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OPEN ACCESSA Monthly Newsletter on Indian Renewable Energy Market

Disclaimer: All information presented in this newsletter is from publicly available sources. REConnect Energy does not warrant the accuracy and completeness of information available and therefore will not be liable for any loss incurred. The content provided here is for the general informational purposes only. REConnect Energy shall not be held responsible for damages resulting from the use of this report. Readers are advised to make appropriate analysis and take appropriate advice before acting on the contents of this report.

Volume 83, March 2019

OPEN ACCESSA Monthly Newsletter on Indian Renewable Energy Market

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From Team REConnect

Dear Reader,

The main article this month analyses Tamil Nadu’s Forecasting, Scheduling & Settlement regulation. TN was the last state with a major RE capacity to announce its Forecasting & Scheduling regulations - with this, all the large RE states in the country have F&S regulations in place. The TN regulations are broadly in line with those in other states with two major exceptions - the accuracy band is narrower but with a lower per unit DSM charge, and DSM charges are capped at Rs 0.05/kwh per annum.

In this volume we also provide regulatory updates like Large Hydro Power is now included in renewable sources, amendment in the Maharashtra’s Forecasting & Scheduling regulations, and Amendment in Interstate transmission charges & losses (sixth amendment)

In REC Trading markets, March trade session saw an increase in the price trend maintaining the pattern of the previous trade sessions. RE generation has seen an increase in all the five regions.

- Team REConnect

Regulatory updates

Feature article

Editor’s take

RE generation statistics

About REConnectAbout

REConnectAbout

REConnect

About REConnectRegulatory

updates

Regulatory updates

Trade statisticsTrade

statistics

Trade statistics

Trade statistics

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Featured article

Executive summary:

● The accuracy band (<=10% - > 30%) is narrower compared to other states and compared to the Model FOR Regulations

● However, the per unit DSM charge is also lower compared to other regulations (in these aspects TN regulation is similar to that of Gujarat)

● Total DSM charge is capped at Rs 0.05/unit on an annual basis

● Aggregation is not allowed.

Applicability:

● From the date of publication in the official gazette.

● Levy and collection of DSM Charges

shall commence after six months

from the date of publication in the

official gazette.

Regulation Applicable on all Wind and

Solar Energy Generators (excluding

Rooftop PV Solar power projects) in Tamil

Nadu.

Deviation Accounting: The deviation

accounting will be carried out based on the

Available Capacity :- Absolute error in %

Tamil Nadu announces Forecasting, Scheduling, and settlement deviation mechanism 2019.

● Point of Forecasting: Plants

connected to the Intra-State

Transmission System or Distribution

System, including those connected

through Pooling sub-stations, and

using the power generated for

self-consumption or sale within or

outside the State.

Forecasting tool to be established in

three months period.

Aggregation: Unlike in Karnataka and AP,

Tamil Nadu’s regulation does not have a

provision to provide an aggregated

forecast.

Role of a QCA:

● Meter reading and data collection and its communication, and coordination with the Distribution Licensees, the SLDC and other agencies;

● De-pooling of Deviation Charges within the constituent Generators of the Pooling sub-station and settlement of payments/receivables.

● Settlement of the Deviation Charges specified in these Regulations with the SLDC on behalf of the Generators.

100 X Actual Generation - Scheduled

Generation

Available Capacity (AvC)

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Featured article

Revisions:● The QCA may revise the Schedule of

Generators connected to the Intra-State Transmission Network (excluding collective transactions) by giving advance notice to the SLDC.

● 16 revisions are permitted for Generators starting from 00.00 Hrs of the All the revisions are effective from the 4th time-block.

Other Key Points:

● The total deviation charges remitted on account of deviations by a wind / solar generators through QCA into State Deviation Pool Account (Wind and Solar) in a financial year shall be capped at the Ceiling Rate of 5 paise per unit, and excess DSM charges beyond this limit shall be remitted back to the generator.

● Every QCA shall pay the total

amount of Deviation Charges pertaining to the Pooling Sub-station to the SLDC, and collect it from the concerned Generators in proportion to their actual generation.

● Provided that the onus of ensuring the payment of the Deviation Charges to the SLDC by the QCA shall remain that of the concerned Generators.

● The QCA shall de-pool the Deviation

Charges against each Generator in proportion to the actual generation by the generators.

● The SLDC will share the curtailment information with the QCA id any, via an IT-enabled communication system; failing which the DSM for subsequent time blocks will not be charged by the SLDC.

● All accounts relating to deviations within pooling sub-station shall be prepared by the QCA on a weekly basis based on inputs from the SLDC, and be accessible to the SLDC through an IT-enabled system and software.

● Further, it is the QCAs responsibility to provide the correct schedule on the basis of curtailment.

● If the QCA is unable to do so, the SLDC will change the schedule as per the curtailed values.

Important differences between intrastate and interstate transactions:

● The deviations for Inter-State and

Intra-State transactions at Pooling

Station will be accounted for

separately. Separate schedules

will be sent for the interstate to

SLDC and RLDC.

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Featured article

● The Inter-State transactions will be

settled on the basis of their

scheduled generation and will be

considered only if the Inter-state

capacity is connected to the STU via

the separate feeder.

● The Generator will pay the Deviation

Charges for under or over injection

applicable within Telangana in case

of deviations in the State DSM Pool.

Deviation Charges in case of under or

over-injection for sale/supply of power

within the State

Deviation Charges in case of under or over-injection for sale/supply of power outside the State

● Deviations in respect of Inter-State and Intra-State transactions for each source of RE i.e. wind and solar Generation shall be accounted for separately at each Pooling Sub-Station.

● The SLDC shall provide separate energy and Deviation Accounts for Inter-State and Intra-State transactions in respect of wind and solar Generation to the QCA, who shall settle the Deviation Charges with the concerned Generators.

Conclusion: This regulation is broadly in line with regulations in other states, but with two key differences which are beneficial to project owners: the capping of DSM charge on an annual basis, and the reduction of per unit DSM charges (though the permissible deviation band is also narrower). On these fronts (capping of DSM charge, narrower accuracy band and lower DSM charge per kwh), the TN regulation may be a template that other states follow in future amendments.

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Regulatory Updates

MERC (Forecasting, Scheduling and Deviation Settlement for Solar and Wind Generation) Regulations, 2018 amendments

Maharashtra Electricity Regulatory Commission (MERC) has announced an amendment in the forecasting & scheduling regulations, the commission has notified that the effective date of commercial arrangement will be 1st July 2019.

This has come after Commission has noted the concern raised by Stakeholders during the meeting dated 26 February 2019 regarding the short time available for implementation of the Regulations and also the submission made by MSLDC about its preparedness to rollout the Commercial Arrangement by 30 June 2019.

Further, the commission has also announced amendments in the implementation of Procedure under MERC (Forecasting, Scheduling and Deviation Settlement for Solar and Wind Generation) Regulations, 2018.The clause 7.1 of the said Detailed Procedure specified the MSLDC fee and charges including scheduling fee and the re-scheduling fee payable by QCA to MSLDC. The said issues were highlighted by

REConnect also, how the rates stated by MSLDC are exceptionally high and unfair.A meeting was held by the commission with the stakeholders where they stated their concern regarding the high charges and how these charges are not so high in other states like Andhra Pradesh, Karnataka, Madhya Pradesh & Rajasthan.The commission has announced the updated fees and charges related to scheduling charges, the abstract of which is as follows:

Haryana announces amendments in its solar policy 2016

Recently Haryana Renewable Development Agency (HAREDA) announced amendments in the current guidelines for Solar Power Policy, 2016. The amendments will be applicable on captive users only and work in retrospection. The amendments made in clause 4.3 are as under:

● The wheeling & transmission charges are exempted for ten years from the date of commissioning for all the captive solar power projects who have submitted their projects registration to HAREDA.

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● Further, the projects should also have purchased land or have taken land on lease for thirty years & have bought equipment and machinery or should have invested at least Rs. one crore per Mega Watt for the purchase of equipment & machinery for setting up of such Captive Solar Power Projects till 13th February 2019.

● Cross-subsidy surcharges and additional surcharges are not applicable for Captive Solar Power Projects as per provisions of Electricity Act 2003.

● There is no waiver on transmission charges, wheeling charges, cross-subsidy surcharges, and additional surcharges for solar projects for third party sale.

● However, against the waivers already specified above, Renewable Purchase Obligation (RPO) benefit will be provided to Power Utilities as per RE Regulations 2017 with amendments from time to time.

● Banking will be provided for captive/ third party solar generation projects. However, banking charges shall be applicable as per RE Regulations 2017 with amendments from time to time.

Cabinet approves inclusion of Large Hydro Power as Renewable Energy

In a recent development, the union cabinet chaired by the Prime Minister approved to promote hydropower sector which includes large hydropower projects (HPO) as a part of the non-solar Renewable Purchase Obligation (RPO).

India is endowed with large hydropower potential of 1,45,320 MW of which only about 45,400 MW has been utilized so far. Only about 10,000 MW of hydropower has been added in the last 10 years. The hydropower sector is currently going through a challenging phase and the share of hydropower in the total capacity has declined from 50.36% in the 1960s to around 13% in 2018-19.Update - on 8th March 2019, Ministry of Power Published the approved measures to promote HydroPower, which can be accessed here.The details of the developments are as below:

● Large Hydropower Projects (LHPs) shall be declared as Renewable Energy source (as per existing practice, only hydropower projects less than 25MW are categorized as Renewable Energy; this practice is also followed globally).

● HPO will be a separate entity within non-solar Renewable Purchase Obligation in order to cover LHPs commissioned after notification of these measures (SHPs are already covered under Non-Solar Renewable Purchase Obligation).

● The trajectory of annual HPO targets will be notified by Ministry of Power based on the projected capacity addition plans in the hydropower sector. Necessary amendments will be introduced in the Tariff Policy and Tariff Regulations to operationalize HPO.

Regulatory Updates

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● The HPO will cover all the LHPs commissioned going forward along with all the untied capacity(capacity without PPA) of the commissioned projects. The HPO will be within the existing Non-solar RPO only after increasing the percentage so that existing Non-Solar RPO for other renewable sources remains unaffected by the introduction of HPO assigned for non-solar RPO.

Analysis:

The immediate impact of the change is likely to be minimal for two reasons: (a) this change will be difficult and complex to implement (see below), and (b) large hydro capacity which sells power in open access or under APPC is likely to be very small, and new projects have a long gestation period.

Over the longer term, this can potentially have a significant impact on the RPO and REC mechanism, depending on the details of the implementation.

Also, large hydro projects are very unevenly distributed across the country. If each state will be required to incorporate HPO in its overall RPO target, this may meet with stiff resistance from states that have very limited or no large hydro potential.

Regulatory updates

It is possible that on the lines of Solar RECs, Hydro-RECs are also created. However, this will bring its own challenge as many states are likely to resist HPO targets

Implementation timelines - Having a new HPO target in state regulations will require amendments to several state regulations. At the same time, the REC mechanism will also have to be amended if Hydro-RECs are introduced. Overall, this change will take time to implement.

On the whole, this change will prove complex to implement and may meet with resistance from many states. One option available would be to just incorporate large hydro in the existing Non-solar RPO. However, this will have put a strong negative pressure of REC prices and future non-solar (primarily wind) capacity addition.

Trade Statistics

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The March trade session saw an increase in the price trend maintaining the pattern of the previous trade sessions. The demand scenario was on the higher side while the supply remained the same. The demand-supply scenario has been consistently this way since the past few months. March being the financial year-end, the price of solar soared high at 2000 as there was a rush among the obligated entities to abide by their obligations.

Non-Solar: This session the RECs were traded at the price of INR 1395 at PXIL (39.5% above the floor price) and INR 1500 at IEX (50% above the floor price). A total of 8,31,378 RECs were traded in this session.

Solar: Total number of solar RECs traded in this session was 3,46,383 RECs traded at Rs 1700 at PXIL (70% above the floor price) and at Rs 2000 at IEX (100% above the floor price).The overall trade volume (11,77,761 RECs) decreased by almost 5.08% from the last months’ trade volume (12,40,849 RECs)

RE Generation Statistics

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According to the Central Electricity Authority (CEA), overall RE generation for the FY 18-19 was up by 25% (data upto Dec 18).

A total of 1950 MU renewable energy was generated in the North Region in 2018, compared to 1918 MU in 2017 (2% increase). Similarly in the West Region 3009 MU was generated in December 2018. In the South Region there was generation of 3778 MU in 2018 compared to 3230 MU in 2017 (an increase of 17%). In the East Region there was 223 MU generated in 2018 compared to 218 MU in 2017 (increase of 2%).

A comparison of the installed capacity of RE sources for the period of June-October in 2016-2018 is as below:

Source: CEA RE generation report

Source: CEA executive summary

22.13%

25.18%

159.8%9.8%

(% change from previous year)

About REConnect

REConnect Energy is India’s leading energy services company offering solutions in energy transaction management & predictive analytics. REConnect has also developed a state-of-art AI automation applications/products under GridConnect, enabling accurate power forecast, predicting electricity demand and related services. REConnect has been awarded the Renewable Energy Management Centre (REMC) project for one NLDC & 10 SLDCs, a GOI initiative for tackling the RE variability in the grid. Under this program we handle 61 GW of installed capacity. We are also coming up with a Marketplace based solutions specifically designed to accelerate Renewable Energy procurements among Commercial & Industrial (C&I) Consumers and thereby democratising access to clean energy.

Recent exhibit of REConnect at GridTech - 2019, International level exhibition organised by PowerGrid

Awards & Industry Recognitions

★ Best Wind Energy Forecaster of the Year (2014/15/16/17/18), Indian Wind Energy Forum★ Technology Start-up Enterprise of the Year (Energy & Utilities) - 2017, 24MRC Network, India★ Top 100 Global Energy Start-ups, Start-up energy transition Awards, Berlin, German★ Times Network Award in Innovation in Digital Energy Solutions, New Delhi, May 2017★ Smart Start-up of the year- ISGF Innovation Awards , New Delhi February 2018.★ Outstanding contribution in the field of IOT - 2018, IPPAI Power Awards★ REC facilitator of the year and forecasting company of the year - 2018 IWEF★ Award for the highest REC volume member - 2018 IEX