressively upgraded from Category 'A' license in 2004 to Category 'F' on 9th June 2005 and again to Category 'I' on 16th February 2009 which continues to entitle it to trade unlimited power. Tata Power Trading has become a trailblazer in the power trading arena with a host of innovative initiatives. Tata Power Trading has been at the forefront in shaping India's vibrant power trading market. With access to Technical, Managerial and Financial resources of its parent company, it is uniquely equipped to provide an unmatched range of services, customer care and complete payment security for its customer s at the most competitive rates. As an extremely well knit organization, it has domain expertise in all the segments of Power Trading whether it be Marketing, Commercial or Operations, supported ably by the Finance, Legal and Administrative functions. In a short span of time after receiving the license, Tata Power Trading has catalyzed the flow of electricity across the length and breadth of the country helping bridge the demand and supply gap of the various utilities. 1.1 VISION To be the leading and the most admired power trading company in India. 7 P a g e

19 1.2 MISSION To serve our customer and partners through innovative and effective power trading solutions and associated services; rendered with transparency, speed, reliability, safety and efficiency. To create value for all the stakeholders through unique combination of talent, knowledge, skills and technology. 1.3 CORE VALUES 8 P a g e

20 CHAPTER-2 LITERATURE SURVEY & SCENARIOS 2.1 LEGISLATION EVOLVEMENT The legislature for electricity sector has been evolving from the 1800s providing important guidelines for smooth and efficient functioning of power sector. The concept and need of provisions for inclusion and enhancement of renewable energy was felt in the later stages. In this section we take a look at different acts and see what they say about renewable including solar energy ELECTRICITY ACT 1910 The electricity act 1910 was the first act which provided detailed definitions and also made efforts for competition enhancement. It was also the first act which provided judicial framework for the power sector and clearly defined theft and related penalties, but the act does not talk about renewable energy as at that time the concept was not on ground and the focus was on regulating the sector by solving the present problems and providing a clear framework ELECTRICITY SUPPLY ACT 1948 The act was made on broad lines of Electrify (Supply) act 1926 of United Kingdom. Main aim of act was to provide for the rationalization of the production and Supply of electricity, and generally for taking measures Conducive to Electrical development. The formation of EA and SEB s and stating their statutory powers was the main highlight of this act. This act also doesn t talks about renewable as the efficient and usable technology was not present ELECTRICITY REGULATORY COMMISSIONS ACT 1998 As the sector progressed, need was felt to divest regulatory powers from government and in pursuance of this vision this act was formulated to provide for the establishment of a Central Electricity Regulatory Commission and State Electricity Regulatory Commissions, rationalization of electricity tariff, transparent policies regarding subsidies, promotion of efficient and environmentally benign policies and connected matters. During this period the installed capacity of solar PV in the world had surpassed the 700 MW mark but India was 9 P a g e

21 still not in the picture and also the act did not convey any guidelines for the non conventional sources of electricity generation ELECTRICITY ACT 2003 Electricity Act 2003 is considered the most transformational and dynamic act till date. The main focus of act was on de-bundling of the electrical utilities, but it also included guidelines for renewable energy. Section 4 The National policy on stand-alone system shall include renewable sources. Section 61 (h) The section states that while specifying term and conditions of tariff determination the commission shall consider the promotion of generation from renewable sources of energy along with other factors. Section 86 (1) (e) The section states that state commission shall promote generation of electricity from renewable sources of energy and also tells that it shall be done by providing suitable measures for connectivity with the grid and sale of electricity to anyone. A percentage of total consumption in distribution licensee s area shall be satisfied from renewable sources specified by the commission NATIONAL ELECTRICITY POLICY 2005 (NEP) National electricity policy was launched in accordance with section 3 of electricity act 2003 Section 5.12 The section states that there is urgent need to promote energy generation from renewable sources of energy because of their environmental friendliness. Efforts must be directed to reduce the capital cost of these projects. It also states that the share of electricity from onconventional sources through competitive bidding would need to be increased as prescribed by State Electricity Regulatory Commissions and the Commission may determine an appropriate differential in prices to promote these technologies NATIONAL TARIFF POLICY 2006 (NTP) National electricity policy was launched in accordance with section 3 of electricity act 2003 in continuation with national electricity policy 10 P a g e

22 Section 6.4 The section states that in present stage the conventional and non-conventional technologies cannot compete at similar tariff and hence the power shall be procured from nonconventional sources at preferential tariff determined by the appropriate commission but it also states that in long term the non-conventional technologies have to compete with other sources in terms of full cost. It also states that appropriate commission will fix the minimum percentage of power to be procured from non-conventional sources with reference to section 86 (1) of electricity act NATIONAL ACTION PLAN ON CLIMATE CHANGE Keeping in view the depletion of environment and resources and need for conservation of energy sources on 30th June 2008 prime minister Dr. Manmohan Singh released India s first National Action Plan on Climate Change identifying eight core national missions Section 4.1 As per this section a national solar mission was launched on 11th Jan to significantly increase the share of solar in total energy mix. The programme was launched in three phases with following targets:- 1. To create an enabling policy framework for the deployment of 20,000 MW of solar power by To ramp up capacity of grid-connected solar power generation to 1000 MW within three years by 2013, an additional 3000 MW by 2017 through the mandatory use of the renewable purchase obligation by utilities backed with a preferential tariff. This capacity can be more than doubled reaching 10,000 MW installed power by 2017 or more, based on the enhanced and enabled international finance and technology transfer. The ambitious target for 2022 of 20,000 MW or more, will be dependent on the learning of the first two phases, which if successful, could lead to conditions of grid-competitive solar power. The transition could be appropriately up scaled, based on availability of international finance and technology. 3. To create favorable conditions for solar manufacturing capability, particularly solar thermal for indigenous production and market leadership. 4. To promote programmes for off grid applications, reaching 1000 MW by 2017 and 2000 MW by To achieve 15 million sq. meters solar thermal collector area by 2017 and 20 million by P a g e

23 6. To deploy 20 million solar lighting systems for rural areas by The ultimate objective of the Mission would be to develop a solar industry in India that is capable of delivering solar energy competitively against fossil options from the Kilowatt range of distributed solar thermal and solar PV to the gigawatt scale of base load priced and dispatchable CSP within the next years. Section 3.1-Technical This section defines different technologies used for solar generation as addressed earlier in section 1.2 and also encourages research and technology collaborations, it also defines the responsibilities of National solar mission as:- 1. Deployment of commercial and near commercial solar technologies in the country. 2. Establishing a solar research facility at an existing establishment to coordinate the various researches, development and demonstration activities being carried out in India, both in the public and private sector. 3. Realizing integrated private sector manufacturing capacity for solar material, equipment, cells and modules. 4. Networking of Indian research efforts with international initiatives with a view to promoting collaborative research and acquiring technology where necessary, and adapting the technology acquired to Indian conditions. 5. Providing funding support for the activities foreseen under 1 to 4 through government grants duly leveraged by funding available under global climate mechanisms, and earnings from deployment of research sponsored by the Mission. Policy and Regulatory measures for promotion of solar technologies would also be enhanced as common to all renewables based technologies. The section also addresses the targets and the technology gap between domestic and foreign players and goes on to say that Indian approach should be in order to bridge this gap 12 P a g e

24 NTPC Vidyut Vyapar Nigam Ltd. (NVVN) It was formed by NTPC Ltd, as its wholly owned subsidiary to tap the potential of power trading in the country thereby promote optimum capacity utilization of generation and transmission assets in the country and act as a catalyst in development of a vibrant electricity market in India. In order to facilitate grid connected solar power generation in the first phase, a mechanism of "bundling" relatively expensive solar power with power from the unallocated quota of the Government of India (Ministry of Power) generated at NTPC coal based stations, which is relatively cheaper, has been proposed by the National Solar Mission. This "bundled power" would be sold to the Distribution Utilities at the Central Electricity Regulatory Commission (CERC) determined prices NVVN is the designated Nodal Agency for procuring the solar power by entering into a Power Purchase Agreement with Solar Power Generation Project Developers who will be setting up Solar Projects before March 2013 and are connected to the grid at a voltage level of 33 kv and above. For each MW of installed capacity of solar power for which a PPA is signed by NVVN, the Ministry of Power (MoP) shall allocate to NVVN an equivalent amount of MW capacity from the unallocated quota of NTPC coal based stations and NVVN will supply this "bundled" power to the Distribution Utilities INDIAN ELECTRICITY GRID CODE (IEGC) IEGC provides standards, guidelines and rules to be followed by all utilities using and connected to interstate transmission system (ISTS) to develop, maintain and operate the power system, in the most secure, reliable, economic and efficient manner so that healthy competition in the generation and supply of electricity can occur IEGC 2006 IEGC 2006 does not provide for guidelines for renewable energy IEGC 2010 IEGC 2010 includes the guidelines for the use of renewable described below 13 P a g e

25 Section 1.2 This section states that providing facilitation of the development of renewable energy sources by specifying the technical and commercial aspects for integration of these resources into the grid is one of the objectives of IEGC. Section 1.4 (v) & 6.2 The interpretation of this section in view of renewable is that while formulating scheduling and dispatch code it has been kept in mind that focus of Indian government is towards enhancement of renewable. Section This section states that preparation of monthly renewable regulatory charge account based on data provided by SLDC/RLDC of the State/Region by RPC Secretariat or any other person as notified by the Commission from time to time is amongst the roles of RPC. Section 3.4 (a) In formulating perspective transmission plan the transmission requirement for evacuating power from renewable energy sources shall also be taken care of. Section 3.4 (b) (6) The sections statement states that the CTU while planning scheme shall consider renewable capacity addition plan issued by Ministry of New and Renewable Energy Sources (MNRES). Section (c) This section talks about outage plans and states that the outage planning of run-of-the-river hydro plant, wind and solar power plant and its associated evacuation network shall be planned to extract maximum power from these renewable sources of energy. 14 P a g e

26 Section 6.5 (11) This section states that while formulating scheduling and dispatch procedures for long term access, medium term and short term open access it is to be considered that all renewable energy power plants, except for biomass power plants and non-fossil fuel based cogeneration plants whose tariff is determined by the CERC shall be treated as MUST RUN power plants and shall not be subjected to merit order dispatch principles. Section 6.5 (13) (iii) The Concerned RLDC and SLDC shall maintain the record of schedule from renewable power generating stations based on type of renewable energy sources and also while scheduling generating stations in a region, system operator shall aim at utilizing available wind and solar energy fully. Annexure-1 (7) In case of solar generation no UI shall be payable/receivable by Generator. The host state shall bear the UI charges for any deviation in actual generation from the schedule. However, the net UI charges borne by the host State due to the solar generation, shall be shared among all the States of the country in the ratio of their peak demands in the previous month based on the data published by CEA, in the form of regulatory charge known as the Renewable Regulatory Charge operated through the Renewable Annexure-2 (9) This section issues guidelines to NLDC to prepare, within one month of notification of these regulations, a detailed procedure for implementation of the mechanism of Renewable Regulatory Fund and submit the same for approval by the Commission TARIFF REGULATIONS 2009 Tariff regulations were launched for the rational determination of tariff throughout the electricity sector but tariff determination of power from non-conventional sources of energy was not in its scope 15 P a g e

27 Section 4 The Commission decided to come out with a separate regulation for determination of tariff based on nonconventional energy sources TARIFF REGULATIONS FOR RENEWABLE ENERGY 2012 Tariff regulations for renewables for a period of five years starting from were released by CERC. The main objective of these regulations was to rationalize the tariff and to bring the non-conventional sources at par with conventional sources. The tariff regulations comprehensively defined terms and levellised tariff calculations criteria s with examples Solar Some important point given under the regulations for solar are:- 1. As per section 2 (1) (aa) the useful life of solar is 25 Yrs. 2. As per section 6 (b) tariff period for solar (PV and thermal) is 25 Yrs. 3. As per section 5 the benchmark capital cost of solar technologies (PV & Thermal) may be reviewed annually by CERC. 4. As per section 9 the tariff shall be single part-tariff with five fixed components namely, a) Return on equity b) Interest on loan capital c) Interest on working capital e) Operation and maintenance expenses. d) Depreciation 5. As per section 11 (4) solar generating plants with capacity of 5 MW and above & connected at the connection point of 33 KV level and above shall be subjected to scheduling and dispatch code as specified under IEGC-2010, as amended from time to time. 2.2 GOVERNING INSTITUTIONS The Ministry of New and Renewable Energy (MNRE) is the nodal Ministry of the Government of India for all matters relating to new and renewable energy. The broad aim of 16 P a g e

28 the Ministry is to develop and deploy new and renewable energy for supplementing the nergy requirements of the country. The ministry has evolved in following steps:- 1. The sudden increase in the price of oil, uncertainties associated with its supply and the adverse impact on the balance of payments position led to the establishment of the Commission for Additional Sources of Energy (CASE) in the Department of Science & Technology in March The Commission was charged with the responsibility of formulating policies and their implementation, programmes for development of new and renewable energy apart from coordinating and intensifying R&D in the sector. 2. In 1982, a new department, i.e., Department of Non-conventional Energy Sources (DNES), that incorporated CASE, was created in the then Ministry of Energy. 3. A unique institutional innovation has been the setting up of the IREDA (Indian Renewable Energy Development Agency) in 1987 to finance renewable energy projects. The main objective of IREDA is to operate a revolving fund for promotion, development and commercialization of New and Renewable Sources of Energy (NRSE) and to extend financial support to Energy efficiency & conservation projects and schemes 4. In 1992, DNES became the Ministry of Non-conventional Energy Sources. MNES, in 1993 prepared policy guidelines for promotion of power generation from renewable energy sources which included provisions such as accelerated depreciation, concessions regarding the banking, wheeling and third party sale, among others. Power being a concurrent subject between the central and the state governments in India; different states adopted the MNES guidelines to varying degree. 5. In October 2006, the Ministry was re-christened as the Ministry of New and Renewable Energy (MNRE). MNRE is the nodal Ministry of the Government of India for all matters relating to new and renewable energy. MNRE is the administrative ministry entrusted with the responsibility of policy making, planning, promotion and coordination of various aspects of renewable energy. 17 P a g e

29 2.2.1 FUNCTIONS OF MNRE Facilitate research, design, development, manufacture and deployment of new and renewable energy systems/devices for transportation, portable and stationary applications in rural, urban, industrial and commercial sectors through: 1. Technology Mapping and Benchmarking. 2. Identify Research, Design, Development and Manufacture thrust areas and facilitates the same. 3. Lay down standards, specifications and performance parameters at par with international levels and facilitate industry in attaining the same. 4. Align costs of new and renewable energy products and services with international levels and facilitate industry in attaining the same. 5. Appropriate international level quality assurance accreditation and facilitate industry in obtaining the same. 6. Provide sustained feed-back to manufacturers on performance parameters of new and renewable energy products and services with the aim of effecting continuous up gradation so as to attain international levels in the shortest possible time span. 7. Facilitate industry in becoming internationally competitive and a net foreign exchange earner especially through (ii) to (v) above and related measures. 8. Resource Survey, Assessment, Mapping and Dissemination. 9. Identify areas in which new and renewable energy products and services need to be deployed in keeping with the goal of national energy security and energy independence. 10. Deployment strategy for various indigenously developed and manufactured new and renewable energy products and services. 18 P a g e

30 11. Provision of cost-competitive new and renewable energy supply options FUNCTIONS OF GOVERNMENT Central Government shall, from time to time, prepare the National Electricity Policy, policy for stand-alone systems in rural areas and tariff policy, in consultation with the State Governments and the Authority for development of the power system. The information flows according to the organizational structure as stated below. Fig. 2.1 Organizational Structure of Indian Electricity Sector 19 P a g e

31 2.3 WORLD SCENARIO Coal and Oil have been major energy sources for a long time and in the recent time there have been continuous fluctuations in their supply pertaining to many reasons, further there has been a steep rise in the price of coal worldwide and consumption with countries like Japan entering market as coal consumers, these situations have led the world to recognize the vast potential and need of renewable sources including solar energy in the total energy mix and the efforts in the field of renewable have increased a great deal which can be seen through continuous rise in the installed capacity of Solar 40% Energy consumption fuel 35% 30% 25% 20% Energy consumption fuel 15% 10% 5% 0% Oil Natural gas Coal Nuclear Hydro Renewables Fig. 2.4 Primary Energy Consumption by Fuel 20 P a g e

32 2.3.1 FUTURE PROSPECTS In this century, solar power has already become a small part of daily life. From solar heated swimming pools to solar powered homes, some examples already exist to show the useful application of the clean, safe, sustainable power of the sun. Yet many wonder if small applications will be all solar power is capable of handling. Certainly, the difficulties of large solar plants are many, although many experts continue to insist that the future of solar energy is quite sunny. According to some experts, the sun is our best source of renewable, clean energy. Some estimate that the sun can produce 10,000 times as much energy as the Earth uses at the turn of the 21st century. The future of solar energy depends mostly on how it is applied, rather than whether it would be enough energy to be a viable world power source. The largest problem facing the future of solar energy is the space required to build solar power plants. A solar plant is comprised of thousands of solar panels and requires a consistently sunny area and a considerable amount of space. Currently, the one of the largest solar power stations in the world covers more than 10 square miles (16.9 km squared) and creates enough power to run about 200,000 homes. In addition to building more and larger plants, the future of solar energy lies in the construction of new buildings and the retro-fitting of many older ones. As long as the trend toward alternative energy supplies continues, some experts predict that most, if not all, new buildings will have solar-energy panels installed on roofs. Since these are also easily installed, many older buildings may receive upgrades to run on solar power. Experts and environmentalists hope that green-energy building will be encouraged by world government through generous tax incentives and exemptions for alternative energy use. One encouraging factor about the future of solar energy is that many of the world's greatest innovators are choosing to focus their considerable talent and funds on improving alternative energy technology. 21 P a g e

33 Fig. 2.5 Solar Potential of Major Countries Although there are many reasons to believe that the future of solar energy is bright and coming soon, the answer really lies in the hands of the world's citizens. In a world largely governed by economics and politics, what ordinary citizens choose to buy and support will dictate the trends of the future. By installing solar panels, donating to research organizations involved in alternative energies, majoring in science or engineering, and voting for measures that give money to alternative energy development, anyone can influence the future of solar energy UNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE CHANGE In 1992, countries joined an international treaty, the United Nations Framework Convention on Climate Change, to cooperatively consider what they could do to limit average global temperature increases and the resulting climate change, and to cope with whatever impacts were, by then, inevitable. By 1995, countries realized that emission reductions provisions in the Convention were inadequate. They launched negotiations to strengthen the global response to climate change, and, two years later, adopted the Kyoto Protocol. The Kyoto Protocol legally binds developed countries to emission reduction targets. The Protocol s first commitment period started in 2008 and ends in Till date there are total 195 parties 22 P a g e

34 KYOTO PROTOCOL The Kyoto Protocol was adopted in Kyoto, Japan, on 11 December 1997 and entered into force on 16 February The detailed rules for the implementation of the Protocol were adopted at COP 7 in Marrakesh in 2001, and are called the Marrakesh Accords. In Kyoto protocols three mechanisms namely emission trading, clean development mechanism (CDM) and Joint implementation (JI) with targets for reduction in overall GHG emissions were stated and accepted by the parties (nations). India acceded to the Kyoto Protocol in August 2002 and one of the objectives of acceding was to fulfill prerequisites for implementation of Clean Development Mechanism projects, in accordance with national sustainable priorities, where-under, a developed country would take up greenhouse gas reduction project activities in developing countries. MoEF is pursuing capacity building projects with GTZ (Gesellschaft für Technische Zusammenarbeit), UNDP (United Nations development programme) and ADB (Asian Development Bank). CDM is explained in detail in the later part of this report. 2.4 INDIAN SCENARIO India is a tropical country, where sunshine is available for longer hours per day and in great intensity. Solar energy, therefore, has great potential as future energy source. It also has the advantage of permitting the decentralized distribution of energy, thereby empowering people at the grassroots level. India is endowed with vast solar energy potential, about 5,000 trillion kwh per year energy is incident over India s land area with most parts receiving 4-7 kwh per sq. m per day. Solar is the most secure of all sources, since it is abundantly available Theoretically, a small fraction of the total incident solar energy (if captured effectively) can meet the entire country s power requirements. It is also clear that given the large proportion of poor and energy un-served population in the country, every effort needs to be made to exploit the relatively abundant sources of energy available to the country. To enhance and implement solar technologies NSM (National Solar Mission) was launched. The installed capacity of solar has reached a significant level and if the targets of JNNSM are met there shall be a steep rise in the installed capacity. 23 P a g e

35 Date of Update: 9th March 2013 Sr. No. States Installed Capacity (MW) 1 Andhra Pradesh Arunachal Pradesh Chhattisgarh 4 4 Delhi Goa & UT Gujarat Haryana Jharkhand 16 9 Karnataka Kerela Madhya Pradesh Maharashtra Odisha Punjab Rajasthan Tamil Nadu Uttarakhand Uttar Pradesh West Bengal 2 Total Note : The data is compiled on the basis of information obtained from IREDA, NVVN, State Agencies and Project Developers Projects Capacity (MW) Projects Under JNNSM Projects under the State Policy Projects Under RPSSGP/GBI Scheme 91.8 Projects Under REC Scheme Other projects Total FUTURE PROSPECTS The solar technology is still in upcoming stage and Indian government is providing various incentives monetary and non-monetary to enhance solar power generation, the government has fixed certain percentage of total energy mix to be obtained by solar power or REC s under RPO (Renewable Purchase Obligation) similarly a generating company can opt for 24 P a g e

36 manufacturing a solar plant according to preferential tariff determined by commission or can go for REC plants which generate tradable certificates on the energy exchanges REC Renewable Energy Certificates (RECs) represent the attributes of electricity generated from renewable energy sources. These attributes are unbundled from the physical electricity and the two products the attributes embodied in the certificates and the commodity electricity may be sold or traded separately. In other words, one REC represents that 1MWh of energy is generated from renewable sources. RECs are expected to 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. RECs can be used by the obligated entities to demonstrate compliance with regulatory requirements, such as Renewable Purchase Obligations Other prospects Based on below solar map the solar potential of different regions is calculated and accordingly planning is done for setting up solar projects. The solar industry has immense potential for a tropical country like India where around 45% of households, mainly rural ones, do not have access to electricity, India is endowed with large solar potential estimated to be MW per square kilometer, with regions like Rajasthan or Ladakh having well over 6 kwh incoming insolation/m2 daily in which some 15% can be converted to electricity using efficient photovoltaic modules. Allocating just 1% of India s land area for solar could provide for roughly MW of capacity. Roof top solar PVs have great potential in India as almost every region of country gets sunlight also concepts like green building have been accepted by the government and industry which generate huge markets for solar companies Many states have started promoting solar based applications by giving incentives and tax savings. States like Gujarat and Rajasthan have formulated transparent and progressive regulatory framework in order to boost the solar industry. Besides, states like Delhi, Uttar Pradesh, West Bengal, Maharashtra and Chandigarh are promoting solar energy in rural, urban and semi urban areas. 25 P a g e

37 Fig. 2.8 Solar Resource Map of INDIA 26 P a g e

38 CHAPTER-3 STATE SOLAR POLICY ANALYSIS States have issued polices for promoting solar energy, some have issued a separate policy for solar while others have integrated the same in policy for new/renewable/non-conventional or energy policy, some states have also issued orders. In this section following parameters of the policy have been studied:- 1. Eligible Producer 2. Land Allotment 3. Operative period 4. Sale of power and tariff 5. Wheeling 6. Banking 7. Power evacuation & grid interfacing 8. Incentives and general The states have issued guidelines/policy or orders keeping in view the requirement (present and future) of state and to fulfil mandatory obligation. All policies have pros and cons which are shown state wise in the next section from a developer s point of view:- 27 P a g e

39 3.1.1 GUJARAT A state specific policy dedicated to solar was first envisioned by Gujarat in The outlines were given under the policy titled Solar Power Policy The policy was the first solar specific policy introduced in the country predating the National Solar Mission. The Gujarat Solar Policy is operative till 31st March 2014.Any Solar Power Generator (SPG) commissioned during the operative period shall become eligible for incentives declared under this policy for a period of 25 years. Salient Features: Capacity: o Only new plants and machinery will be eligible under this Policy. No fossil fuel shall be allowed for Solar Thermal Project. o The minimum capacity of for Solar PV and Solar Thermal projects will be 5 MW each. A total of 500MW SPG shall be allowed for installation during the operative period of this policy. Cross-subsidy charge: Cross subsidy surcharges shall not be applicable for Open Access obtained for third party sale within the state. Wheeling Charges: As determined by GERC from time to time. Electricity Duty: - Exempted from payment of electricity duty for sale through all modes(self consumption/sale to third party/sale to licensee) - Exemption from demand cut to the extent of 50% of installed capacity 28 P a g e

40 PPA : PPA duration will be 25 years Bank Guarantee: Developer to furnish a 50Lakhs/MW at the time of PPA signing with Distribution Licensee.BG to be refunded if the developer commissions the project in time as per PPA. Metering of Electricity: Electricity generated would be metered jointly on a monthly basis by GEDA/GETCO. Metering to done at sending sub-station of 66 kv or above, located at the site. Reactive power charges: As per GERC order. Transmission infrastructure: Transmission line from SPG switch yard to GETCO sub-station shall be laid by GETCO.SPG to inject power at 66kV. Sharing of CDM benefit: SPG will pass 50% of CDM benefit to DISCOM with whom PPA is signed. Forecasting & Scheduling: SPG based generation shall not be covered under scheduling procedure for Intra-state ABT. Nodal Agencies for facilitation and implementation of Solar Power Policy- 2009: - Gujarat Energy Development Agency (GEDA) - Gujarat Power Corporation Limited (GPCL) The detailed policy document can be downloaded from the following link: Gujarat Solar Policy 2009 PROs The policy is very detailed and comprehensive and even describes the financial and technical requirements of SPG The tariff allotted is very lucrative. Long Incentive period of 25 years attract investors. Wheeling charges of 2% are comparatively lower than other states. The incentive programme is very good and a large no. of benefits are provided 29 P a g e