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1.

Indo – German Energy Programme

Green Energy Corridors

Analysis of Existing Framework for

Renewables and RE policy in India

i

Consortium Partners

Ernst & Young LLP, India

Fraunhofer IWES, Germany

University of Oldenburg, Germany

Fichtner GmbH & Co. KG, Germany

ii

1. Power Scenario in India ............. 1

1.1 Renewable Energy (RE) Scenario in India.............................................................................................. 1

1.2 RE Targets in India .................................................................................................................................. 2

2. Key Stakeholders and Structure of Power Market in India 4

3. Goals and Objectives ................. 5

3.1 Problem Statement ............................................................................................................................ 5

3.2 Mission ............................................................................................................................................... 5

4. Approach & Methodology .......... 6

4.1 Study Framework ............................................................................................................................... 6

4.2 Review of Existing RE Market Drivers ............................................................................................... 6

4.3 Stakeholder Consultation ................................................................................................................... 7

4.4 Criteria of Evaluation ......................................................................................................................... 7

4.5 Evaluation .......................................................................................................................................... 8

5. Outcome of Analysis .................. 9

6. Situational Analysis .................. 20

6.1 Central ............................................................................................................................................. 20

6.1.1 RE Potential of States Considered for Analysis .......................................................................... 21

6.1.2 Targeting Analysis ....................................................................................................................... 22

6.1.3 Policy and Regulatory Support .................................................................................................... 24

6.1.4 National Solar Mission ................................................................................................................. 26

6.1.5 Renewable Purchase Obligation (RPO) and RE Certificates ...................................................... 35

6.1.6 Open Access................................................................................................................................ 41

6.1.7 Technical Considerations ............................................................................................................ 44

6.1.8 Key Enablers for investment in RE sector in India ...................................................................... 51

6.1.9 Banking of Renewable Energy .................................................................................................... 54

6.1.10 Upcoming Initiatives ..................................................................................................................... 60

7. Recommendations .................... 62

Bibliography ...................................... 66

Annexure 1 – State Analysis ....... LXIX

Detailed Analysis of the selected Indian States ....................................................................................... LXIX

Tamil Nadu ............................................................................................................................................... LXIX

Gujarat ................................................................................................................................................... LXXXI

Himachal Pradesh ............................................................................................................................... LXXXVI

Rajasthan .................................................................................................................................................. XCI

iii

Karnataka ............................................................................................................................................... XCVII

Annexure 2 – Installed Power Capacities for States CIX

Annexure 3 – Renewable Purchase Obligation Database for States CXIII

iv

List of Figures

Figure 1 – Cumulative Installed Capacity (in GW) ....................................................................................... 1 Figure 2 - RE Installed Capacity in India (May 2015) [2] .............................................................................. 2 Figure 3 - Growth of Installed Capacity of RE in India (in GW) ................................................................... 2 Figure 4 - Key Stakeholders in the Indian Power Sector .............................................................................. 4 Figure 5 - Approach for Reviewing Existing RE Market Drivers ................................................................... 6 Figure 6 - Outcome of Situational Analysis for States ................................................................................ 10 Figure 7: Fuel Mix of Conventional and RE Generation in 2014-15 ........................................................... 22 Figure 8: Fuel Mix of Conventional and RE Generation in 2021-22 ........................................................... 23 Figure 9: Peak Electricity Demand Vs Expected Installed RE Capacity (in GW) ....................................... 23 Figure 10 - Timeline of Solar Policies in India against Deployment in Gujarat and JNNSM ...................... 27 Figure 11 – Project Success measured w.r.t. % Completion of Project ..................................................... 29 Figure 12 - RPO targets.............................................................................................................................. 36 Figure 13 - Growth in Transmission System in Central and State Sector .................................................. 46 Figure 14 - Methodology for Calculation of Hydro Balancing Potential in States ....................................... 49 Figure 15 - Hydro Balancing Potential in the identified States ................................................................... 50 Figure 16 - Prices Jun 2014 at IEX ............................................................................................................. 57 Figure 17- Prices January 2015 at IEX ....................................................................................................... 58 Figure 18 - Electricity Peak Demand v/s installed RE capacity for Tamil Nadu ..................................... LXIX Figure 19 – Ideal Scenario of power utilization during peak demand season in TN ............................ LXXVI Figure 20 - Electricity Peak Demand v/s installed RE capacity for Gujarat .......................................... LXXXI Figure 21: Electricity Peak Demand v/s installed RE capacity for HP ................................................ LXXXVI Figure 22: Electricity Peak Demand v/s installed RE capacity for Rajasthan .......................................... XCI Figure 23 - Electricity Peak Demand v/s installed RE capacity for Karnataka ...................................... XCVII Figure 24: Electricity Peak Demand v/s installed RE capacity for AP ........................................................ CII

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List of Tables Table 1: RE Targets and Actual Installed Capacity ...................................................................................... 3

Table 2 - Market Drivers at the Central and State Level .............................................................................. 7

Table 3 - Outcome of Situational Analysis for States ................................................................................... 9

Table 4 - State wise Solar Potential [3] ...................................................................................................... 21

Table 5 - State wise wind potential [4] ........................................................................................................ 21

Table 6 - JNNSM Targets ........................................................................................................................... 27

Table 7 - Batch 1 & 2 Aggregate Statistics [7] ............................................................................................ 30

Table 8 - Batch 1 & 2 Ranking as per Different Indicators ......................................................................... 30

Table 9 – Assessment of risk factors for Solar PV and thermal in India .................................................... 31

Table 10 - Solar Policies declared after NSM............................................................................................. 33

Table 11 - Evaluation of Effectiveness of JNNSM ...................................................................................... 34

Table 12 - RPO Trajectory for States ......................................................................................................... 36

Table 13 - Possible options for RPO compliance by resource rich and resource deficient states ............. 37

Table 14 - Issues with RECs ...................................................................................................................... 37

Table 15: All India Installed Capacity and Generation Data for 2013 ........................................................ 38

Table 16: All India RE Installed Capacity and Generation Data for 2013 & 2022 ...................................... 38

Table 17: Projected National RPO Targets (Solar, Non-Solar and Total Targets)..................................... 39

Table 18: Sensitivity of 2022 Solar and Non-solar RPO targets to the Solar and Wind plant PLF ............ 40

Table 19 - Benefits of Open Access ........................................................................................................... 41

Table 20 - Conditions for payment/receiving of VAr Charges .................................................................... 45

Table 21 - Slabs for PoC Rates for injection and withdrawal of power for Jan-March 2015 [10] ............... 47

Table 22 - State wise banking provisions ................................................................................................... 55

Table 23 - Result of Analysis Case 1 T.N ................................................................................................... 58

Table 24 - Analysis of Wind Power Tariff in TN .................................................................................... LXXIV

Table 25 - Existing Transmission Constraints in TN [12] .................................................................... LXXVII

Table 26 - Hydro Balancing Potential in TN ....................................................................................... LXXVIII

Table 27 - Transmission schemes for Wind Power Evacuation [15] ................................................. LXXVIII

Table 28 - Stakeholder Consultation in TN........................................................................................... LXXIX

Table 29 - Analysis of Wind Power Tariff in Gujarat (INR/kWh) ......................................................... LXXXIII

Table 30 - Existing Technical Constraints in Gujarat ......................................................................... LXXXIV

Table 31 - Hydro Balancing Potential in Gujarat ................................................................................. LXXXV

Table 32 - Stakeholder Consultation in Gujarat .................................................................................. LXXXV

Table 33 - Hydro Balancing Potential in HP ...................................................................................... LXXXVII

Table 34 - Stakeholder Consultation in HP ........................................................................................ LXXXIX

Table 35 - Solar Capacity Addition in Rajasthan under JNNSM ............................................................. XCII

Table 36 - Wind Capacity Addition in Rajasthan as per Wind Policy 2012 ............................................ XCIII

Table 37 - Existing Transmission Constraints in Rajasthan [12] ............................................................ XCIV

Table 38 - Hydro Balancing Potential in Rajasthan ................................................................................. XCV

Table 39 - Stakeholder Consultation in Rajasthan .................................................................................. XCV

Table 40 - Existing Transmission Constraints in Karnataka [12] ............................................................ XCIX

Table 41 - Hydro Balancing Potential in Karnataka ...................................................................................... C

Table 42 - Stakeholder Consultation in Karnataka ...................................................................................... CI

Table 43 - Categorization of wind power projects as-per AP wind policy 2015 ....................................... CIV

Table 44- Existing Transmission Constraints in AP [12] .......................................................................... CVI

Table 45 - Hydro Balancing Potential in AP ............................................................................................. CVI

Table 46 - Stakeholder Consultation in AP............................................................................................. CVIII

Table 47 - Installed Capacity in Himachal Pradesh in MW (As on 31st January, 2015) [1] ..................... CIX

vi

Table 48 - Installed Capacity in Gujarat in MW (As on 31st January, 2015) [1] ...................................... CIX

Table 49 - Installed Capacity in AP in MW (Residual after bifurcation) as on 31st Nov, 2014 .................. CX

Table 50 - Installed Capacity in Karnataka in MW ................................................................................... CXI

Table 51 - Installed Capacity in Rajasthan in MW (As on 28th Feb 2015) ............................................... CXII

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List of Abbreviations Used

ABT Availability Based Tariff

AD Accelerated Depreciation

CEA Central Electricity Authority

CERC Central Electricity Regulatory Commission

CTU Central Transmission Utility

DSM Demand Side Management

DISCOMs Distribution Companies

EHV Extra High Voltage

EY Ernst & Young LLP

FiT Feed in Tariff

FY Financial Year (in India April to March)

FYP Five Year Plan

GBI Generation Based Incentive

GEC Green Energy Corridor

GoI Government of India

GPCL Gujarat Power Corporation Ltd

GW Giga Watt

HP Himachal Pradesh

HV High Voltage

IEA International Energy Agency

IEGC Indian Electricity Grid Code

IEX Indian Energy Exchange Ltd.

IPP Independent Power Producer

IREDA Indian Renewable Energy Development Agency

ISGS Inter State Generating Stations

IWPA Indian Wind Power Association

JNNSM Jawaharlal Nehru National Solar Mission

LDC Load Dispatch Centres

MM Man-Months

MNRE Ministry of New and Renewable Energy

MoU Memorandum of Understanding

MW Mega Watt

NAPCC National Action Plan on Climate Change

viii

NDP Net Domestic Product

NIWE National Institute of Wind Energy

NLDC National Load Dispatch Centre

NOFL National Optical Fibre Network

NVVN National Vidyut Vyapaar Nigam

PFC Power Finance Corporation

PGCIL Power Grid Corporation of India Limited

PLF Plant Load Factor

PTC Power Trading Corporation

R&D Research and Development

RE Renewable Energy

REC RE Certificates

REMCs RE Management Centres

RES RE Sources

RLDCs Regional Load Dispatch Centres

RPC Regional Power Committee

RPO Renewable Purchase Obligation

RTUs Remote Terminal Units

SCADA Supervisory Control and Data Acquisition

SEB State Electricity Board

SERC State Electricity Regulatory Commission

SLDCs State Load Dispatch Centre

SPP Solar Power Parks

SRRA Solar Radiation Resource Assessment

SS Substations

STM Synchronous Transport Module

STU State Transmission Utility

SWOT Strengths Weakness Opportunities and Threats

PGCIL Power Grid Corporation of India Limited

POSOCO Power System Operation Corporation Limited

UI Unscheduled Interchange

VAT Value-added Tax

WDV Written Down Value

1

1. Power Scenario in India

India has the fifth-largest power generation portfolio worldwide. Around 60% of India’s current power

generation capacity is coal based. India is increasingly relying on coal & oil imports to meet its requirements

of energy. The country has been rapidly adding capacity over the last few years, with total installed power

capacity growing to 272.5 GW [1]. India has grown from being the world’s seventh-largest energy consumer

in 2000 to the fourth-largest one within a decade [3]. Economic growth and increasing prosperity, coupled

with factors such as growing rate of urbanization, rising per capita energy consumption and widening access

to energy in the country, are likely to further raise the energy demand in the country.

The following figure depicts the installed capacity at the end of the Tenth and Eleventh FYP. It also shows

the source wise capacity addition plans under the Twelfth FYP.

Figure 1 – Cumulative Installed Capacity (in GW)

Source: EY Analysis

1.1 Renewable Energy (RE) Scenario in India

India’s renewable power generation portfolio stands at 35.8 GW out of the total 272.5 GW power generated

in the country, as of May 2015 [2]. As per the present estimates, India has an estimated RE potential of

about 895 GW [3]from commercially exploitable sources. Although the share of RE in the generation mix has

been rising over the years, India still has large untapped RE potential.

India has vast RE potential through wind, solar, biomass and small hydro which is concentrated in certain

parts of the country. The wind and solar potential is mainly in the southern and western states viz. Tamil

Nadu, Karnataka, Andhra Pradesh, Maharashtra, Gujarat and Rajasthan. The following illustration

summarizes the current split of RE installed capacity in India.

0

20

40

60

80

100

120

140

160

180

200

10th FYP 11th FYP 12th FYP

in G

W

Thermal

Hydro

Nuclear

Renewables

2

Figure 2 - RE Installed Capacity in India (May 2015) [2]

1.2 RE Targets in India

The Central Energy Authority (CEA) has made an assessment of capacity addition of 32,000 MW (wind/

solar/small hydro) likely to come up during the 12th Plan (2012 - 2017). The following graph depicts that at

the current rate of growth, this target of 32GW of installed RE capacity by 2017, is achievable.

Figure 3 - Growth of Installed Capacity of RE in India (in GW)

The following table compares the targets and actual installed capacity of RE in India since the beginning of

the 12th Five Year Plan.

Solar10%

Wind64%

SHP14%

Bio-Power12%

RE Installed Capacity in India

3

Table 1: RE Targets and Actual Installed Capacity

Renewable

Energy

2010-11 2011-12 2012-13 2013-14 2014-15

Target

(MW)

Actual

(MW)

Target

(MW)

Actual

(MW)

Target

(MW)

Actual

(MW)

Target

(MW)

Actual

(MW)

Target

(MW)

Actual

(MW)

Wind

Power 2,000 2,350 2,400 3,197 2,500 1,699 2,750 512 3,000 2,312

Small

Hydro 300 307 350 353 350 237 400 54 400 251.61

Bio Power 472 474 475 488 400 472 400 - 520 45

Solar

Power 200 27 200 905 1000 754 1,000 75 2000

1117.0

2

Total 2,972 3,158 3,425 4,943 4,250 3,162 4,550 641 5,920 3,726

Source: EY Analysis

To put things in perspective, planned renewable capacity additions during the 12th FYP are almost one- third

of the planned conventional energy capacity addition during the same period. In FY 2011 and 2012 the RE

installations have exceeded the targets. In FY 2013 and FY 2014 targets were not met, primarily as a result

of decline in wind installations.

A road-map for integrating the envisaged RE production capacity into the electricity grid and its adaption to

future requirements was prepared in July 2012 by Power Grid Corporation of India Limited (PGCIL) on behalf

of the Ministry of New and Renewable Energy (MNRE). As per the report, the required capital investment for

developing the evacuation infrastructure for the renewable capacity during the 12th plan amounts to EUR 6

billion. Considering India's RE potential and the target of 175 GW of additional capacity installation by 2022,

it is estimated that the RE sector will require significant financing.

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2. Key Stakeholders and Structure of Power Market in India

The Ministry of Power is responsible for perspective planning, policy formulation, processing of projects for

investment decision, monitoring of the implementation of power projects, training, manpower development

and the administration and enactment of legislation in regard to overall power generation, transmission and

distribution in the country.

The MNRE is the nodal ministry for all matters relating to new and RE. The broad aim of the Ministry is to

develop and deploy new and RE for supplementing the energy requirements of the country in conformity with

the Government's policy objectives.

The major Indian power sector stakeholders are summarized in the following figure. However the figure is not

indicative of the hierarchy in the power sector.

India has been demarcated into five transmission regions - Northern, Eastern, Western, Southern and North

Eastern. As per EA 2003, Regional Power Committees (RPCs) have been constituted for these five regions

to facilitate stability and smooth operation of the grid and economic and efficient operation of the power

system in that region. Each region has a Regional Load Dispatch Centre (RLDC), which is the apex body to

ensure integrated operation of the power system in the concerned region.

The SLDC is the apex body that ensures integrated operation of the power system within a state. SLDC

exercises supervision and control over the intra-state transmission system. It is responsible for carrying out

real time operations for grid control and despatch of electricity within the state through secure and economic

operation of the State grid in accordance with the Indian Electricity Grid Standards and the State Grid Code.

The SLDC complies with the directions of the RLDC.

In addition, there is an apex body at the national level called the National Load Dispatch Centre (NLDC) to

ensure integrated power system operation in the country. The NLDC and RLDCs together form a part of the

Power System Operation Corporation Limited (POSOCO), which is a wholly owned subsidiary of the

Central Transmission Utility (CTU), Powergrid Corporation of India Limited (PGCIL). The SLDCs fall

under the jurisdiction of the state governments.

•Central - Ministry of New & Renewable Energy, Ministry of Power

•State - State Energy DepartmentsPolicy Making Bodies

•Central Electricty Regulatory Commission (CERC)

•State Electricty Regulatory Commissions (SERCs)

• Forum of Regulators (FOR)Regulatory Bodies

•Central Transmission Utility (CTU)- PowerGrid

•State Transmission Utility (STUs)

• Private Ttansmission UtilityTransmission

•Central - POSOCO - NLDC, 5 RLDCs at the regional level

•SLDCs at the state levelSystem Operators

•Inter State Generating Stations

•State Generating Stations

•Private, PPP, CPPs , MPPs etc.Generating Stations

Figure 4 - Key Stakeholders in the Indian Power Sector

5

3. Goals and Objectives

3.1 Problem Statement

At present, renewable sources form about 13% of the total installed capacity of power in India. Government

of India is currently targeting to increase the renewable energy capacities from 35.8GW as of May 2015 to

175GW by 2022. This ambitious capacity addition plans call for several changes in the policy actions,

regulatory measures, technical advancements and suitable investments supports. The Central Electricity

Authority (CEA) has made an assessment of RE capacity addition likely to come up during the 12th Plan

(2012 - 2017) and the 13th Plan (up to 2022 as detailed in the national targets specified above). The major

focus for capacity addition in India is envisaged in eight RE rich states i.e. Tamil Nadu, Karnataka, Andhra

Pradesh, Maharashtra, Gujarat, Rajasthan, Madhya Pradesh and Himachal Pradesh. For the purpose of this

study, we are evaluating the situation in Gujarat, Rajasthan, Tamil Nadu, Andhra Pradesh, Karnataka and

Himachal Pradesh only.

In order to develop a suitable action plan/roadmap to achieve the 2022 target, it is imperative to analyse and

evaluate the current RE scenario/AS IS against its policy & regulatory actions/measures undertaken and

technical challenges at the national level & state level and assess its impact. The outcome of the

assessment will enable the decision makers to suitably respond by any mitigation actions in order to abate

the further challenges/roadblocks envisaged.

3.2 Mission

This study conducts a detailed analysis of the existing market framework for renewables at the centre and

state level. This includes an analysis of the existing RE policies, market mechanisms, regulatory issues, and

technical issues within the different states. The study hopes to provide clarity on problems prevalent in each

of the six states and their impact on the national RE plan. It highlights which obstacles have to be tackled in

the specific states or at the national level in order achieve RE capacity addition, seamless grid integration

and RE evacuation.

This detailed study of the prevalent conditions, priorities and obstacles to RE capacity addition for each of

the 6 states considered will form the basis of suggestions for developing a suitable market design for RE

Integration in India.

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4. Approach & Methodology

4.1 Study Framework

The overall approach adopted for assessing the progress of the RE framework and policies in India at the

national level and across the six states is depicted in the illustration below.

4.2 Review of Existing RE Market Drivers

The approach adopted for reviewing the existing RE market drivers is done in two stages, at the central and

the state level. The review at both the stages will be conducted on the core focal areas mentioned below.

Figure 5 - Approach for Reviewing Existing RE Market Drivers

Regulatory & Policy issues

Budgetary & Financial Reforms

Fiscal Provision for

RERE

Investments

Nodal agencies apprehensions in

technical capabilites. Focus

Areas

Stating the problem statement and identifying the objective of the study Step 1

Review policies, regulatory and technical documentations and the existing market

mechanisms that drive that Renewable market at the national level

Step 2

Review the six states RE potential and conduct a situational analysis of the states driven

initiatives in response to National RE plan

Step 3

Indicate the maturity level and performance of the states by establishing indicators for

evaluation

Step 4

Stating the Outcome of Analysis by identifying the deficits in each of the 6 states

Step 5

Suggest the Way Forward post garnering the feedbacks from the stakeholders

Step 6

7

Table 2 - Market Drivers at the Central and State Level

Policies

Review all the relevant policies that contributed to development of RE in India and in

the individual states, RE specific measures such as JNNSM, NAPCC undertaken by

the government and assessment of its adequacy for encouraging the states to promote

RE.

Regulatory

measures

Review the regulatory framework that promote RE development such as RPO/RECs,

Feed in Tariffs, Open access, incentives/subsidy framework, existing market

mechanisms for the six states.

Technical

capabilities

Review of the current technical standards established at the central and state level

such as power system standards, grid integration methodologies, inter/intra state

power flow and RE evacuation methodologies. Based on it assess the deficits in

current system.

Fiscal Scenario

Review of Government budget allocations for promoting RE, transmission line planning

and assessment of the effectiveness of the funds infused in RE development in India.

4.3 Stakeholder Consultation

The identification of the above focal areas for reviewing the existing RE framework was based on the

preliminary stakeholder consultations across the 6 states and discussing at the central level. The

stakeholders’ perspective will be represented in the review phase and will be the major input for the

situational analysis for the national level and state level analysis.

4.4 Criteria of Evaluation

Post reviewing the existing RE market drivers as mentioned in above section at the national level and across

the six states, the performance of the states will be evaluated to gauge their alignment with the plan defined

at the national level. The evaluation of the states will be based on certain criteria/indicators that can help to

depict:

Current situation of the states,

States’ achievement of status based on its set targets,

States’ alignment with the national targets,

States’ interest in RE development through its policy measures and regulatory support,

States’ technical capability and sustainability to manage high RE capacity addition,

States’ interaction with national level and the support received/reciprocated

In order evaluate the states to depict the above mentioned parameters; the criteria/indicators chosen are

listed below. The states will be qualitatively evaluated for each indicator to assess their importance in the

national RE promotion.

Targeting

Efficiency

Coordination

Implementation

8

Targeting

This indicator helps to quantitatively measure the state’s ability to drive RE capacity growth and its

commitment level towards its own RE targets as well as contribution to the national targets. Assessment will

be based on the past growth trajectory for RE development across the state. With the premise of the states’

RE potential, how much RE can be tapped and what should be the future growth trajectory required as per

the committed targets or past trend. This will help to understand that for the observed future growth

trajectory, what key measures are currently taken/need to be taken and future outlook of success of these

measures.

Efficiency

This indicator helps to qualitatively measure the efficiency of state’s current initiatives taken for RE

development, in terms of policy, regulatory and fiscal measures. There will also be a qualitative measure of

its synergy with the national framework.

Coordination

This indicator helps to qualitatively measure the states’ responses to the central programs/missions and

states’ alignment with the national decision making bodies. The assessment of the support extended to the

national vision/programs and the support received from national decision making bodies help to evaluate this

parameter.

Implementation

This indicator helps to qualitatively gauge the technical prowess to add large scale RE into the system, grid

operation procedures and RE market mechanisms of the states.

4.5 Evaluation

The steps described above will help in developing a comprehensive understanding of the status of the RE

framework in India, with a special focus on the 6 states identified for the purpose of this study. Since the

study conducted will assess the relevant market drivers and also take into account the key stakeholders’

opinions and actual problems faced by them, the situational analysis so developed will present a clear

picture of the status quo.

On the basis of the findings of the situational analyses, a diagnostic tool will be used to evaluate the states

upon the four indicators mentioned above. Results of this analysis are presented in the following section.

9

5. Outcome of Analysis

In our analysis, we have attempted to identify the gap between each state considered in this study and an

ideal state. The ideal state is assumed to have 100% maturity with respect to each of the five indicators as

described in the methodology. The relative degree of maturity is measured as per the following scale with

basic depicting the least maturity and leading depicting the most maturity.

Basic Developing Established Advanced Leading

The following table summarizes the findings of our analysis and displays the maturity of each state when

compared to the maturity level of the ideal state with respect to the following four indicators defined in the

methodology.

Table 3 - Outcome of Situational Analysis for States

Indicator Gujarat TN Rajasthan Karnataka AP HP

Targeting Established Established Advanced Established Established Established

Efficiency Advanced Established Advanced Established Developing Developing

Coordination Established Established Established Developing Developing Developing

Implementation Advanced Established Established Established Developing Developing

Maturity Index Advanced Established Advanced Established Established Established

The following graph depicts the outcome of our analysis. It shows the present status of maturity levels of the

6 states. The graph shows that while the efficiency of current initiatives taken for RE development and

implementation capabilities of the state are adequate, Gujarat needs to work towards co-ordination with

national RE development plans to get closer to the maturity level of the ideal state

10

Figure 6 - Outcome of Situational Analysis for States

In order to explain the gap between the maturity level of each state and the ideal state, we have identified

the key deficits for each state summarised as under.

Gujarat

Targeting Established

Installed RE capacity is 4430MW (January, 2015) which is

15% country RE installed capacity.

As per GEDA, 12th Five Year plan target for addition of RE

installed capacity is 4385 MW by 2017 (includes 1960 MW

solar, 2165 MW wind capacity addition by 2017).

Gujarat’s RPO target in FY 2013-14 was 7% (Non-Solar 6%

and Solar 1%). The total target of 7% (Non-Solar 4.99% and

Solar 2.07%) was met however the non-solar target for the

state was not met.

There is also no clarity on long term RPO targets beyond

2016.

Efficiency Advanced

Enabling policy and regulatory mechanisms for RE

development - Gujarat Solar Policy 2009 had been notified

even before JNNSM phase 1

The long-term fixed tariffs guaranteed by the Gujarat Solar

Policy supported 860 MW of capacity addition till 2014.

The state solar policy was applicable till March 2014. The

state recently drafted a new solar policy which shall be

operational till 2020.

0

0.5

1

1.5

2

2.5

3

3.5

4

Targeting

Efficiency

Coordination

Implementation

Gujarat

Rajasthan

Karnataka

AP

HP

TN

11

Wind power policy was amended in 2013 (and is applicable

till 2016) to address revised targets and new potential

estimates by MNRE. As per the policy WTGs installed and

commissioned during the operative period shall be eligible for

the incentives for a period of 25 years from date of

commissioning or the life span of the WTGs. The electricity

generated from the WTGs is exempted from Electrical Duty.

WTGs for Captive use are exempted from demand cut to the

extent of 30% of the installed capacity.

Capacity addition initiatives are faced with land availability,

power evacuation and accessibility issues. Higher cost of

setting up capacity in the marshlands where significant

potential for solar and wind is present and unavailability of

water are major roadblocks to capacity addition.

In January 2015, Adani group signed an MoU for setting up a

solar park in Gujarat in partnership with US-based SunEdison

at an investment of USD four billion (about INR 25,000 crore)

and Welspun Renewables announced an investment of INR

8,300 crore to set up about 1,000 MW solar and wind

capacities in the state.

Coordination Established

No major deployment under JNNSM. Investors preferred

fixed tariffs under Solar Power Policy of Gujarat, as opposed

to prices from competitive bidding under JNNSM.

The state RE targets need to be realigned with the latest

state committed targets to MNRE.

Good co-ordination with majority of RE developers who are

giving their generation schedules to SLDC.

Implementation Advanced

Established a pilot functional RE management desk at the

SLDC and run a pilot RE forecasting project. There have not

been any satisfactory results from pilot forecasting projects

undertaken by appointing of 5 different FSPs.

Conventional plants are backed down on the basis of merit

order dispatch during low demand periods or in case of

increase in wind generation. Few gas power plants are kept

as balancing power reserve, and supply power to the grid in

case of sudden drop in wind generation. Load regulation is

done only in the extreme cases through equal percentage of

reduction in load at each feeder on priority basis for load

shedding. In this way Gujarat minimises the incidents of

backing down of RE.

Insufficient evacuation infrastructure for the evacuation of

power from additional RE capacity - government is planning

to upgrade existing transmission corridors to accommodate

the increase in generation capacity

Gujarat has Asia’s first and the largest solar park with a

capacity of 590 MW at Charanka (274 MW commissioned till

May, 2014). The “Solar Park” also has capacity to generate

100MW of Wind Power making it the world’s biggest solar-

wind hybrid park.

Government of India declared Gandhinagar as a “Model

12

Solar City” (5MW Gandhinagar grid connected Solar rooftop

project)*

Gujarat has initiated the world’s first canal-based solar power

project in Mehsana district - INR 100crs announced for solar

plants along the banks of canals

Tamil Nadu

Targeting

Established

Without a comprehensive wind policy, with no targets set,

without roadmap/plan for target achievement with a definite

control period; state has added 7600MW of wind capacity as

on 2015. Increased deployment of wind capacities were due to

good wind resources, accelerated depreciation benefits and

GBI schemes.

As per Solar Policy 2012, state was supposed to add 3000MW

by 2015. However, current achievement is only 119.06MW as

on 2015.

Untapped wind potential (80m Hub) is 14152 MW (as per

NIWE 2010), however the state as per its commitment to

MNRE is adding around 4300MW by 2022 in order to achieve

a cumulative wind target of 11900MW by 2022.

Untapped Solar potential in State 17.67 GW (as per NISE

2014), state has committed to MNRE a cumulative target

achievement of 8884MW in solar by 2022.

As per Lawrence Berkeley National Laboratory reports 2012

and as per studies conducted by MNRE, the state has

abundant off shore potential (more than 100GW, which is still

under validation). This potential should be tapped by defining

an off shore wind policy with suitable schemes, measures and

targets.

The CAGR required for achieving the state RE target for 2022

is 14.4%. This is higher in comparison to the state CAGR of

RE capacity addition since 2011 which are around 8%- 9%.

2022 targeted RE capacity, 21508MW as per MNRE is nearly

72% of the peak demand (29975MW) for 2022. Currently the

state ongoing/proposed conventional power projects are more

than 7712MW as per state energy policy note 2014-15. This

depicts an alarming situation for the state to build an efficient

market mechanism in order export its excess generation from

the state. Since technical limits of conventional have a

threshold and also it is a threat to grid security.

Efficiency Established

State energy sector in its Vision 2023, has clearly represented

its tentative investment plans(public and private) of INR

4,50,000 in order in order to build enormous non -

conventional, conventional and T&D infrastructure

development. State does not have suitable incentive

/schemes to promote PPP investment schemes for building

transmission infrastructure for renewable energy.

State needs to repower old WEG or WEG with low PLF.

13

Required policy actions are absent currently.

Solar Policy 2012 has a control period for only 3 years. Policy

amendment with clear action plan is awaited for the state to

increase its capacity from 119MW currently installed to

8884MW by 2022.

States’ performance in solar power development has met lot of

challenges. The government underwent a tender process for

1000MW to award projects, however it received bids only for

500MW.and also issued letter of intent for 226MW1 to

developers. However, it was later scrapped in 2014. Later the

state, came up with attractive FiT under which project were

awarded under first come first serve basis instead of bidding.

This too has complications as FiT scheme is applicable for

new projects commissioned before Sep 2015. Around 30MW

was signed and ready to be commissioned as of Feb 20152.

State has still not charted a roadmap/action plan for this wind

target achievement. A wind policy with defined targets, plan of

actions and definite control period is absent.

Letters of intent has been issued by TANGEDCO to establish

solar power plants of 708 MW capacity to fifty two private

developers as per State Energy Policy note 2014-15.

State initiatives to promote rooftop schemes such CM rooftop

schemes, CM’s solar power Greenhouse scheme displays the

states’ intent to propagate solar mission amongst the

consumers. However, in order to achieve targets of 2022,

proportion of the deployment capacity in the state between

large scale and rooftop scale is still unclear.

State successfully launched the net metering policy in 2014.

State’s solar purchase obligation of 6% has been challenged

by certain consumers association in the state.

State tariff policy offers a return of equity of 20% (pre-tax) for

solar and 19.85% (pre-tax) for wind. However, analysis of

wind tariff for developers depicts that the group captive + REC

route provides developers with 65% more revenue than FIT.

However, apart for group captive, the developers are willing to

avail preferential tariff due to its long term clarity and fixed

return of investment.

Coordination Established

State has installed only 15MW in JNSSM; however the

national mission success enabled to develop the state solar

policy 2012. TN Solar policy committed higher capacities of

deployment, nearly much aligned with earlier JNNSM

capacities (20000MW) for 2020. However, JNNSM target

capacities for 2022 have increased significantly; the state solar

policy needs a revision with clear action plans/measures and

schemes.

State has not clearly defined deployment capacities that will

undergo competitive bidding and defined deployment

1http://www.thehindubusinessline.com/news/early-signing-of-solar-ppas-unlikely-in-tn/article5800847.ece 2http://www.thehindubusinessline.com/news/states/tn-begins-to-sign-solar-ppas-at-last/article6913372.ece

14

capacities that will be offered FiT.

The state has 13.43% of RE capacity used for power

generation however RPO target of only 9% after downward

revision in 2011.

There is no clear RPO trajectory post 2015.

As per Energy policy note 2014-15, the state has proposed to

build transmission schemes for augmenting network for

evacuation of wind power and solar power at a total cost of

Rs. 1,600 crores with the assistance of NCEF, kfw loan and

owned infused equity.

Implementation Established

Managing “Must run status” for wind power during high wind

season is difficult due to the season coinciding with low

demand season, limited threshold for technical back down of

conventional plants and thus challenging grid stability.

Managing high RE variability especially wind power within the

state is causing increased balancing cost.

Only 400MW of pump hydro balancing potential available,

hence the grid operators are representing to the centre and

state to bring efficient market mechanism.

There is fund requirement for building pumped storages such

as Kundah and Kadamparai.

Huge transmission constraints observed and the state is in a

nascent stage for building HVDC lines for evacuating RE

power. Transmission planning is not in line with RE capacity

addition

Rajasthan

Targeting

Advanced

SOLAR

o Rajasthan has the highest solar resource in India

with a potential of 142.31 GWp (as estimated by

NISE) and a very aggressive RE growth plan for the

state to achieve 25000 MW installed capacity in the

state. MOUs for 30 GW of solar parks have already

been signed.

o Presently, the installed solar capacity is 858 MW (as

of Feb 2015) out of which only 41 MW of solar power

is installed from April 2014 to Feb 2015.

o Rajasthan’s Solar Policy 2011 was superseded by

Solar Policy 2014 to include more ambitious capacity

addition targets in line with the resource potential.

WIND

o The installable wind resource potential in Rajasthan

is 5050 MW at 80m level (as per NISE).

o At present, Rajasthan has 3108 MW (as of 28 Feb

2015) of installed wind capacity and plans to have a

total capacity of 8600 MW (MNRE) by 2022.

o About 300 MW of wind power is installed in the last

15

one year against a target of 400 MW as per the

policy.

o The Rajasthan Policy for Electricity Generation from

Wind Energy 2012 was amended in 2014. However,

there is no clarity on wind capacity addition targets

beyond 2015-16.

RE capacity addition needs to increase by 18.5% annually to

achieve RE capacity target of 14362 MW set by MNRE.

By 2022, during low demand periods, the projected demand

can drop down to 6500 MW. In this case, renewable power

might be able to cater to the complete state load and also

might need to be exported out of the state.

Efficiency Advanced

RREC has plans to carry out wind resource assessment with

participation from private developers.

For wind power projects, the Government land is allotted to

the developers at concessional rate of 10% of the DLC rate

(agriculture land). The maximum allotable land is 5 Hect. /

MW.

Private land can also be purchased by the wind developers

for setting up of wind power plants. However, this private land

will need to be converted for industrial use by paying

conversion charges of 10%.

As per the 12th FYP, the Government of Rajasthan has

allocated INR 12,500 crores for the building and

strengthening of the transmission system within the state.

Also, about INR 3044 crores have been allocated for the

strengthening of sub-transmission and distribution system.

Transmission system for the new Solar and Wind Power

Projects is also part of the plan.

Coordination Established

One of the few states to fully comply with JNNSM Phase I

solar capacity addition plan with capacity addition of 432 MW

against the sanctioned capacity of 456 MW.

Rajasthan's RPO targets are in line with the national targets

set by NAPCC. For the year 2015 and 2016, the targets are

slightly higher than the national targets e.g. for 2015, the

state's RPO target is 10.2% against the 10% national target.

RPO targets are defined only till 2016. No RPO trajectory

defined by the RERC for future years.

Implementation Established

Due to unavailability of hydro storage projects, conventional

sources are backed down to a large extent to balance the

variations in RE.

Solar generators produce power only during the day. At night,

the transmission lines which are dedicatedly for the solar

power evacuation are charged at no load. It is difficult to

maintain the voltage of these lines.

Unlike doubly fed or full-converter wind turbine generators,

induction-based wind generators without converters are

unable to control reactive power. As most of the small wind

generators installed in Rajasthan are Type 1 or Type 2

induction type machines, they absorb huge amounts of

16

reactive power during start-up and some reactive power

during normal operating condition.

Major solar and wind resource in the state lies in the western

part of Rajasthan which is far away from the load centres in

Jodhpur, Jaisalmer and Bikaner. This introduces huge

transmission costs and losses which are to be borne by the

state.

Karnataka

Targeting Established

Karnataka has about 240-300 sunny days in a year with an

estimated solar potential of 24.7 GWp (as per NISE).

Also, as per NIWE’s estimation, the state has fourth highest

installable wind potential of 13593 MW at 80m height in India.

Significant achievement in installation of RE capacity of

4749MW which is 15% of country's RE installed capacity.

The solar policy of the state aims to add 1600 MW of grid

connected utility scale solar power projects by 2021 and 400

MW of grid connected roof-top projects by 2018. However,

the present installed solar capacity is only 84 MW.

RE capacity addition of 18.5% annually is required to meet

the target of 14817MW set by MNRE.

Efficiency Established

Karnataka RE Policy 2009-14 (which is the wind power

policy) was launched in 2010 and was valid up to five years

till 2014. Since the operative period of the existing policy is

over, there is no clarity on the state’s wind capacity addition

plan.

State’s solar capacity addition target of 2000MW by

2021under the solar policy is not in line with the target of

5697 MW solar capacity addition committed by the state to

MNRE.

Solar generators are exempted from payment of wheeling,

banking and cross subsidy surcharge for a period of ten

years from the date of commissioning.

For RE development, KREDL subleases the land to

developers for a period of 30 years.

Solar power developers are allowed to use agricultural land

also.

Coordination Developing

Karnataka revised its solar policy in 2014 before the

expiration of the old policy to aggressively aim for higher

targets.

Trajectory of RPO targets for the state is not defined in the

long term. The regulation does not specify the year till which

the current RPO targets are applicable. Also it does not

specify the change (increase) in RPO targets in the future.

This also discourages developers to invest in RE

development in the state

Implementation Established Installed hydro capacity might not be sufficient to balance the

future growth in RE and conventional plants would have to be

17

required for balancing.

Though the state is aggressively allocating funds for

developing conventional plants, coal linkages and gas

availability form the major bottleneck.

KPTCL’s major concern is the acquisition of land for the

establishment of sub-stations and procuring right of way for

drawing transmission lines within the state.

Andhra Pradesh

Targeting Established

Solar:

o 300 sunny days in a year with a solar potential of

38.44 GWp as per NISE.

o The government is targeting a capacity of 5000 MW

in the next 5 years.

Wind:

o As estimated by the NIWE has a total wind potential

of 14,497 MW at a hub height of 80m

o The targets of the policy are to set up a 4000 MW

wind generation capacity over the next 5 years.

Capacity addition of 37.9% every year is required to meet the

target of 18477 MW set by MNRE.

Efficiency Developing

Solar

GoAP is promoting setting up of solar PV manufacturing and

training facilities

GoAP is promoting net metering for roof top PV with

incentives for 25 years over and above JNNSM incentives

Exemption from distribution losses for injection under 33 kV

Exemption from clearance requirements of AP pollution

control board for solar PV

There is a significant policy push in terms of financing and

un-complicating of procedures (NREDCAP) towards setting

up of grid connected solar projects.

Wind:

No T&D charges for power supplied within the state

100% energy banking facility at 2% is provided for all 12

months. Peak periods drawl restrictions are imposed

Open access clearance is provided for the complete life of

the project or 25 years whichever is earlier.

Wind power generated will not be charged electricity duty for

power sold to AP Discoms.

Deemed PPP, Industry status awarded, Must run status

awarded, No clearance from pollution control board and

automatic conversion of land to Non agricultural

Coordination Developing

44.75 MW capacity is installed under JNNSM Phase 1

AP’s RPO targets are not aligned with the National RPO

targets. Being a RE-rich state, the RPO compliance for AP

should be increased to bring it in line with the NAPCC

targets.

18

Implementation Developing

During monsoon season, reservoirs fill up and hydro power

becomes a must-run. At the same time, due to high winds

even production of wind is high but the load is not so high.

Due to low requirement of power, conventional power is

curtailed.

Shortage of fuel (Gas/coal) for conventional power plants

restricts balancing capability

Himachal Pradesh

Targeting Established

Due to absence of solar and wind policy, there are no set

targets for solar and wind capacity addition.

Solar potential is 33.84 GWp (as per NISE). Wind energy has

little power generation potential in the state. There are

objections to setting up wind plants owing to environmental

concerns.

RE power target by 2022 is 776MW for Solar Power and

1500MW for SHP.

Capacity addition of 17.8% every year is required to meet the

target of 2276 MW set by MNRE.

High hydro potential 18820MW, majorly run of the river.

Untapped capacity is 7214MW.

Current hydro installed capacity is 3206.5MW of which

393MW state share. RES installed capacity is 638MW

Efficiency Developing

At present, 501 power projects with an aggregate capacity of

2050MW have been allotted in HP, of which 98 projects of

total installed capacity of 500MW have been commissioned.

Of the remaining 403 projects, PPAs have been signed for 90

projects for a total capacity of 325MW. This leaves about 313

allotted projects that are non-starters. HP is currently

struggling to attract IPPs to come forward to invest in these

313 projects.

There is no notified policy for wind and solar power in HP;

however the state has a policy for small hydro power projects

above 5MW and below 5MW. These policies provide detailed

long term clarity on eligibility criteria for setting up hydro

power projects, wheeling charges, regulations for power

disposal and incentives by MNRE and the state.

No clarity on solar/wind policy is a major drawback for RE

capacity addition in the state.

Coordination Developing

RPO compliance improving year on year. During 2009, RPO

achievement was around 4% however during 2010, RPO

achievement increased to 7% against target of 10%.

The state has been unable to meet solar RPO targets as low

as 0.25% in FY2014-15.

According to stakeholder consultations at HPSEB, the state

has been meeting its RPO targets through purchase of

hydropower however as per MNRE guidelines, large hydro is

not considered to be a RES.

19

Implementation Developing

In HP, for power plants of capacity greater than 5MW, it is

mandatory to have SCADA systems installed. At present, 10

micro hydro power stations are connected through GPRS

and transmit real time data. However, about 130 MW of micro

hydro power stations are only monitored through telephone

once a day.

Uncertainty of market off take of RECs is perceived as a

major barrier by lenders, financial institutions and new RE

project developers. Long term visibility of floor price and

forbearance is necessary to ensure stability of price regime

which cannot be ensured through trading platform under

existing arrangement.

Adequate balancing capability and managing RE growth not

a challenge. However, there is some resistance to drive solar

potential owing to topography of the state and seeking

environmental clearance for setting up large scale plants.

Deviation from demand forecast is only about 2%. State

demand is less compared to other RE rich states of around

1300MW.

20

6. Situational Analysis

6.1 Central

As on 31st May 2015, India’s total installed capacity of RES stood at 35.8GW [2].There is a need to assess

the existing supporting framework available to achieve the ambitious target of 175 GW of RES capacity

additions by 2022.

The GoI is playing an active role in promoting the adoption of RE by encouraging private sector investment

and mandating the use of renewable resources. It is offering various incentives, such as GBIs and tax

holidays, to encourage the development and use of RE sources. GoI has also created a liberal environment

for foreign investment in RE projects. In addition to allowing 100% foreign direct investment (FDI), the

government is encouraging foreign investors to set up RE-based power generation projects on a build-own-

operate (BOO) basis in the country.

RE equipment prices have fallen dramatically due to technological innovation, increasing manufacturing

scale and experience curve gains making RE cost competitive with fossil fuels. This is particularly true of

solar and wind technology, where solar module prices have declined by almost 80% since 2008. Wind

turbine prices have declined by nearly 30% during the same period [6]. Falling equipment prices have led to

large-scale deployment of these technologies in India and globally.

Figure 8 - RE Capacity Addition in India till FY14 [2]

The illustration shown above depicts the historical growth of RE (including wind, biomass, co-gen and SHP)

since FY02-FY14 and the historical impact of policies and regulatory framework introduced by the GoI.

21

6.1.1 RE Potential of States Considered for Analysis

The NAPCC and tariff policy have set non-solar and solar RPO target respectively at national level. Hence,

there is a need to assess whether the proposed RE capacity development based on assessed potential is

sufficient for achieving the set RPO target. This will also act as an indicator for the growth potential of REC

market provided the economic, institutional, and commercial issues around development of REC market are

addressed.

Since the distribution of RE resource is not uniform in the country, a separate analysis should be conducted

for resource rich and resource deficient states for assessing the sufficiency of renewable generation to meet

RPO targets. For the purpose of this situational analysis at the centre and state levels, the MNRE estimates

of the RE potential of states considered in this study are given in the following tables.

Table 4 - State wise Solar Potential [3]

State Solar Potential in GWp Ranking

Rajasthan 142.31 1

Andhra Pradesh 38.44 2

Gujarat 35.77 3

Himachal Pradesh 33.84 4

Karnataka 24.7 5

Tamil Nadu 17.67 6

As per the MNRE ranking of all 29 states according to their assessed solar potential, the states ranked 1-15

are considered to be resource rich. Since all the states evaluated in this study fall within the first 15 ranks,

they are all considered rich in solar energy. Of the states considered in this study, the highest estimated

solar potential is in Rajasthan and the lowest in Tamil Nadu.

Table 5 - State wise wind potential [4]

State

Wind Potential at 50m

hub height (in GW)

Wind Potential at 80m

hub height (in GW) Ranking

Gujarat 10.609 35.071 1

Andhra Pradesh 5.394 14.497 2

Tamil Nadu 5.374 14.152 3

Karnataka 8.59 13.59 4

Rajasthan 5.005 5.050 5

Himachal Pradesh 0.020 0.064 6

As depicted in the above table Gujarat, Andhra Pradesh, Tamil Nadu and Rajasthan can be categorized as

wind resource rich states while Himachal Pradesh is deficient in wind energy. Himachal Pradesh is however

rich in RE owing to its vast hydro potential. The wind resource potential of a state varies with hub height of

the wind turbine.

22

6.1.2 Targeting Analysis

This analysis is done in order to assess the viability of the national RE capacity addition plans of 175 GW of

renewables by 2022 as per the targets set by the Government of India. The analysis also outlines the key

issues to be addressed in order to achieve the target. It also hints to necessary amendments that need to be

made to the available market mechanisms, policy structure and technical infrastructure on a national level to

support achievement of these targets.

As per the CEA data, the peak electricity demand in India for the year 2014-15 is 148,166 MW and the

installed capacity is 271722.17 MW. This generation capacity includes 61% of generation by coal, 15% by

hydro, 9% by gas, and 2% by nuclear and 13% by renewables. Figure below illustrates the generation from

different types of fuels.

Figure 7: Fuel Mix of Conventional and RE Generation in 2014-15

As per the 18th Electric Power Survey, the electricity peak demand of India is projected to increase to

199,540 MW by 2016-17 i.e. end of 12th Five Year Plan period and to 283,470 MW by 2021-22 i.e. end of

13th Five Year Plan period. This marks a 16% increase in demand annually till 2016-17 and then a 7%

increase annually till 2021-22. Such increase in demand is expected in the future due to the rapid

industrialization and increase in per capita energy consumption. Introduction of the Power for All initiative by

the Government of India will increase the electricity connectivity and access in the country which will

contribute to the increase in electricity demand.

To cater to the electricity demand and as per the proposed capacity addition targets, the installed power

capacity projected by the CEA and the MNRE (for renewables) by 2021-22 is as given in the figure below. It

can be clearly observed that the percentage of renewable capacity in the total generation capacity will have

to increase from 13% in 2014-15 to 30% in 2021-22 which implies a 25% growth year-on-year.

Coal, 164635.

88

Nuclear, 5780

Gas, 24261.9

Hydro, 41267.4

3

Renewables,

35776.96

Fuel Mix of Total Generation by 2014-15 (in MW)

Wind, 23444

SHP, 4055.36

Bio Power, 4533.63

Solar, 3743.97

Mix of Renewable Generation by 2014-15 (in MW)

23

Figure 8: Fuel Mix of Conventional and RE Generation in 2021-22

A comparison of the peak electricity demand projections and the expected RE installed capacity is shown in

the graph below. From the below tables it can be observed that an annual RE capacity growth of 25% is

required to meet the capacity addition target for 2022. It can also be inferred in the year 2022, the planned

RE capacity is nearly 62% of peak demand. This inference implies that there is a need to develop sufficient

conventional capacity for balancing the variable RE and adequate market mechanisms to evacuate the

additional RE power generated.

Figure 9: Peak Electricity Demand Vs Expected Installed RE Capacity (in GW)

Renewable energy can be generated only in some pockets of the country where the resource potential is

high. Out of the 35776.96 MW of present installed capacity, almost 84% is concentrated only in the six states

of Tamil Nadu, Rajasthan, Gujarat, Andhra Pradesh, Karnataka and Maharashtra. Similarly, as per MNRE,

the majority of RE capacity addition envisaged to meet the 175 GW target will also be concentrated in these

states and a few more like Madhya Pradesh and Uttar Pradesh, Jharkhand, Chhattisgarh etc.. However, the

Coal, 286663

Nuclear, 13180

Gas, 30202

Hydro, 73832

Renewables,

175000

Fuel Mix of Total Generationby 2021-22 (in MW)

Wind, 60000

SHP, 5000

Bio Power, 10000

Solar, 100000

Mix of Renewable Generation by 2021-22 (in MW)

0.0050.00

100.00150.00200.00250.00300.00

Peak Electricity Demand Vs Expected Installed RE Capacity (in GW)

Peak Demand RE Capacity

Peak Demand

(in MW)

RE Capacity

(in MW)

2014-15 1,48,166.00 35,776.96

2015-16 1,71,944.89 44,884.26

2016-17 1,99,540.00 56,309.90

2017-18 2,14,055.01 70,644.02

2018-19 2,29,625.87 88,627.00

2019-20 2,46,329.40 1,11,187.70

2020-21 2,64,247.98 1,39,491.39

2021-22 2,83,470.00 1,75,000.00

24

RE-rich states with enough installed RE capacities are already facing issues with managing this intermittent

power. A very good example is Tamil Nadu where the high wind power developed during the night cannot be

utilized within the state due to low demand. This issue is discussed in detail in the state specific analysis

later.

With the increase in RE capacity in these states, issues like managing the variations in the RE power by

forecasting and scheduling, development of balancing services, availability of transmission infrastructure to

evacuate this power and development of a market mechanism to sell this power to other states would be

faced in the RE-rich states for the export and sale of RE power.

A similar targeting analysis has been conducted in the next section, for each of the states considered in this

study.

6.1.3 Policy and Regulatory Support

Electricity Act, 2003

Launched in June 2003, EA 2003 provides for policy formulation by the Government of India and mandates

SERCs to take steps to promote renewable and non-conventional sources of energy within their area of

jurisdiction. It calls to promote cogeneration and generation of electricity from renewable sources of energy

by providing suitable measures for connectivity with grid and sale of electricity to any person, and also

specify, for purchase of electricity from such sources, a percentage of total consumption of electricity in the

area of distribution licensee.

Legislation prior to the Electricity Act, 2003 (EA 2003) had no specific provisions that would promote

renewable or nonconventional sources of energy. Despite this shortcoming, the Ministry for New and RE has

worked towards supporting the sector by way of policy guidelines since 1994-1995, with mixed results.

However, the EA 2003 changed the legal and regulatory framework for the RE sector in India. The EA 2003

mandates policy formulation to promote renewable sources of energy by the federal government, the State

governments and the respective agencies within their jurisdictions.

As mandated by the EA 2003, the SERCs determine the tariff for all RE projects across the respective

States, and the state-owned power Distribution Companies (DISCOMs) ensure grid connectivity to the RE

project sites, which generally are situated in remote locations away from major load centres. States have

come out with technology specific Renewable Purchase Specification (RPSs), which they continue to split

between ‘Solar’ and ‘Non-Solar’ categories.

Further, EA 2003 has explicitly stated the formulation of National Electricity Policy (NEP), National Tariff

Policy and plan thereof for development of power systems to ensure optimal utilization of all resources

including renewable sources of energy. Also a January 2011 amendment to the National Tariff Policy

mandated SERC’s to specify a solar-specific RPS at state level. By 2015, as mandated under Electricity

Act3, all SERCs except Sikkim have fixed quotas (in terms of % of electricity being handled by the power

utility, CPPs and OA consumers) to procure power from RE sources.

National Electricity Policy, 2005

The National Electricity Policy 2005 aims to exploit feasible potential of RE resources; reduce capital costs;

promote competition and private sector participation. The NEP stipulates that the share of electricity from

non-conventional sources would need to be increased progressively as prescribed by SERCs. Purchase by

distribution companies shall be through competitive bidding process; considering the fact that it will take

3Section 86 1(e) of the EA 2003 made the SERCs responsible for the following (a) Ensuring suitable measures for connectivity of

renewable power to the grid, (b) Sale of renewables based electricity to any person, (c) Mandating purchase of a certain percentage of

total energy consumption from renewables

25

some time before non-conventional technologies compete, in terms of cost, with conventional sources, the

commission may determine an appropriate deferential in prices to promote these technologies.

Integrated Energy Policy Framework & RE Law

In India the first attempt at pulling together an umbrella energy policy came when the Planning Commission

released the ‘Integrated Energy Policy: Report of the Expert Committee’ (IEP) in October 2006, which

provided a broad overarching framework for all policies governing the production, distribution, usage etc. of

different energy sources. Although the report of the expert committee has been available since 2006, political

commitment to it has been limited.

While the IEP report emphasized on the need to move away from capital subsidies towards performance

incentives, to promote RE sources [6] it assigned a limited role to power generation from RE sources even

as late as 2032, with only 5.2 percent of renewables based electricity in the grid.

Recently the Energy Coordination Committee under the Prime Minister’s Office has decided to support the

enactment of a RE Law to develop and adopt an integrated energy framework that has a long-term vision, a

time-bound plan and an implementing mandate that supports India’s efforts for achieving clean, secure and

universal energy access. Such a framework, if adopted, can help to address not only the concerns of

investors in relation to volatile policy environment and market risks but also deliver indigenous power supply

free from the fuel price risk associated with fossil fuels.

National Tariff Policy 2006

As per the Tariff Policy announced in January 2006, the appropriate commission fixes a minimum

percentage for purchase of energy RE sources taking into account availability of such resources in the region

and its impact on retail tariffs. RE procurement by distribution companies is done at preferential tariffs

determined by the appropriate commissions. This is done through a competitive bidding process, under

Section 63 of the EA 2003, between suppliers offering same type of RE sources.

NEP says that a minimum percentage of RE procurement should be made applicable and the central

commission should lay down guidelines within three months for pricing non-firm power, especially from non-

conventional sources, to be followed in cases where such procurement is not through competitive bidding.

NAPCC 2008

The National Action Plan of Climate Change by the Government of India identifies 8 core national missions

running through 2017, envisaging several measures to address global warming. One of the missions states

that a dynamic minimum renewable purchase standard (DMRPS) be set, with escalation each year till a pre-

defined level is reached. It set targets of 5% RE purchase for FY 2009-10, with an increase of 1% in target

each year to reach 15% RE penetration by 2020. SERCs may however set higher percentages than this

minimum at each point in time [2].

There has been considerable emphasis on solar energy and energy efficiency measures. It is observed that

the missions have been placed in 8 separate silos and very little synergy among the missions. Thus the

problems and solutions need to be viewed from sector specific lenses and from separate portfolios of the

ministries.

One of the keys missions of NAPCC is JNNSM. This is focused to position the country as one of world

leaders in solar energy and built the ambition for solar in individual states. Establishing renewable purchase

obligations (RPOs) and use of reverse auction to allocate projects has brought in a fair degree of

transparency and accountability to the process. This has however, brought about some non-alignment

between the targets established by states and the mission.

26

Moreover, some potential challenges of the mission faces and fails to explain are

How is the country prepared to resist the competition from China in stream of manufacturing? What

kind of enabling policies may be required?

How is the country prepared on grounds to building R&D facilities? Are we prepared to discard

spurious and low quality products?

Emphasis upon the off grid potentials.

6.1.4 National Solar Mission

With most parts of the country receiving an average annual global solar radiation of 1,600-2,000 kWh/m2,

India has a solar potential of 6 billion GWh that can be used to generate much more than the country’s

current electricity needs (CERC 2011).

Motivated by the urgency of reducing dependence on fossil fuels, improving energy security and available

technical potential of solar energy technology in the country, India launched the Jawaharlal Nehru National

Solar Mission (JNNSM) in 2010.

Since solar power has not achieved grid parity; it is not competitive in the marketplace. The successful

growth in solar deployment in recent years can therefore be attributed mainly to the long-term fixed tariffs

guaranteed by the state policy of Gujarat and JNNSM.

JNNSM had contributed approximately 1353.5 MW of solar capacity by 11 June 2015 (MNRE, 2015). This

deployment has happened in a cost-effective manner, primarily due to competitive bidding. The impact of

JNNSM has influenced many other states to come up with their own solar policies based on competitive

bidding for solar power deployment, and to fulfil their solar renewable purchase obligations (RPOs). Between

April 2011 and May 2015, thirteen states announced solar policies as depicted in the following figure.

27

Figure 10 - Timeline of Solar Policies in India against Deployment in Gujarat and JNNSM

JNNSM targets have three phases – Phase 1 (until 2013); Phase 2 (2013-17); and Phase 3 (2017-22).

Phase 1 was split into Batch 1 and Batch 2. The JNNSM target was to implement 500 MW of solar PV and

500 MW of solar thermal, with 150 MW of solar PV and 500 MW of solar thermal in Batch 1, and 350 MW of

solar PV in Batch 2 (MNRE 2013).

Phase 1 was implemented by the National Thermal Power Corporation (through National Vidyut Vyapar

Nigam (NVVN), the power trading arm of the NTPC). To reduce the delivered cost of solar electricity, NVVN

bought solar energy at the corresponding levelised cost realized through reverse bidding, bundled it 20%-

80% with energy from traditional power sources and sold the bundled energy to customers. This phase is

now complete. Phase 2 of JNNSM is underway.

The JNNSM focuses on four application segments – grid connected utility-scale installations, including

rooftop systems; off-grid solar applications; solar collectors; and solar lighting systems as depicted in the

following table.

Table 6 - JNNSM Targets

S.No. Application Phase-1 Target

(2010-13)

Phase-2 Target

(2013-17)

Phase-3 Target

(2017-22)

1 Utility grid power,

including roof top

1,000-2,000 MW 4,000-10,000 MW 20,000 MW

2 Off grid solar applications 200 MW 1,000 MW 2,000 MW

3 Solar collectors 7 million m2 15 million m2 20 million m2

4 Solar Lighting Systems 20 million

28

Recently, Government of India increased the targets to install 100 GW of solar projects by 2022. The

purpose of this analysis is to assess the success of the JNNSM in terms of its stated targets and

understanding the reasons behind its success (or failure). The cost-effectiveness of the JNNSM will be

assessed in this analysis from the perspective of cost reductions from domestic as well as international

benchmarks.

Methodology

The following three schemes under JNNSM will be assessed in this analysis.

NVVN Scheme - Solar tariff was fixed by a pay-as-you-bid scheme where the developers providing

the highest discounts from the CERC feed-in tariff benchmark were selected.

Migration Scheme - 84 MW of existing utility-scale solar PV projects were merged into JNNSM

Phase 1 under this scheme. These projects were already under development under existing power

plant pilot schemes, and were allowed to collect a tariff of INR 16/kWh.

Rooftop PV and Small Solar Power Generation Programme (RPSSGP) - Rooftop systems with a

maximum capacity of two MW each, were selected under this scheme. A total of 98 MW was allotted

under the RPSSGP scheme (MNRE 2013).

The following indicators are used to evaluate each of the above schemes applicable under JNNSM.

Indicator 1 - Measures the percentage of projects commissioned under the JNNSM by June 2014.

Indicator 2 – Measures the percentage of projects completed by their due dates under JNNSM by

June 2014. This is a more accurate indicator of policy performance.

Indicator 3 - Measures the percentage of implementation success by timelines of the project

completion. This indicator gives late projects a partial credit that diminishes with increasing delay.

The third indicator is estimated for each scheme by calculating the product of the (percentage completion of

the project capacity with total planned capacity) and (the number of months from beginning of a programme

to due date divided by the number of months from beginning of a programme to completion). This

normalization by the number of months from the beginning to completion ensures that two projects with

different lengths can be compared and also takes into account the underlying characteristics of technology

development.

To assess the performance of different aspects of the JNNSM, we use indicator 3 as it provides the most

comprehensive measurement of completed and uncompleted projects, with appropriate penalties for delays

by provision a fair comparison between the schemes as opposed to the other two indicators. We use the

following ranges to define the success of each scheme as understood from the value of indicator 3.

29

By June 2014, in Batch 1, out of a planned 500 MW of solar thermal, 30 MW was added through the

migration scheme and the remaining 470 MW was offered through the reverse bidding process under the

NVVN scheme. Except for one 50 MW project, all other projects have gone beyond the deadline of March

2014 and an extension of 12 months has been granted without any deduction of bank guarantees or

cancellation.

Under the NVVN scheme, the projects that didn’t sign PPAs under Batch 1 were disqualified because the

winning bidders could not furnish the required bank guarantee. The ones that didn’t sign PPAs in Batch 2,

failed to meet technical criteria.

Under the RPSSGP scheme, the original target for solar PV was 98.5 MW. Though only 8 MW was complete

by the due date, approximately 90.8 MW had been completed by June 2014.

Under the migration scheme, the original target for solar PV was 54 MW, and 48 MW was completed by the

due date and by June 2014. The following table summarizes the statistics of the projects that were under the

purview of the above schemes.

GREATER THAN 95% Highly Successful

BETWEEN 75% - 95% Successful

BETWEEN 50% - 75%

Somewhat Successful

BETWEEN 25% - 50%

Unsuccessful

BETWEEN 0% - 25%

Highly Unsuccessful

Figure 11 – Project Success measured w.r.t. % Completion of Project

[Type text]

Published by

Table 7 - Batch 1 & 2 Aggregate Statistics [7]

Scheme Technology

Capacity

Planned

(MW)

Capacity to be

commissioned

as per PPA

(MW)

Capacity

Actually

commissioned

as of June 2014

(MW)

Capacity Commissioned (MW)

By Due

Date

With 3

Months

Delay

With 3-6

Months Delay

With 6-9

Months

Delay

With 18

Months

Delay

Phase 1, Batch 1,

under NVVN

Solar PV 150 140 140 60 60 10 5 5

Solar Thermal 470 470 50

50

0

0

-

-

Total (Phase 1, Batch 1 under

NVVN) 620 610 190

110

RPSSGP Solar PV 98.5 98.05 90.8 8 14 54.6 14.3 -

Migration scheme

Solar PV 54 54 48 48 - - - -

Solar Thermal 30 30 2.5 2.5 - - - -

Total 182.5 182.05 141.3 58.5

Phase 1, Batch 2

under NVVN Solar PV 350 340 310 235 65 10 - -

Under the Phase 2 Batch 1 of JNNSM, 505 MW (67% of planned capacity) of projects are commissioned by May 2015 (SECI) out of the planned capacity

of 750 MW.

Table 8 - Batch 1 & 2 Ranking as per Different Indicators

Scheme Indicator 1

(%)

Indicator 2

(%)

Indicator 3

(%) Success Rate

Phase 1, Batch 1

Under NVVN

Solar PV 93% 40% 80% Successful

Solar Thermal 11% 11% 11% Highly unsuccessful

RPSSGP RPSSGP 93% 8% 65% Somewhat successful

Migration

Solar PV 89% 89% - Successful

Solar Thermal 8% 8% - Highly unsuccessful

Phase 1, Batch 2 Under NVVN Solar PV 89% 67% 82% Successful

31

Results

The statistics in the above tables indicate that JNNSM Phase 1 is almost on target for solar PV. Under the

JNNSM, solar PV reached a total deployment of about 588 MW by end of Batch 2. On the other hand,

solar thermal projects reached a total deployment of only 52.5 MW by June 2014. It is therefore apparent

that the JNNSM has been successful in deploying solar PV, while failing to meet the deployment target for

solar thermal.

Solar thermal projects, which were allocated only in Batch 1 under the NVVN and migration schemes were

supposed to be commissioned by March 2013 of which only 52.5 MW of capacity was deployed until June

2014 therefore the JNNSM has failed to deploy solar thermal.

Risk Assessment

The following table examines the risks associated with Solar PV and Solar Thermal technologies. Based

on our assessment, the impact of these risk factors is under JNSSM is indicated in the right column.

Table 9 – Assessment of risk factors for Solar PV and thermal in India

Type of

Risk Technology Description of Risk Level of Risk

Technology

Risk

Solar PV

Simple mechanical set-up, no moving parts and no

cooling mechanism. Thus maintenance and operation

of solar PV plants easy and risk-free.

Low

Solar Thermal

Lack of installation and technology experience in India,

complicated technology and need for large amounts of

water for cooling and cleaning caused delays in

execution of these projects. Almost all the solar

thermal projects have been allocated to the desert

state of Rajasthan, with insufficient sources of water.

High

Developer

Risk

Solar PV

NVVN reduced participation by non-serious players by

incorporating a bid-bond that penalized delays in

commissioning. If the solar project developer failed to

commence supply of power to the NVVN by the

specified date, the performance bank guarantee would

kick in. Thus, although fewer developers vied for solar

PV projects under Batch 2, the average project size

was much larger, indicating that only serious

developers were staying in.

Both the RPSSGP and NVVN schemes required

developers to deposit very similar bank guarantees.

Moreover, projects under the RPSSGP were paid a

higher tariff compared to the average tariff in the NVVN

in Batch 1 and 2. Thus, the projects under the

RPSSGP had more to lose due to delays. Given

almost identical timelines, the projects under the

RPSSGP were delayed more than those under the

NVVN because of the lack of experience in deploying

solar PV in India.

Low

32

Solar Thermal

New market and lack of technology experience could

not guarantee the expected time period of

commissioning the plant and its hidden difficulties.

However, there was participation of serious developers

(for example, Reliance, Lanco, Godawari Power and

Ispat) in the bid bonds.

Medium

Low

Offtake

Risk

Solar PV

All the projects under Phase 1 have a 25-year PPA

signed with the NVVN, the power trading arm of NTPC.

Owing to the good financial health of NVVN, the PPA

enjoys a strong credit rating and bankability (IEP

2012). This has allowed these projects to secure

funding in a timely manner. This would not have been

possible if the off-takers were state electricity boards

(SEBs), given that most of them are in financial

distress

Low

Solar Thermal NVVN was the major off takers Low

Resource

Risk

Solar PV

India has very good solar resources with average

capacity utilization factor of most solar PV plants

between 15%-19% range. In particular many plants

were located in Rajasthan which has CUF nearly 20%.

For the JNNSM, the GHI values used in designing

solar PV plants and determining the energy output are

based on satellite data provided by the NREL in the

US. The variation – that is, risk – between data based

on satellites and on-ground stations is found to be low

(less than 5%) for GHI.

Low

Solar Thermal

Large projects require a lot of land, with good direct

normal irradiance (DNI), the total amount of radiation

received on a surface always kept horizontal to the

sun’s direct rays. In the JNNSM, the DNI values used

in designing a solar thermal plant and determining the

energy output were again based on satellite data

provided by the NREL. These, given that they are not

on ground measurements, contain a significant margin

of error – around 20%. Hence, developers have had to

set up measuring instruments on site to measure the

exact DNI before starting construction, adding to delay.

High

JNNSM has achieved its solar PV target in a cost-effective manner aided by good solar resources in India

and rapidly falling solar PV module prices. The success of the reverse bidding process in the JNNSM

encouraged many states (like Karnataka and Madhya Pradesh) to follow its method of price discovery

through reverse bidding and bid-bonds. Following the success of solar PV under the JNNSM the following

states declared their own solar policies as shown in the table below.

33

Table 10 - Solar Policies declared after NSM

Solar Policies announced

after NSM Period

Emphasis on

Solar PV

Emphasis on

Solar Thermal

Rajasthan Policy 4/11 High Low

Karnataka Policy 7/11 High Low

Madhya Pradesh policy 7/12 High Low

Andhra Pradesh Policy 9/12 High Low

Chattisgarh Policy 11/12 High Low

Tamil Nadu Policy 10/12 High Low

UP Policy 3/13 High Low

Odisha policy 7/13 High Low

It is clear that all these policies have learned from the JNNSM since they have mostly maintained tariffs

within short range of the lowest bid in NVVN Batch 2. While some states used fixed feed-in tariffs

combined with bid-bonds, these feed-in tariffs were essentially the lowest bids in reverse auctions.

There was a lot of concern about aggressive bidding by players in the JNNSM. Developers also benefited

from rapidly falling prices of solar PV modules. It is not clear whether the trend of rapidly falling PV module

prices driving down system costs and hence solar tariffs will continue in the future.

Solar thermal technology offers many advantages compared to solar PV however, as we have shown, the

JNNSM has been very unsuccessful in getting solar thermal deployed, even though it shares some of the

elements behind the successful take-off of solar PV – low offtake, and developer risks. There have been

multiple challenges in getting solar thermal projects off the ground, primarily related to technology risks.

Since only a tenth of the capacity came online by the due date of March 2013, the projects were first given

an extension till May 2013 and then till March 2014, all without any penalties. Not penalizing projects for

delays may however have negative repercussions on policy credibility in the long run.

Conclusion

Using quantitative indicators, our analysis has shown that the JNNSM has been successful in reaching its

solar PV targets in a cost-effective manner due to its reverse-bidding process. While JNNSM has been a

key driving factor behind solar energy deployment in India, it has failed in reaching its solar thermal

targets. The following table summarizes the findings of our analysis on the effectiveness of the JNNSM.

34

Table 11 - Evaluation of Effectiveness of JNNSM

Technology Solar PV Solar Thermal

Technology Barrier Low High

Developer Barrier Low Medium

Off take barrier Low Low

Resource barrier Low High

Follow up Actions (example:

Initiations of state policies) High Low

Price Discovery Good (nearly 39%-50%) price

reduction as per CERC tariffs Medium

Cost effectiveness Good Low

Implementation Effectiveness Success Low

User adoption rate High Low

Overall Performance Successful Unsuccessful

The JNNSM has demonstrated that auctions can be successful, provided they are combined with bid-

bonds. The bid-bonds proved to be an effective mechanism, especially when combined with mature

technologies like solar PV to reduce the developer risk. These auctions have provided a price discovery

mechanism that has brought down the delivered cost of electricity from solar PV considerably, largely

removing the biggest barrier against solar adoption. This has encouraged many states to adopt solar

deployment policies that use reverse auctions with bid-bonds. Finally, the JNNSM has greatly benefited

from the low offtake risk provided by the NVVN PPA. This is because the NVVN is backed by the NTPC,

which is in good financial condition. This indicates that mechanisms that lower the offtake risk will be

crucial to solar deployment in India.

All the above policy measures that have been largely driven by fiscal incentives and subsidies have

resulted in growth of RE supply. However, such measures do not help in large scale development of RE.

For development of RE markets it is important to create demand pull as well which will result in better

pricing of power from RE. Hence, market creation remains the overwhelming emphasis of the policy

makers. In this regard, mechanisms such as Renewable Purchase Obligation (RPO) and RE Certificates

(REC) have been introduced through policies and regulations.

35

6.1.5 Renewable Purchase Obligation (RPO) and RE Certificates

As per Section 86 of EA 2003, SERCs have to specify obligations of various entities to purchase or

generate a certain percentage of their total electricity requirement from renewable sources.

RPOs were created to provide a minimum market for renewables in the absence of pricing externalities of

conventional power generation. RPOs created incentives for RE generation driven not only from supply

side, but also from demand side for large scale market creation through RPO/SPO. MNRE urged the

Ministry of Power (MoP) to make the RPO compliance mandatory for states to make them eligible to avail

funds for financial restructuring of their utilities.

Issues with RPO Regulation

While the National Electricity Policy (NEP) and the National Tariff Policy provide clarity on section 86 of EA

2003, for effective enforcement there is also a need to elucidate the following aspects of the regulation.

Penalties for non-compliance by obligated entities

Existing legal and policy provisions do not prohibit SERCs from reducing or carrying forward the RPOs of

obligated entities. This creates significant uncertainties for developers of RE projects. While the proposed

amendment of the EA 2003 has more stringent provisions for penalization in case of non-compliance of

RPO, no incidence of this penalty being levied on obligated entities has been reported yet.

Long term RPO targets for all states and uniformity in their specification

While the NEP has a provision which states that 'the share of electricity from non-conventional sources

would need to be increased progressively as prescribed by SERCs’, there is no such provision in the EA

2003. The increase in RPO therefore has been left to the discretion of SERCs causing regulatory

uncertainty.

Uniform mechanism for monitoring and verification of RPO

Under the RPO regulations, State Nodal Agencies (SNAs) are responsible for identification of obligated

entities, monitoring their electricity consumption, computing the RPO of the obligated entities, and

reporting to SERCs the status of compliance with the RPO. Owing to inadequate institutional capacity,

SNAs are unable to effectively execute the tasks assigned to them especially the RPO monitoring of CPPs

and open access consumers. In the absence of standard MRV guidelines for RPO compliance, each state

adopts a different approach for the same.

Alignment of RPO targets with national-level trajectory of RE purchase

There is a need to set national level RPO targets to reflect the availability of RE resource in the country as

a whole. NAPCC targets that have been set according to the national emission reduction targets (India has

voluntarily committed to reduce by 2020 its intensity of carbon emissions by 20%–25% over the 2005

levels) are applicable for the entire country while the provisions of Section 86 only apply to individual

states.

As a result, there is no mechanism that can convert national targets to state-level targets. Also since

NAPCC could not be mentioned in EA 2003 the provisions of NAPCC are not binding on SERCs.

36

The following table summarizes the RPO target for the states under consideration in this study and

compares them with the NAPCC targets.

Table 12 - RPO Trajectory for States

States 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

AP 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%

TN 9.00% 9.00% 9.00% 11.00% 11%

Karnataka 10.25

%

10.25

%

10.25

% 10.25% 10.25% 10.25% 10.25% 10.25% 10.25% 10.25%

HP 10.01

%

10.25

%

10.25

% 10.25% 11.25% 12.25% 13.50% 14.75% 16% 17.50%

Gujarat 6.00% 7.00% 7.00% 8.00% 9.00% 10.00%

Rajasthan 6% 7.10% 8.20% 9.00% 10.20% 11.40%

NAPCC 6% 7% 8% 9% 10% 11% 12% 13% 14% 15%

The following graph depicts the RPO trajectories of the six states and the national RPO targets as per

NAPCC.

Figure 12 - RPO targets

Besides the above considerations, financial impact of high RPO targets on distribution utilities that are

already under financial distress, inter-state difference in tariffs and incoherent resource assessment need

to be corrected.

To provide an alternative route (in addition to direct purchase of power from RE sources) to enhance

compliance to RPO and to catalyse the development of RE in India for compliance of RPO, Central

Electricity Regulatory Commission (CERC), in January 2010, introduced REC regulations to create a pan-

India market for renewables through REC trading mechanism. The following are the possible routes that

can be taken for fulfilment of RPO –

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%

20.00%

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

AP

TN

Karnataka

HP

Gujarat

Rajasthan

NAPCC

37

o The FiT route - RPO obligation can be satisfied through physical RE at a preferential FiT

o REC framework - obligated entities can fulfil their RPO by purchasing RECs through the

power exchange.

The following table outlines the possible options for RPO compliance by resource rich and resource

deficient states.

Table 13 - Possible options for RPO compliance by resource rich and resource deficient states

Resource Rich states Resource Deficient states

Through purchase of RE at

the FiT

Through purchase of RE based power from resource rich states through

ISTS

Through REC route Purchase REC's from the exchange

Issues with REC Instrument

Although the REC market has been functioning regularly since 2011, prices and volumes are languishing.

The following table highlights the key issues faced by REC market.

Table 14 - Issues with RECs

Issues faced by RECs

Insufficient Demand

Non-Solar RECs - Major buyers have largely been CPPs and OA

consumers, very few DISCOMs like TATA power, Torrent, REL etc.

Solar RECs - Major buyers have been largely CPPS and OA consumers,

very few DISCOMs like Chandigarh, Tata steel power distribution licensee.

Lack of incentives to new

investors

Lack of long-term price signals, contracts, and other commitments greatly

increases the risk therefore discouraging new investors.

Long term contractual

clarity

Lenders/financial institutions & RE project developers tend to seek long term

certainty on the REC off-take arrangement.

Behavioural issue

The Obligated Entities intending to purchase the RECs along with the

electricity from the same RE Generator cannot do so as purchase of energy

and REC in bundled form is not permitted under existing framework. State

utilities, more used to long-term contracting for electricity are uncomfortable

with the purely short-term nature of RECs for meeting their RPO

requirement.

Lack of Incentive beyond

RPO targets

Utilities exceeding RPO targets by procurement under FIT/competitive

bidding framework do not have any incentive for exceeding RPO targets

Market off take of RECs

not certain

New RE project capacity addition would like to seek assurance of market off-

take of REC along with stability of price regime on long term basis, which

cannot be ensured through trading platform under existing arrangement.

Long-term tariff

uncertainty under REC

framework

Greatly increases the risk to potential investors for their energy sales beyond

control period of REC price

Lack of secondary

market or bilateral

exchange for RECs

RECs can only be traded once and pass from the entitled party (generator)

to the obligated entity. Cannot be used as a financial instrument.

Inconsistencies between

states

State RPO regulations that govern the issue and redemption of RECs vary

from state to state .There is no unanimity in the definition and the

mechanism of computing the average power purchase cost (APPC).

38

Case Study – RPO targets

In this section, an analysis is conducted to calculate the national RPO targets each year up to 2022 and

also to check if the present state RPO targets are in-line with the national targets.

By August 2013, the total installed capacity of power generating stations in India was 2, 27,357 MW which

consisted of 28,184 MW of Renewable Installed capacity (12% of the All India installed capacity). During

the same period the all India generation was 959 BU and the RE generation was 47 BU (which is 5% of

the total generation) (Authority, Large Scale Grid Integration of Renewable Energy Sources - Way

Forward, 2013) as shown in the table below. This implies that in 2013, an RPO target of 4.9% could be

met by the country.

Table 15: All India Installed Capacity and Generation Data for 2013

Percentage of total

2013

All India Installed Capacity (in MW) 227,357

RE Installed Capacity (in MW) 28,184 12%

All India Generation (in MU) 959,000

RE Generation (in MU) 47,000 4.9%

The installed capacities of each of the Renewable technologies in 2012-13 was used with the average PLF

of each technology to calculate the total energy generated from each RE technology in 2013. The average

wind PLF was taken as 25%, Solar PLF as 19%, Biomass PLF as 70%, Small Hydro Power PLF as 45%

(CERC, Terms and Conditions for Tariff Determination from Renewable Energy Sources, 2015) and

Bagasse PLF as 50% (MNRE, Frequently Asked Questions (FAQs) on Biomass Power Generation).

Assuming the PLF of each of these renewable technologies remains the same till 2021-22; the energy

generated by each of the technology is calculated using the proposed installed capacity by 2021-22 and

the RE installed capacity and generation data of 2012-13 as shown in the table below.

Table 16: All India RE Installed Capacity and Generation Data for 2013 & 2022

Wind Solar Biomass

Bagas

se SHP Total

Installed Capacity (MW)

(Authority, Large Scale

Grid Integration of

Renewable Energy

Sources - Way Forward,

2013)

2012-

13

18,176 1,650 574 2,802 1,063 24,265

Average PLF 25% 19% 70% 50% 45%

Energy Generated (MU) 39,805 2,746 3,520 12,273 4,190 62,535

Estimated Installed

Capacity (MW)

[Source: MNRE] 2021-

22

60,000 100,000 10,000 - 5,000 175,00

0

Estimated Energy

Generation (MU)

131,40

0 166,440 61,320 19,710

378,87

0

39

From the table above, it can be observed that in the year 2012-13, the achieved generation percentage

from solar technology was 0.3% and from non-solar technologies (wind, biomass, bagasse, SHP) was

6.2%.

Also, as per the analysis it was found that by 2021-22 approximately 378,870MU of energy shall be

produced by renewable energy sources of total installed capacity of 175GW. Also, the CEA has estimated

the total energy demand by 2021-22 to grow to be 1,904,861 MU. This implies that the RE generation

would be 19.9% of the total all India generation by 2021-22 (out of which technology specific RPO targets

would be 8.7% for solar, 6.9% for wind, 3.2% for biomass and 1% for SHP). Therefore, a national RPO

target of ~20% needs to be imposed on all the states uniformly to enable procurement of the generated RE

power. Out of this, the Solar Purchase Obligation (SPO) is 8.7% with an installed capacity of 100GW and

the Non-solar purchase obligation is more than 11% assuming an installed capacity of 60GW wind, 10GW

biomass and 5GW SHP.

The national RPO target that could be met by the country in 2013 was 6.5% and the RPO target required

for the country to absorb the power produced from 175GW of installed RE by 2022 is close to 20%. Table

below depicts the trajectory of the solar, non-solar and the total national RPO projected using the linear

increment in solar and non-solar RPO targets each year.

Table 17: Projected National RPO Targets (Solar, Non-Solar and Total Targets)

Year Solar RPO Non-solar RPO Total RPO

2012-13 0.3% 6.2% 6.5%

2013-14 0.4% 6.7% 7.1%

2014-15 0.6% 7.1% 7.7%

2015-16 0.9% 7.6% 8.5%

2016-17 1.3% 8.1% 9.4%

2017-18 1.9% 8.6% 10.5%

2018-19 2.8% 9.2% 12.0%

2019-20 4.1% 9.8% 13.9%

2020-21 6.0% 10.5% 16.4%

2021-22 8.7% 11.2% 19.9%

As per CEA, in 2014-15 the total energy consumed at the All India level was 1,030,785MU (Authority, Load

Generation Balance Report 2015-16, 2015). The same report also highlights the energy consumed in each

state in MU. As per the RPO targets specified for each of the states, the total energy required to meet the

national RPO targets was calculated to be 70,957 MU which is 6.9% of the total energy consumed at All

India level. Refer Annexure 3 for the calculation of energy requirement for RPO. The following need to be

taken care of to ensure the planned sustainable RE development:

Strict compliance to the RPO targets by all the states

RPO obligation to be imposed on states till renewable power is able to compete commercially with

the conventional power.

Gradual increase in RPO obligation for all the states such that there is faster growth in RPO

targets for states with lower obligation presently and slower growth for RE-rich states with high

RPO targets.

Declaration of yearly and long term RPO targets by all states.

Incentives for states meeting the RPO targets.

40

Sensitivity Analysis: Sensitivity of RPO Targets to PLF of Solar and Wind Plants

In the analysis conducted in the above section, we have taken the wind and solar plant PLF as 25% and

19% respectively. Since the PLF of these plants can vary in the future with advanced technologies and

improved integration of RE into the grid, we have conducted a sensitivity analysis to determine the change

in the total RPO targets with the change in PLF of these plants. Only solar and wind plants are considered

in this analysis as 160GW of projects out of the proposed 175GW RE installed capacity by 2022 will be

from these two technologies only.

The PLF of the wind plants are varied from 23-27% and for solar plants it is varied from 17-23%. The solar

and non-solar RPO targets are calculated with the change in the CUF.

Table below shows the sensitivity of the variation of solar CUF on the solar RPO and wind CUF on the

non-solar RPO respectively for the year 2022. It can be observed that the RPO target varies from 15.5-

23% which implies that choosing the most accurate average PLF for both the wind and solar plants is very

crucial in projecting the RPO targets for the future years.

Table 18: Sensitivity of 2022 Solar and Non-solar RPO targets to the Solar and Wind plant PLF

Solar PLF

(in %)

Variation in 2022

Solar RPO

Wind PLF (in %)

Variation in 2022

Non-solar RPO

17 7.8% 23 10.6%

18 8.3% 24 10.9%

19 8.7% 25 11.2%

20 9.2% 26 11.4%

21 9.7% 27 11.7%

22 10.1%

23 10.6%

41

6.1.6 Open Access

Activities in the Indian power sector have largely remained a natural monopoly. Reforms in the power

sector commenced in 1991 when the Indian Economy underwent liberalization and amendments were

made in the Indian Electricity Act, 1910 & The Electricity Supply Act, 1948. The major purpose of making

amendments in these laws was to attract private investments for capacity addition in generation and also

diluting the monopoly of SEBs in phases. It was The Electricity Act 2003, woven around a framework

aimed at promoting competition combined with the regulatory supervision, which led to the evolution of

Open Access.

As per Electricity Act, 2003 Open Access has been defined under Section 2 (47) as follows:

“The non-discriminatory provision for the use of transmission lines or distribution system or associated

facilities with such lines or system by any licensee or consumer or a person engaged in generation in

accordance with the regulations specified by the Appropriate Commission”

Open Access is a framework for development of power market and for promoting competition, is mandated

to allow freedom for consumers to choose suppliers and vice versa. The following table highlights the

benefit accrued by the Indian power sector from Open Access purchase of power.

Table 19 - Benefits of Open Access

Benefits of Open Access in India

Reducing the

monopolistic

nature of the

electricity

market

It has been an obligation for a generating system to sign a BPTA to adhere to

connectivity conditions of the transmission company. Open Access grants the

generation company, the non-discriminatory use of transmission & distribution lines

thus promotes competition at various levels of power industry.

Giving

consumers the

choice to source

their need

OA based market offers competitive prices and reliability. Consumers who have a

requirement of more than 1 MW can directly source their energy from generators,

instead of contracting themselves to traders or distributors.

Reducing

monopolistic

prices

Development of Competitive market will lead to competitive prices that are lesser than

monopolistic price.

Better

Infrastructure

Competitive environment raises investment sentiments in the sector and thus helps in

developing better evacuation and distribution infrastructure to route electricity from the

area with surplus amount of electricity to a region of deficit.

Barriers for Open Access

The Electricity Act 2003 essentially induced the Government of India to come out of power generation and

distribution business. However, even a decade after the shift from monopoly government supply to

competitive power markets, inadequate market development is causing the Indian economy to suffer.

Impediments to implementation of Open Access have been detailed herewith.

Regulatory Issues

Irregularity of OA charges especially cross subsidy surcharge levied in different states depending

on the subsidy provided in the state

EA 2003 calls for gradual reduction of cross subsidy surcharge, but no such reduction trajectory is

found in any of the states

42

States invoke Section 11 of the Act to prevent generators to sell their power outside the State.

Clarification of the Section 11 is necessary through an amendment of the Act.

Examples of regulatory deterrents to OA in various states

Punjab - High wheeling charges

Haryana - Notification for only RTC & peak hour procurement

Tamil Nadu - Section 11

West Bengal - Very high OA charges; CSS not determined in consistence with mechanism in

National Tariff Policy

Maharashtra/UP/Jharkhand/Delhi/ East& NE: Resistance by utility

Infrastructural Issues

Distribution licensees have a natural monopoly on the infrastructure. In order to avail full open access if the

consumer wishes to switch from the DISCOM to a third party, he is uncertain about the network availability

which is under the control of the DISCOM. This seriously deters the ability of the consumer to avail

alternative supply. This can be curbed by separating the accounting of wire and supply business followed

by its financial separation. This issue is being addressed in the Electricity Act amendment bill.

Also, minimum service conditions of distribution licensee could be defined by State Commission for open

access consumer and serious penalties can be specified for non-compliance. Majority of states allow open

access connections only on independent feeders, most of the substations falling under this category are

already overloaded or are approaching limits. There is significant gap between the capacities existing and

required for hassle free open access.

Inconsistencies across States

The provisions in the current inter-state regulations do not encourage open access transitions. Inter-State

open access is granted on monthly basis and maximum up to 3 months. To guarantee full open access it

is required that a user entitled to avail open access for any period seamlessly. The cross subsidy

surcharge varies significantly from state. This is a significant deterrent to open access. There is a

requirement of setting up single window clearance system for open access applications. This is because

significant delay is observed in implementation due to lack of knowledge amongst both the approving

authority (at various levels) and the project developers.

Transmission Corridor Availability

Transmission congestion is one of the major deterrents in availing open access. The evacuation systems

are planned mainly based on the transmission capacities required to meet Long-term PPAs but the

present transmission system has to meet the firm transmission needs as well as Open Access

requirements arising in the short term. Therefore, transmission planning should inherently include margins

for medium and short-term open access. There is no competitive market mechanism for the booking of

transmission capacity. These result in open access consumers operating in capacity remaining unutilized

by long term PPAs. Non uniform charges for T&D losses across states create economic deterrents for

open access to flourish in certain regions of the country.

43

Problems faced by the DISCOM

OA consumers are major contributors of cross subsidy for rationalization of subsidized tariffs.

Reduction in power off take by OA Consumers from DISCOM power pool affects adversely to the

subsidized tariff for other categories.

DISCOMs are expected to act as standby supplier for the OA consumers. But there is no spinning

reserve available to absorb these load variations.

Schedule of OA power arranged through the exchange is made known at 5 PM only. By that time

the utility has no option available for arranging excess power or surrender surplus power

Power scheduled by consumers through OA varies according to prevailing market rate and for

their remaining requirement they draw power from the utility. Thus the power requirement for the

utility varies unpredictably.

OA consumers procure power from power exchange on hourly basis after watching the price

trend. Maximum power is procured during night hours and minimum during the evening peak

times. This varying schedule during the day renders the balancing of demand and availability very

difficult.

OA consumers (for simplicity, taking the example of large industrial HT consumers that purchase power

from the exchange) furnish only day-ahead schedule for power purchase from trading process and not

from DISCOMs. Bidding rates are generally lower that of the H.T tariff (example - INR 5.5/kWh for

Rajasthan in 2014). If the bid is cleared then OA consumers purchase power. But if the bid is not cleared,

OA consumers draw energy from the utility. To meet out the demand utilities will have to overdraw from

grid and deviate from the schedule furnished day ahead which will lead to power mismanagement in the

state grid and hefty payments in terms of UI charges.

A similar problem may also arise when the utilities take account of open access consumer energy in their

account in day-ahead schedule and consumers do not consume energy from them and take power from

the open market through bid process. This creates the two main issues of - revenue and power

management for the DISCOM.

If bids of OA consumers were not cleared, then they draw energy from DISCOM through its HT

connection. Many times DISCOMs also have to overdraw from the grid to maintain demand and supply.

Over drawal rates are based on the frequency in the 15 minutes time blocks lead to huge financial losses.

If open access consumers underdraw power, there is no charge for settlement.

If open access consumers draw more power that of day-ahead PX schedule, the OA consumers pay as

per HT connection tariff. This is usually very less compared to the overdrawing rates that the DISCOM has

to pay to meet the extra load.

Open Access transactions will form the basis of the power market design of the future. Keeping in mind the

upcoming RE capacity additions, the current OA framework has to be revamped to address the grievances

of all affected parties. The following factors need to be considered to facilitate OA transactions for RE

power.

44

Sale of RE power through OA transactions will further increase the DISCOMs’ burden as RE

power is inherently difficult to schedule.

Sale of RE power through OA transactions will be affected by the levy of Cross Subsidy Surcharge

(not applicable in case of captive). Offtake of RE power will be affected by the increase in cost of

power owing to CSS. However, it has to be kept in mind that CSS is important to release the

financial stress on DISCOMs owing to subsidised tariff. The proposed amendment in the Electricity

Act proposes exemption of CSS for open access transactions involving RE.

6.1.7 Technical Considerations

Frequency management in India

A stable frequency is one of the primary parameters used to evaluate power quality on a grid. Frequency

instability occurs due to the mismatch of demand and supply of energy on a grid. In India the grid

frequency is quite unstable. The current situation is not ideal as control of frequency is achieved via

regulations and management of energy at dispatch centre. The variations in frequency occur due to

problems on both the generation as well as consumption side.

On the consumption side it has been observed that load schedules are inaccurate and as a result utilities

overdraw or under draw significantly from time to time. This causes significant disruptions in frequency.

Frequency disruptions are also observed due to generators not adhering to generation schedules and

plants going offline either without notifications or citing causes such as force majeure. Demand forecasting

is an area that needs significant improvement in India to aid in frequency stabilizations via accurate load

schedules.

RE capacity addition is a new entrant in the league of factors affecting stable grid frequency. RE capacity

has the inherent problem of significant variability and very high errors on forecasts (Current). Being must

run in most states RE power by policy needs to be evacuated as it is generated. As on date the

contribution of RE generation is small and its variability is not a major contributor to grid instability. With the

ambitious capacity addition targets of GOI, it is estimated that this variability in RE will be a significant

contributor to grid instability. Technical as well as market mechanisms will face enormous challenge in

supporting the massive planned capacity addition and the variability it brings to the system. There is an

urgent need for forecasting that is reliable and where forecasting agencies are also accountable for their

forecasts.

Frequency management is achieved globally in 3 steps. The first is primary reserves which are responsible

for arresting the change (rising/falling) in grid frequency. The second stage is the use of low reaction time

plants like Hydro, Gas etc. to provide load balancing in the short run. This technique of frequency

management is technically feasible in India but there is no market mechanism available for it to work

seamlessly. Hydro power plant may be unavailable due to restrictions from departments (esp. irrigation)

other than electricity. Gas power plants across the country are plagued by the problem of gas availability

hence may not be available as planned. The third is to activate tertiary reserves which sustain the action of

secondary reserves. Most countries have spinning reserves and static reserves which enable frequency

management. In India there is almost no reserve to manage the frequency; generators do not have any

incentives to maintain spare capacity which can be used for managing frequency deviations. As a result all

generators always try and operate at maximum capacity for economic reasons.

45

In many cases, generators are not allowed to participate in primary regulation (RGMO). When sudden

disturbances occur, system collapses causing blackouts e.g. the northern grid collapsed on 30th and 31st

July 2012. The situation has vastly improved in the recent years after the introduction of availability based

tariff (ABT) and free governor mode of operation (FGMO) regimes in some areas. The current

mechanisms of DSM and UI provide functionality to the power system that is similar to secondary and

tertiary frequency control, however these are not guaranteed services as the activation is not contracted.

The individual generators are free to react to price or frequency signals and may choose not to act;

therefore these mechanisms don’t guarantee the corrective action.

Reactive power and voltage control in India

Reactive power compensation in an ideal scenario should be provided locally, by generating/compensating

for reactive power as close to the consumption as possible. The regional entities except for generating

stations are expected to provide local VAr compensation/Generation such that they do not draw VArs from

the EHV grid, particularly in a low voltage condition. The draw of VArs from the ISTS is priced as follows:

Table 20 - Conditions for payment/receiving of VAr Charges

The regional entity

except for generating

stations pay for VAr

drawl when voltage at

the metering point is

below 97%

The regional entities

except for generating

stations get paid for

VAr return when the

voltage is below 97%

of the specified value

at the metering point

The regional entity except for

generating stations get paid

for VAr drawl when the

voltage is above 103% of the

value specified for the

metering point

The regional entity

except generating

stations pays for VAr

return when the voltage

at metering point is

above 103% of the

specified value.

It can be observed above that generating stations are neither paid for nor penalized for the contribution

they give in voltage control of the grid. The onus of managing the voltage on the ISTS rests with the

regional entities that have to maintain voltage levels at their own metering points. The charges for VArh

are levied at the rate of 25 paisa/KVArh W.E.F 1.4.2010 and shall be escalated at a rate of 0.25

paisa/KVArh per year thereafter unless revised by the commission. The current system of maintaining the

voltage profile relies very heavily on the regional entities managing the reactive power at the metering

point.

Based on the provisions in the Indian Electricity Grid Code (IEGC) a RLDC may direct a regional entity

except generating stations to curtail its VAr drawl or injection. The IEGC does not propose any

methodology as to how this will be implemented. In the eventuality of the regional entity not being able to

curtail its drawl/injection within permissible limits it may have to be disconnected to maintain overall system

stability.

The ISGS and other generating stations connected to the regional grids must generate/absorb reactive

power as instructed by the RLDC. This management of reactive power is to be done without sacrificing

active power generation that the unit has been scheduled for at the time. No payments are made or

penalties imposed on these plants for the generation/absorption of VAr. This methodology of managing

VAr is not very efficient as the generators have no incentive/disincentive to support the voltage levels.

Absorption/generation of VAr has costs associated with it for which the generators are not compensated

directly; as a result generators may be motivated to shy away from these obligations citing technical

limitations.

Currently all reactive power management is done via regulatory enforcement and there are no incentives

to promote and develop this as an ancillary service. There is an apparent need for the setting up of a

reactive power markets, where service providers would freely trade in the services required for maintaining

46

voltage levels. These markets would be similar in structure to the power markets. They have to be

localized due to the technical limitations in handling reactive power.

The major technical challenge comes from the variability of wind and solar power. Solar power and WEG

type 3 and 4 machines use AC-DC-AC convertors to connect to the grid which have inherent control over

reactive power. The problem is caused by the type 1 and 2 WEGs as they are induction generators.

Induction generators cannot participate in voltage regulation and will need switched capacitor banks for

reactive compensation. Most of the wind generators in India are of type 1 and type 2. Induction type WEG

absorbs substantial amounts of reactive power during start-up and some during operations. Wind power is

highly intermittent in nature, thus the turbines start and stop multiple times during a day. This leads to

unscheduled and large drawl of reactive power from the grid leading to voltage instability.

The variability in the reactive power drawl/injection need to be managed specifically for WEGs at the ICP

or pooling substations levels. SVC/ STATCOM shall have to be provided at RE pooling station for dynamic

voltage support and avoid any undesirable reactive power flow to or from the grid.

Transmission system planning in India

Transmission infrastructure is the backbone for the operation of the National electricity grid and for

integration of RE into the grid. The planning of the transmission system must take into account the

generating capacity on one side and growing demand on the other side. In India, the transmission planning

is done by the Central Transmission Utility (CTU) for the Inter State Transmission Systems (ISTS) and the

State Transmission Utility (STU) for transmission systems within the state. During the 12th FYP, the fund

requirement for the transmission sector is about Rs.233914 Cr [8].

Figure 13 - Growth in Transmission System in Central and State Sector

Point of Connection (PoC) Charge

As per the provisions of the National Electricity Policy on Transmission, a national transmission tariff

framework needs to be implemented by CERC to facilitate cost effective transmission of power across the

region [8]. This led to the introduction of Point of Connection charges. It is the latest transmission charge

pricing methodology introduced for sharing of Inter State Transmission Systems (ISTS) charges and

Losses among the Designated ISTS Customers (DICs) depending on their location and sensitive to their

47

distances from load centres (generators) and generation (customers) and the direction of the node of the

grid.

The PoC charges are beneficial to the DICs in the following ways [9]:

1. Presently, signing of Bulk Power Transmission Agreements (BPTAs) by all the expected

beneficiaries of the transmission system secure the transmission investments in a huge way. After

the introduction of PoC charges, the Transmission Service Agreement (TSA) once notified shall be

the default transmission agreement and shall apply to all Designated ISTS Customers (DICs)

thereby facilitating financial closure of transmission investments.

2. This mechanism would facilitate integration of electricity markets and enhance open access and

competition by removing the need for pancaking of transmission charges.

3. This tariff is based on load flow analysis and captures utilization of each network element by the

customers.

4. Presently, the decision of generators is based on just the fuel transportation costs. However, now

since to the transmission charges are geographically differentiated – the generators will have to

take a view both on transmission costs of electricity and transportation costs of fuel.

5. For solar based generation there is no transmission access charge for use of ISTS and the

allocated transmission loss to solar based generation is also zero.

Table 21 - Slabs for PoC Rates for injection and withdrawal of power for Jan-March 2015 [10]

Sl. No. Name of Entity Slab Rate (`/MW/Month) Slab Rate (Paisa/Unit)

1 Rajasthan W 122173 16.89

2 Rajasthan Inj 92173 12.89

3 Gujarat W 107173 14.89

4 Gujarat Inj 122173 16.89

5 Tamilnadu W 122173 16.89

6 Tamilnadu Inj 92173 12.89

7 Andhra Pradesh W 122173 16.89

8 Andhra Pradesh Inj 92173 12.89

9 Karnataka W 122173 16.89

10 Karnataka Inj 122173 16.89

11 Himachal Pradesh W 92173 12.89

12 Himachal Pradesh Inj 92173 12.89

From the point of view of new RE generation coming up in the above mentioned states, the PoC injection

charges for each of the states is important as these would either encourage or discourage the investors

from putting up new plants. As it can be seen, for the state of Gujarat and Karnataka, the PoC slab rates

for injection of power into the ISTS network are the highest at 16.89 paise/unit. This can dampen the

setting up of new RE plants in these states.

Right Of Way (ROW)

As per the provisions of Electricity Act, 2003 and Indian Telegraph Act 1885, land is not to be acquired to

lay transmission lines but full compensation towards damages sustained is required to be paid. There is no

specific mention of compensation towards reduction of land value and the term damages have also not

been elaborated. Under Section 16 of Indian Telegraph Act 1885, the local authorities / District Magistrate

have the powers to fix the compensation and adjudicate during the dispute for compensation. When the

48

Indian Telegraph Act 1985 was introduced, the transmission lines were mainly pole type structure which

required very little area and ROW. With increase in transmission voltage, the requirement of land for tower

footing and ROW has increased substantially [11].

The Right of Way problem has been faced by the transmission corridor developers in many agricultural

states in India. For instance, severe ROW problem has been reported in Gujarat where presently

construction of the 400 kV Mundra-Zerda D/C line, 400 kV Vadinar-Amreli D/C line and 400 kV Amreli –

Kasor D/C line has been delayed due to this issue [12].

In 2011, Central Electricity Authority (CEA) estimated that more than 120 transmission projects faced

delays because of the developer's inability to get ROW or acquire land and get timely clearances

from the host of stake-holders like forest department, aviation department, defence, and PTCC

(Power and Telecommunication Coordination Committee). In the same year, PGCIL had challenges

in spending its planned Rs.6000 Crores in capital expenditure, for the construction of the inter-state

transmission lines, primarily because of the hurdles in land acquisition & ROW problems [13].

Consumer engagement is necessary from initial stage, to avoid hindrance and litigations at later stage.

The support of state government is necessary in explaining the importance of transmission lines to local

population to avail power supply from cheapest source to mitigate power shortage. On the technical front,

POSOCO has been involved in the development of innovative tower design with which the ROW

requirement has reduced from 85 m to 64 m for 765 kV and from 52 m to 46 m for 400 kV D/C line. Also,

installation of pole type structure for 400 kV transmission line in densely populated urban area has

reduced the ROW & base width requirement.

Balancing potential of states (Using Hydro Power)

The extensive capacity addition of renewable power across the RE rich states in the country is causing

grid instability owing to the variable generation that needs to be balanced. This issue can be solved to an

extent by identifying power plants that can be backed down or ramped up easily. In this section, we intend

to assess the available capacities of such plants in India. In order to make this assessment, we have

selected the balancing capability of hydroelectric power plants owing to their small reaction times in

comparison to other conventional sources of power. Secondary balancing can also be achieved through

natural gas based power plants.

For this analysis, we have considered the major reservoir based and pumped storage hydroelectric power

plants of capacities greater than 30MW.

49

Figure 14 - Methodology for Calculation of Hydro Balancing Potential in States

Based on the above methodology, the balancing potential for the 6 states has been assessed in the

situational analysis for each state. These estimates could vary based on the variation in water inflow,

planned maintenance of plants and forced outages apart from other factors that limit the production from

the plants.

The balancing potential of these plants is further limited by the water availability. It can be observed that

the average PLF of Indian hydro power plants is only 39 % (CEA hydro performance analysis 2013).This

however proves to be an advantage as it gives a freedom to completely back down the plant or ramp it up

to full capacity at any time of the year without the need for majorly altering the commercial aspects of the

project. Besides these the irrigation and drinking water facilities of the reservoirs will have to be accounted

for and seasonal limits of its generation will have to be enforced.

In the graph given below, the vertical axis indicates the installed capacity in MW and the horizontal axis

indicates time in hours. The graph gives us a graphical view of the balancing capacity available with each

state and for what duration we will have access to it. The stepped nature of the graph indicates the

different durations for which we can run the capacity in a particular state based on water availability in the

individual reservoirs. Every step in the graph indicates that a particular plant in the given state will no

longer be able to provide a balancing capacity as it will run out of water.

50

Figure 15 - Hydro Balancing Potential in the identified States

For example, the state of Karnataka has 3 steps in the graph. Karnataka has three hydroelectric power

plants that were found suitable for the use in balancing. The state is estimated to have a total balancing

capacity of 2660 MW. This complete capacity is available for 604 hours after which Almatti HPS will run

out of water and hence reduce the balancing capacity by 290 MW (Installed capacity of Almatti). The first

step in the graph for Karnataka represents the event of Almatti shutting down. Similarly the second and

third steps in the graph represent the shutting down (due to lack of water) of Shravanti HPS and Supa

HPS respectively.

This analysis is based on reasonable assumptions to depict a broad possibility of using existing

hydropower plants as balancing reserves.

0

500

1000

1500

2000

2500

30001

18

9

37

7

56

5

75

3

94

1

11

29

13

17

15

05

16

93

18

81

20

69

22

57

24

45

26

33

28

21

30

09

31

97

33

85

35

73

37

61

39

49Bal

anci

ng

Po

ten

tial

(M

W)

Number of Hours

Karnatka

Andhra Pradesh

Tamil Nadu

Himachal

Gujrat

Rajasthan

51

6.1.8 Key Enablers for investment in RE sector in India

In order to promote investment in RE sector in India, the GoI has introduced several enablers, some of

which have been noted in this section.

Accelerated Depreciation

As per the Section 32, Rule 5 of the Income Tax Act, RE power producers were permitted to claim AD up

to 80% in the first year on a written-down value (WDV). While AD was successful in driving RE capacity

addition in the past, it resulted in mushrooming of players with the purpose of off-setting income from other

business to claim tax benefits rather than actual production of electricity.

Generation Based Incentives

The GoI along with Indian RE Development Agency (IREDA) as the nodal agency, had introduced a

scheme for grid interactive wind power projects which provided an incentive of Rs. 0.50 per kilowatt-hour

(kWh), with a cap of Rs. 15 lakh per MW per year, totalling Rs. 62.5 lakh per MW to be availed for a

minimum of four years and maximum of 10 years. The scheme was however limited to a capacity of first

4,000 MW commissioned through GBI on or before 31 March, 2013.

AD for wind power projects was withdrawn in 2012 to attract attention from more serious players for

development of RE. This has slowed down wind energy capacity addition by almost 50% on year-on-year

basis. Recently GBI was reinstated to attract investments in wind sector. Under the scheme, a GBI is

provided to wind electricity producers @ Rs. 0.50 per unit of electricity fed into the grid for a period not less

than 4 years and a maximum of 10 years with a cap of Rs. 100 lakhs per MW. The total disbursement in a

year is not to exceed one fourth of the maximum limit of the incentive i.e. Rs. 25 lakhs per MW during the

first four years. The GBI scheme is available for wind turbines commissioned on or after 01-04-2012 and

for entire 12th plan period. Also upon the request of wind developers the AD benefits were restored in

2014 [14].

The GoI has also offered non tax incentives such a R&D funding support for RE technologies, favourable

Feed in Tariffs (FiTs), subsidies and rebates on capital expenditures available on manufacturing of solar

and wind components, land facilitation, low cost financing, etc.

The tax based incentives include investment tax credits, investment allowances, deemed export benefits,

tax free grants, reduced VAT on RE projects, tax holidays, exemptions and other deductions to support

production.

Investments in RE Sector in India

Presently, the Indian renewable energy market is highly attractive and full of opportunities. It has the

potential to reduce India’s rising demand supply gap of energy and is the key component in India’s energy

security strategy. With a combination of feed-in tariffs, renewable procurement obligations and Renewable

Energy Certificates, an encouraging policy & regulatory framework has been placed by the Indian

government.. JNNSM is successful spiking the growth of solar power deployment.

52

India saw record small-scale project investment of USD 0.4 billion in 2012. 4It also witnessed globally the

fourth highest investments in wind power and the third highest investments in solar water heating capacity

in 2013.

100% Foreign Direct Investment (FDI) in renewable energy is permitted in India.

FDI inflows in renewable energy industry from April 2000 – February 2013 were about USD 2.5

billion

In view of recent development in solar technology, government of India plans to hasten the growth and

looking at steep fall in the solar prices, Government of India is targeting to add 100GW of solar by 2022. In

order to achieve this target, investment requirement for solar itself will be nearly 100 billion USD in next 5

years. To meet the financing requirement, more and more foreign investors are being attracted owing to

potent natural resources, large-scale investment opportunities, and attractive Government incentives.

Wind and solar sectors are expected to garner massive overseas investments in the coming years. All

efforts are being made to attract FDI from investors and autonomous power producers internationally. A

variety of investors finance renewable energy projects in India, including institutions, banks, and registered

companies. Institutional investors are either state-owned or bilateral and multilateral institutions. Among

banks, both private sector and public sector banks are involved. In addition to registered companies,

venture capital and private equity investors contribute equity investment. Development Banks-IREDA,

continue to represent a key source of funds for RE investments, particularly in project finance, over the

medium term.

Investments in RE Manufacturing Sector in India

Investment in manufacturing in the renewable energy sector is also expected to grow to support the

targets and plans of the government along with the investment in generating assets. We can envisage

incentives and policies conducive to support manufacturing of renewable energy equipment in India in the

long run with the new government supporting manufacturing in India through its ‘Make in India’ initiative.

Solar Power

A huge investment potential can be seen for solar manufacturing in India due to JNNSM targets been

increased from 20GW by 2020 to 100GW by 2022.For solar PV, the cumulative installed capacity of Indian

solar PV manufacturers is about 1,200 MW of cells and 2,500 MW of modules5. Higher investment and

R&D in solar manufacturing will help India in competing with imported solar modules on both cost and

technology in the long run. Solar manufacturing in India is in a nascent stage and requires a nurturing

environment if it is to compete with international players in this rapidly evolving sector.

Small Hydro Power

As of now, India has an estimated potential of about 20,000 MW, about 80% of which is untapped. It only

around 25 equipment manufacturers listed as per the MNRE website, who fabricate almost the entire

range of small hydro power equipment. Further, up gradation of water mills and micro hydel projects is

also being undertaken throughout the sector. Both these factors depict promising potential for an increase

in domestic manufacturing.

4 Ren21 Renewables Global Status Report(GSR) 2014 5 MNRE: http://mnre.gov.in/file-manager/UserFiles/tentative_cells_&_modules.pdf

53

Bio-energy and WtE

Equipment manufacturing in these renewable energy technologies is dominated by small to mid-sized

companies. WtE sector particularly is at an early stage of development in India and has potential due to

increased urbanization and waste management issues. Bio-energy also has a huge untapped potential

that provides a positive outlook for manufacturing ramp-up in India. This sector will provide immense

opportunities to project developers for captive projects for production of gaseous and liquid fuels besides

power generation and co-generation.

Wind Power

The global wind generation capacity is expected to increase to 1,149 GW by 2020 and 2,500 GW by 2030.

India’s proposed National Wind Energy Mission also targets 60 GW generation capacity in India by 2022.

India’s wind manufacturing capacity has an annual capacity of 10 GW6; cater to the global market owing to

lower manufacturing costs. Considering this immense potential in both domestic and global demand, the

manufacturing sector is set to achieve new heights. Further government initiatives in promoting offshore

wind energy and improving technology in the wind generation avenue have strengthened India’s

manufacturing sector and will continue to do so. As a result, leading manufacturers like Suzlon, Vestas,

Enercon, GE and Siemens have already set up operations in India, and are further increasingly

announcing new investments.

6http://www.electricalmonitor.com/ArticleDetails.aspx?aid=1935&sid=2

54

6.1.9 Banking of Renewable Energy

Energy banking allows RE generators to inject power into the grid for later consumption. This power is not

consumed in the time block of injection, at the time of injection the power is considered banked. This

power in real time is dispatched and consumed as it is generated. The purchaser of RE power withdraws

power as required. The DISCOM has to procure this power from an alternate source and supply to the

entity withdrawing banked power. This process is illustrated below.

Need for Energy banking

The need for banking of energy generated by RE sources arises out of the inherent variability and

intermittency in RE generation. For example in the case of a captive consumer, their demand may not

coincide with the generation period of RE. In such a case the RE when generated would need to be

banked and withdrawn when the consumer requires it. Banking is a critical service for the promotion of RE

in the country.

Problem statement

The availability of RE power is not constant and not controllable. Quantum of energy generated by RE

sources varies with time. The generation of RE power varies daily as well as seasonally. At the time of

banking the DISCOM has to sell the power generated by RE and back down conventional generation. At

the time of withdrawal the DISCOM has to procure the power from a conventional source and supply to

withdrawing entity. The rates of power procurement to the DISCOM also vary seasonally as well as

intraday. The difference between the rate at time of banking and withdrawal of power has financial

implications on both consumers and DISCOMS. These implications are studied below in this section.

55

Case of Tamil Nadu

For the state of Tamil Nadu the banking period of one year from 1st April to 31st March of the

following year was permitted in the earlier wind orders. During the period of wind season in Tamil Nadu,

there is a considerable generation from TANGEDCO’s Hydro Power Stations. This also coincides with the

south west monsoon which results in increased hydro generation in all southern states. Hence the

Distribution Licensee has to back down lower cost generation also to absorb the wind energy part of

which will be treated as banked energy. But, during the non-wind season when the demand is more and

consequently cost of power is also high, the Captive users / third party users utilize the banked

energy resulting in high cost power purchase by the distribution licensee to service the banked

energy. Keeping this in mind both the TANGEDCO and Government of Tamil Nadu recommended

withdrawal of banking provision during the last wind order.

Due to extension of banking facility, the loss that may be accrued to the Distribution Licensee is the

difference between marginal cost of power purchase of TANGEDCO and the applicable wind tariff. Thus,

the TANGEDCO has been permitted to collect banking charges which are up to the difference as stated

above.

Currently energy banking applies to a very small fraction of dispatched power. However the amount of

banked power is growing continuously in the case on Tamil Nadu. The provision of encashment of

unutilized banked energy, leads to additional financial burden to TANGEDCO. The quantum of unutilized

banked energy is increasing every year. In 10/2008 it was 315 MU, in 31.03.2009 it was 251.3 MU

and in 31.03.2010 it was 350.658 MU (TNERC, 2012). Hence cash outflow for payment of unutilized

banked units is high every year. This increasing financial burden would be felt by every DISCOM

facilitating the banking of energy.

Thus in the latest wind order, TNERC allowed banking for one financial year (April to March) with INR

0.94 per unit of banked energy as banking charge. For unutilized energy the beneficiary is paid 75% of

wind FiT. For projects under REC framework, banking facility is available for a month only and unutilized

energy is considered lapsed.

Banking provisions in other states

Banking provisions in India vary in every state and are different for wind and solar. The table below

lists the various banking provisions in the five focus states. It can be observed that the banking

provisions in the states are not uniform. This non-uniformity would create competitive barriers for

producers in states with lagging provisions.

Table 22 - State wise banking provisions

State Type of RE

Generator Availability

Banking

Charges

energy)

Drawl period Banking

period

Tamil Nadu

Wind Yes INR 0.94

per unit

Drawl restrictions in

peak hours 1st April to

31st march Solar Yes INR 0.94

per unit

Drawl restrictions in

peak hours

56

State Type of RE

Generator Availability

Banking

Charges

energy)

Drawl period Banking

period

Andhra

Pradesh

Wind Yes 2%

Drawl restriction

everyday 6.30 PM

to 10.30 PM, drawl

restriction from Feb

to Jun 1st Jan to

31st

December

Solar Yes 2%

Drawl restriction

everyday 6.30 PM

to 10.30 PM, drawl

restriction from Feb

to Jun

Karnataka Wind Yes 2% 24 hours 1st April to

31st march Solar Yes 0% 24 hours

Rajasthan Wind Yes (Captive only) 2% 24 hours

1 month

Solar Yes (Captive only) 2% 24 hours

Gujarat Wind Yes (Captive only) 2% 24 hours

1 month

Solar Yes (Captive only) 2% 24 hours

Gujarat: In Gujarat, banking is allowed for one month for captive use. Surplus energy by Wind power

producer for every month is payable at 85% of applicable tariff. For generators under REC route, APPC is

paid for unutilised generation.

Karnataka: In Karnataka annual banking is allowed on payment of banking charges @ 2% of input

energy. Surplus energy by Wind power producer for every month is payable at 85% of applicable tariff.

Rajasthan: In Rajasthan banking is allowed for one month. Utilization of banked energy will be settled at

60% of energy charges including fuel charges applicable to large industrial power tariff (excluding fuel

surcharge component).

Andhra Pradesh: In AP the energy generated by captive RE generating plants, if not consumed

during the banking period (12 months), would be deemed to have been sold to respective DISCOM and

the DISCOM may pay for such unutilized energy at the rate of 50% of the APPC.

Scenario evaluated to analyse the effect of banking on DISCOMS and generator/consumer

In this scenario it has been assumed that RE power generation enjoys a must run status and as a result

can be generated and banked in any of the 96 time blocks all days of the year. In line with the policies

existing in the states permitting banking, 100% of RE can be banked. In this scenario the rates of IEX for

the region in the time block have been used. These rates are relevant as banking has no schedule of

withdrawal or injections; as a result it is assumed that DISCOM would have to procure power in short term

market.

57

1. Ideal banking scenario: In this scenario the banked power can be withdrawn in any of

the 96 time blocks on any day of the year.

Case Tamil Nadu: Energy is banked in June 2014 and Withdrawn in January 2015. This

scenario is representative of the effect of long term (seasonal variations) in prices on the finances

of the DISCOM and generator/consumer. During this period the withdrawal restrictions are

absent in order to study the maximum benefits a generator can have.

Methodology

It is assumed that 1 MWh of power is banked in the peak wind season of June 2014 and

withdrawn in the off-peak wind season of January 2015.

The cost of power at the time of banking for the month is considered as the average off-peak cost

of power over the month on the IEX (IEX, 2015). This is because the peak wind generation

season coincides with the low demand season of the state and hence the costs are expected to

be lower, this is also supported by the IEX prices.

The above cost is multiplied with the assumed banked quantity of 1 MWh to obtain the total cost

of power at the time of banking.

The cost of power at the time of withdrawal has been considered as the average peak time cost

of power for the month.

The above cost is multiplied with the assumed 1 MWh of power withdrawn.

Adjustment for 2 % banking surcharge is made.

The below graphs represent the variations in cost of power on the exchange for the region in the months

of June 2014 and July 2015 respectively.

Figure 16 - Prices Jun 2014 at IEX

58

The below table summarises the result of the above mentioned analysis. The cell highlighted in

orange represents the 2% banking charge adjustment. The cell in blue is the difference in costs to be

borne by the DISCOM without adjusting for banking charges. The cell in red indicates the difference in

cost to be borne by the DISCOM over and above the banking charges of 2%.

Table 23 - Result of Analysis Case 1 T.N

Cost of Power

(INR)

Quantity of Power

(MWh) Total 2% banking

Period of

Injection Jun

2014

4331.49 1000 4331490

Period of Drawl

Jan 2015 5915.7 1000 591570 118314

DIFFERENCE 1584210 1465896

Figure 17- Prices January 2015 at IEX

59

Inference

From the above analysis it is observable that the 2% banking charge is not sufficient to cover the

difference in cost of power to DISCOM at the time of injection and the cost of power to DISCOM at the

time of withdrawal with no drawl restrictions. At the same time it is important to understand that RE

generators / consumers can’t forecast their generation with full accuracy. Thus banking facility should be

provided to these generators. However, they should start forecast of their generation in order to have

some visibility about their generation. Model guidelines on Banking of Renewable Energy should be

formulated and discussed with all the relevant stakeholders. Financial impact of RE banking on DISCOMs

and aspects of promotion of RE should be balanced while developing the model banking guidelines

Page | 60

6.1.10 Upcoming Initiatives

RE Resource Assessment Databases

To promote utilization of RE in the country, the GoI has invested in developing data bases for RE

resource assessment. The National Institute of wind energy (NIWE) has developed the wind atlas of

India. NIWE also collects data from Solar Radiation Resource Assessment (SRRA) stations to assess

and quantify solar radiation availability, quality of data assessment, processing, modelling and to make

solar atlas of the country.

Solar Park Schemes

Solar parks are concentrated zones of development for solar power generation projects, demarcating an

area that is well characterized, with proper infrastructure and where the project risks are minimized &

clearances are facilitated. As per the National Scheme on Draft Solar parks, MNRE will setup 25 solar

parks of capacity sizes between 500 MW to 1000 MW. It will provide support of INR 2,000,000 /MW to

the park development agencies.

Draft Solar Policy

GoI is in the process of drafting the central solar policy with the central objective of harnessing the

incident solar insolation on the country and to realize the potential benefit to the environment by

deploying of solar plants. The policy will cover the areas of, solar power plants (SPP) announced under

GoI schemes, SPP for sale of electricity to the distribution licensee and others, SPP under REC

mechanisms, development of solar parks, development of SPPs on canals and implementation plan for

rooftop solar photovoltaic power plants connected with the electricity system

Draft National Onshore Wind Policy

The MNRE is currently working on a draft of the national onshore wind policy that is focused on

addressing the need to create necessary implementation framework for deployment of wind power

projects on a large scale, ensuring long term policy certainty, enabling market certainty, enabling

coordination among states for aggressive off-take of wind power and encouraging higher efficiency. The

policy aims to work with central and state level bodies address the various aspects of grid integration,

balancing resources and storage technology options.

Page | 61

Some relevant excerpts of the draft policy are given in the following excerpt.

V. Grid Integration

The Policy aims to work with Central and State Transmission Utilities to address the following aspects related to grid

integration of wind power:

A. Forecasting and scheduling

Forecasting and scheduling of wind power will make power system operations more predictable, and would ultimately

reduce the cost of balancing and system management. Therefore, compliance to such guidelines as may be issued

by the CERC must be ensured by the obligated entities.

B. Balancing Resources

The inherent variability of wind power makes it necessary to have balancing resources of power, which have quick

ramp up – ramp down rates, which can smoothen the variations in wind power and retain stability of the grid.

Therefore, efforts will be made towards achievement of the following objective in this regard:

(i) Facilitate creation of large balancing areas and broad-basing the balancing responsibilities.

(ii) Ancillary Services resources may be available to the System Operators for real time management of the system.

These could be through contracts and eventually through a structured and well performing Ancillary Services market.

(iii) Carrying out Integrated Resource Planning.

C. Storage Technologies

Energy storage technologies viz., pumped hydro, compressed air energy storage, various types of batteries,

flywheels, electrochemical capacitors, etc., provide for multiple applications: energy management, backup power,

load levelling, frequency regulation, voltage support, and grid stabilization. Efforts will be made towards

popularization of the energy storage technologies for better integration of wind energy projects into grid.

Draft National Offshore Wind Policy

The MNRE is currently working on a policy for deployment of offshore wind energy projects in the

Exclusive Economic Zone (EEZ) of the country. The policy proposes to address issues such as resource

assessment & surveys, seabed allocation & lease arrangement, facilitation in clearances and approvals

and evacuation of power generated from offshore wind power projects. As a first step towards

development of offshore wind sector in India a MoU was signed on 1st October 2014 for setting up of a

Joint Venture Company (JVC) towards undertaking the First Demonstration Offshore Wind Power Project

in the country. The MoU was signed by MNRE, National Institute of Wind Energy (NIWE), and consortium

of partners consisting of National Thermal Power Corporation (NTPC), Power Grid Corporation of India

Ltd (PGCIL), Indian RE Development Agency (IREDA), Power Finance Corporation (PFC), Power

Trading Corporation (PTC), and Gujarat Power Corporation Ltd (GPCL).

Green Energy Transmission Corridor

In order to develop a network specifically for wheeling of RE power from proposed capacity additions,

Powergrid had planned high capacity transmission systems (green energy corridors) for evacuation of

renewable power from RE rich states to load centres with an aggregate capital outlay of around INR 425

billion in the first phase (EUR 5 billion). With the implementation of the GEC, the pockets of the RE

generation would receive grid infrastructure and thereby the restrictions on RE evacuation, losses (as RE

would be connected at EHV than HV level) would reduce.

Page | 62

7. Recommendations

RE Act

A Renewable Energy Act (RE Act) should be drafted and be made a subset of the

Electricity Act. The RE Act is intended to consolidate all the measures that enable the

development of renewable energy, therein promoting competition , secure reliable

supply to all consumers, rationalisation of tariff and renewable purchase obligation,

ensuring transparent policies. It should also be developed in order to provide a

comprehensive framework in the sector by reducing risks and transactions cost in the

Indian RE market, thereby creating attractive options for indigenous and global

investments. MNRE should be empowered to draft and administer the RE Act. Under

this Act, following critical provisions should be specified:

Functions and composition of the different decision making bodies at the

central and state level

Design of National RE Policy and other related policies to foster RE growth

and integration

National RPO targets and their compliance methodology

National and state level funds for RE development

National RE

Policy

Till date, to promote RE development only programs and schemes have been

available at the National level. To achieve 175,000 MW of RE installations by 2022, a

comprehensive Renewable Energy policy is required at the central level. This policy

should also encompass all the current schemes and programs launched by the

central government. This can also include new instruments to foster accelerated RE

growth.

The national RE policy should also contain the proposed national RE targets and also

define broad RE targets for states. This should ensure the alignment of the state

policies with the national RE policy.

Development of National RE Policy should be followed by development of RE specific

regulations. Every new policy or regulation introduced in the RE domain should have

a specific start and end date to support developers’ planning.

National RPO

Targets &

Renewable

Energy

Certificates

National RPO targets should be increased as per the proposed national RE capacity

addition plan. The state RPO targets should be aligned with the national targets.

National RPO targets should not be a guideline but a notified Executive Order.

While the NEP has a provision which states that 'the share of electricity from non-

conventional sources would need to be increased progressively as prescribed by

SERCs’, there is no such provision in the EA 2003. This should thus be included in

the RE Act to specify long-term and progressive RPO trajectories for each of the

states to attract investors.

All states should have uniform RPO targets or RPO targets based on conventional

generation consumed by the state. There should be a clear rationalization defined at

the national level to determine the RPO targets. The state should align and determine

their RPO target based on the guidelines defined at the national level. This will ensure

a fair competition between different state utilities and to avoid giving undue

competitive advantage to any state.

Page | 63

RPO compliance by all the obligated entities should be ensured in all the states,

especially the non-RE rich states. Penalties in case of non-compliance to RPO targets

should be specified in the RE Act.

The institutional capacity of the State Nodal Agencies (SNAs) should be improved to

ensure accurate and timely Monitoring, Reporting and Verification (MRV) of RPO

compliance by the obligated entities.

SNA has to be informed if the Open Access consumers seek approval for their

transactions and Captive consumers seek approvals for setting up captive

generations.

All the obligated entities should submit/report their quarterly RPO compliance

achievement to the SNA.

Separate entity/agency should be created under NLDC which will monitor the national

level RPO compliance, and be responsible for unsold renewable energy certificates

as REC market maker.

Unsold Renewable energy certificates will be bought by this agency at minimum

support prices and suitable funds should be allocated from NCEF, and/or state’s RPO

non-compliance penalty fund, and/or grants received for renewable energy, if needed.

The SNAs as monitoring agencies of RPO should primarily purchase the RECs to

meet the state’s obligation from this agency before it buys from the open market.

REC framework should be strengthened by introducing a market mechanism to

increase the bilateral trade of RECs outside the exchange so that the generators can

enter into long-term agreements with the obligated entities to sell RECs.

Since the RECs are issued by the NLDC and traded at the national level, it is

important that RECs are made a statutory instrument and defined under the RE Act.

Open Access

and Banking

A single window clearance system should be set up for open access applications to

avoid delays on account of lack of knowledge amongst both the approving authority

(at various levels) and the project developers.

Leverage technology solutions and automate processes for NOC issuance, energy

scheduling, energy settlement and clearances. IEX has introduced SLDC interface to

help manage NOCs of customers in the state of Punjab and Tamil Nadu. The same

can be adopted for other states

Open Access Registry will bring in transparency and facilitate faster

transactions using automatic rule-based open access clearance while

removing manual discretions

Amendment to EA 2003 should remove the ambiguity and clarifying the scope in the

following sections and therefore facilitate OA.

Sec 11: OA to generators restricted by state government by citing extraordinary

circumstances

Page | 64

Sec 37: State governments can direct LDC to restrict power sale outside state in lieu

of maintaining smooth and stable supply

Sec 108: Directions of state government will prevail where public interest is involved

There is a need to define uniform methodology of determination of additional

surcharge under Section 42(4). The CERC should provide clear guidelines on what

constitutes ‘extraordinary circumstances’ (to prevent misuse of Section 11 by states to

restrict interstate sale of power) and SERCs should make state specific guidelines in

line with CERC guidelines.

In case of any disputes in matters related to OA, the Appellate Tribunal should be

approached.

The following provisions need to be strictly implemented.

EA 2003, Sec 42 (2) :“….Provided also that such surcharge and cross subsidies shall

be progressively reduced in the manner as may be specified by the State

Commission…”

Tariff Policy 8.3.2: Tariff to be +/-20% of cost of supply by 2010-11

NEP, 2005 Sec 5.8.3: “…..the amount of surcharge and additional surcharge levied

from consumers who are permitted open access should not become so onerous that it

eliminates competition…….”

Presently, transmission planning is done taking into account the transmission capacity

required for long term PPAs. To encourage open access, transmission planning

should inherently include margins for medium and short-term open access also. A

competitive market mechanism should be developed for the booking of transmission

capacity by open access consumers as suggested in later report on power market

design.

The drawl of OA consumer from the DISCOMs during the time blocks when

no power is scheduled under OA should not be more than the time-blocks

when power is scheduled from any source under open access.

Need for clarity on Over-drawal and Under-drawal charges that should be

levied on OA consumers. These charges should be in line with UI charges the

DISCOM has to pay to balance the power in grid when OA consumers

deviate from their schedule. Intra-state ABT mechanism has to be

implemented in all the states.

Rationalisation of charges for interstate OA transaction of RE power - to

ensure RE power can be exported out of states with high RE potential, the

transmission, wheeling and other related OA charges for interstate

transaction of RE power should be rationalised to make it economically

Page | 65

feasible for interstate OA consumers to purchase RE power from another

state. As a promotional measure these charges may be exempted for wind

energy (for solar inter-state transmission charges are exempted) for the initial

couple of years and later on charges on per kWh basis could be levied on all

RE generators.

Scheduling of RE power (by the generator taking forecast from one or more

FSPs) should be a minimum requirement for sale of RE power through OA.

Model guidelines on Banking of Renewable Energy should be formulated and

discussed with all the relevant stakeholders. Financial impact of RE banking

on DISCOMs and aspects of promotion of RE should be balanced while

developing the model banking guidelines.

Feed-In Tariff

and competitive

bidding

There is need for MNRE to define capacities of RE plant that will receive Feed in

Tariffs and capacities that will undergo competitive bidding. Feed in tariffs can be

offered only for small capacity RE power plants up to certain definite capacities as

decided by MNRE. Large scale plants above a defined capacity as decided by MNRE

will undergo competitive bidding procedure to determine the tariff as discovered in the

process.

Standard bidding guidelines / documents for competitive bidding of wind energy

should be finalised.

Planning of

Transmission

Corridors

The transmission corridor planning for renewable energy takes into account the RE

capacity addition planned in the future.

Page | 66

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8]

M. E. M. I. P. Ltd., "Integrating Variable Renewable Energy with the Grid: Lessons from the Southern

Region," Sustainable Energy Foundation, November 2012.

Page | 68

[2

9]

FICCI, "Power Transmission , The Real Bottleneck," FICCI, September 2013.

Page | LXIX

Annexure 1 – State Analysis

Detailed Analysis of the selected Indian States

Tamil Nadu

In India, Tamil Nadu is the only state where one-third of the installed power comes from renewable

sources. The present installed capacity of 20,714MW mostly consists of Coal, Hydro and RE.

Tamil Nadu peak demand had been nearly 13,000MW as of 2014. In order, to meet the peak demand

there has been tremendous efforts taken by the state in building capacities both in conventional and non-

conventional energy sources. In the last released volume of Vision 2023 as mentioned in the policy note

2014-15, the state has ambitious plans for setting up an additional 20,000 MW of power generating

capacity. The Plan lays emphasis for development of incremental capacity of 10,000 MW of green power.

This looks promising basing upon its past achievements and initiatives to promote RE.

The electricity peak demand for Tamil Nadu in 2014-15 was 13707 MW [27]. During the same year, the

RE installed capacity was 8395.74 MW [28]. As per the MNRE, the RE installed capacity in the state by

2021-22 is expected to increase to 21508 MW [29] which includes solar, wind, biomass and small hydro

plants. The electricity peak demand for 2021-22 is projected by CEA to increase to 29975 MW [30].

Figure below shows the peak electricity demand and the expected RE capacity for each year from 2014-

15 to 2021-22 obtained assuming linear growth every year. It can be observed from the table shown

below that in order achieve the 2022 RE installed capacity target of 21508 MW, the state has to increase

its RE capacity addition at 14.4% annually while the peak demand increases by 11.8% annually.

The current RE installed capacity accounts to 25.11% of the total RE installed in the country and 39% of

the overall installed capacity in the state. The contribution of RE to the state is around 13.43% which

indeed is higher than the contribution of RE to India which is about 10.03%.

Tamil Nadu

Year Electricity

Peak

Demand

(MW)

Expected RE

Installed

Capacity

(MW)

2014-15 13,707 8,395.74

2015-16 15,328 9,603.33

2016-17 17,141 10,984.62

2017-18 19,168 12,564.58

2018-19 21,435 14,371.79

2019-20 23,970 16,438.95

2020-21 26,805 18,803.43

2021-22 29,975 21,508.00

0

5000

10000

15000

20000

25000

30000

35000

Electricity Peak Demand (MW)

Expected RE Installed Capacity (MW)

Figure 18 - Electricity Peak Demand v/s installed RE

capacity for Tamil Nadu

Page | LXX

The above graph clearly depicts the installed RE capacity will be nearly 72% of the total electricity peak

demand by 2022. Out of the state RE target for 2022, nearly 11900MW is wind and 8884MW is solar

capacity.

In 2012-14, the state has aggressively commissioned thermal and hydro projects, out of which the state

receives a share of 2792.5MW. Currently the ongoing/proposed conventional power projects are more

than 7712MW as per state energy policy note 2014-15. Gauging the conventional capacity addition

growth during the 2014-2022, it clearly depicts that state is adding both conventional and non-

conventional beyond its peak demand. This however beckons for a robust market mechanism to

accommodate RE power within the state and also explore market mechanism to trade its power to the RE

deficit states. Moreover, aggressive increase in the state RE capacity lucidly explains that the state

should sufficiently use conventional capacity indigenously or through bilateral trade agreements for

balancing the variable RE. Thus, the state has a need for an adequate evacuation infrastructure, efficient

policy & market mechanism.

POLICY FRAMEWORK

The state has been observed to be one of the high wind and RE resource rich state, which has been

progressive in driving RE growth in the state.

Wind Policy

As discussed in the above section, the state has recorded the highest installed wind capacity in the

country. It is imperative to analyse this achievement because neither the state has conducive Wind policy

till date nor does exist a comprehensive wind policy in the national framework. The government and

institutional framework in the state has extremely receptive to all the government initiative, programs and

schemes driven to build wind energy capacities.

When India’s first Wind Power Development programme commenced around 1983-84, Tamil Nadu had

been the fore runners in implementing this national program. From the inception of this national program,

the wind power development sector in the state inclined towards a market oriented strategy with the

commercial development of the technology. The National programme broadly included wind resource

assessment activities, support for research and development, implementation of demonstration projects

to build awareness and deployment of new technology, development of infrastructure capability and

capacity for manufacturing, installation, O&M of wind turbine generators and above all providing

adequate policy support. Tamil Nadu had responded by actively utilizing its four natural passes namely,

Palghat, Aralvoimozhi, Senghottai and Cumbam, which have an average wind speed around 18-24km/hr

due to tunnelling effect during the South west monsoon season. The state had best utilized these passes

to majorly build wind capacities and displayed interests in R&D and support projects. During 1986, the

state’s first demo wind farm with 20 nos. wind electric generators each of 55KW were erected at

Mullaikadu in Tuticorin District, in association with Tamil Nadu Energy Development Agency (TEDA)

under the aid of Ministry of Non-Conventional Energy Sources (MNES), Government of India.

Subsequently various windfarms were erected by TNEB at other places in Kayathar, Muppandal,

Puliankulam and Kethanoor area.

This is evident from the deployment capacities of wind power at Kayathar. This location has wind turbines

deployed in the range of 200kW to 2MW. This location has wind flow speed reaching 26 m/s during the

months of April to September. At Kayathar, the wind resource assessment is conducted at 50m, 75m and

120m mast heights. Today, NIWE choses Kayathar as strategic location for the deployment of pilot

technological or innovative projects in Wind power such as pilot generation forecasting projects, LIDAR

for measurement for power curve, deployment of phasor measurement unit and so on. Moreover, this

Page | LXXI

attracts foreign collaborations for deploying more innovative pilot project. Kayathar is today the only

destination where wind turbine testing facility is available in India but for which wind developers would

have to depend upon International Certifying bodies for their turbine test certificates.

The key factors that steered the tremendous growth of wind power in the state were due to the below

benefits

A. MNRE, Government of India

Accelerated depreciation up to 80% for income tax calculations subject to a minimum utilization

for 6 months in the year in which deduction is claimed.

Generation based incentives(GBI)

Tax holiday for 10 years

Import of wind electric generator permitted under Open General License.

Customer duty concessions on wind electric generators and certain essential spares

RPO & REC.

B. Government of Tamilnadu

Feed in Tariff

Must run dispatch principle

To buy surplus energy at Rs. 2.75 per unit from the wind mills commissioned before 15.05.2006

and Rs 2.90 per unit commissioned after 15.05.2006 Rs. 3.51/unit for projects commissioned

upto 31.7.2014

However, some of the above factors did not greatly prove successful as was intended to, such as GBI

which failed to attract IPPs focused in RE. GBI scheme nevertheless attracted thermal IPPs and other

large captive consumers. AD and Feed in Tariff greatly impacted by attracting investor attention and at

the same time built long term certainty to his/her investment. Overall it is assessed that above factors in

varying proportions added significant positive impact. Private developers have reaped the maximum

benefits from the program such the Open access / Third party sale / REC trading, Generation Based

Incentive (GBI) and Accelerated Depreciation. Recently in 2012, the AD and GBI for the Wind power

developers were removed, which drastically reduced the Wind energy capacity growth over last 3-4

years. AD and GBI later was resumed back in 2014, yet the growth trajectory is not observed as high as

its past trajectory.

Moreover, the efforts undertaken by TNEB by acting as a single window for developers are worth

mentioning. TNEB extended all facilities for developers such as consultancy services, processing of

applications for issuance of NOC, other clearances, extending grid connections and establishing effective

systems for registering energy generated by wind farm.

From the analysis, it is imperative for state to draft and notify a conducive wind energy policy at this stage

that would address a clear direction for the state wind power sector. It could possible suggest the

methods to sell power more than what the state can consume and provide directives for interstate power

bilateral mechanism. It can suggest upon the resource reassessment for higher mast heights,

mechanisms for repowering older turbines, R&D support projects schemes and mechanisms to evacuate

power efficiently.

Solar Policy

Tamil Nadu also in solar resource potential falls in the category of resource rich states and has

reasonably high solar radiation (5.6-6.0 kWh/sq. m) with around 300 clear sunny days in a year. GIZ is

Page | LXXII

currently conducting a study named “Solar Radiation Resource Assessment (SRRA)” along with NIWE to

overcome the deficiencies in the availability of investor grade ground measured solar radiation data,

which is crucial for planning and implementation of solar power projects. The project is implemented by

NIWE in two phases, in the first phase, 51 no of SRRA stations were set up by October, 2011 (in 11

States and 1 Union Territory) and in the second phase, 60 no of SRRA stations (in 28 states and 3 Union

Territory ) and 4 Advanced Measurement Stations (AMS) by June,2014.

The JNNSM programme has been one of the successful programmes to drive Solar PV capacity addition

in India. Though this program enabled the state to install about 15 MW in the program, it considerably

made an impact in the influencing the Tamil Nadu government to roll out Tamil Nadu Solar Energy Policy

2012 - Approved by Government of Tamil Nadu vide no. GO(Ms)No.121/Energy(C2) dt. 19-10-2012.The

state has currently about 147 MW of solar PV installed in the state out of which 79 MW comes from REC

scheme and 2 MW in Rooftop solar.

Some of the major objectives of Tamil Nadu’s Solar Policy 2012

To project Tamil Nadu as a Solar Hub

To generate solar energy capacity of 3000MW by 2015

REC capacity and SPO obligation

Net metering facility

To achieve grid parity by 2015

To promote indigenous solar manufacturing facilities in the state

Major setback observed in the policy was that over and above the RPO compliance which has solar

component associated. The policy insisted on 6% SPO compliance for heavy power consumers. TN

Spinning Mills association and Consumer association challenged this in tribunal stating that the state

does not have much installed solar capacity to buy third party power. Moreover, due to RPO compliance

the consumers had already invested in wind mills and new investment was not anticipated.

It was also observed that the state TANGEDCO tendered 1000MW despite at a price of Rs. 6.48/kWh

received only lukewarm response with bids only for 500MW.

Moreover, the state proposed funding methods and promoting this development. Out of the target set in

utility scale of 1500 MW capacity, 1000 MW is to be funded by SPO and the remaining 500 MW through

Generation Based Incentive (GBI). SPO being challenged is a key set back to relook the targets. Also

500MW in utility scale and 350MW rooftop solar associated GBI, has also taken pace as expected. The

net metering had been introduced but implementation saw initial challenges. However, success of the

GBI in target achievement is to be observed.

Though, the target achievement of 3000MW by 2015 does not look promising, however the state is taking

strong initiative to build capacities at least by 2022. Appropriate missions and tax incentives as per Tamil

Nadu Industrial Policy are provided to attract investors from India and abroad.

Demand cut exemption to the extent of 100% of the installed capacity assigned for

captive use purpose is allowed.

Single window clearance is guaranteed through TEDA in 30 days so that the plants

can be commissioned in less than 12 months.

All the solar power developers/producers are eligible to avail Clean Development

Mechanism (CDM) benefits to enhance the viability of the projects.

Page | LXXIII

Solar water heating system mandatory for new house/building/marriage halls/hotels

etc. by amending relevant Acts of Municipalities/Corporations

Post this there has been enough impetus and interest to promote more Solar power and hence there

have several Government initiatives undertaken by Tamil Nadu Energy Development Authority (TEDA)

such as CM rooftop solar scheme, CM’s solar power Greenhouse scheme and some Wind Solar hybrid

schemes are underway. Government initiatives were more towards Solar PV nevertheless considerable

efforts were taken to promote Solar Thermal technology. Unfortunately, effort to promote Solar Thermal

didn’t seem as successful as Solar PV technology. Some factor that impedes growth of Solar Thermal

technology in the state can be attributed to poor DNI resource potential and high technology cost.

Presently, it can be observed that the state is taking more initiative to drive more Solar power capacity

than Wind power capacities. State has devised comprehensive solar policy and rolling out mission.

However, reasons for a wind resource rich state still not notifying comprehensive Wind policy and off late

displaying a lesser priority toward wind power will be more analysed in the subsequent sections.

REGULATORY FRAMEWORK

There have been many developments in the field of RE regulation. Some of the main regulations The

State has made considerable efforts in notifying RE regulation that enable RE development in the state.

The state however, has some regulations that attract as well as repel private investor interests. Some of

the main regulations related to RE are discussed below.

Methodology for determining Tariff

Key features of the tariff order are

All tariff orders have a control period specified only for two years and not more

Provision of a cost plus tariff. Issues a single-part tariff for wind, solar and small hydro plant, and

two-part tariff for biomass, bagasse cogeneration, biogas and bio-gasification power plants.

The Commission approved an average tariff for wind and small hydro, while a levelized tariff was

awarded for small scale solar power projects commissioned under JNNSM.

One critical issue that needs attention is the efficient monitoring mechanism of the control period. Since it

is very short duration, it is critical to discuss and sufficiently monetize the stakeholders.

.

Transaction through Open Access (OA)

The notified regulation enables the generators to sell the energy to any entity other than TANGEDCO.

The distribution licensee can sell power at mutually agreed tariff subject to the payment of applicable

transmission/wheeling charges and other OA charges as per the TNERC tariff orders. Moreover, the

generators are allowed for a banking facility in the regulation.

Major concerns of OA transactions in the state are that they are allowed even during load shedding.

There is no provision to strict impose Section 11 of Electricity Act [17], which various states have used to

restrict power during power shortages.

Forecasting of demand and supply becomes a concern which results in DISCOMS paying for the

capacity charges thereby increasing their financial burden. The load management becomes a challenge

as most of the industries meet only the base load through Open Access and rest have to be supplied by

DISCOM when the load is variable. The generators also intend sell bulk power through OA while

industries typically have demand of about 3-5MW.

Page | LXXIV

Transaction through OA has thus imposed some issues upon the Consumers in the realms of availability

of power and availability of grid. Moreover, DISCOM is also facing issues in load management and

forecasting of demand and supply.

Renewable Purchase Obligation (RPO)/RE Certificate (REC)

Tamil Nadu government is much aligned with national mission by placing an obligation upon large

consumers/distributors of electricity, captive power consumers and open access consumers to purchase

or generate certain percentage of its energy consumption from RE sources. In order to ensure the

implementation TNERC notified a regulation on RPO in 2010 which later underwent amendment in 2011

to incorporate REC provisions. The state has targeted the obligated entities to consumer 9% of

renewable power which includes 8.95% Non-Solar power and 0.05% of solar power. As explained earlier

in the solar policy section, the establishment of Solar Purchase Obligations is challenged in the state as it

is contrary to the RPO obligation targets for the Solar in the state.

It can be acknowledged from the regulations that the State can meet its RPO compliance target through a

Preferential Tariff/Feed in Tariff mechanism or throughRE Certificates (REC) mechanism. Analysis to

determine which route could be a beneficial route for RE resource rich has been discussed in the earlier

chapter with emphasis on Tamil Nadu as the case. The analysis clearly depicted that in order for the

state to meet its RPO compliance, Feed in Tariff is the most cost efficient mechanism due to procurement

of physical power and attracting investments into the state.

However, we also intend to analyse the RE market instruments from the perspective of RE

generator/developer. This will not only help to determine the effectiveness of the FiT, REC mechanism and

other market mechanism currently prevalent for the Wind developers but also enable to understand the

developer motivation factors for capacity growth.

Hence, for the analysis purpose we considered the case of Wind developer who has installed Wind power

capacity and intends to sell the energy in prevalent market mechanism.

Table 24 - Analysis of Wind Power Tariff in TN

FiT APPC+REC Captive+REC Third party

+REC PX+ REC

Tariff to RE generator 3.51 3.11 5.7 6 4.8

REC price 1.5 1.5 1.5

OA charges:

Wheeling charges 0.23 0.23

2.47 Wheeling losses 0.23 0.23

Transmission charges 1.78 1.78

Transmission losses 0.15 0.15

Cross subsidy surcharge 2.77

Net realisation 3.51 4.61 4.82 2.35 2.33

Upside over FiT 31% 37% -33% -34%

From the above the analysis it can be observed that generator selling energy through a Group Captive+REC

mechanism is the most beneficial route. Also we can overall observe that the REC mechanism has been the

prime drivers for the developers. However, during our stakeholder consultation with RE developers, we could

Page | LXXV

observe that developer seemed more inclined to selling power through an FiT route due to long term PPA

certainty. The developers and consumers are not most inclined towards purchase of REC due to lack of long

term price clarity and due to large quantity of unsold REC in the market.

Utilization of Evacuation infrastructure

RE developers can utilize the evacuation infrastructure in some of the below mentioned modalities as per

the regulations. Presently, it can be observed that RE generator if opts for selling the entire energy to the

distribution licensee then State Transmission Utility(STU)/distribution licensee will be bearing the cost of

interfacing line and related evacuation infrastructure. Alternatively, if the RE generators opts for a

captive/self-consumption or sell entire energy to a third party, then the RE generators has to

bear/reimburse the cost of evacuation infrastructure.

However, state has also notified an alternative infrastructure development model more beneficial for

DISCOM. Under this regulation, the wind developer can choose for a Build & Transfer (B&T) model. Here

the developer invests in the infrastructure cost which can then be transferred to the distribution licensee.

The DISCOM later reimburses the developers an amount equivalent to the L1/lowest tender quote

received for the same infrastructure development. An investor who is observing the financial condition of

DISCOMs fails to see the benefit in the model. This regulation will require financial intervention from the

state government to build more credibility to the developers.

TECHNICAL

Tamil Nadu with the highest RE installed capacity is combating serious issues in grid integration.

One of the most critical grid integration issues are due to increased growth of installed capacity of Wind

power which has posed major issues for the grid operators to technically manage the variable generation

and associated commercial implications. The state is facing the technical challenges of balancing the

existing high variability of Wind power generation within the state and thus apprehensive of adding more

Wind capacity.

Lack of RE evacuation infrastructure

Wind power generators during peak wind season in places such as Kayathar, Tirunelveli, Tuticorin are

unable to evacuate to nearby major 230kV or 400kV substation since sufficient demand of DISCOM is

already being met. This however overloads the existing 110kV transmission lines thus resulting in

backing down the wind power even if the system has not met its demand in totality. In order to evacuate

seamlessly, the wind power plant may be directly be connected to 220kV or 400kV lines or strengthen the

existing line. In either case, there are high technical and commercial impacts. Moreover, large capacities

of RE power plants are located in remote locations and creation of addition HV infrastructure for large

clusters of small capacity plants does not often justify the cost as peak generation is achieved only for

few hours during the day in comparison to the conventional generation plants.

Methodology of Transmission Line Planning

Presently, planning for transmission lines is made on the basis of future conventional generation plant

capacity addition. This does not ensure the definite evacuation infrastructure for RE generators and

hence RE generators plan their capacities based on the conventional plan based transmission lines.

There is no provision for a long term transmission planning procedure to incorporate transmission and

evacuation requirements for RE. This creates an unwarranted situation for RE developers as the RE

plant installation gestation period is far low in comparison to grid infrastructure creation timeline. This

Page | LXXVI

adversely implies that new transmission may or may not be able to accommodate the high growth RE

portfolio. This can however be a deterrent factor for the state against the national RE plan.

Moreover, it is observed that Ministry of Power is creating concept of Green Energy Corridor in a phased

manner and also delving to make demand specific mentions in EA 2003 to factor likely RE capacity in

transmission planning. Certainly in the long-term the state will be potent to evacuate renewable

generation and import/export power from a wider pool.

High Variability in Wind generation

Observing the load curve of Tamil Nadu during Jun 2015, depicts that peak load occurs at 8am in the

morning and 8pm in the evening. The high wind season in the state is between June to September, when

the wind speed touches up to 26m/s in high wind regions such as Kayathar, Tirunelveli district.

This high-wind season coincides with the low-demand situation in Tamil Nadu. During this time, the wind

as per “must run” dispatch principle is tried to be scheduled to cater the demand. Conventional

generation is generally maintained at its technical limits. In an event of sudden variability of wind

generation, due to wind inherent characteristics, balancing the generation becomes real challenging. By

studying the load curve and generation trend from SLDC data, it can be observed that intra-day variation

is higher than seasonal variation and is around 2000 MW. In such an event, sudden ramping up/down of

pumped hydro reserves is necessary. While assessing the indigenous pump storage capability it can be

observed that the state currently has 400MW subject to availability of water storage in upstream and

downstream. Also ramping up and down of thermal plants for generation beyond a technical threshold,

below 60% is not feasible. Once the thermal plant is shut then it takes at least 48 hrs to get fully

operational again. However, the state load dispatch centre is managing by undertaking maintenance of

thermal plant during high wind season. Also exploring the option of nuclear plant is bleak since it is “must

run” condition.

Figure 19 – Ideal Scenario of power utilization during peak demand season in TN

Secondly, when the peak demand drops to 8000 MW, the situation of backing down central and external

share (which can be done from central share, LTOA, MTOA, STOA, PX) cannot be more than 500 MW.

This implies that the remaining capacity has to be supported from Wind, Thermal and Hydro. Also the

thermal power station technical limits cannot go below 60%. Hence, accommodating the entire wind

generation into the system is not feasible and curtailment of the capacity is often observed in order to

maintain grid stability and security issues. Moreover, maintaining overall deviation between +/- 150 MW

seems to be a challenge for the state.

Robust implementation of forecasting and good forecasting accuracy, which could allow utilities to plan

for wind generation and significantly reduce operational complexities and commercial impacts arising

Page | LXXVII

from generation variability, is currently not observed. Importantly, there should be robust market

mechanism to ensure and support the state to export the excess generation or ensure regional balancing

of the variability.

This hint us a need for regional balancing and as we understand that the state has been trying the

combat and manage high wind variation within the state. When we observe the overall southern region

hydro power, we can understand that with efficient interstate co-operation through bi lateral agreements

and suitable commercial incentive for storage based hydro schemes to participate in spinning reserves,

the inter regional balancing can be explored. In consultation with stakeholders at RLDC in this regard, it

can observed that the entire southern region is divided into S1 and S2 region. S1 region comprises of

Andhra Pradesh and Karnataka and S2 region comprises of Tamil Nadu and Kerala. Presently there is

high congestion observed when power flows from S1 to S2 region while S2 to S1 is less congested. So

even if the regional balancing is undertaken, the congestion from S1 to S2 presently cannot support state

generation balancing.

Stability of the power system

Majority of the grid connected wind farms in TN have old turbines or asynchronous generators which

draw considerable reactive power from the grid. This poses serious voltage instability and power quality

issues. Decentralized locations also depict weak interconnection links that impact and cause

disturbances such as overloading at transmission and sub transmission level. The new wind farms and

solar power plants are taking measures to overcome this obstacle. In our discussion with SMA, the new

inverters are upgraded to provide sufficient reactive power to the system. Thus it can be expected that

new technologies can also provide a voltage ride through (VRT) in addition to supporting the grid with

reactive power based on system conditions.

Table 25 - Existing Transmission Constraints in TN [12]

Transmission Line

Constraints

1. 400kV Udumalpet-Palakkd DC line

2. Overloading of 220 kV Shoolagiri-Hosur(TN)

3. Constraints in 230kV Evacuation lines of MTPS and Kundah complex

4. Constraints in Chennai 230kV System

5. 400kV Kolar-Hosur DC line

Expected Transmission

Constraints

High loading on 400kV Madurai-Udumalpet SC line

Delay in transmission

lines affecting grid

operation adversely

1. NCTPS-II Evacuation

2. Stage-1 Wind evacuation system of TNEB

3. 400kV Salem pooling Station-Salem DC line: Congestion S1-S2 Corridor

Available Hydro Balancing Potential

In our broad assessment, Tamil Nadu has a total hydro balancing potential of 1095 MW. This is split

between three hydroelectric projects of Mettur, Periyar and Kundah with capacities of 370 MW, 140 MW

and 585 MW respectively. As shown below, these power plants can provide varying degrees of balancing

potential based on their storage capacities. It can observed that at FRL Tamil Nadu will be able to offer a

balancing potential of 1095 MW for a period of 551 hours and at MDL they will be able to offer a potential

of 140 MW for a period of 1542 hours. This can cater to a maximum PLF of 16.7% above which at any

instance seems difficult due to restrictions in water availability.

Page | LXXVIII

Table 26 - Hydro Balancing Potential in TN

Hydro project Installed

Capacity

(MW)

FRL

(m)

MDL

(m)

Energy

available

per m of

water level

(KWh)

Run time at

Full installed

capacity per

meter of water

level(h)

Maximum

run time at

full installed

capacity (h)

PLF%

Mettur dam

complex 370 240

211.2

3 7090719.49 19.16 551.35 6.29%

Periyar dam

complex 140 46.33 33.53 16875000 120.54 1542.86 17.61%

Kundah Power

project 585 NA NA NA NA NA

FISCAL

Commercial implications of infrastructure development

Strengthening of existing network or creation of new dedicated evacuation infrastructure carries

significant cost implications for the utility. Issues related to evacuation infrastructure are thus commercial

and require a commercial solution. It seems that TNEB has also realized this and under the National

Clean Energy Fund (NCEF) proposal submission process of the Ministry of New and RE (MNRE), has

asked for central assistance of Rs. 17,570 million to develop transmission grid infrastructure to evacuate

about 4,000 MW of renewable power. This expansion is aimed at evolving a power grid to facilitate free

flow of power across regional boundaries by raising the transmission voltage from 230 kV to 400 kV and,

if required, enhancing transmission capability to 765 kV level. (Source: MNRE, TNEB websites).

TANTRANSCO has planned to develop the transmission infrastructure to effectively evacuate power from

the existing and new power stations. After this Government has assumed charge, 134 substations (up to

31.03.2014) have been commissioned to provide reliable power supply for the consumers. 51 substations

at a cost of Rs 394.50 crores have been inaugurated.

Transmission schemes for Wind Power Evacuation

Table 27 - Transmission schemes for Wind Power Evacuation [15]

Scheme Cost

(Rs.) in

Crs.

Description of the Transmission line

Phase I 2262.75 Network consisting of 2 new 400 kV substations and 1,488 circuit kms of 400

kV Lines, which will connect Kayathar (New SS) – Karaikudi (existing PGCIL

SS) – Pugalur (existing PGCIL SS) – Kalivanthapattu - Sholinganallur (New SS

- Ottiyambakkam) for effectively transmitting the power across the State.

Kayathar substation and the entire line works from Kayathar to Kalivanthapattu

near Chennai will be commissioned by September 2014. Sholinganallur

(Ottiambakkam) 400 kV SS works and Kalivanthapattu to Ottiambakkam line

works are under progress and will be completed by 2015-16.

Page | LXXIX

Phase II 1190.18 Separate corridor with the 400kV substations at Thappagundu (New SS),

Anikadavu (New SS) and Rasipalayam (New SS) along with the associated

400 kV lines of 798 kms connecting to the 765 kV substation being executed

by PGCIL at Salem. Tenders have been awarded and works are under

progress. This transmission system is expected to be commissioned during

2015-16.

Inter-state

power

evacuation

993.43 Establishment of 400 kV substation at Tiruvalam along with associated

transmission lines from Tiruvalam to Mettur Thermal Power Station - Stage-III

and 400 kV substation at Alamathy with a 696 circuit kms of associated

transmission line under progress.

JICA

Assistance

3572.93 Establishing 5 nos. 400kV substations and 14 Nos. 230 kV substations and

associated transmission lines in five years have been sanctioned. Out of the

five 400 kV substations, works are under progress at Sholinganallur

substation. Tender has been finalized and work is being awarded for

Karamadai substation. Tenders are under process for Manali substation and

tenders are to be called for in respect of Korattur and Guindy substations. Out

of fourteen 230 kV substations, works are under progress in respect of Alandur

and Ambattur 3rd Main Road. Tender has been

finalised and work is being awarded for Kinnimangalam, Raja

Annamalaipuram, Kumbakonam, Poiyur, Karuvallur and Central substations.

Tenders are under scrutiny in respect of Purisai and TNEB Head Quarters

substations. Retenders have been floated for Kanchipuram, Savasapuram,

Shenbagapudhur and Tiruppur substations.

Additional Transmission Schemes for evacuation of RE

It is proposed to take up transmission schemes for augmenting network for evacuation of wind power and

solar power at a total cost of Rs 1,600 crores approximately with financial assistance of Rs.637.2 crores

(40%) from National Clean Energy Fund as grant, 40% from German Financial Institution KfW as soft

loan and the remaining 20% from TANTRANSCO’s own funds as equity.

STAKEHOLDER CONSULTATION

Table 28 - Stakeholder Consultation in TN

S.

No.

Questions Asked Key Aspects Discussed

1 Power Scenario Largest Wind installed capacity in the country

Nearly 300MU of energy met in a day of which approximately 1/3rd

of the energy is met through wind

Currently more focus is laid on building Solar power capacities.

3 Variation of

generation

More than 2000MW variations in wind and availability of only

400MW of pumped storage.

Forecasting methodologies are not so prevalent and unable to

manage variations. Hence, resorting to load shedding.

Curtailment is done only for maintaining frequency.

Accommodate cheaper source of power in merit order dispatch.

Page | LXXX

4 Power evacuation

infrastructure

Dedicated Wind evacuation lines are unavailable.

Eagerly looking forward to Green Energy corridor.

There are lot of transmission line congestions. Mettur to Thiruvalam

line once commissioned will ease certain problem.

Government is aggressively allocating funds to build evacuation

line.

6 Regulations Requesting relaxations on DSM 150MW and +/- 12% variations by

increasing the band for variations.

Do not place RE resource rich and deficit states on the same

platform.

Need for Intra state ABT.

Need for market mechanisms to trade power to RE deficit states at

a reasonable price. Such that the state is not forced to consume its RE

generation more than what its demand is.

7 Demand forecast Central Grid operators mentioned that there is a considerable

deviation in demand forecast and also huge variations in conventional

generation.

8 Generation

Forecasting

Lack of availability of forecast schedules for wind power.

16000 ABT meters to be installed in all generating stations.

Page | LXXXI

Gujarat

As of 31st January 2015, the total installed capacity in Gujarat was approximately 28.4GW (including

allocated shares in joint and central sector utilities) [1]. Thermal power continues to be the main source of

power generation, constituting nearly 80% of the installed capacity, followed by renewables which

contribute around 17% of the total capacity. The state’s share of RE sources in western region is 46%

and all India share is 15% [18].

The electricity peak demand for Gujarat in 2014-15 was 13603 MW [27]. During the same year, the RE

installed capacity was 4717.55 MW [28]. As per the MNRE, the RE installed capacity in the state by

2021-22 is expected to increase to 17133 MW [29] which includes solar, wind, biomass and small hydro

plants. The electricity peak demand for 2021-22 is projected by CEA to increase to 26973 MW [30].

Figure below shows the peak electricity demand and the expected RE capacity for each year from 2014-

15 to 2021-22 obtained assuming linear growth every year. It can be observed from the table shown

below that in order achieve the 2022 RE installed capacity target of 14362 MW, Gujarat has to increase

its RE capacity addition at 20.2% annually. A graphical representation of electricity peak demand Vs

expected RE installed capacity is given below.

Figure 20 - Electricity Peak Demand v/s installed RE capacity for Gujarat

It can also be noted from this analysis that the percentage of installed RE capacity in Gujarat Peak

demand in 2022 will be 63%.

Since Gujarat has an estimated RE potential of 750GW [19], it can be deduced that the annual linear

capacity addition growth rate of 20.2% up to 2022 can be achieved to support the projected electricity

demand growth. In such a situation, there should sufficient conventional capacity to balance the variable

RE. This will call for better market mechanisms to export excess power to RE resource deficit states and

also build efficient evacuation infrastructure.

Gujarat has the highest potential for solar and wind power in the country. NIWE assessment at 80 m hub

height estimates the wind power potential in the country as 102 GW out of which the maximum potential

is estimated in Gujarat (about 35 GW). The state is clearly one of the top users of RE in India. With

around 900 MW [19] installations as on May 2014, Gujarat has taken a lead in deployment of grid

connected solar power that is about 36% of the total installed capacity in India.

0

5000

10000

15000

20000

25000

30000

Electricity Peak Demand (MW)

Expected RE Installed Capacity (MW)

Year

Electricity

Peak

demand

(MW)

Renewable

Installed

capacity

(MW)

2014-15 13,603 4,717.55

2015-16 15,000 5,671.96

2016-17 16,542 6,819.46

2017-18 18,241 8,199.11

2018-19 20,115 9,857.88

2019-20 22,181 11,852.23

2020-21 24,460 14,250.06

2021-22 26,973 17,133.00

Page | LXXXII

POLICY AND REGULATORY FRAMEWORK

Overall, Gujarat is the most aggressive state in RE development particularly solar and wind energy. The

increasing share of renewables in the state can therefore be attributed to the enabling policy framework

provided by the Government of Gujarat.

Solar Policy, 2009

The Gujarat Solar Power Policy of 2009 promotes solar power by defining and facilitating various aspects

such as wheeling charges, exemption from payment of electricity duty, exemption from demand cut, high

feed-in tariff for a period of 25 years, grid connectivity and evacuation facilities, open-access for third

party sale, relaxation from forecasting and scheduling, mandating renewable purchase obligation and

assigning of state nodal agencies for ease of implementation. This policy was effective up to 31 March,

2014. Currently, it is unclear whether this policy is still referred or if the state is drafting a new solar policy.

Gujarat was the first state to initiate a notified solar policy. Even though solar power is still more

expensive than conventional energy and is not competitive in the market place, the long-term fixed tariffs

guaranteed by this policy supported the tremendous growth of solar power deployment in India by

enabling the cost determination methodology for the solar power in the country.

Wind Policy, 2013

The GoG had notified the Wind Power Policy in June 2007 for the development of wind power projects in

the state. The latest amendment of the policy was notified in 2013, keeping in mind the recently

estimated high wind power potential estimate for the state. This policy will be effective till 2016. Some

provisions of this policy that promote wind power capacity addition in the state include the following.

Wind Turbine Generators (WTGs) installed and commissioned during the operative period shall

be eligible for the incentives for a period of 25 years from date of commissioning or the life span

of the WTGs, whichever is earlier.

The electricity generated from the WTGs is exempted from Electrical Duty.

WTGs for Captive use are exempted from demand cut to the extent of 30% of the installed

capacity.

Only WTGs which are approved either by MNRE, Gol, or by recognized international test house,

to be eligible for installation.

WTGs under captive use are eligible for one month banking for electricity generated during the

same calendar month. This facility is not available for third-party sale of wind energy.

Renewable Purchase Obligation (RPO)/RE Certificate (REC)

An analysis has been conducted to study the interests for developers to drive the RE capacity growth.

The analysis presented in the earlier sections clearly depicted that in order to comply with state RPO,

Feed in Tariff is the most cost efficient mechanism.

The situation has also been analysed from the perspective of RE generator/developer. Data for this analysis

has been retrieved from discussions with state wind developers and internal EY sources. This analysis will

not only help to determine the effectiveness of the FiT, REC mechanism and other market mechanism

currently prevalent for the Wind developers but also enable in understanding the developer’s motivation

factors for capacity growth.

Hence, for the purpose of this analysis, the case of Wind developer who has installed Wind power capacity

and intends to sell the energy in prevalent market mechanism is considered.

Page | LXXXIII

Table 29 - Analysis of Wind Power Tariff in Gujarat (INR/kWh)

FiT APPC+REC Captive+REC Third party +REC PX+ REC

Tariff to RE generator 4.15 2.8 4.45 4.01 3.5

REC price 1.5 1.5 1.5

OA charges:

Wheeling charges 0.05 0.05 1.34

Wheeling losses 0.45 0.40

Transmission charges 0.76 0.76

Transmission losses 0.11 0.11

Cross subsidy surcharge 2.01

Total OA charges 0 0 1.37 3.33 1.34

Net realisation 4.15 4.3 4.58 2.18 2.16

Upside over FiT 4% 10% -47% -48%

A generator is more incentivized to go for captive consumption than the FiT route in Gujarat. Since

DISCOMs have to meet the RPO target, they prefer to buy the electricity at the FiT than buying the

variable energy at APPC and then buying REC from market to fulfil their RPOs. This leads to ambiguity in

signing of PPA.

Current Balancing and Forecasting Techniques

All wind and solar power plants are considered as must run power plants. Conventional plants are asked

to back down their generation during light load periods or in case of increase in wind generation. Backing

down is done on the basis of merit order dispatch.

Few gas power plants are kept as balancing power reserve, and are asked to supply power to the grid in

case of sudden drop in wind generation. During high demand and low wind availability period, load

regulation is done only in the extreme cases when the wind generation goes down and the conventional

power plants are not able to increase their generation. Equal percentage of reduction in load at each

feeder is followed on priority basis for load shedding.

Gujarat SLDC carries out its own forecast of wind generation broadly by using BBC weather forecast

data. Based on the long term experience of SLDC Gujarat on the wind power generation patterns from

the existing wind farms in the state and the weather forecasts, the SLDC sends instructions to respective

sub stations to take precautionary measurements and be ready for the expected situations.

The SLDC analyses the trend of wind generation and plans for safe management of the grid. Till now

SLDC has been able to manage the grid using above mentioned process and only a few times in a ear in

case of grid instability, wind developers are asked to back down their turbines. Gujarat has been the only

state to set up a RE Management Desk and has taken reasonable efforts to run pilot RE generation

forecasting projects.

Provisions for grid interconnections for evacuation of power from renewables

Both the wind and solar policies of the state have specific provisions for grid connectivity and evacuation

facility up to the GETCO substation. The wind energy generators in the state have to construct the

evacuation facility from their substation to the GETCO substation up to 100 kms at their own cost.

Beyond this limit GETCO to erect the evacuation facility. However in case of solar plants, the evacuation

Page | LXXXIV

lines from the solar power generating substation/switch yard to the GETCO substation have to be laid by

GETCO.

TECHNICAL

The following table summarises certain technical issues that need to be addressed to ensure smooth

operation of the grid in Gujarat.

Table 30 - Existing Technical Constraints in Gujarat

PoC Charges

At 16.89 paisa/unit the PoC charge for power injection into the grid for

Gujarat is very high. This is a strong deterrent for interstate transmission of

power.

Harmonics

Variable frequency generators in WTGs use AC-DC converter for connection

with grid increasing the harmonics level in the system. Though harmonics is

being minimised at generating station level, there is no arrangement at

GETCO s/s level for protection against Total Harmonics distortion (THD).

Voltage Regulation

New WTG machines with variable frequency drives have inherent control of

reactive power output and can participate in voltage regulation. Old WTG

machines with induction generators have not been required to participate in

system voltage regulation. Their reactive power demand is currently being

compensated by switched shunt capacitors.

Poor Power Quality Even with the large RE potential available, there are no guidelines for power

quality measures, e.g. allowable total harmonic distortion, flickers, etc.

Delay in

transmission lines

affecting grid

operation adversely

[12]

1. 400 kV Mundra-Zerda D/C: Severe ROW problem reported

2. 400 kV Vadinar-Amreli D/C: Severe ROW problem reported

3. 400 kV Amreli – Kasor D/C: Severe ROW problem reported

Inter Connecting

Transformer (ICT)

Constraints

Loading on ICTs at Asoj (2x500 MVA 400/220k) is in the range of 300-370

MW resulting in ‘N-1’ noncompliance. Load trimming scheme implemented

as an interim measure to take care of contingency.

Transmission Line

Constraints 1. 400 kV APLSami-Dehgam D/C lines

2. 400 kV SSP-Asoj S/C and SSPkasor S/C

Available Hydro Balancing Potential

In our broad estimate the total balancing potential for Gujarat is 1750 MW for a period of 1253 hours and

300 MW for an additional period of 1457 hours. This balancing potential is available with 2 major projects

in the state namely Ukai HPS and Sardar Sarovar HPS with installed capacities of 300 and 1450 MW

respectively. The table below indicates the various parameters that were taken into consideration for the

balancing potential analysis.

Page | LXXXV

Table 31 - Hydro Balancing Potential in Gujarat

Hydro

project

Installed

Capacity

(MW)

FRL(m) MDL(m)

Energy

available

per m of

water level

(KWh)

Run time at

Full

installed

capacity per

meter of

water

level(h)

Maximum

run time at

full installed

capacity (h)

PLF%

Ukai

Hydro

Station

300 105.16 82.3 35564304.46 118.55 2710 30.94%

Sardar

Sarovar

(Narmada

river valley

project )

1450 138.68 110.18 63773789.47 43.98 1253.49 14.31%

STAKEHOLDER CONSULTATION

Table 32 - Stakeholder Consultation in Gujarat

S.No. Questions

Asked Key Aspects Discussed

1

Current

balancing

techniques

State suggests 5% balancing margin as a must for future plants and a

regulation should be in place for the same.

Sardar Sarovar, 200MW which has 6 m/c river bed power house has a

reversible facility. Similarly, hydro at Kadala 60MW, 4m/c reversible

facility with dam is available. However, there seems to vibration

problems which demands investments.

2

Data

Acquisition

and

Monitoring

Should use the present SLDC SCADA system (with some modifications

at the field level) before separate SCADA for REMC is available to make

real time data acquisition up to SLDC level available in the shortest time.

Ex: In Gujarat, they have extended the RTU with a sub RTU with radio modem

technology.

Existing special energy meters (under ABT or DSM) can be used for

AMR and energy accounting not for real time monitoring. These meters

have a capacity of 96 readings a day and 10 days at a time therefore the

receiving server will have a lot of problems. There is also a challenge in

replacing the existing meters with new technology.

As per policy, wind developers have made investments but there is no

initiative to enhance the investment to make monitoring possible.

Data available is poor due to transducers that are not working, ICCP link

not working, communication channels are down, etc.

Ex: Virtual private network on GPRS experience in Gujarat has worked well with

their AMR data from 1200 locations.

3 RE

Forecasting

Should have sub group of IMD to provide relevant data for the purpose

of forecasting to avoid irrelevant data.

Page | LXXXVI

4 RE

Generation

Variability

State has 94 days with variability of 1000 MW and 257 days with

variability of 500 MW in a year. However, the state never cuts Solar and

Wind generators.

Himachal Pradesh

As of 31st January 2015, the total installed capacity in HP was approximately 4.1 GW (including allocated

shares in joint and central sector utilities) [1]. Hydro power continues to be the main stay of power

generation, constituting nearly 78% of the installed capacity, followed by renewables which contribute

around 15% of the total capacity. While solar potential is viable in the state, because of lack of available

land, wind energy has little or no power generation potential in the state.

Owing to the state’s high hydro potential and the maturity of hydro technology, HP has contributed greatly

to the RE development plans in India.

The electricity peak demand for HP in 2014-15 was 1422 MW [27]. During the same year, the RE

installed capacity was 724 MW [28]. As per the MNRE, the RE installed capacity in the state by 2021-22

is expected to increase to 2276 MW [29] which includes solar, wind, biomass and small hydro plants. The

electricity peak demand for 2021-22 is projected by CEA to increase to 2589 MW [30]. Figure below

shows the peak electricity demand and the expected RE capacity for each year from 2014-15 to 2021-22

obtained assuming linear growth every year. It can be observed from the table shown below that in order

achieve the 2022 RE installed capacity target of 2276 MW, HP has to increase its RE capacity addition at

17.8% annually.

Figure 21: Electricity Peak Demand v/s installed RE capacity for HP

It can also be noted from this analysis that the percentage of

installed RE capacity (mostly hydro) in HP’s Peak demand in 2022 will be 88%. While hydro power in HP

can be used as balancing reserves for other states, adequate market mechanism and transmission

infrastructure is needed to evacuate this excess power to other states.

POLICY AND REGULATORY FRAMEWORK

0

500

1000

1500

2000

2500

3000

Electricity Peak Demand (MW)

Expected RE Installed Capacity (MW)

Himachal Pradesh

Electricity

Peak

Demand

(MW)

Expected RE

Installed

Capacity

(MW)

2014-15 1422 723.91

2015-16 1549 852.62

2016-17 1688 1004.21

2017-18 1838 1182.75

2018-19 2003 1393.04

2019-20 2182 1640.71

2020-21 2377 1932.42

2021-22 2589 2276.00

Page | LXXXVII

The private sector participation to exploit hydro potential of the state through the small hydro sector

began during 1995-96. Since then, the government of HP has taken several measures to promote private

sector investment in small hydro power projects in the state [21].

With a PLF of 60-70% for hydro power plants in HP, it is not cost effective for private players to invest in

plants with capacity lesser than 25MW.

At present, 501 projects with an aggregate capacity of 2050MW have been allotted in HP, of which 98

projects of total installed capacity of 500MW have been commissioned. Of the remaining 403 projects,

PPAs have been signed for 90 projects for a total capacity of 325MW. This leaves about 313 allotted

projects that are non-starters. HP is currently struggling to attract IPPs to come forward to invest in these

313 projects.

There is no notified policy for wind and solar power in HP; however the state has a policy for hydro power

for small hydro power projects above 5MW and below 5MW. These policies provide detailed description

of eligibility criteria for setting up hydro power projects, wheeling charges, regulations for power disposal

and incentives by MNRE and the state.

TECHNICAL

In HP, for power plants of capacity greater than 5MW, it is mandatory to have SCADA systems installed.

The process of connecting smaller power generating stations with the SCADA system is underway. At

present, 10 micro hydro power stations are connected through GPRS and transmit real time data.

However, about 130 MW of micro hydro power stations are only monitored through telephone once a

day.

At present, the evacuation path for Parbati-III (4×130 MW): Parbati-III (4×130 MW), three machine of

Parbati-III has been synchronized and CoD in Mar’14. Parbati-III is evacuating through only 400kV

Parbati-III – Parbati pooling point (Banala). Contingency of the 400kV Parbati-III-Banala would cause loss

of Generation in of Parbati-III.

Available Hydro Balancing Potential

Himachal Pradesh being a hill state has one of the highest hydro potentials available in the country. This

topography enables the state to play an important role in maintaining grid stability in the RE capacity

growth of the country. In our broad assessment, we observe the state has total balancing potential

of1876 MW which can be operated for a period of443 hours and in incidence a period after 443 hours the

state has residual balancing potential l of 1480 MW for an additional period of 725 hours. The lion’s share

of this potential comes from the Bhakra Nangal river valley project which in itself offers a balancing

capability of 1480 MW for 1168.24 hours. This can cater to a PLF of 13.34% thereby not affecting the

commercial operation of the plant.

Table 33 - Hydro Balancing Potential in HP

Hydro

project

installed

Capacity

(MW)

FRL(m) MDL(m)

Energy

available

per m of

water level

(KWh)

Run time at

Full

installed

capacity per

meter of

water

level(h)

Maximum

run time at

full installed

capacity (h)

PLF%

Bhakra

Nangal 1480 513 445.62 25660433.36 17.34 1168.24 13.34%

Page | LXXXVIII

Project

Pong

Hydro

project

396 426.72 384.05 4116709.63 10.4 443.59 5.06%

Page | LXXXIX

STAKEHOLDER CONSULTATIONS

Table 34 - Stakeholder Consultation in HP

S.No. Questions Asked Key Aspects Discussed

1 Power Scenario 420MW Hydro and Micro Hydro plants installed

623 MW drawl from interstate production but schedule for

central sector is 588MW

Peak demand is 1300MW

2 Issues with RPO

compliance

Hydro capacity in the state is sufficient to meet RPO obligations

Solar RPO targets are not met owing to lack of land for Solar

Installations. Setting up Solar/Wind power plants also raises

environmental concerns owing to damage caused to flora and fauna

Less than 1% of demand is met through solar power

3 Power evacuation

infrastructure

Large Hydro (Greater than 100MW) – Transmission by HPPCL,

evacuation by HPTCL, connected to central grid via ISGS line by

PGCIL

Small Hydro – Connected to state grid by HPSEB. Total

evacuation is between 11kV, 33kV and 66kV

Transmission losses are high

4 Over drawl/Under

drawl

Over/Under drawl is not more than 50MW

Electrical stress cannot be more than 150 MW

5 Demand forecast Less than 2% variation

Forecast is different in Mar-Apr & Sep-Oct owing to weather

conditions

Load demand is rising 5-7% year on year

6 Generation

Forecasting

On week ahead basis

Only 10% is day ahead

Weather forecast is taken from IMD

7 Scheduling Scheduling is done on the basis of historical data

All generators above 5MW give their schedule by 10am in the

morning

During monsoon season, small power plants can be asked to

back down

Possibility of stopping small hydro plants for 2-3 days during

lean months is nearly 100%

8 Need for

forecasting

To manage small hydro power plants

Weather and meteorological data needs to be simulated with

scheduling

Currently temperature is used as reference for forecasting. This

is insufficient

9 Targets 500MW of small hydropower in 5 years

250MW of solar plants

10 Way Forward Policy underway to aggregate small hydro power projects for

the purpose of better monitoring

This will also encourage more IPPs to invest in small hydro

plants

Ancillary services may be brought about by DISCOMs

Page | XC

11 Power

Procurement

At present, the certain power demand in HP is met through

bilateral arrangements while the uncertain power is procured through

IEX.

Page | XCI

Rajasthan

In Rajasthan, by Feb 2015 the installed capacity of 15787 MW mostly consisted of Coal, Hydro and RE.

Rajasthan peak demand had been nearly 10047 MW in 2014. In order, to meet the peak demand

tremendous efforts have been taken by the state in building capacities both in conventional and non-

conventional energy sources. The recently released Solar Policy 2014 aims at an ambitious target of

25,000 MW of installed Solar Power Generation capacity in Rajasthan. Rajasthan, by virtue of its

geography, enjoys the highest number of cloud-free days and high insolation ideal for generation of Solar

Power. In this regard, MOUs for 21000 MW capacities of Solar Parks have already been signed by the

Rajasthan government.

Rajasthan has a moderate share of total installed RE capacity which accounts for 9.2% of the total

installed capacity. However, the percentage of installed RE capacity is 24% of the state’s total installed

capacity. During Apr-14 to Feb-15, 1415 MW of RE capacity was added in Rajasthan.

The electricity peak demand for Rajasthan in 2014-15 was 10642 MW [27]. During the same year, the RE

installed capacity was 4386.25 MW [28]. As per the MNRE, the RE installed capacity in the state by

2021-22 is expected to increase to 14362 MW [29] which includes solar, wind, biomass and small hydro

plants. The electricity peak demand for 2021-22 is projected by CEA to increase to 19692 MW [30].

Figure below shows the peak electricity demand and the expected RE capacity for each year from 2014-

15 to 2021-22 obtained assuming linear growth every year. It can be observed from the table shown

below that in order achieve the 2022 RE installed capacity target of 14362 MW, Rajasthan has to

increase its RE capacity addition at 18.5% annually.

Figure 22: Electricity Peak Demand v/s installed RE capacity for Rajasthan

It can also be noted from this analysis that the percentage of

installed RE capacity in Rajasthan Peak demand in 2022 will be 73%.

Case 1: High load demand, high renewable generation - Assuming high RE generation (~70% of installed

capacity i.e. 10,000 MW) and high load demand (i.e. 19,692 MW) renewable energy will be able to cater

to almost 50% of the demand.

Case 2: Low load demand, high renewable generation - The 2014 hourly load data received from Gujarat

SLDC was linearly extrapolated using the 2022 peak demand to get the hourly load demand for 2022

(assuming the load profile remains the same). It was observed that during low load periods, the state load

0

5000

10000

15000

20000

25000

Electricity Peak Demand (MW)

Expected RE Installed Capacity (MW)

Rajasthan

Electricity

Peak

Demand

(MW)

Expected RE

Installed

Capacity

(MW)

2014-15 10642 4386.25

2015-16 11620 5196.16

2016-17 12688 6155.61

2017-18 13854 7292.22

2018-19 15127 8638.70

2019-20 16517 10233.81

2020-21 18035 12123.45

2021-22 19692 14362.00

Page | XCII

was projected to fall as low as 6500 MW. If the RE generation is high during such times, then the

renewable power might be able to cater to the complete state load and also might need to be exported

out of the state.

This clearly implies that robust transmission planning would be required to evacuate all the excess RE

generation power from this region. Also, the excess RE power generated would require a market

mechanism to wheel it to the RE deficit states. This also alarms a need for increasing the conventional

power for balancing the variable RE in order to assure a seamless grid integration and supporting RE

deficit states.

POLICY FRAMEWORK

Solar Policy

Rajasthan is blessed with solar radiation intensity of about 6-7 KWh/m2/day and more than 325 days

sunny days in a year with very low average rainfall. The state has the highest solar resource in India with

a potential of 142.31 GWp (Total Solar Resource Potential as estimated by NISE, MNRE report) and a

very aggressive RE growth plan for the state.

The JNNSM programme was the major driver for solar capacity addition in Rajasthan. This program

enabled the state to install about 432 MW and also influenced the Rajasthan Government to draft and

notify Solar Policy in 2011 which was recently amended to a revised version of Solar Policy 2014. The

table below lists down the solar capacity addition under the NSM by May 2015.

Table 35 - Solar Capacity Addition in Rajasthan under JNNSM

S.

No.

Name of Scheme Sanctioned

Capacity (MW)

Commissioned

Capacity (MW)

Capacity Under

Execution (MW)

1 Generation Based Incentive Scheme 8 8 0

2 National Solar Mission Phase -1

a. Migration 36 35 0

b. RPSSGP 12 12 0

c. NSM Phase -I (Batch-I) 100 100 0

d. NSM Phase -I (Batch-II) 300 285 5

e. NSM Phase -II (Batch-I) 375 295 80

Total 823 727 85

Rajasthan is one of the few states to completely fulfil the sanctioned capacity targets under the NSM. By

the end of July 2015, Rajasthan had an installed capacity of 1163.7 MW of solar energy which includes

capacity addition under NSM, state schemes, REC scheme, open access, private initiative and bidding

(solar parks).

The Rajasthan Solar policy 2014 came into effect from 8th October 2014 and shall remain in force until

superseded or modified by another policy. As noted above, the policy aims at solar installed capacity of

25000 MW. However, the year to achieve this target is not mentioned in the policy document. None the

less, after enforcement of this policy, Rajasthan has signed MOUs with different project developers to

develop Solar PV projects and Solar Parks with an installed capacity of almost 30,000 MW. The State will

promote development of Rooftop PV Solar Power Plants connected to LT under Net Metering Scheme as

well as decentralized and off-grid solar projects. Some of the incentives given by the policy are:

Page | XCIII

Easy land allotment as the security deposit is waived off for projects sanctioned under NSM or

through competitive bidding process by RREC / DISCOMs.

Availability of water shall be ensured by the Water Resource Department for power generation by

solar plants.

All solar power plants have been notified by the Rajasthan State Pollution Control Board as

Green Category projects and the consent applications for these projects will be issued within 15

days.

Solar power projects are allowed to bank their power as per the RERC regulations.

Penalty charges in case the solar projects are not completed as per schedule will encourage

setting up of new plants as planned.

Solar Power Projects in Rajasthan are also eligible to avail all the incentives available to

industrial units under Rajasthan Investment Promotional Scheme.

Wind Policy

The Rajasthan Policy for Electricity Generation from Wind Energy – 2012 came into operation with effect

from 18.07.2012. The policy was amended twice in 2012 and 2014 and will remain in force until

superseded or modified by another Policy.

As per the Indian Wind Atlas published by the National Institute of Wind Energy, the installable wind

resource potential in Rajasthan is 5005 MW and 5050 MW at 50m and 80m level respectively. At present,

Rajasthan has 3108 MW of installed wind capacity out of which, about 300 MW is installed in the last one

year. The Rajasthan wind power installation plan under the wind policy is given below. It can be seen that

the trajectory for wind power installation under this policy is limited to 2016 only.

Table 36 - Wind Capacity Addition in Rajasthan as per Wind Policy 2012

Year 2013-14 2014-15 2015-16

Wind power plants to be set up for

direct sale to DISCOMs of Rajasthan

300 MW 400 MW 500 MW

The incentives and benefits offered by the policy are:

Exemption from payment of electrical duty for the energy consumed by the Power Producer for

his own captive use.

Energy from wind power plants is sold directly to DISCOMs of Rajasthan from 2013-14 to 2015-

16 on preferential tariff up to extent of RPO of that financial year.

RREC will carry out wind resource assessment with participation of private developers.

Government land will be provided on temporary basis for a maximum period of 3 years for the

same.

Security amount is forfeited in the event of failure to adhere to the stipulated schedule of date of

commissioning or extension which promotes completion of projects on time.

TECHNICAL

Wind and solar power development in Rajasthan is close to 25% of the total installed capacity. Due to

this various technical issues faced by the developers to evacuate this power and maintain grid stability

and security at the same time. Some of these issues are briefly highlighted below.

The basic technical challenge comes from the variability of wind and solar power which affects the load

generation balance, varying demand for reactive power and impact on voltage stability. Most of the wind

Page | XCIV

generators installed in Rajasthan are induction type machines that absorb huge amounts of reactive

power during start-up and some reactive power during normal operating condition. Unlike doubly fed or

full-converter wind turbine generators, induction-based wind generators without converters are unable to

control reactive power. Since wind is a very variable source, the wind generators start multiple times in a

day, resulting in huge quantum of reactive power absorption from the grid. This causes voltage dips in the

grids at the points where these generators are located.

Rajasthan has an installed wind capacity of 3108 MW presently which is expected to grow to about 4200

MW by 2016-17. Variations in Wind resource have been recorded in the range of 1000 MW during the

peak season. Since Rajasthan has a limited hydro resource, it uses its thermal plants (coal and lignite) to

balance the wind variability in the State by reducing to the extent that they do not need oil support for

steady flame in the boiler. They also use their two gas-based stations, Ramgarh (113 MW) and Dholpur

(330 MW) for balancing. Since wind generators do not provide the required VAR support, over voltage

causes over-fluxing in transformers resulting in tripping.

Evacuation arrangement for RE resources is difficult owing to resource locations in remote areas where

the distribution grids are typically weak. This is especially problematic for small-capacity plants whose

size cannot justify creation of additional HV infrastructure. Even in case of large capacity clusters, the

laying of parallel evacuation infrastructure not only adds to costs but also to construction time. The major

concern for the state of Rajasthan is that the major solar and wind resource in the state lies in the

western part of Rajasthan which is far away from the load centres in Jodhpur, Jaisalmer and Bikaner.

This introduces huge transmission costs and losses which are to be borne by the state.

Further, solar generators produce power only during the day. At night, the transmission lines which are

dedicatedly for the solar power evacuation would be charged at no load. Also, it would be difficult to

maintain the voltage of the lines. If these lines are made open (i.e. circuit breaker is open), there is a very

high chance of theft of conductors. Therefore, if provision of storage is available with solar plants, at least

a small amount of power can flow at night as part of the reserve power.

Table below lists down some of the existing transmission system constraints in Rajasthan.

Table 37 - Existing Transmission Constraints in Rajasthan [12]

Transmission Line

Constraints

1. 220kV Bhiwadi-Rewari (Bus split) & 220kV Bhiwadi-Mau - Both these

circuits are connected to Haryana and import of power from Haryana

is restricted through bus split.

2. 220kV Bhiwadi-Bhiwadi Raj D/C line is always loaded.

Delay in transmission

lines affecting grid

operation

1. Evacuation path for Kawai TPS (2X660 MW) and Kalisindh TPS

(2X600 MW)

2. 765kV Phagi-Gwalior: Strengthens WR - NR interconnection

Available Hydro Balancing Potential

It can be observed that the state has only one hydro power plant, RP Sagar complex which can be used

for grid balancing. In our broad assessment of t balancing potential which was calculated on the average

FRL and MDL for a period of 13 year, we can assess that271 MW of balancing capacity for a period of

648.1 hours per annum is available. This can cater to a PLF of 7.4% of its installed capacity. However, it

is observed that there is limitation on balancing due to lack of water availability. The balancing capacity of

the state is also further limited by the fact that the benefits of the project are shared with other states,

thus allowing only a fraction of the available potential to be used in the state.

Page | XCV

Table 38 - Hydro Balancing Potential in Rajasthan

Hydro project

Installed

Capacity

(MW)

FRL

(m)

MDL

(m)

Energy

available

per m of

water level

(KWh)

Run time at

Full installed

capacity per

meter of

water level

(h)

Maximum

run time

at full

installed

capacity

(h)

PLF %

RP Sagar complex 271 352.81 343.83 19561247.22 72.18 648.19 7.40 %

FISCAL

With the increase in the generation capacity likely to be added to the Rajasthan network in the future, a

robust transmission planning is required at both the central and state level to evacuate this power to other

states and also for effective utilization within Rajasthan. Under the 12th Five Year plan, the evacuation

system for Chhabra Super Critical TPS unit 5 & 6, Kalisindh TPS Unit 1 & 2, Suratgarh Super Critical

TPS Unit 7 & 8, Kawai Super Critical TPS and Ramgarh TPS is already under progress. Transmission

system for the new Solar and Wind Power Projects is also part of the plan. The government also has

plans for the construction of 220 KV & 132 KV Sub-stations and its connecting lines and increasing the

capacity of existing Grid Substations. The government of Rajasthan has allocated INR 12,500 crores for

the building and strengthening of the transmission system within the state. Also, about INR 3044 crores

have been allocated for the strengthening of sub-transmission and distribution system.

STAKEHOLDER CONSULTATIONS

Table 39 - Stakeholder Consultation in Rajasthan

S.No. Questions Asked Key Aspects Discussed

1 RRF and DSM

Mechanism

RRF should be made mandatory - commercial penalty should

be imposed on RE generators to maintain grid discipline.

DSM band should be relaxed for the RE rich states. A

relaxation of UI should be made for a fixed percentage (say

about 30%) of the total RE installed in these states.

2 Forecasting and

scheduling

Must for RE.

No solar or wind forecasting is happening. Quality of forecast

submitted by a few wind developers is too low as there is no

commercial penalty.

Solar forecasting available from NVVN for 1 hr intervals as it is

to be traded to other states. The quality of forecast is within

30%.

Scheduling to be done at the pooling station level (i.e. by the

coordinating agency) and not at the developer level as defined

in the regulation.

Pilot project for forecasting solar, wind and conventional

generation has taken place in the past.

3 Balancing Should be done at the regional level. And then also at the

national level if required.

NLDC should have control over some hydro and gas based

plants (reserve capacity) and to settle the imbalance at the

RLDC and SLDC.

Solar plants can be instructed to store a small % of the power

Page | XCVI

produced during the day (10-20%) and use it at night for

balancing the conventional and wind generation.

4 Power evacuation

infrastructure

High transmission losses due to long distance between RE

generation location and load centres.

No power production by solar during night which causes high

voltage and reactive power flow in the transmission lines. If the

lines are disconnected, chances of theft increase.

Storage can be introduced in solar plants and so that a small

amount of power will flow at night as part of reserve power.

5 Functionality of

REMCs

REMCs should be co-located with SLDC.

Balancing required at the regional level as Rajasthan does not

have enough hydro and conventional capacity for balancing.

6 Way Forward Need a robust market mechanism to sell the extra power to

other states.

Evacuation infrastructure required to export the RE power

within and outside the state.

Page | XCVII

Karnataka

Karnataka has a total generation capacity of 15433.7MW; the state has a peak demand of 10,772 MW

with a combined at a net domestic product growth of 7%. Non-conventional energy capacity of the state

is 30.7% of the total installed capacity; this includes 2622 MW of wind power and 1257MW of biomass

and cogeneration. Karnataka as a state has a very high fraction of its energy coming from non-

hydrocarbon sources.

Total Non-Conventional energy installed in the state is 14.8% of the national total. The state has an

estimated unexploited non-conventional potential of 19315 MW out of which currently only 24.5% has

been exploited till date, this gives the state immense potential for future development of non-conventional

technologies.

The electricity peak demand for Karnataka in 2014-15 was 10001 MW [27]. During the same year, the RE

installed capacity was 4510.23 MW [28]. As per the MNRE, the RE installed capacity in the state by

2021-22 is expected to increase to 14817 MW [29] which includes solar, wind, biomass and small hydro

plants. The electricity peak demand for 2021-22 is projected by CEA to increase to 18403 MW [30].

Figure below shows the peak electricity demand and the expected RE capacity for each year from 2014-

15 to 2021-22 obtained assuming linear growth every year. It can be observed from the table shown

below that in order achieve the 2022 RE installed capacity target of 14817 MW, Karnataka has to

increase its RE capacity addition at 18.5% annually.

Figure 23 - Electricity Peak Demand v/s installed RE capacity for Karnataka

The above graph clearly depicts that the installed RE capacity will nearly be 89% of the total electricity

peak demand by 2022. This indicates that the state will have ample amount of renewable capacity

addition. Though Karnataka has ample hydro capacity, it may not be sufficient to balance the RE peak

generation and might call for the need for conventional capacity for balancing the variable RE. A robust

transmission infrastructure to evacuate the extra RE and an efficient policy and market mechanism would

also be required for trading the RE power with other states.

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

Electricity Peak Demand (MW)

Expected RE Installed Capacity (MW)

Karnataka

Electricity

Peak

Demand

(MW)

Expected

RE Installed

Capacity

(MW)

2014-15 10001 4510.23

2015-16 10911 5345.56

2016-17 11905 6335.60

2017-18 12988 7509.00

2018-19 14170 8899.73

2019-20 15460 10548.03

2020-21 16868 12501.60

2021-22 18403 14817.00

Page | XCVIII

POLICY FRAMEWORK

Solar Policy

The state of Karnataka is blessed with 240-300 sunny days with good solar radiation of about 5.4 – 6.2

kWh/m2/day. Karnataka had launched its Solar Policy 2011-16 in 2011 to tap the solar potential available

in the state. However, a revised policy was launched in 2014 before the expiration of the old policy to

aggressively aim for higher targets in line with the JNNSM.

Karnataka has launched its revised Solar Energy Policy 2014-2021 - Order No. EN 21 VSC 2014 dated

22-05-2014 issued by Energy Department, Government of Karnataka. The policy came into effect from

2014 and shall remain in force until 2021 or till any changes are made in the policy by the State

Government. The major objective of the policy is to install a minimum of 1600 MW of grid connected

utility scale solar power projects by 2021 and 400 MW of grid connected roof-top projects by 2018.

Some of the incentives allowed under the policy are:

Industrial consumers who choose to draw power from Solar Power Projects under REC

Mechanism, Captive Generation and Independent Power Producer (IPP) projects shall be

allowed corresponding pro-rata reduction in contract demand on a permanent basis. This

decision, however, shall be subject to the final judgement of Karnataka Electricity Regulatory

Commission (KERC).

Pollution control board clearances shall not be required for Solar PV projects.

As per the Karnataka Industrial Policy, tax concessions shall be provided for entry tax stamp duty

and registration charges.

Central Excise Duty and Custom Duty exemption (Central incentives/concessions allowed by

MNRE) shall be applicable to the solar power producers.

Wind Policy

Karnataka has the second highest installable wind potential of 8591 MW at 50m height in India.

Karnataka RE Policy 2009-14 vide no. EN 354 NCE 2008 Bangalore, dated 19.01.2010 and amendment

order no. EN 76 EMC-2/2010 dated 06.05.2010 was launched in 2010 and was valid up to five years till

2014. Since the operative period of the existing policy is over, no new wind policy is introduced by the

Karnataka Government. Further, there is no clarity if the same policy is being followed for the present

projects.

REGULATORY FRAMEWORK

Tariff

As per the revised KERC order for the new tariff and open access charges for 2015-16, the tariffs have

been increased for both industrial and commercial consumers by 15 paisa/unit and 20 paisa/unit

respectively. The new tariff will have a direct impact on the open access customers due to the steep

increase in the cross subsidy surcharge. E.g. – For HT industrial consumers connected at 11/33 KV and

paying earlier paying cross subsidy of 7 paisa/unit will now pay almost 63 paisa/unit. This will discourage

purchases from IPP, Bilateral contracts and power exchange. However, on the other hand, it will open up

new opportunities for solar power transactions where cross subsidy surcharge is zero.

TECHNICAL

One of the major concerns for Karnataka Power Transmission Corporation Limited (KPTCL) is the

acquisition of land for the establishment of sub-stations and procuring right of way (RoW) for drawing

transmission lines. As per the Karnataka RE Policy 2009-2014, Karnataka RE Development Limited

(KREDL) will sublease the developed lands to the RE Developers for a period of 30 years. After this

Page | XCIX

period, the project will be renewed for a period of 5 years at a time after the lease period subject to

fulfilment of conditions stipulated by the Government. Also, as per the recent Karnataka Solar Power

Policy 2014- 2021, the state government plans to facilitate deemed conversion of land for solar projects

by amending section 95 of Land Reforms Act. The solar developers in Karnataka are allowed to start the

project execution without waiting for formal approval on filing application for conversion of agricultural

land. Despite such relaxed rules by the state government, RoW remains a major issue.

In 2011-12, the transmission and distribution losses in Karnataka were in the order of 19.98%. The higher

the losses, higher would be the transmission charges to transfer the power from one point to another.

With the addition of RE into the system in the future, the transmission charges would increase further.

Under the 12th Five Year Plan, the Government of Karnataka plans to reduce these losses to 15%.

Never the less, the state has to introduce mandatory and periodic assessment of losses at all levels of

the system.

Table below lists down some of the existing transmission system constraints in Rajasthan.

Table 40 - Existing Transmission Constraints in Karnataka [12]

Transmission Line

Constraints

In Karnataka, presently following transmission lines are overloaded:

1. 400kV Hiriyur-Nelamangala DC line

2. 220 kV Bangalore Metro Network

3. 220 kV Sharavathy-Shimoga lines (4 nos.) and 220 kV Sharavathy-

Talaguppa D/C

Expected Transmission

Constraints

High loading on transmission lines downstream of Raichur due to high import

on 765kV Raichur-Sholapur lines and high wind generation in Karnataka.

Delay in transmission

lines affecting grid

operation adversely

1. 400kV Mysore-Khozhikode DC line

2. 400kV Gooty-Madhugiri DC line & 400kV Madhugiri-

Yelahanka DC line

Available Hydro Balancing Potential

It is observed from the above analysis that the state of Karnataka has the highest balancing potential

among the six states evaluated. Karnataka’s utilizable capacity is only marginally higher than AP’s 2635

MW at 2659.2 MW the total water storage capacity of its reserves is significantly higher hence the state is

inferred to have the highest endurance for balancing RE among the six states evaluated. Karnataka has

a balancing potential of 2659 MW with an endurance of 604 hours, followed by an additional endurance

of 2369 MW and 955 MW for 2500 hours and 1005 hours respectively. Karnataka is predicted to emerge

as a major player in stabilizing the grid using its substantial hydro power resources.

Page | C

Table 41 - Hydro Balancing Potential in Karnataka

Hydro

project

installed

Capacity

(MW)

FRL(m) MDL(m) Energy

available

per m of

water level

(KWh)

Run time at

Full

installed

capacity per

meter of

water

level(h)

Maximum

run time at

full installed

capacity (h)

PLF%

Sharavati

HPS

1414.2 554.23 522.73 139492063.5 98.63672995 3107.056993 35.47%

Supa HPS 955 564 513.5 77762376.24 81.42657198 4112.041885 46.94%

Almatti

HPS

290 519.6 511.1 20623529.41 71.11561866 604.4827586 6.90%

FISCAL

Major constraints faced by the Karnataka government included shortage of power and lack of access to

the available power. The fiscal commitments of the state in the energy sector are aligned with these

constraints only.

1. In Karnataka, some of the power generation projects are stalled due to unavailability of coal

blocks or coal linkages. The state government has sought for the assistance of the Planning

Commission in this regard to provide long-term coal linkages to power generation companies.

2. Capacity addition of 8290 MW is planned during the 12th Five Year Plan period which will incur a

cost of Rs. 40,000 crore. The state government is encouraging the private sector to participate in

power sector through bid route and has planned to install a number of power projects. Some of

these projects for which applications have been submitted to the Ministry of Coal for allocation of

Coal Linkage include:

a. Yeramarus Thermal Power Station (2 x 800 MW)

b. Yedlapur Thermal Power Station (1 x 800 MW)

c. Godhana Thermal Power Station at Chhattisgarh (2 x 800 MW)

d. Bellary Thermal Power Station-Unit-3 (1 x 700 MW)

Further, two coal based thermal power projects at Gulbarga and Ghataprabha with a capacity of

1320 MW each have been proposed for implementation under competitive bidding route, Case –

2.

3. Karnataka has requested the Central Government for allotment of gas at affordable prices.

Karnataka Power Corporation Limited (KPCL) has planned for addition of two gas based plants in

Bidadi (2 x 700 MW) and Tadadi (3 x 700 MW). It is also proposed to install Gas Based Power

Projects along the Dabhol-Bangalore gas line.

Page | CI

4. Construction of hydro generating stations and transmission lines are facing major environmental

clearance constraints. The state has requested the Centre for time bound clearance to speed up

the resolving of environment related issued.

5. The transmission and distribution losses in Karnataka’s T&D system were in the order of 19.98%

in 2011-12. The government has planned to reduce these losses to 15% by 2013‐-14

STAKEHOLDER CONSULTATION

Table 42 - Stakeholder Consultation in Karnataka

S.No. Questions

Asked

Key Aspects Discussed

1 Balancing

potential

Almost 3500 MW of installed Hydro capacity in the state.

Approximately 2500MW of the installed hydro potential can be

utilized for balancing:

o Sharavathy hydro plant has installed capacity of 1035 MW

which can be varied between 20-1035 MW in 5 mins.

o Hydro potential leveraged from Nagjhari hydro power plant

can vary between 0-850 MW.

o Hydro potential leveraged from Varahi hydro power plant

can vary between 60-400 MW.

Presently, Karnataka has 1850 MW of installed wind capacity with

lowest generation from wind going down to 9MW.

Existing hydro can easily balance the variations in wind.

Fluctuation in the generation of MPPs and IPPs in the state is also

handled by hydro.

2 State

demand

Total demand of 60,000 MU out of which 13.000MW is catered by

state owned conventional hydro plants.

3 Managing

excess RE

Variations in RE are handled by varying output of hydro power

plants.

When generation from RE is highest, thermal plants (cheapest

power, Rs. 2.3/unit) are backed down.

Page | CII

Andhra Pradesh

Andhra Pradesh as a state has a total generation (Residual after bifurcation of state) capacity of

10628.22 MW mostly consisting of coal and hydro. RE contribution is minimal. Andhra Pradesh peak

demand had been nearly 6600 MW as of 2014. Andhra Pradesh has a planned capacity expansion of

7749 MW by FY 18-19 inclusive of state, private and central generation utilities as-per the “Power for all”

initiative by the Governments of India and Andhra Pradesh. The state has 1747.6 MW of hydro capacity,

small quantities of solar and almost no installed capacity in wind (2 MW). The state is estimated to have

large potential for development of solar and wind resources.

Total Non-Conventional energy installed in the state is 0.7% of the national total, and it is 14% of the total

power installed in the state. The state has very low RE capacity but its geographical features give it

immense exploitable potential in the form of a 972 Km coastline and sunshine for almost 300 days a year.

The electricity peak demand for AP in 2014-15 was 7144 MW [27]. During the same year, the RE

installed capacity was 1946 MW [28]. As per the MNRE, the RE installed capacity in the state by 2021-22

is expected to increase to 18477 MW [29] which includes solar, wind, biomass and small hydro plants.

The electricity peak demand for 2021-22 is projected by CEA to increase to 33194 MW [30]. Figure below

shows the peak electricity demand and the expected RE capacity for each year from 2014-15 to 2021-22

obtained assuming linear growth every year. It can be observed from the table shown below that in order

achieve the 2022 RE installed capacity target of 18477 MW, AP has to increase its RE capacity addition

at 38% annually.

Figure 24: Electricity Peak Demand v/s installed RE capacity for AP

It can also be noted from this analysis that the percentage of installed RE capacity in AP’s Peak demand

in 2022 will be 56%. This however, emphasizes that there should be sufficient Conventional and hydro

capacity for balancing the intermittent RE and indicates urgency for adequate evacuation infrastructure

and efficient policy & market mechanism. We understand that conventional capacity will grow

correspondingly. This emphasizes on the need for establishing a market mechanism to facilitate the

seamless growth and integration of RE capacity on the grid.

0

5000

10000

15000

20000

25000

30000

35000

Electricity Peak Demand (MW)

Andhra Pradesh

Electricity

Peak

Demand

(MW)

Expected RE

Installed

Capacity

(MW)

2014-15 7144 1946

2015-16 8897 2684.01

2016-17 11080 3701.91

2017-18 13799 5105.83

2018-19 17185 7042.19

2019-20 21402 9712.90

2020-21 26654 13396.47

2021-22 33194 18477.00

Page | CIII

POLICY FRAMEWORK

Solar Policy

Andhra Pradesh has about 300 sunny days in a year with a solar insolation of 5kWh/m2/day. To meet the

twin objectives of energy security and clean energy, the GoAP has found it necessary to come out with a

new policy for solar power. The policy aims to promote widespread usage of solar power and is keen to

tap the immense solar potential of the state. The government is targeting a capacity of 5000 MW in the

next 5 years.

Operative period of the policy is 5 years from 12/2/2015 and the benefits will be available for up

to 10 years from the date of commissioning. Given that the plant is commissioned in the

operating period of the policy

Eligibility: any company/Partnership/Consumer of AP DISCOMS is eligible

GoAP is promoting projects of up to 2000 MW for exclusive supply to AP DISCOMS and setting

up solar parks of total 2500 MW capacity in a phased manner over the next 5 years. They have

also incentivized the setting up of manufacturing and training facilities for solar.

The government is promoting Gross/Net metering for rooftop solar projects with incentives for up-

to 25 years. Developers can also avail additional subsidy under JNNSM

Incentives from the state government:

The below incentives will be provided to the eligible developers for the promotion of solar energy

Distribution losses shall be exempted for solar power projects injecting at less than 33 kV

Projects developed with the above incentives will also be eligible for REC

Deemed Industry status to the generation of solar power

Land allocated to solar power projects will be deemed non-agricultural on the payment of the

requisite fees

Must run status: All generation from a solar power plant will be considered scheduled

Solar PV projects will be exempted for any pollution control laws under the AP state pollution

control board.

NREDCAP will function as the nodal agency and will facilitate acquiring revenue land, power evacuation

and/or open access, water allocation from concerned departments, coordinate in getting the required

clearances and approvals from the concerned departments. A onetime migration opportunity will be

extended to all solar projects established under the 2012 policy other than those with existing PPAs and

those that have not been commissioned before 30th June 2014. For facilitation the development of the

solar power ecosystem and job creation in the region, the policy provides for land allocation on a priority

basis to manufacturers and an exemption from electricity duty for a period of 10 years.

Andhra Pradesh policy for solar development is a new policy and its outcomes can only be analysed after

the performance of the policy has been observed over an extended period. The policy is a significantly

improved and comprehensive. It appears to have addressed many major roadblocks in meeting the

capacity addition targets for 2022. The policy lays significant emphasis on the development of off grid

solar rooftops projects via the net metering route. There is a significant policy push in terms of financing

and un-complicating of procedures (NREDCAP) towards setting up of grid connected solar projects.

There are no policy elements that focus on the development of solar thermal which has no installed

capacity in the state.

Wind Policy

Page | CIV

Andhra Pradesh as estimated by the NIWE has a total wind potential of 14,497 MW at a hub height of

80m. The wind power policy for the state of Andhra Pradesh was notified on the 13th of February 2015

and is applicable to all projects that are yet to be commissioned. This policy is a successor to the

previous policy which expired in April 2013. The targets of the policy are to set up a 4000 MW wind

generation capacity over the next 5 years, promote the setting up of manufacturing for WEG related

technologies and attract private investment. The policy will operate for a period of 5 years and the

projects commissioned under it shall be eligible for benefits for a period of 10 years from the date of

commissioning.

Table 43 - Categorization of wind power projects as-per AP wind policy 2015

Category

I

Projects setup on

government/revenue lands or

assigned forest areas, also on

private lands selling power inside

the state

Advance possession of land to NREDCAP and

Developer Jointly by the district collector

NREDCAP will withdraw its rights from the land

once the project is commissioned

For projects in private lands the developers will

have to procure the land on their own accord

Category

II

Projects setup for captive/group or

third party use, for sale within or

outside the state

No cap on capacity

They will qualify for REC subject to meeting all

other regulations

Category

III

Projects setup under the REC

mechanism for sale of power at

average pooled power cost

No cap on capacity

Registration with state and central accreditation

agencies will be needed for issue of REC

certificates

Power shall be purchased at average pooled

power cost

Wind power projects can be established at sites notified by NIWE or a private survey may be conducted

on obtaining approval from the government for the same. There is a capacity approval cap of 40 MW for

projects approved by nodal Agency (NREDCAP). Projects with higher planned capacities will have to

obtain approvals from GoAP. The policy also promotes the setting up of solar and wind hybrid projects for

better land utilization and repowering of WEGs which are 15 years or older subject to amendment of PPA

for a period of another 25 years.

Key Incentives provided under the policy:

No T&D charges for power supplied within the state, APERC defined rates will be charged to

power sold outside the state.

100% energy banking facility at 2% is provided for all 12 months. The banked energy cannot be

withdrawn during peak months or peak hours of the day. Unutilized banked power will be

considered sold to DISCOM at APPC.

Open access clearance is provided for the complete life of the project or 25 years whichever is

earlier.

Wind power generated will not be charged electricity duty for power sold to AP DISCOMs.

Deemed PPP, Industry status awarded, Must run status awarded, No clearance from pollution

control board and automatic conversion of land to Non agricultural

NREDCAP will be the nodal agency and will function as a single window clearance system,

maintaining accountability on the timelines of implementation of regulations. The policy also

enables and facilitates the setting up of WEG manufacturing in the state as a long term initiative.

Page | CV

The policy has been notified on the 15th February 2015 and its outcomes can be analysed only after an

extended period of time. The policy aims to boost the currently negligible wind penetration in the state. It

is a first among the state policies which promotes the development of wind and solar hybrid projects. The

policy is comprehensive and appears to have addressed most major road blocks in achieving the 4000

MW capacity addition over the next 5 years.

REGULATORY FRAMEWORK

Open Access

Open access in the state of Andhra Pradesh until recently was very lucrative as average power costs for

open access were in the range of 4.5 to 5.5 Rs. These were the rates when power was being purchased

on the exchange. As of 2015 the GoAP has introduced the Cross Subsidy Surcharge which is now a

major deterrent in the penetration of open access in the state. The Cross Subsidy Surcharge increases

the average power cost to the range of 6.6 to 9.2 Rs via the open access route. This regulation however

is a boon for solar energy as the Andhra Pradesh Solar policy 2015 gives solar projects an exemption

from paying the Cross Subsidy Surcharge. Wind energy and other renewable however are not included in

the exemption. This combination of policy and regulations will lead to a skewed development in RE as it

will boost the installation of solar capacity and pose a hindrance in the development of wind and other

renewable.

Grid Connectivity and Evacuation Facility

The power generated from the solar project should be at an appropriate voltage before injection into the

substation or the interconnection point. The cost of setting up this infrastructure is to be borne by the

developer of the project. The project developers will be exempted from paying the supervision charges

for the project’s internal power evacuation infrastructure up-to the interconnection point. AP Transco or

DISCOMS will dispose the proposals for technical feasibility within a period of 14 days from the receipt of

the application; any strengthening in the upstream infrastructure is to be borne by

APTRANSCO/DISCOMS on a priority basis.

The wind power projects are exempted from paying supervisory charges to APTransco/ DISCOM for the

evacuation infrastructure up-to the pooling substation. Any upstream strengthening cost is to be borne by

APTransco/ DISCOM on a priority basis.

The above regulations make projects in RE more viable. This is because the cost of setting up the

transmission as well as operating it would significantly alter the returns of small power producers. The

regulation however will not have a significant effect on large power producers as the evacuation costs will

be smaller fractions of their total project cost.

TECHNICAL

Seasonal variation of power plant supply causes biggest integration challenge in AP. During the three

month of monsoon reservoirs are filled and start spilling over. Reservoirs reach level of 90% from July

until September (rainy season) and thus, hydro power becomes must-run during this period. The monthly

average of wind power production during these months is also high. To further complicate the problem,

during this season the electricity demand is low due to lower agricultural consumption (water pumps), low

heating and cooling load. Therefore to integrate RE, conventional units are backed down to 70% part-

load limit. Further, shut-down of units (especially expensive ones) for maintenance is done in

monsoon/rainy season.

Page | CVI

After the split of Telangana and Andhra Pradesh, AP operates around 10 GW of power plant capacity,

including around 800 MW of hydro power plants. In the present situation, the impact from RE is quiet low

as the capacity is relatively small (PV ~125 MW, Wind ~900 MW). Though solar plants provides an

almost steady power output due to good resource potential in the state, the variations of 200-300 MW per

day have been observed due to wind power. Additionally, before the state split large amounts of hydro

capacity could be used to balance the RE, which are now located in Telangana. Looking at the ambitious

future RE capacity addition plans of AP, integration of RE could be a challenge as alternate means of

balancing will have to be evaluated. Some of the present transmission system constraints faced by the

state have been listed in the table below.

Table 44- Existing Transmission Constraints in AP [12]

Transmission Line

Constraints

Constraints in Coastal and South AP: The Southern and coastal AP loads

have increased and with increased generation at Rayalaseema TPP (5 units

on bar at present, 220 MW each and 5th unit has been added without

augmenting the evacuation which was designed for 2 units of 220 MW).

Expected Transmission

Constraints

High loading on 400kV Srisailam- Karnool SC line - With full generation in

Srisailam left bank, the flow on 400kV Srisailam-Karnool SC line exceeds 650

MW.Depending on gas availability in Vemagiri complex, the flow on this line

would exceed 800 MW. New generations coming up at Vemagiri complex and

at Srikakulam also need to be accommodated in the future.

Delay in transmission

lines affecting grid

operation adversely

400kV Vijayawada-Nellore DC line: Constraint on existing 400kV Vijayawada-

Nellore DC line, if Vemagiri complex generation increases.

Available Hydro Balancing Potential

Andhra Pradesh has a low installed RE capacity in comparison to the other resource rich states in the

country. Andhra Pradesh has a significant balancing potential of 2635 MW which is available for a period

of 926 hours and in addition a potential of 965 MW for a period of 522 hours, this potential is available

from Srisailam HPS and Nagarjun Sagar at 1670 MW and 965 MW respectively. The state is inferred to

have one of the longest endurance for balancing RE owing to its significant utilizable capacity and large

reservoirs which can sustain the balancing for longer durations than the plants in the 6 other states

analysed.

Table 45 - Hydro Balancing Potential in AP

Hydro

project

Installed

Capacity

(MW)

FRL

(m)

MDL

(m)

Energy

available

per m of

water level

(KWh)

Run time at Full

installed

capacity per

meter of water

level(h)

Maximum

run time at

full installed

capacity (h)

PLF %

Srisailam 1670 269.74 243.84 59768339.77 35.79 926.95 10.58%

Nagarjun

Sagar 965 179.83 150.89 48306841.74 50.06 1448.70 16.54%

Page | CVII

FISCAL

Gas shortage for existing and upcoming power plants: The GoAP has requested the Central

Government to allocate gas for the existing and new projects - Karimnagar gas based project

(2100 MW) and Shankarapally gas based project (1000 MW).

Shortage of coal to APGENCO and NTPC Simhadri thermal plants: GoAP has requested MCL

AND Coal India Limited (CIL) to supply the coal as per the agreement. Further, Long Term Coal

Linkages will be required for the upcoming new projects like Sattupally TPP (600 MW), IGCC at

Dr. NTTPS (182 MW), Vadarevu Mega TPP (4000 MW) and RTPP Stage IV (600 MW).

Transmission corridor constraints: The AP Government has requested for the enhancement of

transmission corridor capacity for seamless transfer of power.

Page | CVIII

STAKEHOLDER CONSULTATION

Table 46 - Stakeholder Consultation in AP

S.

No.

Questions

Asked Key Aspects Discussed

1

RRF and

DSM

Mechanism

60-70% of the wind farm operators provide a schedule though it is not

used in system operation due to poor quality.

2

Forecasting

and

scheduling

Solar energy is regarded as quiet predictable given 300 days of

sunshine.

Wind patterns are derived from met mast results and based on rough

predictions made by the staff of SLDC.

3 Issues with

Balancing

Shortage of gas - only 300 MW is used out of installed capacity of 2700

MW of gas plants.

Only two relevant hydro power stations - one is used as base load plant

and other can be used as peak power plant. No pumped storage

available in AP.

Water release is regulated and demanded by government in the following

priorities (drinking, irrigation, electricity)

Balancing power in the monsoon season is the most difficult due to the

following reasons:

o During rainy season electricity demand is low due to lower

consumption by agriculture (water pumps), low heating and

cooling load

o The monthly average wind power production during these

months is high(8-14 MU per day)

o During monsoon season hydro power becomes must-run to

avoid water spilling from the reservoirs.

Thus, during the monsoon months, using the wind power within the state

becomes a challenge.

To balance RE, conventional units are backed down to 70% part-load

limit, shut-down of units for maintenance is done in monsoon season

Retro-fitting of conventional units for reducing the technical limit of

operation is estimated to take 1 year during which no spare capacity is

available with the state.

PPAs allow only one revision instruction per day to the thermal units,

second instructions costs extra. This is increasing the cost for balancing.

4 Managing

excess RE

Excess RE is sold to the Indian Energy Exchange if the price is higher

than the FIT (around 3 MU out of 35 MU of RE have been sold last year)

Page | CIX

Annexure 2 – Installed Power Capacities for States

Table 47 - Installed Capacity in Himachal Pradesh in MW (As on 31st January, 2015) [1]

Coal 152.02

Diesel 61.88

Gas Stations 0.13

Total Thermal 214.03

Nuclear 34.08

Hydro 3206.54

RES 638.91

State 1032.64

Private 1748

Central 1312

Total Installed Capacity 4093.56

Table 48 - Installed Capacity in Gujarat in MW (As on 31st January, 2015) [1]

Coal 15738.27

Diesel 17.48

Gas Stations 6906.09

Total Thermal 22661.84

Nuclear 559.32

Hydro 772

RES 4430.20

State 7596.70

Private 17194.80

Central 3631.86

Total Installed Capacity 28423.36

Page | CX

Table 49 - Installed Capacity in AP in MW (Residual after bifurcation) as on 31st Nov, 2014

Installed Capacity in AP (after bifurcation)

Conventional (In MW)

Hydro State owned 1747.60

Thermal State owned 2810

Gas Stations (Joint Ventures) 272

Private thermal (gas) 2494.70

Mini Power plants (private) 78.79

Total Achievement 7403.09

Non-Conventional

Wind (total State + Private) 895.12

Solar (Private) 126.85

Biomass, Co-Generation (total State + Private) 421.14

Others (Gas Wells + Waste Heat + Industrial Waste + Municipal waste) 59.70

Total Achievement 1502.81

TOTAL 8905.59

Central Power plants total share to state 1633.22

TOTAL INSTALLED CAPACITY 10620.12

Page | CXI

Table 50 - Installed Capacity in Karnataka in MW

Installed Capacity (in MW)

Conventional

State Owned [22]

Hydro 3542.40

Thermal 2720.00

Diesel 108.00

Central generating stations [23]

Thermal 1361.30

Nuclear 477.00

Unallocated quota 309.3

Privately owned [1]

Thermal 2060.00

Diesel 106.50

Current Achievement 10684.50

Non-Conventional [24]

Wind (total State + Private) 2622.44

Small Hydro 785.21

Biomass, Co-Generation (total State + Private) 1257.58

Solar 84.00

Current Achievement 4749.23

TOTAL 15433.73

Page | CXII

Table 51 - Installed Capacity in Rajasthan in MW (As on 28th Feb 2015)

Installed and Firm Capacity

Conventional Installed Capacity (In MW) Firm capacity available to

Rajasthan (MW)

RVUN – Thermal 4590.00 4590.00

RVUN – Gas 603.50 603.50

RVUN – Hydro 163.85 163.85

Shared – Thermal 250.00 100.00

Shared – Hydro 3252.30 847.95

Central Gen Stations – Thermal 11740 1404.41

Central Gen Stations – Gas 1912.45 221.10

Central Gen Stations – Hydro 7137.22 646.22

Central Gen Stations – Nuclear 1620.00 556.74

Private Plants 9040.00 2924.00

Current Achievement 40309.32 12057.77

Non-Conventional

Wind 3108.045 3108.045

Biomass 114.300 99.300

Solar 858.100 521.600

Current Achievement 4048.445 3728.945

Total 44389.77 15786.72

Page | CXIII

Annexure 3 – Renewable Purchase Obligation Database for States

State /Union

Territory RE Technology

RPO Target for

2014-15 (MNRE,

Indian Renewable

Energy and

Energy Efficiency

Policy Database -

Renewable

Purchase

Obligation 2014-

15, 2015)

Load Demand

Met (in MU)

(Authority,

Load

Generation

Balance Report

2015-16, 2015)

RPO Requirement =

State’s Total RPO target

x Load Demand Met

(in MU)

Andaman &

Nicobar

Solar 0.40%

180

0.7

4.7

5.4

Non Solar 2.60%

Total 3.00%

Andhra

Pradesh

Solar 0.25%

56,313

140.8

2674.9

2815.7

Non Solar 4.75%

Total 5.00%

Arunachal

Pradesh

Solar 0.20%

610

1.2

41.5

42.7

Non Solar 6.80%

Total 7.00%

Assam

Solar 0.25%

7,926

19.8

535.0

554.8

Non Solar 6.75%

Total 7.00%

Bihar

Solar 0.75%

18,759

140.7

797.3

938.0

Non Solar 4.25%

Total 5.00%

Chandigarh

Solar 0.40%

1,616

6.5

42.0

48.5

Non Solar 2.60%

Total 3.00%

Chhattisgarh

Solar 0.75%

21,230

159.2

1273.8

1433.0

Non Solar 6.00%

Total 6.75%

Dadra & Nagar

Haveli

Solar 0.40%

5,304

21.2

137.9

159.1

Non Solar 2.60%

Total 3.00%

Page | CXIV

Daman & Diu

Solar 0.40%

2,086

8.3

54.2

62.6

Non Solar 2.60%

Total 3.00%

Delhi

Solar 0.25%

29,106

72.8

1731.8

1804.6

Non Solar 5.95%

Total 6.20%

JERC (Goa &

UT)

Solar 0.60%

3,932

23.6

106.2

129.8

Non Solar 2.70%

Total 3.30%

Gujarat

Solar 1.50%

96,211

1443.2

7215.8

8659.0

Non Solar 7.50%

Total 9.00%

Haryana

Solar 0.25%

46,432

116.1

1393.0

1509.0

Non Solar 3.00%

Total 3.25%

Himachal

Pradesh

Solar 0.25%

8,728

21.8

872.8

894.6

Non Solar 10.00%

Total 10.25%

Jammu and

Kashmir

Solar 0.75%

13,119

98.4

688.7

787.1

Non Solar 5.25%

Total 6.00%

Jharkhand

Solar 1.00%

7,390

73.9

221.7

295.6

Non Solar 3.00%

Total 4.00%

Karnataka

Solar 0.25%

59,926

149.8

5992.6

6142.4

Non Solar 10.00%

Total 10.25%

Kerala

Solar 0.25%

22,127

55.3

940.4

995.7

Non Solar 4.25%

Total 4.50%

Lakshadweep Solar 0.40%

48 0.2

1.2 Non Solar 2.60%

Page | CXV

Total 3.00% 1.4

Madhya

Pradesh

Solar 1.00%

53,082

530.8

3184.9

3715.7

Non Solar 6.00%

Total 7.00%

Maharashtra

Solar 0.50%

1,33,078

665.4

11311.6

11977.0

Non Solar 8.50%

Total 9.00%

Manipur

Solar

678

0.0

0.0

0.0

Non Solar

Total 0.00%

Mizoram

Solar

425

0.0

0.0

0.0

Non Solar

Total 0.00%

Meghalaya

Solar 0.60%

1,634

9.8

6.5

16.3

Non Solar 0.40%

Total 1.00%

Nagaland

Solar 0.25%

661

1.7

51.2

52.9

Non Solar 7.75%

Total 8.00%

Orissa

Solar 0.25%

26,052

65.1

1628.3

1693.4

Non Solar 6.25%

Total 6.50%

Pondicherry

Solar 0.40%

2,376

9.5

61.8

71.3

Non Solar 2.60%

Total 3.00%

Punjab

Solar 0.19%

48,144

91.5

1834.3

1925.8

Non Solar 3.81%

Total 4.00%

Rajasthan

Solar 1.50%

65,310

979.7

4898.3

5877.9

Non Solar 7.50%

Total 9.00%

Sikkim RPO Target not

0.00% 399 0.0

Page | CXVI

specified

Tamil Nadu

Solar 2.00%

92,750

1855.0

8347.5

10202.5

Non Solar 9.00%

Total 11.00%

Tripura

Solar 1.05%

1,048

11.0

15.2

26.2

Non Solar 1.45%

Total 2.50%

Uttarakhand

Solar 0.08%

12,072

9.7

845.0

854.7

Non Solar 7.00%

Total 7.08%

Uttar Pradesh

Solar 1.00%

87,062

870.6

4353.1

5223.7

Non Solar 5.00%

Total 6.00%

West Bengal

Solar 0.15%

46,827

70.2

2037.0

2107.2

Non Solar 4.35%

Total 4.50%

Total 71,023.6 MU

Imprint The findings and conclusions expressed in this document do not

necessarily represent the views of the GIZ or BMZ.

The information provided is without warranty of any kind.

Published by Deutsche Gesellschaft für

Internationale Zusammenarbeit (GIZ) GmbH

Indo – German Energy Programme – Green Energy Corridors

Registered offices: Bonn and Eschborn, Germany

B-5/2, Safdarjung Enclave

New Delhi 110 029 India

T: +91 11 49495353

E: info@giz.de

I: www.giz.de

Authors Shuvendu Bose

Sudhanshu Gupta

(Ernst & Young LLP, India)

Editors

N.S.Saxena

(Ex-Director, PowerGrid Corporation)

New Delhi, October 2015

This project/programme’ assisted by the German Government,

is being carried out by ‘Ernst & Young LLP’ on behalf of the

Deutsche Gesellschaft für Internationale Zusammenarbeit

(GIZ) GmbH.