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Fundamentals of Renewable Energy: Economics, Policy and Regulation send Renewable Energy Development 2020-11-27 15:28:09

MN

MNRE: Draft Guidelines for Implementation od Off-Grid Solar Power Plants in RESCO model under MNRE Programme

Keywords: RESCO model, upfront, SNA/IA, CFA


Highlights -

The Ministry of New and Renewable Energy (MNRE) on 18th May, 2020 released draft guidelines for implementation of off-grid solar power plants under RESCO model. Key highlights are given below: 
❖ The scheme is applicable only for North-eastern States and extended till 31 Mar, 2021. 
❖ Off-grid solar power plants up to 25 kWp can be installed in areas without or unreliable electricity access. 
❖ Vendor will install and operate project up to 10 kW (above 10 kW) for atleast 10 (15) years. 
❖ RESCO will sign PPA with power purchaser (beneficiary), who will supply daily min. guaranteed power to the beneficiary, who in-turn will pay for the electricity used on a monthly basis. 
❖ Two types of systems are proposed: Isolated off-grid systems and Grid connected system (including net metering). 
❖ Upfront payment of 90%  CFA after successful commissioning, or 50%  CFA at commissioning and rest at the end of 5 years. 
❖ The company needs to submit bank guarantee for an amount equivalent to 50% of the eligible MNRE CFA. 
❖ State Nodal Agency (SNA)/Implementing agency (IA) will select RESCO through competitive bidding. 
❖ If subsidy is paid upfront, tariff will be 5.96/kWh. Tariff would be 9.55/kWh, if 50% subsidy is paid upfront and rest after completion of 5 years. 
❖ Projects to have remote monitoring systems accessible to implementing agency and MNRE.    
                                                 
The MNRE Document can be accessed here.

CER Opinion:

❖ The guidelines should provide a framework to identify the size/number of such projects from a list of pre-identified districts having under electrified/unreliable supply. 
❖ A transparent and fair process for the 'Swiss Challenge' approach, which allows for identification for prospective sites by a developer, may be adopted for procurement under this scheme. 
❖ To reduce risk for developers and to enhance competition, numerous small project sites can be identified and bundled, thus, enhancing economies of scale for investment. 
❖ The data captured from remote monitoring system (block-wise energy generated, consumed and injected to the grid), along with basic technical parameters like installed capacity, panel/module efficiency, storage capacity, source of funding and location should be publicly available through MNRE/dedicated portal for enabling research thereof. 
❖ The implementing agency should make the quarterly reports, incorporating details such as generation profile, consumption, etc., publicly available through the above mentioned portal. 
❖ To safeguard against future operational risk, proposed upfront CFA of 90% at time of commissioning should be limited to 70%, and the remaining be sanctioned in equal installments of 10%  each. 
❖ Given that benchmark cost of MNRE are often significantly higher than the dynamically changing market costs, investors while anticipating 90%  CFA a lucrative offer, might be willing to participate even at negative bids. Therefore, the competitive bidding must account for such cases to deter any gaming by the bidders/investors.                                                    



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Electricity send Acts 2020-11-27 15:17:46

El

Electricity Act, 2003 Amendment 2020 [Draft]

Keywords: ECEA, DSL, DBT, APTEL, Payment Security Mechanism


Highlights -

The Ministry of Power on 17th Apr, 2020 issued draft for amendment to the Electricity Act, 2003. A brief summary of the proposed Amendments are given below:

❖ National Renewable Energy Policy (NREP) (Section 3A): Central Government, in consultation with State Governments, will prepare NREP to promote RE generation, and prescribe RPO for renewable and hydro energy.

❖ Cross Border Trade of Electricity (CBTE) (Section 49A): Central Government to frame rules and guidelines, and CERC will formulate regulations to facilitate CBTE. 

❖ Tariff Subsidies (Section 62 & 65): Tariff to be calculated without accounting for subsidies, and government to provide subsidies directly to the consumers. 

❖ Selection Committee to Recommend Members (Section 78): - A single committee, consisting of five members to recommend members of Commissions (Central and State), Appellate Tribunal, and ECEA. 
- The Committee to finalise the selection of the Chairperson or the Member within three months of the receipt for every recommendation for vacancy. 

❖ ECEA (PART XA): - The ECEA to have “sole authority and jurisdiction to adjudicate upon matters regarding performance of obligations under a contract related to sale, purchase or transmission of electricity” (Section 109A). 
 - ECEA to dispose-off any application within 120 days of receipt of application (Section 109B).
 - ECEA to consist of a Chairperson, two or more Judicial Members, and three or more Technical Members (Section 109C). 

❖ Appellate Tribunal (Section 110 & 112): 
- A person can appeal against the order of ECEA at Appellate Tribunal. 
- The Appellate Tribunal to have a Chairperson and minimum seven members.

❖ Punishment for Non-compliance of Directions by Appropriate Commission (Section 142): 
- In case of contravention against the provisions of the Act, max. 1 crore for each contravention, and in case of a continuing failure to meet directives, an additional penalty of max. 1 lakh/day. 
- In case of non-compliance of RPO, 0.50/kWh for shortfall in first year, 1/kWh for the second year, and 2/kWh for non-compliance continuing after the second year.

The MoP Document can be accessed here.

CER Opinion:

1) Standard Guidelines for Distribution sub-licensee (DSL) and franchisee
❖ The set of standard guidelines for award of DSL and franchisee should be formulated by the Central Government in consultation with State Government and the SERCs. These guidelines should define the mode of award for DSL (outright sale, lease, etc.), role of competitive bidding, duration, commercial arrangements, sharing of risk and regulatory provisions thereof. 
❖ Visibility of operations and regulatory purview for franchisee also needs to be enhanced. 
❖ SERCs would need to amend distribution license and the relevant regulations to segregate the provisions applicable to the distribution licensee and the distribution sub-licensee. For example, the provisions related to the sub-licensed areas would now need to be excluded from the original licensed areas to avoid multiplicity of accountability. 
❖ Will the respective SERC be able to cancel DSL in case of its failure to meet the provisions of the Act and regulations of the respective SERC? 

2) PPA allocation to DSL
❖ Commercial arrangement for award of DSL should also specify if the sub-licensee would be allocated the existing PPAs, or provided electricity at pooled price by the existing holding/bulk supply company of the state or would be allowed to make own arrangement for power purchase. 
❖ As the DSL would not require a license for power trading, would it be allowed to make its own power procurement? If so, the existing distribution licensee will be saddled with expensive PPAs unless the same is allocated to the DSL. 

3) National Renewable Energy Policy
❖ National Renewable Energy Policy (Section 3A), should be formulated after consultation with the State Governments as their active participation in policy formulation can help in achieving the RE target. 

4) Large Hydro as RE 
❖ MoP notification dated 8th March, 2019 “Large-Hydro” (>25 MW) has been declared as “Renewable”. This expanded definition for renewable energy can be enshrined in the Act itself. Draft Amendment differentiates between 'Renewable' and 'Large Hydro'. Further, Hydro Purchase Obligation (HPO) is notified to be a part of non-solar RPO. 

5) RPO 
❖ The Act does not specifically provide for separate categorization (and hence differential treatment) - 'solar' and 'non-solar RPO'. Given that, cost of solar energy has declined significantly, the two sub-categories should be merged together to enhance liquidity and economic efficiency.
❖ The NREP should provide for differential RPO across states due to disparity of RE resources, generation mix as well as consumer mix. 
❖ Section 3A - NREP “prescribing” RPO, Section 86 (1) (e) - SERCs “specifying” RPO, as prescribed by the Central Government, Section 86 (4) - SERC to be guided by the NREP, and Section 61 (i) - Tariff regulations to be guided by the National Electricity Policy and tariff policy by NREP, thus, needs to be appropriately amended. 

6) Renewable Generation Obligation (RGO) 
❖ Section 176 (2) empowers the Central Government to specify RGO. The Act should also provide for RGO compliance framework, penalty for shortfall in RGO and applicability of RECs. Further, the concurrence of RPO and RGO requires that these targets to be set in coordination so as to synchronize the overall RE target for the country. 
❖ RGO should be specified within the framework of NREP as it impacts the whole power system as well as its economics.

7) Integrated Resource Planning for Capacity Adequacy 
❖ The provision for specifying adequate capacity resources (Section 176 (2) (ae)) should be part of the National Electricity Policy (NEP). While this will enhance system reliability, it can significantly influence overall cost burden for the consumers. The NEP should provide for adequate reserve at the regional level considering coincidental peak demand growth and growing share of VRE across the constituent states. 

8) Storage as Generator or Licensee
❖ Economic storage can address variability associated with RE generation, and can also play along the arbitrage opportunities across time of the day. The Act should identify a role for storage services and its regulations.
❖ If storage is a part of 'generation' or 'distribution' business, separate license should not be required. 
❖ In case of stand-alone storage or operation of storage asset for arbitrage by a generator, the same should be a licensed activity as it can influence market outcome as well as system operation. 

9) RPO Compliance 
❖ A new proviso in Section 86 (1) (e) can be inserted to allow for banking/roll-over of the non-complied RPO quantum to offer flexibility to the obligated entities.
❖ The proposed penalty for non-compliance of RPO creates a perverse incentive not to comply and pay penalty if REC equivalent price is more than penalty for the respective year of non-compliance. Hence, the penalty should be set at the forbearance price of REC. 
Further Reading: 
❖ RPO penalties imposed on and paid for by the DISCOMs/obligated entities should not be passed through the ARR, or included in other charges. The RPO shortfall penalty collected should be deposited in a new fund, may be called RPO Fund, which may be utilized for promotion/adoption of RES, particularly to enable creation of monitoring and forecasting infrastructure for Rooftop PV. 

10) Development of REC and Ecerts Market 
❖ Section 66 may be amended as follows “The Appropriate Commission shall endeavor to promote the development of a market (including trading) in power, REC, Energy Efficiency, and Energy Futures in such manner as may be specified and shall be guided by the National Electricity Policy and National Renewable Energy Policy referred to in Section 3 and 3A respectively in this regard.”
❖ NEP and NREP should be included reference to REC and Ecerts as well. 

11) Tariff Design
❖ To enable design of economically efficient tariffs, which evolve with the technological and market developments in the sector, Section 62 (3) may be amended as follows: 
“The Appropriate Commission shall not, while determining the tariff under this Act, show undue preference to any consumer of electricity but may differentiate according to the consumer's load factor, power factor, voltage, reliability, total load/sanctioned load/maximum demand, pre-payment, total consumption of electricity during any specified period or the time at which the supply is required of consumption of electricity or the geographical position of any area supply, the nature of supply and the purpose for which the supply is required.” 
❖ To provide for effective implementation of demand response program, a provision for reliability-differentiated tariff is suggested to be incorporated above.
Further, this should also provide for unbundling of distribution tariff in network and energy related charges. 
❖ Only Max. Tariff during Shortage (Section 62 (1) (a)) - Provided that the Appropriate Commission may, in case of shortage of supply of electricity, fix the minimum and maximum ceiling of tariff for sale or purchase of electricity in pursuance of an agreement, entered into between a generating company and a licensee or between licensees, for a period not exceeding one year to ensure reasonable prices of electricity.

12) Carriage and Content Separation for Phased Retail Competition
❖ Separate provision can be mandated for carriage and content separation, with flexibility to the state governments in phasing it across the identified license/sub-license areas. Further, the appropriate tariff regulation should also provide for unbundling of distribution and retail supply tariff. 

13) Open Access - Cross Subsidy Surcharge
❖ While amendment to Section 42 (2) (3 Proviso) lets the state commission be guided by the tariff policy for progressive reduction of CS and CSS, state-level flexibility (within a framework) should be provided to account for current status of CS, consumer mix, cost structure etc. across states. 

14) Open Access (OA)
❖ Given the limited progress on grant of OA in some of the states, an OA registry mandating publication of the application status and retail, and standardization of the procedures will significantly improve the competitive environment thereof.
❖ The procedure and modalities to obtain open access for any consumer/generator connected within an area of franchisee/DSL should be clarified. 

15) Market Destination 
❖ Section 26 (Section 28) provides for optimum scheduling and despatch of electricity across (within) RLDC. The Security Constrained Economic Despatch optimizes schedule across entities embedded within the RLDC. An amendment to Section 26, enabling optimized scheduling across the country (including intra-state entities) by the NLDC would strengthen countrywide deployment of Security Constrained Economic Despatch, and ultimate migration towards Market Based Economic Despatch. 

16) Cross Border Trade of Electricity (CBTE)
❖ The CBTE is currently restricted to the nodal agencies identified by the ministry, thus limiting competition in such transactions. Given this barrier to market entry, Section 79 should provide for setting trading margins for import/export of electricity.
❖ Development of a regional power market would not only benefit the participating countries but also enhance competition in the market. Addition of new market areas on the Indian power exchanges to represent interconnected neighboring countries would enable regional participation. It can be clarified if the CBTE provisions may be guided by bilateral/regional policy. 
   Further Reading: 
❖ The word 'our country' should be replaced with 'territory of India' or 'a license area' in the Section 2 (15a). 

17) Direct Benefit Transfer (DBT) (Section 62 & 65)
❖ The proposed scheme of billing the consumer by the DISCOM on the basis of subsidized tariff, and subsequent claim of subsidy from the government would pose cash-flow challenge to the DISCOMs. For such consumers, prepaid meters financed through prepaid subsidy under DBT would address this hardship.
❖ Similar to DBT scheme implemented for LPG, a DBT scheme for the electricity sector (may be called eDBT) can also ensure targeted delivery of subsidy. Unique identification of the 'beneficiary consumer', in case different from the premise owner, would be required for its effective implementation. To avoid cash-flow hardship to Kutir Jyoti/Lifeline consumers and small farmers, subsidy should be reflected in the bill against normal tariff and the same should be directly payable to the DISCOMs.
❖ Along with introduction of DBT, flat rate tariff should be withdrawn. This would promote efficient consumption and would make DBT more beneficial for small consumers.

18) Unified Selection Committee 
❖ The Proposed Single Selection Committee may face political economy constraints while also presenting its own implementation challenges. Clarification regarding the tenure of selection committee members (especially CS of states by rotation), and its nature being a standing committee should be provided (Section 78). 

19) Electricity Contract Enforcement Authority 
❖ Creation of a new institutional layer (ECEA) for redressing contract related disputes would face the challenge of consensus across states, and may also face challenge to outline the scope of jurisdiction and its power. Barring this, ECEA may address the investor's concern for variety of PPA related disputes.
❖ It needs to be clarified if ECEA's jurisdiction will also cover matters related to REC mechanism, solar rooftop projects etc.
❖ Since commercial disputes handled by ECEA can significantly influence tariff payable by the consumers, a mechanism for participation of consumer/associations in the ECEA proceedings would help safeguard consumer interests. 
❖ The alternate usage of words such as non-performance/violation/breach of contract/non-fulfilment of obligation etc. across the draft needs to be standardized (Section 109B).
❖ The proviso regarding eligibility for reappointment of Chairperson (Member) as Member (Chairperson) of ECEA is ambiguous, and needs to be clarified (Section 109E). 

20) Regulatory Independence 
❖ A cooling-off period for regulatory appointments would help strengthen the virtue of regulatory independence in the sector. Concerns about regulatory capture, adversely influencing the consumer's interest, can be addressed by enhancing transparency of regulatory processes and consumer participation thereof. 

21) National Regulatory Certification Program 
❖ Electricity/Energy Sector Regulation is a specialized skill that has limited pool of human resources. Identification of such 'certified' pool of officers across the overall organizational structure of the power sector and their deployment for regulatory responsibilities can address this limitation. Institutes of national importance can develop appropriate certification/eMasters program for the same.
* Note : Underlined text is additional and strikethrough is suggested to be deleted.



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Renewable send Tariff 2020-11-27 14:26:46

CE

CERC Terms and Conditions for Tariff determination from Renewable Energy Sources (RES) Regulation, 2020

Keywords: RoE, CAPM & Three factor IoWC, RE Storage

Highlights -

CERC issued draft for Terms and Conditions for Tariff determination from Renewable Energy Sources (RES) Regulation, 2020 for the control period 2020-21 to 2022-23. Highlights of the proposed regulations are given below:

❖ 'Floating solar project', 'Grid Code', 'Pumped storage hydro project', 'State Nodal Agency', and 'Storage' have now been defined. Further, the regulations also provides for the 'treatment for over generation'.

❖ Loan tenure is proposed to be increased from 13 years to 15 years.

❖ Depreciation rate from 5.28% for 13 years to be changed to 4.67% for 15 years. The concept of 10% salvage value is also proposed to be removed, and remaining depreciation, after 15 years, to be evenly spread year over the remaining useful life of the project.

❖ For the calculation of Interest on Working Capital (IoWC), receivables equivalent to 45 days to be considered instead of 60 days.

❖ To consider IoWC, interest rate equivalent to the normative interest rate of 350 basis points (previously 300 basis points) above the average SBI MCLR (one-year tenure) prevalent during the last available six months is to be adopted.

❖ Normative O&M expenses to be allowed during the first year of the control period at an escalation rate of 3.84% (previously 5.72%) per annum.

❖ For payment made within 5 days of presentation of bill, a rebate of 1.5% is proposed. Further, LPS of 1.50% (1.25%  earlier) can be levied for bills due beyond 45 days.

The CERC Document can be accessed here.

CER Opinion:

❖ RoE: Pre-tax vs Post-tax (Section 19): - Clause 2 of Section 16 should be modified as –“The normative Return on Equity shall be 14%, to be grossed up st by prevailing rate of Minimum Alternate Tax (MAT), as on 1st  April preceding the CoD, for the entire Tariff Period”. (underlined text to be included)

- The cost on equity estimated by the CAPM approach is a post-tax estimate. A recent study at CER, IITK using CAPM and multi-factor models using a comprehensive data for over 125 infrastructure companies between 1998-2018, estimates the cost on equity for RE sector to range between 12.87-16.58%, on a post-tax basis. The estimate referred to in the Statement of Reasons (SoR) is also a post-tax estimate. Against the estimated post-tax cost of equity of 12.87% (using CAPM), the proposed RoE works out to 16.96% (after grossing up with 15% MAT plus 12% surcharge, and 4%  ecss).

❖ IoWC vs IoL: Difference between Interest on Working Capital (IoWC) and Interest on Loan (IoL) is 150 bp. Given the observed difference in yield of short-term and long-term government securities, the interest rate differential may be made dynamic and linked to the prevailing short-term and long-term yields.

❖ Rebate on Early/Advance Payment: Given the dynamics in the financial markets, rebate on early payment may also be linked to SBI MCLR. Additionally, provision for 'advance' payment may also be incorporated.

❖ Hybrid RE Projects: Clarification regarding scope of Hybrid RE projects vis-a-vis their definition in case of more than two technologies is needed. Further, mentioning if Co-generation with Hybrid RE technology would also fall within the scope.

❖ Storage in RE and Hybrid RE Projects Scope: It will be useful to clarify scope of storage based RE (Hybrid) projects vis-a vis minimum storage capacity with respect to the rated 'energy' capacity of the RE plants. Further, it should be clarified if co-generation with storage technology would also fall within the scope would be useful.



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Fundamentals of Renewable Energy: Economics, Policy and Regulation send RE Policy and Regulation 2020-07-06 15:17:36

WB

WBERC’s Draft for Amendment to Cogeneration and Generation of Electricity from Renewable Sources of Energy Regulations

Keywords: Renewable Energy, Cogeneration, Net-metering, Solar Rooftop, RPO Regulations, RPO Targets, West Bengal, Solar REC, Non-solar REC


Highlights -


The WBERC notified draft for the amendment to Cogeneration and Generation of Electricity from Renewable Sources of Energy Regulations, 2013. Highlights are below:

1. Consumer can install rooftop system of 1 kW or above capacity (up to total sanctioned load or contract demand) can claim net-metering/net-billing benefits.
2. DISCOMs are proposed to procure 100% of energy from waste to energy plants in their respective areas.
3. Unmet solar RPO obligation above the 85% of total RPO can be met by non-solar energy, and vice-versa.


CER Opinion -


1. RPO trajectory for the state should be specified in advance so as to provide opportunity to obligated entities to make appropriate investments or plan to procure RE/REC.
2. In case the tariff for RE has been discovered under section 63 of EA, 2003 and has been adopted by the commission, the same should not be subjected to the price cap under regulation 6.0.
3. An RPO compliance framework, supported with penalty in proportion to the shortfall, would help ensure that obligated entities take adequate steps to meet their RPO target including through purchase of RECs.



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Distribution send Standard of Performance 2020-06-08 11:44:55

CS

CSERC Standard of Performance (SoP) in Distribution of Electricity Regulation, 2020

Keywords: Standard of Performance, DISCOMs, ARR, Consumer Awareness, SoP Compensation.


Highlights -

The Standard of Performance (SoP) regulation issued by CSERC on 15th May 2020 allows variation across geographical areas of DISCOM, and across DISCOMs. A summary is below:
1. If the licensee fails to maintain SoP, it is liable to compensate consumer at rates specified in the regulation, which cannot be claimed in ARR.
2. To spread awareness regarding SoP among consumers and staff, the licensee to make manuals available at offices and on the website, display guaranteed standards of performance at local offices.
3. The licensee is to submit quarterly report on the level of performance achieved, and on the number of cases in which compensation was payable and the amount paid/payable in each case to the commission.

CER Opinion -

1. A SoP index can be developed based on key performance parameters for each feeder and consumers connected to it, which should be used for implementing a penalty/incentive framework for the associated employees.
2. Given that DISCOM would manage a system of complaint registration and follow thereof, such a system should have a mandatory audit trail with due communication (SMS/email) to the consumers.
3. The commission may periodically review the current level of performance and setup multi-year benchmarks for SoP.



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Transmission send State Grid Code Regulation 2020-05-25 13:40:47

ME

MERC’s Draft for State Grid Code Regulations, 2020

Keywords: Grid Code Regulations, Annual Fixed Charges, Ramp-up, Ramp-down, Spinning Reserve, Grid Coordination Committee, STU, capacity factors, Solar Rooftop Systems, Intra-state Transmission, Ancillary Services, Merit Order Despatch


Highlights -


MERC released draft State Grid Code Regulations (MEGC, 2020) on 1st Mar 2020. MEGC, 2020 is applicable to all generators in the state connected to intra-state transmission system (InSTS), transmission licensee in the state including STU, Maharashtra SLDC, distribution licensees including deemed distribution licensees, Indian Railways, OA consumers and EHV consumers connected to InSTS. Major highlights of the proposed regulations are below:


1. STU is to explore and evaluate alternate options if capital expenditure for any new transmission system exceeds threshold limit of ₹100 crore or as declared by the Commission from time to time.

2. SLDC need to maintain the spinning reserve margin equivalent to 3% of the system peak demand and 3% of installed capacity for the generators to manage ramp up.

3. The generating company can de-rate the capacity or can go for repeat trial run. The demonstrated capacity, in case of derating, will be equal to or greater than 105% of de-rated capacity for thermal InSGS and 110% for hydro generating station.


CER Opinion:


1. The investment approval framework should include a cost-benefit analysis considering economic efficacy of the investment and the system security over medium to long-term. Excess investment towards reliable of power supply needs to be controlled to avoid burden on consumers.

2. Clause 30.6 requires 'instantaneous' picking up of the generation to 105/110% in case of ‘sudden fall in system frequency’, which should be specified.

3. Framework for procurement and payment for spinning reserve capacity margin and its recovery from system participation (specially load serving entities) should be specified.



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Renewable send REC Framework 2020-05-25 13:33:49

CE

CERC's Proposal for Determination of Forbearance Price and Floor Price for the REC Framework

Keywords: REC Framework, Floor price, Forbearance Price, Solar REC, Non-solar REC, RPO


Central Electricity Regulatory Commission (CERC), via notification dated 31st Mar 2020, proposed to adopt forbearance price and floor price of Renewable Energy Certificates (REC) as given in the table:


Details

Solar REC (₹/MWh)

Non-Solar REC (₹/MWh)

Forbearance Price

1,000

1,000

Floor Price

0

0


CER Opinion:


1. As the proposed REC floor price for solar/non-solar RECs is zero, reference to floor price as a part of REC framework under the principle REC Regulations can be deleted.

2. Given that SERCs are allowing excess solar (non-solar) RPO quantum to be adjusted against non-solar (solar) RPO, fungibility between solar and non-solar RECs is clearly visible and should be institutionalized.



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Distribution send Open Access 2020-05-25 13:03:20

HE

HERC: Guidelines for certifying or refusing to certify non-availability to Transmission/Distribution system or Unscheduled Load Shedding

Keywords: Open Access, Captive plants, Independent Power Producers, Contract Demand, Inter-state sale, Intra-state sale.


Highlights -


HERC drafted guidelines for certifying or refusing to certify non-availability to transmission or distribution system for OA consumers. Major highlights of the proposed regulations are below:

1. Surplus capacity to be offered to LTOA, MTOA, and STOA in respective order. In case of system enhancement, the applicant will pay the Distribution Capacity cost for grant of LTOA.
2. Consumers capacities of 10 MW and above will be eligible for connectivity at 33 kV or above, rest at below 33 kV.
3. In case of unnotified outage on account of transmission/distribution system, the licensee will compensate the OA consumer the charges payable by consumer to the generating company or the lowest tariff applicable to the consumer category, whichever will be lower.


CER Opinion:


1. To discourage withholding and to bring competitiveness in allocation of unused transmission/distribution capacity, the unused transmission capacity should automatically be released to the SLDC.
2. In case of refusal of OA application, SLDC should provide alternate slots/lower capacity or a timeline for available capacity in future.
3. In case of failure of power evacuation and compensation for wheeling and transmission charges, a mechanism to pass on the benefit to the buyer should be introduced.



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System Operation & Forecasting send Data Collection 2020-05-25 12:55:10

CE

CEA proposes amendment to Furnishing of Statistics, Returns and Information Regulations, 2007

Keywords: Captive Projects, Independent Power Producers, industrial Consumers, Power Purchase Agreement, The Electricity Act 2003, National Electricity Policy, 2005, National Tariff Policy, 2016, REC, Wind Projects, Solar Projects, Hybrid Projects, Electricity Demand.


Highlights -


The Central Electricity Authority (CEA) has proposed amendment to Furnishing of Statistics, Returns and Information Regulations, 2007. The CEA proposes to add four new formats (Format 21A, Format 21B, Format 66 and Format 67) for furnishing of the information in the Regulations.


CER Opinion:


1. Scope for format 21A and 21B should be defined in such a manner that the two tables are mutually exclusive. As per given definition, there would be common CPPs whose data would be reported in both tables.
2. In the format 21A, unit of Electricity Demand should be MVA instead of MW as industrial contract demand is considered in MVA
3. ‘Variable charges’ may be used in place of ‘fuel charges’ in column 16 of the format 66.



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Power Markets send Real Time Market (RTM) 2020-04-12 11:23:28

PO

POSOCO's "Draft Procedure for Collective Transactions through Real Time Market (RTM)"

Keywords: NLDC, RLDC, SLDC, Energy Trading, IEX, PXIL, Load Curtailment, Congestion Management


Highlights -  

POSOCO released draft procedure for scheduling collective transactions in RTM. The draft addresses issues related to processing of application, treatment of losses, congestion management, and revision of schedule, etc. Major highlights are below:


1. Proposal for allocation of transmission corridor to exchanges based on ratio of their shares in the cleared volume in DAM, subject to minimum 10% for exchange having smaller share.  

2. It is proposed that the exchange should submit scheduling request to the NLDC 3 time blocks ahead for delivery of the power.

3. Proposal for the SLDCs to schedule transactions for state utilities/intra-state entities, given the exchange should send detailed breakup of each point of injection and drawl to respective SLDCs two time blocks ahead of delivery time.

4. In case of transmission constraints or threat to grid security, short term transaction to be curtailed first, followed by medium and long-term.


CER Opinion:


1. POSOCO should evaluate the impact of the allocation scheme and identify the pattern of underutilization of allocated transmission capacity and seek suggestions to address the same.

2. More clarification is required for cases where a beneficiary/generator can trade in RTM for the ‘same’ capacity, a single standing clearance, if required, would suffice.

3. If the respective ERC order for intrastate transmission charges or the SLDC system operating charges is not available, the procedure specifies such charges to be applicable. Legal aspects of such a ‘determination’ should be reviewed to avoid any issues later.



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Renewable send Solar Power Procurement 2020-04-07 19:31:44

GE

GERC's "Tariff Framework for Procurement of Power by Distribution Licensees and Others from Solar Energy Projects and Other Commercial Issues for the State of Gujarat"

Keywords: Open access regulation, Captive power plant, Cross-subsidy Surcharge, Transmission Charge, Wheeling charges, Third Party Sale, Solar power, Power procurement, REC, Competitive bidding, Energy Banking, Banking charges, RE Forecasting

Summary -


The GERC notified discussion paper for tariff framework concerning procurement of solar power by DISCOMs and other stakeholders. The discussion paper proposes competitive bidding for all solar projects, including small projects of 5 MW or less capacity. A brief summary is below:

 

1. For projects below 5 MW capacity, proposal to determine tariff through competitive bidding in different time period of 6 months of the year.

2. Proposes a maximum allowed capacity at 50% of contracted load for captive use, third party sale, and projects under national solar mission.

3. Wheeling and cross subsidy charges between 50% to 100% as applicable to normal OA consumers, are proposed for different category of projects.

 

CER Opinion


1. Linking tariff determination of small project (below 5 MW) with larger projects is a positive step, but the commission should also consider the significant diseconomies of scale for smaller projects while finalizing tariff.

2. We suggest that the basis for linking of tariff for small project can be pegged at a rate bit higher than the prevailing mark-up.

3. A large number of small scale projects can be bundled together to form a competitive market for smaller PV projects and offering them for bidding. This can address issues related to economies of scale.  



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Renewable send Renewable Power Procurement 2020-03-26 11:14:26

TN

TNERC's "Consultative Paper for Procurement of Solar and Wind Power by Distribution Licensee and Related Issues"

Keywords: Open access regulation, Captive power plant, Cross-subsidy Surcharge, Transmission Charge, Wheeling charges, Third Party Sale, Solar power, Power procurement, REC, Competitive bidding, Wind power, Energy Banking, Banking charges, RE Forecasting


Summary: 

The TNERC notified consultative paper for procurement of solar and wind power by DISCOM, which proposes competitive bidding for solar power procurement, and to levy 100% transmission and wheeling charges, line losses, and cross-subsidy surcharge. Further, it proposes to impose stand by charges, grid availability charges, charges for higher harmonics, reactive power charges, power factor disincentives, and capping of contracted capacities for open access consumers including captive users. Additionally, multiple energy banking options are proposed for wind projects according to their commissioning dates.  

CER Opinion:

1. Removal of exemptions for wheeling and intrastate transmission charges would only reduce the cost advantage for Captive and OA consumers but would not eliminate it. 
2. Withdrawing exemptions is not likely to contribute to the financial gap and may not enhance the 'financial performance' of the utilities. 
3. Additionally, the intermittency issues of RE can be addressed by tightening the state's grid code and regulations for forecasting and deviation settlement.
4. Capping excess generation for OA consumers including captive users can be addressed by allocating equivalent RECs or by paying equivalent REC price.



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Renewable send Open Access and Captive Generation 2020-03-23 17:59:36

AP

APERC's "2nd Draft Amendment to Open Access Regulation"

Keywords: Open access regulation, Captive power plant, Cross-subsidy Surcharge, Transmission Charge, Wheeling charges, Third Party Sale, RE Forecasting


(Open Access and Captive  Generation) Summary: 

The APERC notified draft for 2nd amendment to its open access regulation 2005, which proposes to impose 100% transmission and wheeling charges, distribution losses, and cross-subsidy surcharge for captive use or third-party sale.

CER Opinion:

1. Concern regarding RE intermittency issues could be addressed by tightening forecasting regulations along with the application of deviation settlement mechanism (DSM) can help ameliorate this impact to some extent. 
2. Removing exemptions may only reduce benefits for captive and open access consumers, 
3. The small revenue generated by relaxing exemption may not have much effect on DISCOMs financial performance. 



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