Wind Force Newsletter Feb, Edition, 2012

Enabling High Efficiency and Reliable Wind Power Projects
2

Policy and Regulatory

1. TNERC: Order regarding Demand and Quota calculation
TNERC issued an order on 28.12.11 clarifying whether the supply of electricity to a
consumer from captive power plant or wind power or third party purchases has to
be subtracted from the TNEB quota as per the Restriction and Control Measures
introduced in the order of the Commission dated 28-11-2008 in M.P. No. 42 of 2008
or not:

Ÿ Consumer in Tamil Nadu is at present permitted to utilise power from captive
sources. Order would enable a consumer to purchase power from third party
sources as well. Procurement of power through Open Access under Electricity
Act, 2003 will be treated as additionality. The ceiling, upto which a consumer can
utilise power including the TNEB quota demand, captive power and third party
purchase would be the sanctioned demand. In such a situation, there would be
no need for advance declaration by the consumer of procurement of captive
power of third party power. As TNEB had allowed procurement of power upto the
sanctioned demand “procedure for allowing third party sale / purchase under
Intra State Open Access”, there should be no difficulty in allowing the consumer
to procure power upto the sanctioned demand.

• The equivalent demand brought in by the consumer from captive and third party
sources should be subtracted from the maximum demand recorded by the meter
of the consumer. Balance would be the demand actually supplied by the TNEB. If
this figure exceeds the quota demand of the TNEB, the consumer would be liable
to pay excess demand charges at the rates stipulated in the order of the
Commission in M.P.No.42 of 2008. Similarly, the energy purchased from captive
and third party sources would be subtracted from the total energy consumed by
the consumer. The balance would be deemed to be the energy actually supplied
by the TNEB. If this quantum exceeds the energy quota of the TNEB, the
consumer would be liable to pay excess energy charges at the rates stipulated in
the order of the Commission in M.P.No.42 of 2008.

To know more please visit:
http://tnerc.gov.in/orders/commn%20order/2011/R%20A%20No%201%20and%202%20of%202011%20Muthammal%20Textile
%20and%20National%20textile.pdf

Findings from the order:
The order enables a consumer to consume power upto sanctioned demand
including TNEB quota demand and procurement of power from captive sources
and third party sources (intra state). The need for advance declaration of the
consumer for procurement of power through open access stands dispensed.

www.windforce-management.com

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2. KERC issued notification with certain amendments in RPO regulation
KERC had issued notification for proposed amendments to the principal regulations
and had invited comments/ suggestions from interested parties. Various parties
submitted their comments including the government and the distribution licensees
of the State. After conducting a public hearing on 23.08.2011 and duly considering
the comments/ suggestions, the Commission made the following amendments to
the existing regulations:

Clause No. Existing Regulations Proposed Amendments

Clause 3(ii) Any other person consuming electricity Any other person consuming electricity
generated from captive generating plant or generated from grid connected captive
plants, using other than renewable sources and generating plant or plants, using other than
having a total capacity exceeding 5 MW; and renewable sources and having a total capacity
exceeding 5 MW; and

Proviso to Provided that, a distribution licensee may in Deleted
Clause 4(i) case of non-availability of solar power
generated in the State of Karnataka procure
from other renewable sources of energy or REC
to the extent of shortfall in its RPO in any year.

Clause 5 Renewable Energy Certificates (REC). – The Renewable Energy Certificates (REC). – The
distribution licensees, Captive Consumers and distribution licensees, Captive Consumers and
Open Access Consumers specified in Clause 3 Open Access Consumers specified in Clause 3
above may purchase REC to meet either partly above, may purchase REC to meet either
or entirely the RPO specified at Clause 4 (1) partly or entirely the RPO specified at Clause 4
above. (i), 4(ii) and 4(iii) respectively.

Provided that, the obligation of a distribution
licensee to purchase electricity from solar
energy may be fulfilled by purchase of solar
RECs only.

Clause 7(c) A Generating Company opting for REC Scheme A Generating Company opting for REC Scheme
shall sell the electricity generated by it to shall sell the electricity generated by it to
ESCOMs of the State at the pooled cost of power ESCOMs of the State at the pooled cost of
purchase as approved by the Commission for power purchase of the State, as notified by the
the previous year in its tariff orders escalated for Commission from time to time.
inflation.
“Explanation.- for the purpose of these
regulations 'Pooled Cost of Purchase' means
the weighted average pooled price at which
the State distribution licensees put together
have purchased the electricity including cost
of self generation, if any, in the previous
year from all the energy suppliers long-term
and short-term , but excluding those based
on renewable energy sources, as the case
may be;


Notification


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3. Tariff proposals for Retail Supply Business for FY 2012-13 filed with APERC by
DISCOMs in Andhra Pradesh
ARR Tariff proposals for Retail Supply Business for FY 2012-13 filed with APERC by
DISCOMs in AP such as APCPDCL, APEPDCL, APNPDCL, APSPDCL. Key points are as
follows:

Category KV level Existing Tariff (Rs./Kwh) Proposed Tariff

Industrial - General 132 KV 2.97 3.97

33 KV 3.25 4.37

11 KV 3.52 4.80

http://www.aperc.gov.in/TariffOrders/ARR/ARRfillingsFY2012-13/APCPDCLARRFilingforFY2012-13.pdf
http://www.aperc.gov.in/TariffOrders/ARR/ARRfillingsFY2012-13/APEPDCLARRFILINGFY2012-13.pdf
http://www.aperc.gov.in/TariffOrders/ARR/ARRfillingsFY2012-13/APSPDCLARR&TARIFFPROPOSALSFOR2012-13-FINAL.pdf
http://www.aperc.gov.in/TariffOrders/ARR/ARRfillingsFY2012-13/APNPDCL -ARRofRetailSupplyBusinessforFY2012-13-Final.pdf

Power Purchase Cost:
For 2011-12, the revised estimates of power purchase costs are higher than the
approved costs due to the increase in coal price and use of imported coal. This
contributed for the weighted average power purchase cost to increase by 61 paise/
kWh over the Tariff Order approved value of Rs 2.45 / kWh.

4. Bangalore DISCOM to seek hike in power tariff
According to reports, BESCOM shall file another tariff hike proposal before KERC.
Expected hike requested would be somewhere in the range of 50 paise. Following a
judgment in November’2011 by the Appellate Tribunal for Electricity, which
directed the KERC to review power tariffs every year, BESCOM wants to file for tariff
hike well before the deadline. Last year BESCOM had submitted a petition for a hike
of 88 paise out of which the KERC had approved a hike of 28 paise in October 2011.


5

What’s New

1. IEGC: Way a-head
NLDC in its letter dated 13.10.2011 had brought to the notice that despite the
communications sent to the SLDCs through the respective RLDC to furnish details
regarding connectivity declaration from Wind farms/Solar generating plants,
contract details (i.e. PPAs etc.) and processed data (i.e. schedule generation and
deviations of generation within different time blocks) to RLDCs /NLDC, the requisite
details had not been received. This affected the schedule of mock exercise as
directed by the Commission (order dated 18.2.2011). It has been submitted that
since the target date for implementation of RRF procedure was 1.1.2012, directions
be issued to the State Load Despatch Centres to submit the required data to NLDC
on immediate basis.

Accordingly, NLDC directed all State Load Despatch Centres to submit the requisite
data to it by 15.12.2011 failing which they shall be liable for appropriate actions
under section 142 of the Electricity Act, 2003. Based on the data received, NLDC
shall submit the compliance position before the Commission with copies to all
SLDCs." Post this, the SLDCs which could not file the information as specified by
NLDC, were directed to furnish the information in the specified format to NLDC
before 16.1.2012. NLDC further directed that all the SLDCs, especially the SLDCs of
the wind and solar power generating states (like Rajasthan, Madhya Pradesh,
Maharashtra, Gujarat, Andhra Pradesh, Karnataka, Kerala and Tamil Nadu) to be
present during the next date of hearing. The petition was supposed to be listed on
24.1.2012.

2. Tariff regulation for less than 200 W/m2 wind projects
One of Indian WTG manufacturer had filed a petition with MERC to amend wind
energy power tariff in view of the relaxation by MNRE on setting up wind energy
projects in low wind density sites.

Earlier MNRE had issued a notice in August 2011 stating that wind energy projects
could be set up at sites with wind density lower than 200 W/m2 at a hub height of
50 m keeping in mind that higher capacity turbines and higher hub heights have
enabled the developers to harness wind resources at sites with relatively lower
wind densities.

As per last tariff order, MERC offers Rs 5.37 per kWh to wind energy projects located
at sites with wind densities between 200 and 250 W/m2. The slab is the lowest
wind energy band in the wind energy power tariff regulations of MERC. The
petitioner requested to revise the WPD slab from '200-250 W/m2' to 'up to 250
W/m2' slab.


6

In its initial response, MERC agreed that, "the provision for consideration of
minimum wind density criteria at 200 W/m2 and wind density measurement
criteria at 50m hub height for wind power projects having wind density less than
200 W/m2, restrains the development of wind sector at lower wind regimes."
MERC also made it clear that the wind energy power tariff regulations are open to
revision and amendments from time-to-time and that it will initiate suitable action
to amend the regulations. The Commission also noted that at least some of the
proposed wind power projects do not fulfill the current wind energy density and
tariff slabs but may be eligible under the new slabs proposed by the petitioner. The
Commission shall initiate suitable action to amend the MERC (Terms and
Conditions for determination of RE Tariff) Regulations 2010 appropriately
pertaining to this matter and any other incidental matters in connection therewith.

3.POSCO: Purchasing RECs from Power Exchange
Last session of REC trade witnessed first Central Public Sector Enterprise (CPSE) to
buy RECs on voluntary basis. Power System Operation and Corporation Ltd
(POSOCO) has become the first PSE to buy RECs to offset their carbon footprint and
fulfilling the responsibilities towards sustainable development, setting an example
for other CPSE too.


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4. Wind Power Potential v/s Installation in India

State Potential (MW) Installation (MW)
(till 31.12.11)
@ 50 m @ 80 m

Andhra Pradesh 5394 14497a 213

Gujarat 10609 35071 2641

Karnataka 8591 13593 1852

Kerala 790 837 35

Madhya Pradesh 920 2931 330

Maharashtra 5439 5961 2560

Rajasthan 5005 5050 1830

Tamil Nadu 5374 14152 6614

Others 7008 10696 4

Total 49130 102788 16079

Wind power density map at 80 m level (by C-WET)

http://www.cwet.tn.nic.in/html/departments_ewpp.html

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5. Marquis Energy Exchange : Marquis Energy ready to launch
Ahmedabad based Marquis Energy Exchange has got ready to launch the country's
fourth power exchange. According to power market regulations, once a third
exchange comes into play, existing bourses with less than 20% market volume have
to shut operations or merge with other exchanges within two years.

Financial Technologies-promoted India Energy Exchange currently commands a
market share of 93% while Power Exchange India, jointly promoted by NSE and
NCDEX is the smaller exchange, which needs to improve its share.

A third exchange called National Power Exchange, a JV of NTPC, NHPC, PFC and TCS,
has already been approved by the government and is likely to begin operations in
coming months.

Upcoming Events
RENERGY 2012, International Conference Cum Expo, organized by Tamil Nadu
Energy Development Agency, 12th-13th March 2012, Chennai Trade Centre,
Nandambakkam, Chennai, India

Renewable Energy Finance Summit: India 2012, Debt, Equity and Market
th
Mechanisms, organized by Renewable Markets India, 20 March 2012, Mumbai,
India


9

Events

WinDForce sponsored Wind IPP Summit India 2012 organized by Renewable
Markets India, held in Mumbai.

Mr. Jami Hossain, Chief Mentor and Founder WinDForce, was one of the speaker
during a panel discussion. WinDForce made a presentation on Owner's Engineer's
Role in Mitigating Implementation Risks for Wind Power Projects:

Wind Data
&
Supply and Assessment
Power
Execution
Evacuation
Quality

Owner’s Engineer’s Role in
Mitigating Project
Implementation Risks

PPA Policy
& &
Off-taker Risks Strategy Regulatory
Development
&
Contracting
Risk Mitigation

REC Trading
Equilibrium Price
3,000

2,500
(Rs / REC)

2,000

1,500

1,000
Apr’11 May’11 Jun’11 Jul’11 Aug’11 Sep’11 Oct’11 Nov’11 Dec’11 Jan’11
IEX Equilibrium Price (Rs / REC) 1,500 1,500 1,505 1,555 1,800 2,300 2,700 2,900 2,950 3,051
IEX Traded Volume (REC) 260 14,002 15,902 14,668 22,096 41,385 92,303 96,154 1,05,942 1,65,460

The above graph indicates that the equilibrium price of REC traded at IEX is
increasing every month. Moreover traded volume is also increasing month by
month.
In the recent trading held on 25th January 2012, there were buy bids for 4,14,387
non-solar RECs against sell bids for 1,86,610 RECs (at IEX). In the last trading, RECs
have been traded @ Rs 3051/ MWh at both the power exchanges. Summarizing till
date, in last 11 sessions, total 5,68,172 RECs have been traded at an weighted
average rate of Rs 2725/ MWh (at IEX). As expected, the volume trade has started
showing an increase in Q4 as most of the state power distribution companies must
have started participating in the trading, as RPO deadlines are approaching.
POSOCO becomes first Indian company to buy RECs to offset carbon emissions.
POSOCO is wholly-owned subsidiary of PGCIL.


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Electricity Price

7.50
6.50
5.50
Rs/kWh

4.50
3.50
2.50
1.50

Nov - 11
Jan - 11

Feb - 11

Mar - 11

Apr - 11

May - 11

Jun - 11

Jul - 11

Aug - 11

Sep - 11

Oct - 11

Dec - 11
Dec - 10

Dec’10 Jan’11 Feb’11 Mar’11 Apr’11 May’11 Jun’11 Jul’11 Aug’11 Sep’11 Oct’11 Nov’11 Dec’11
Bilateral through Traders RTC 4.12 4.12 4.22 4.65 4.76 4.52 3.81 3.90 3.88 3.95 4.19 4.29 4.12
IEX 2.47 3.44 3.88 3.34 3.49 2.96 2.80 2.97 2.89 3.00 5.40 4.08 4.05
PXIL 2.99 3.66 4.54 5.13 4.00 3.03 2.99 3.22 3.01 3.08 5.42 4.09 4.02

From the above graph it is observed that during last one year short term market
price of electricity in bilateral arrangement is higher than that at power exchanges.
This analysis includes only inter-State transactions. In October 2011, there was
steep hike in price at the exchanges because of major power crises in various power
surplus states in India. The issues encountered were more or less resolved and
power prices at exchanges started to settle down in November 2011 as seen in the
graph above.


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Rupesh Singh
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E-mail: rupesh@windforce-management.com

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 Feb, Edition, 2012

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