wind force newsletter october edition

Policy and Regulatory

Maharashtra Wind Zone Classification Procedure

In recent Wind Power Tariff Orders, Maharashtra Electricity Regulatory Commission (MERC)

has come out with wind power tariff structure for different wind zones in the state. In these

orders, MERC has segregated the sites into 4 different zones based on the mean annual

wind power density (WPD) in those areas:

Maharashtra State Electricity Distribution Co. Ltd. (MESDCL) had raised some issues on the

manner in which zoning of different areas was to be done. MSEDCL had also been refusing

execution of the long term Power Purchase Agreements (PPAs) as per the MERC Order in

effect. This had led to a lot of confusion and resentment amongst the investors, lenders and

even the manufacturers of wind turbine generators. The outcome was a significant delay in

investments in windfarm development in the state. Though, it has taken time, but, the

Maharashtra Energy Development Agency (MEDA) has now come out with a clear

procedure for classification of wind zones. The highlights of the zone wise classification are:

Ÿ The mean annual WPD at 50 meter at the reference wind mast, declared by Centre for

Wind Energy Technologies (C-WET) under the Ministry of New & Renewable Energy

(MNRE) or MEDA programme or data vetted by C-WET location shall be considered to be

the annual mean WPD for the effective area of 10 km radial distance from the location of

the reference wind mast.

Ÿ If a Wind Power Project (WPP) falls within the effective areas of two different wind

masts having different values of annual mean WPD, then the annual mean WPD of the

nearest wind mast shall be considered for that WPP.

Ÿ For an upcoming WPP, within the effective area, if 50% or more than 50% of the

proposed WTG location co-ordinates are falling above or below 60 m elevation

difference with reference to the mean sea level (MSL) of the reference wind mast, then

investor/developer shall approach C-WET to obtain project specific annual mean WPD

report either on MEDA's advice or permission. While signing Energy Purchase

Agreement (EPA) with the distribution licensee, developer/investor shall have to submit

letter issued by MEDA for wind zone classification.

1

www.windforce-management.com

Wind Energy Projects Zone

Mean Annual WPD

at 50 m hub-height (W/m2)

Levellised Total Tariff

(FY2011-12) in Rs / kWh

Net Levellised Tariff (upon adjusting for Accelerated Depreciation benefit) (if

availed) in Rs / kWh

Wind Zone-1 200-250 5.37 4.56

Wind Zone-2 250-300 4.67 3.96

Wind Zone-3 300-400 3.97 3.38

Wind Zone-4 Above 400 3.58 3.04

Enabling High Efficiency and Reliable Wind Power Projects

Introduction of Cross Subsidy Surcharge in Maharashtra

Earlier in 2006, to promote Open Access (OA), MERC came with an order determining Cross

Subsidy Surcharge (CSS) as Zero for OA Consumers from September 2006 to September

2011. Later in August 2010, MSEDCL had filed a Petition with MERC seeking review of the

aforesaid order in light of achievement of the same (i.e. to match the electricity demand in

the State through OA.

MERC has decided to re-determine the CSS due to the change in the current power

scenario. The CSS has been computed for Open Access transactions for various consumer

categories based on their voltage levels. The range of applicable CSS is Rs. 0.21/unit to Rs.

2.81/unit for different DISCOMs (R-Infra, MSEDCL, BEST, Tata Power), for different

categories of consumers (industrial, commercial etc), connected at different feeders

(express/non-express) at different voltage levels (above/below 66 kV).

CSS applicable to open access transactions from Renewable Energy Sources has been

fixed at 25% of the applicable CSS of the respective consumer category. MERC has fixed a

discounted CSS in order to promote generation from Renewable Energy sources, which is

in line with the objectives of EA 2003

KREDL Notification for Wind Project Developers

Recently, MNRE has done away with the criteria for Wind Power Density (WPD) for

installation of commercial WPPs in India. In contrast of this, KREDL has decided, not to insist

on this parameter to approve DPRs. However, to ensure use of higher efficiency WTGs only,

KREDL has mandated minimum generation of 20% CUF per WTG in the agreements with

developers/ manufacturers. The clause shall include removal of those WTGs (<20% PLF) on

the cost of manufacturers/developers.

Rajasthan DISCOMs have increased tariff for HT consumers

Rajasthan DISCOMs have filed ARR in RERC for the year 2011-12 and revised the applicable

tariff for industrial and commercial consumers. Following are the new tariff for various

categories:

Due to ~ 100 paisa/kWh hike in tariff, the investors who have already installed WPPs and

those who are planning to install WPPs for captive use, will get higher benefit as their cost of

power remain insulated for such steep hike state tariff.

2

Type of IndustryExisting Tariff New Tariff

Energy charges (Rs. / kWh) Energy charges (Rs. / kWh)

Medium Industries 3.75 4.75

Large Industries 4.01 5.00

Non Domestic (Commercial)

Upto 100 units 4.50 5.90

Above 100 units 4.90



The current qualification criteria for installation of WTGs in India require a certification from

C-WET which is a time taking process even in cases wherein a certificate from

Internationally Recognised Agency is available. This has in-turn restricted certain better

WTG models and technology to be used in India.

To give a boost to wind power development in India by creating the environment that

promotes healthy business, ensures safety standards and encourages technological

growth, MNRE has issued new draft guidelines for installation of wind turbine models in thIndia and invited comments/views/suggestions on the same by 29 September 2011.

Major highlights of these guidelines are:

Ÿ Any new WTGs to be installed in India must possess a valid type certificate from an

internationally accredited certification agency and fully comply with IEGC 2010.

Ÿ Manufacturers can install up to 15 MW of a specific turbine model in India to test its

performance in India. To sell any such model in India, they will be required to establish

manufacturing base in the Country.

Ÿ The self-certification guidelines for installation of WTGs, which allows installation of

non-certified machines, have been discontinued with immediate effect.

This guideline will cover all such machines that have already been approved under the

RLMM scheme, but not yet installed. However, self-certified machines approved under

the RLMM scheme and installed will be subject to guidelines issued in December 2009

and January 2010 that required submission of the documents related to type certificate

within the committed timeframe and other requirements.

Ÿ The guidelines also specify four international certification programmes that will be

accepted in addition to the revised TAPS-2000 programme of C-WET. The certification

clauses will accelerate capacity addition by de-clogging C-WET's pipeline. The guidelines thare applicable from 1st December 2011 in the run-up to the 12 Five Year Plan (2012-

17), and from the same day the RLMM Committee will stand dissolved.

The following certification schemes will be recognised when an accredited certifying body

carries out certification:

Ÿ IEC Certification Scheme

Ÿ Germanisher Loyds Certification Scheme

Ÿ The Danish Certification Scheme

Ÿ The Dutch Certification Scheme

As per addendum to Main List (RLMM) of Wind Turbines in India dated 22.09.2011,

following WTGs have been added viz. Kenersys K100 - 2.5 MW, Global L82 - 2.0 MW, Suzlon

S95, S97 - 2.1 MW & S88 - 2.25 MW.

3

What’s New

Draft guidelines for installation of wind turbine models in India

Addendum to Revised List of Models and Manufacturers (RLMM)



All RE Generators are requested to furnish complete documents as mentioned in the check

list:

Ÿ Hard copy of online Registration application signed and stamped on each page.

Ÿ Accreditation Certificate.

Ÿ Commissioning Certificate/ Commissioning Schedule.

Ÿ Applicable clauses of the declaration given in online application that it has not entered

into any Power Purchase Agreement at preferential tariff on the letter head of the

company.

Ÿ Fees and Charges.

Ÿ Undertaking to pay any service tax or any other taxes applicable on REC fees and charges.

Ÿ Letter for authorised signatory if application is not signed by MD/CEO.

If any information will be found missing and asked by central agency to furnish then it shall

be routed through concerned state agency to central agency.

In FY 12 H1, ~ 1445 MW of Wind capacities have been commissioned. In view of possibility stthat the accelerated depreciation benefit may not be available post 31 March 2012 a good

portion of this capacity may have come from the accelerated depreciation seekers.

Similarly, for IPPs also, as per current policy GBI is available for projects commissioned by st31 March 2012 only. These two can be the key drivers for the huge investment this year. We

expect that the total capacity to be commissioned this year shall be in the range of 2500 -

3000 MW.

Ÿ WinDForce attended in Power Trading Summit 2011organized by Power Markets India,

held in Crown Plaza New Delhi. Various stakeholders of power industry participated in

the event discussing about:

§ Trading Renewable Power, Wind and Solar Scheduling, Annual Pool Power Costs -

Future Trends, REC Markets - Pricing beyond 2012

§ Long Term, Short Term and Medium Term Power Markets, Future of Power

Exchanges, Bilateral Trades v/s Exchange Trades

§ Financial Risks in Trades, Project Finance Risks and Mitigations

Ÿ Mr. Jami Hossain, Chief Mentor and Founder of WinDForce participated in Business-to-

Business Forum on “Fostering Business Partnerships to Promote the Adoption and

Utilizationn of Renewable Energy Technologies” 22-23 September 2011, Colombo, Sri

Lanka. The event organised by Asian and Pacific Centre for Transfer of Technology

(APCTT) of the United Nations - Economic and Social Commission for Asia and the Pacific

(ESCAP) had the participation from many countries of the Asia Pacific region. Speaking

to delegates as well as dignitaries from Sri Lanka including the Energy Minister, Hossain

talked about the possibility of a submarine transmission link between Sri Lanka and

India that would stabilise the Sri Lankan grid as well as enable large scale exploitation of

wind energy in North Sri Lanka. Hossain was invited as a resource person to the meet.

4

Important Notice regarding Registration for Application

India installed capacity in FY 12, H1

Events



Ÿ Workshop on Renewable Regulatory Fund (RRF) Mechanism for Southern Region

stakeholders on 10 October 2011 and for Western Region stakeholders on 14 October

2011 is being organised by NLDC.

Ÿ ICCC-1: International Conclave on Climate Change from 12-14 October 2011at

Hyderabad International Trade Expositions Limited (HITEX), Madhapur, Hyderabad, A.P,

India.

Ÿ Green Conclave and Green Leadership Forum 2011: Discussion on the most critical

issues that surround the clean technologies sector and the investment opportunities it

offers to be held on 14th October 2011 at The Leela Palace, Diplomatic Enclave,

Chanakyapuri, New Delhi

Ÿ RENEWTECH INDIA 2011: International Exhibition & Conference on Renewable Energy

from 10-12 November 2011 at Bombay Exhibition Centre, Goregaon, Mumbai, India.

Ÿ Karnataka Renewable Energy Development Limited (KREDL) has come out with an NIT

inviting bids from the manufacturers with WTG capacity of more than 1500 kW for

development of two wind power projects of 6 MW capacities each in the state of

Karnataka on LSTK basis.

ŸHukeri Rural Electric Co-operative Society Limited has called for Expression of Interest

from the developers in the field of Wind Energy with our without land for a capacity of

100 MW in stages for attaining self sustainability.

The above graph indicates that the equilibrium price of REC traded at both the exchanges is

increasing every month. Moreover traded volume at both the exchanges is also increasing. thIn the recent trading held on 28 September 2011, there were buy bids for ~2, 27,000 RECs

ndagainst sell bids for ~85,600 RECs, where as in the last trading held on 2 September 2011,

there were buy bids for ~ 1, 83,305 RECs against sell bids for ~58,052 RECs.

5

Upcoming Events

REC Trading

Tenders



Calculation of Equilibrium Price (EP) and Volume for RECs at IEX

A matching of the buy and sell bids will take place only if there are crossing prices (Buy Price

>= Sell Price). Accordingly, the EP is determined as per following criteria:

Ÿ EP will be the price at which there is Maximum Tradable Volume (MTV).

Ÿ If there is more than one price with equal value for MTV, the price that leaves the least

volume untraded at its level (minimum unbalance) is chosen as EP.

In price determination process, at every candidate price level (CPL), the volume is

cumulated and the difference between cumulative buy and cumulative sell is calculated.

This gives two values at every CPLs:

Ÿ Tradable Volume (minimum of cumulative buy and cumulative sell)

Ÿ Unbalance (Difference of cumulative buy and cumulative sell; positive, negative or zero.

Following four rules are for calculating EP:

Rule 1: If a CPL with maximum tradable volume exists, this price is an EP. This rule gives one

or more price levels:

Ÿ If the maximum tradable volume is zero (no crossing prices), no EP is determined.

Ÿ If there is only one price level, this is the EP.

Ÿ If there are multiple levels, rule 2 is applied.

Rule 2: If there are several price levels for maximum tradable volume, the levels with

minimum Unbalance are CPLs. This rule gives us one or more price levels:

Ÿ If there is only one price level, this is the EP.

Ÿ If there are multiple price levels, and the unbalance is not zero, rule 3 is applied.

Ÿ If there are multiple price levels, and the unbalance is zero, rule 4 is applied.

Rule 3a: If the sign(+/-) of unbalance is same for all CPLs, the price closest to the price at

which sign of unbalance has changed (from positive to negative or negative to

positive, as the case may be) , is chosen as EP.

Rule 3b:If the unbalances at CPLs have different signs, the highest CPL with positive

unbalance and the lowest CPL with negative unbalance are identified. The EP is

then chosen randomly between these two.

Rule 4: If there are two CPLs with unbalance = 0, then one of them is chosen randomly as EP.

For a better understanding, we may refer the following example:

In this graph, there are 3 different buy bids and 3 different sell bids.

6



A is the buyer who is willing to buy 1000 REC at any price =< Rs 3900/REC, B is willing to buy

6000 REC at any price =< Rs 2300/REC and C is willing to buy 2000 REC at a price of

Rs1700/REC. Whereas D is the seller who is willing to sell 1000 RECs at any price >= Rs

1500/REC, E is willing to sell 2000 RECs at any price >= Rs 1700/REC and F is willing to sell

3000 RECs at any price >= Rs 2000/REC.

Now Rs 2200/REC is the price level for maximum tradable volume and minimum imbalance

so equilibrium volume shall be 6000 RECs at an equilibrium price of Rs 2300/REC.

From the above graph it can clearly be said that during the last one year, most of the time,

except 1-2 month, short term market price of electricity in bilateral arrangement is higher

than that at power exchanges. This analysis includes only inter-State transactions.

Electricity price in bilateral arrangements, in year 2011 is lesser than price in year 2010

showing a decrease in prices. The ratio of electricity traded on power exchanges to that of

total short term bilateral trades has increased from ~22% in 2009-10 to ~36% in 2010-11.

7

Short Term Electricity Price

(* Source: IEX)

Ÿ Wind Resource Assessment (WRA)

Ÿ Owner’s Engineer during the complete

project implementat ion & post

commissioning

Ÿ Detailed Project feasibility Study

Ÿ Detailed Project Report

Ÿ Contract Advisory

Ÿ Technical Due Diligence of proposed

as well as existing wind farms

Ÿ Entry strategies for new WTGs

manufactures

Ÿ Environment Impact Assessment

Ÿ Development/ Co-development of Wind

Power Projects at Identified sites by

WinDForce

Ÿ Structuring of PPA

Ÿ Sale of power and management

WinDForce Services



Corporate Office

WinDForce Management Services Pvt. Ltd.th5 Floor, Universal Trade Tower

Gurgaon - Sohna Road

Gurgaon - 122001, Haryana

Tel: +91 - 124-4353100

Fax: +91-124-4102980

Web: www.windforce-management.com

Contact Us

Kindly write to us if you have any comments on this Newsletter. Your valuable

feedback on this would motivate and help us in improving the quality and enriching

the content. We are eagerly waiting for your kind response to the articles presented in

this Newsletter.

Parish Gupta

Mob: +91 98717 11445

E-mail: [email protected]

Rupesh Singh

Mob: +91 96507 58884

E-mail: [email protected]

A WinDForce Publication

Disclaimer - This Newsletter has been compiled by WinDForce Management Services Private Limited

for circulation among the stakeholders in the energy market. Though the contents of this bulletin are

correct to the best of our knowledge, WinDForce does not vouch for their accuracy.


wind force newsletter october edition

Documents