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Posted on February 14, 2011 by Agneya
Renewable Energy is being betted on as the new sunrise sector of India. Within the broad renewable energy space – wind and Solar are the ones where the potential is high and relatively easier to monetize (as against say biomass or biogas). Only 7 % of electricity supplied in India is generated from the renewable energy sources. The share of RE in installed power is slightly higher than this due to the fact that generation in RE is not continuous and predictable as in the case of conventional sources. Among the various financing/subsidy mechanisms for Renewable Energy projects, Clean Development Mechanism (CDM) introduced by the Kyoto Protocol has been very important contributor in the last 4-5 years. Carbon credits generated from CDM registeredverified RE projects are important revenue streams in the financial closure and decision making for high capital cost projects in RE. Following table shows CDM revenues earned by the Indian Renewable Energy projects. As can be seen, the cash inflow driven by CDM component of RE projects is upwards of 900 crores INR, translating to 200 million USD.
Sector Wind Biomass Hydro Power
No of Projects 139 166 70
CERs 75,31,244 74,82,864 19,10,321
Revenue in INR 406,68,71,760 404,07,46,560 103,15,73,340
* Issued CERs volume till December 2010. The graphs below indicate the share of India in the registered projects by RE class and share in the CDM revenues.
renewable energy project developers face the confusion of mechanism to follow – the REC or the CDM. The important considerations to be kept in mind are as under 1. As long as the condition for the ‘additionality’ – i.Rs 2. By mandating a growing percentage of electricity mix to come from renewable sources for the distribution companies. Since the introduction of REC mechanism. REC mechanism views the electricity generated from renewable sources as composed of 2 benefits – one the power generated and second is the environmental attribute with the ‘renewability’ of this power. Rajasthan. the REC market and CDM markets are not expected to interfere with each other. the PPA for the power project must be signed at the Average Purchase pooled cost (APPC) and not at the preferential tariff. What REC achieves is to treat the environmental benefit of renewable power separately and values it as a tradable commodity as against the fixed feed-in or preferential tariff. Thus. To be eligible for this mechanism. Since there are only a few projects registered under the REC mechanism and the market of RECs will take some time to develop.RECs India has recently launched the Renewable Energy Certificates (REC ) mechanism to encourage Renewable Energy generation in the country.e. REC is a national mechanism.21/kWh.85/kWh.43/kWh. the price discovery of RECs will happen only after significant volumes expansion. REC mechanism is expected incentivize RE generators. Karnataka – Rs 1.15000 INR for the solar projects and 1500-3900 for non solar projects (1REC = 1 MWh of electricity). The developers also need to understand if the two can be accessed simultaneously. The relevant conditions for registration under CDM are additionality and contribution to sustainable development. Kerala – Rs 1. the question of having to choose between CDM and REC does not arise. CDM is an international mechanism instituted under the Kyoto Protocol. Till such a time. the project being financially not-most-attractive in absence of carbon credit revenues is fulfilled. Maharashtra.46/kWh.48/kWh. REC or CDM or is it and? Loaded with the technical details of the Renewable Energy technology already.Rs 2. The APPCs for various Indian states are as under Andhra Pradesh – Rs 1. REC price range would be in the range of 12000.78/kWh.62/kWh. the project developer can continue to access REC market as well as the carbon credits under the CDM framework. GujaratRs 2. Europe etc. The choices made at the beginning stage of the project are essential since they will determine the financial profile of the project over the entire life cycle of the project. three Renewable Energy (RE) generators have registered and four have accredited their projects on REC registry of India (Feb 2011). Similar mechanisms have been operations in the developed markets such as Australia. Second part is known as REC will be traded in the energy markets of India. 2. Tamilnadu.Rs 2. .
This energy coming in at a higher price has increased the APPC for these states. ltd. This implies that the any renewable energy project coming in the states with a higher APPC is likely have a lower working capital requirement since a larger portion of their overall tariff will be provided by the utilities and the realization will depend less on the trading of RECs. This is partially driven by the composition of the current portfolio of states energy mix. This can create a difference in which the 2 cases need to be addressed. We can undertake both CDM project development and REC management for our clients. Pune (India) . Some of the other aspects that need to be kept in mind in analyzing the profitability of RE projects under the REC mechanism are 1. States such as Tamilnadu and Maharashtra for which renewable constitute a significant portion of energy bought by the distribution companies. The durations of PPAs need to be comparable between the preferential tariff sale and the sale at APPC to state utility. Do get in touch with us for more details. 2. The range of price at which PPA will be signed with the state utilities is significant across states.The more appropriate question should be whether the RE project developers should sign up for REC mechanism by signing PPA at the APPC and registering themselves under the REC registry or to lock-in the state utility at the preferential tariff. Contact us at : Agneya Carbon Ventures Pvt.
2 Concentrated Solar Power (CSP) based Solar Thermal Power Plant 11.2.1 Global Solar Scenario 9. Experience of Solar Energy in India 8. Solar Technologies 11. Vision of the Government of Tamil Nadu 3. Preamble 2. Objectives 5.2. Renewable energy installations in Tamil Nadu 8.2. Advantages of Solar Power 11. Shortages and constraints in fossil fuel 7.3 Parabolic Dish Systems .Tamil Nadu Solar Energy Policy 2012 Government of Tamil Nadu Tamil Nadu Solar Energy Policy Contents 1.1 Parabolic Trough Systems 11.1 Solar Photovoltaic 11. Technology Cost 10. Target for promotion of solar energy in the state 6. Title and Enforcement 4.2 Power Tower Systems 11.
Promoting Solar Rooftop Systems 16. Mechanism to Generate 3000 MW by 2015 15.== 2. Promotion of Solar Water Heating Systems 17. Solar Purchase Obligation (SPO) 14.4 Thermal Storage Systems 12. Vision of the Government of Tamil Nadu . some of the sections present in the Policy Document will not be here. Solar Manufacturing Facilities 21. So. Single Window Agency (TEDA) 20. Development of Solar Parks 18. Policy Initiatives 23. Formation of Empowered Committee 25.2. Research & Development and Capacity Building Solar Energy policy 2012 Government of Tamil Nadu Energy Department ==I am leaving out the general knowledge stuff and going straight to stuff that matters. Plant and Machinery 24. Procurement Policy of Solar Power 19. Establishment of Solar Power Plants in Industrial Estates 22. Development of Solar Power in Tamil Nadu 13.11.
3. Development of Solar Power in Tamil Nadu Phase (2013-2015) 2013 Target (MW) 1000 .The Honourable Chief Minister Selvi J Jayalalitha has a vision of developing Tamil Nadu as a world leader in Solar Energy by establishing 3000 MW by 2015. Title and Enforcement This policy will be known as the “Tamil Nadu Solar Energy Policy – 2012”. intends to make Solar Energy a people’s movement just as it did earlier in the case of Rain Water Harvestig. not relevant to the policy== 12. Objectives • • • • • • • • • • To achieve energy security To reduce carbon emissions To project Tamil Nadu as a Solar Hub To generate 3000 MW of Solar Energy by 2015 To achieve grid parity by 2015 To encourage indigenous solar manufacturing facilities in the State To promote Research and Development in the solar energy sector and hybrid systems To create skilled man power and employment in a new industry Target for promotion of Solar Energy in the State It is proposed to generate 3000 MW of Solar Energy by 2015 ==We are jumping to Point 12. The Government of Tamil Nadu will undertake a review of this Policy as and when required in view of any technological breakthrough or any changes taking place in the policy at the National level. 4. the rest of stuff in the middle is general knowledge stuff. Tamil Nadu is committed to leading the country by generating 3000 MW of Solar Power by 2015 through a policy conducive to promoting solar energy in the state. This Government headed by the Hon’ble Chief Minister Selvi J Jayalalitha.
This will be progressively increased. Tamil Nadu will promote setting up solar power projects to the extent of 3000 MW over a period of 3 years. Tamil Nadu will actively promote the solar energy sector by prescribing a certain percentage of electricity consumption through solar energy as mandatory. Telecom Towers All Colleges & Residential Schools Buildings with a built up area of 20. Solar Purchase Obligation (SPO) The State will mandate 6% SPO (starting with 3% till December 2013 and 6% from January 2014) for the following category of consumers: a.m or more LT Commercial (LT Tariff V) The following categories of consumers will be exempted from SPO: • • • Domestic consumers Huts Cottage and Tiny Industries . To retain its leadership position. HT Consumers (HT Tariff I to V) This category will cover all HT consumers including: • • • • • b.2014 2015 Total (by 2015) 1000 1000 3000 With average solar incidence of 5. 13. Tamil Nadu is amongst the states with the highest solar insolation in India.5-6 kWh/m2/day.000 sq. Special Economic Zones (SEZs) Industries guaranteed with 24/7 power supply IT Parks. as furnished above.
and under REC mechanism as follows Utility Scale (MW) (a) 2013 2014 750 550 Solar Roof Tops (MW) (b) 100 125 REC (MW) (c) 150 325 Total (MW) a + b +c 1000 1000 .• • • Powerlooms LT Industrial consumers Agricultural consumers The SPO will be administered by TANGEDCO. The above obligated consumers may fulfill their SPO by • • Generating captive Solar Power in Tamil Nadu equivalent to or more than their SPO Buying equivalent to or more than their SPO from other third party developers of Solar Power projects in Tamil Nadu • Buying RECs generated by Solar Power projects in Tamil Nadu equivalent to or more than their SPO • • Purchasing power from TANGEDCO at Solar Tariff Consumers desirous of availing SPO exemption by captive solar generation shall necessarily install separate meters to measure captive generation This mechanism will require generation of 1000 MW by 2015 14. Mechanism to generate 3000 MW by 2015 The 3000 MW of Solar Power will be achieved through Utility Scale Projects. Rooftops.
Energisation of Street Lights with solar energy. Domestic Rooftop GBI All domestic consumers will be encouraged to put up roof-top solar installations. 2.5 per unit for subsequent 2 years will be provided for all solar or solar-wind hybrid rooftops being installed before 31 March. Solar Home Lighting is being installed in 3 lakh houses under the Chief Minister’s Sola Powered Green House Scheme (CMSPGHS) and will be completed by 2015-16. All new Government/Local Body buildings shall necessarily install solar rooftops. Promoting Solar Roof Top Systems The Government of Tamil Nadu will promote Solar Rooftops through the following measures i. The State will be energizing 1 lakh street lights through solar energy by 2015-2016 3. A generation based incentive (GBI) of Rs 2 per unit for first two years. 15. and Re 0. Promotion of Solar Water Heating Systems .2015 Total 125 1500 125 350 675 1150 1000 3000 In utility scale out of 1500 MW. Consumers desirous of availing GBI shall necessarily install separate meters to measure rooftop generation. 4. A capacity addition of 50 MW is targeted under this scheme. All Street Lights and Water Supply installations in local bodies will be energized through solar power in a phased manner 16. Promoting Rooftops in Government 1. Re 1 per unit foe next two years. 2014. 1000 MW will be funded through SPO and balance 500 MW through Generation Based Incentive (GBI) provided by the Government. Existing Government/Local Body buildings will be provided with solar rooftops in a phased manner 5. ii.
making the use of solar water heating systems mandatory for all designated new Houses/buildings/Marriage halls/hotels etc.O. All the obligated entities committed to meeting SPO will necessarily will have to wither . a cost effective methodology needs to be evolved to promote solar power generation systems.2 Renewable Energy Certificate and Carbon Credits Renewable Energy Ceritificate (REC) mechanism promotes trading of solar power to meet solar purchase obligations (SPO). 2002 G. Solar Parks with a capacity of about 50 MW will be targeted in 24 districts 18. No. The recent experiences of Germany and Spain also prove that competitive bidding is the best way for adoption by Governments. • • G. Development of Solar Parks tility scale solar parks may comprise 250 MW in sizes of 1 to 5 MW.2002 The State will promote Solar Water Heating systems by suitably amending the relevant Acts of Municipalities/Corporations ii. 600 MW in sizes of 5 to 10 MW and 650 MW of sizes above 10 MW. Solar Power projects will be developed through competitive/reverse bidding. No. 112. Municipal Administration and Water Supply (MA1 Dept.1 Tariff based competitive bidding As solar power is expensive compared to conventional/other renewable energy. Housing and Urban Development (UD 1) Dept. Ms. dated 14. Public Buildings The Government of Tamil Nadu has issued amendments to the Building Rules through the following Government Orders. Investments through Joint Ventures by State Public Sector Undertakings will also be encouraged at competitive tariffs 18. Industries Installation of Solar water heating systems will be made mandatory for industries having hot water boiler/steam boiler using fossil fuel 17.O. dated 16. Procurement Policy of Solar Power 18.8. Tamil Nadu will select developers through Tariff based reverse/competitive bidding. 277. The Government of India through NTPC Vidyut Vyapar Nigam (NVVN) also follows the competitive bidding process.i.11. Ms.
training centres. Guaranteed single window clearance will be provided through TEDA in 30 days so that the plants can be commissioned in less than 12 months 20. 20.1 Incentives to Manufacturers Appropriate tax incentives as per the Tamil Nadu Industrial Policy will be provided to attract investors from India and abroad Tamil Nadu will actively support the growth of local manufacturing of solar components and ancillaries. A solar manufacturing ecosystem will be created that will include solar research centres. educational institutions. Local solar manufacturing industry (around 1000 MW/annum) will result in substantial direct and indirect job creation in the supporting sectors. etc. The Government will encourage indigenous manufacturing of solar panels and other related equipment.2 Global industry leaders in solar value chain . resource assessment facilities. Under this mechanism Solar power developers are eligible to possess one tradable RE Certificate per every 1000 units of energy (1 MWh) wheeled to the Distribution utility or to any other licensee. Manufacturing of Solar Thermal components will also be encouraged. test facilities. Solar Manufacturing Facilities The Government of Tamil Nadu will promote integrated solar generation and manufacturing parks which will house the entire ecosystem for solar manufacturing including wafer. 20. All solar power producers are eligible to avail of the Clean Development Mechanism (CDM) benefits to enhance the viability of the projects. 19 Single Window Agency (TEDA) Various statutory clearances that are essential for the development and commissioning of Solar Energy Projects will be handled by TEDA in co-ordination with the concerned departments/agencies. and Balance of System (BoS) component manufacturing.produce solar power (captive) or buy solar power from TANGEDCO or purchase solar RE certificates for an equivalent quantity through the Power Exchange from the Promoters who have tradable RE Certificates. cell and module making.
3 Exclusive Solar Manufacturing Parks Lands will be identified for development of exclusive solar manufacturing parks.000 MT would be required to yield silicon wafers sufficient to produce 1000 MW. Tamil Nadu will position itself as the regional hub for integrated solar manufacturing and technology development. SIPCOT. The State will promote setting up of solar manufacturing industries in these exclusive solar manufacturing parks to be established in the State. Policy Initiatives 22. Aggregate Technical & Commercial (AT&C) losses and other infrastructure expenditure. 20. 20. with appropriate incentives as detailed above.1 Net Metering Net metering will be allowed (at multiple voltage levels) to promote rooftop penetration Net metering facility will be extended to Solar power systems installed in commercial establishments and individual homes connected to the electrical grid to feed excess power back to the grid with “power credits” accruing to the Photovoltaic energy producer. Establishment of Solar Power Plants in Industrial Estates In order to reduce the Transmission & Distribution losses. Solar Power Plants will be set up in all industrial estates subject to availability of land at reasonable cost 22.5 Preference in Industrial Parks Preference will be given for establishing Solar manufacturing industries in the SEZs/Industrial estates / Parks viz. 20.Global majors will be invited to invest in the creation of manufacturing facilities in Tamil Nadu.. SIDCO and similar Government organizations 21. Projects to evacuate power at suitable voltages as suggested below Solar PV System Size <10 kWp Grid Connected 240 V .4 Requirements for Poly Silicon Manufacturing A Poly Silicon capacity of 10.
6 Facilitation by the Nodal Agency TEDA shall endeavour to facilitate the development of the projects in the following areas: • • • • All statutory clearances from Govt. Plant and Machinery .. whenever feasible for providing plug and play facility to Solar Developers 23.3 Exemption from Payment of Electricity Tax Exemption from payment of electricity tax to the extent of 100% on electricity generated from Solar Power projects used for self-consumption/sale to utility will be allowed for 5 years 22. Departments / Agencies Evacuation approval from State Transmission Utility Connectivity to the substation of State Transmission Utility Common clearances from TNPCB etc. to the desired locations for captive use/third party sale within the State will be as per the orders of the Tamil Nadu Electricity Regulatory Commission 22.4 Tax Concessions Tax concessions as per the Tamil Nadu Industrial Policy will be provided 22.10 kWp to < 15 kWp 15 kWp to < 50 kWp 50 Wp to < 100 kWp 240 V / 415 V 415 V 415 V 11 KV >100 kWp 22. 22.2 Wheeling and Banking Charges The wheeling and banking charges for wheeling of power generated from the Solar Power Projects.5 Exemption from Demand Cut Exemption from demand cut to the extent of 100% of the installed capacity assigned for captive use purpose will be allowed.
Formation of Empowered Committee An Empowered Committee under the Chairmanship of the Honourable Minister of Electricity with the following members will accord project clearances for the establishment of solar power projects to be bid out in the State: • • • • • • Chief Secretary Finance Secretary Energy Secretary CMD/TANGEDCO CMD TEDA – Member Secretary One Technical Officer from TANGEDCO 25. Technology Demonstrations on innovative projects in association with reputed institutions will also be encouraged. Research and Development and Capacity Building Research and Development on solar technologies / solar thermal storage systems. Government of India. To effectively implement this policy and to achieve the intended objectives. ==End of Policy Text== . 24. Only plants/machineries which give Plant Load Factor (PLF) as per the latest standards will be permitted.Only new plant and machinery are encouraged as per international standards. testing facilities towards the development of solar technologies will be encouraged. or by approved test centers in India/International test houses. Such machineries/components will be approved either by the Ministry of New and Renewable Energy. the Tamil Nadu Energy Development Agency (TEDA) will promote capacity building in the area of Solar Energy.