Renewable Watch July issue by Mohit Shrimal

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Volume 8 z No. 9 z July 2018

Prices Plummet

Impact of new Chinese policy on the Indian solar market

Trends & Developments

Perspective

Spotlight

Plus

Tepid response to the

Views of SECIâ&#x20AC;&#x2122;s

Solar power

Growing role of IT in the renewable energy sector . . . . . . . . . 28

2 GW wind tender

J.N. Swain

in India

Promoting refuse-derived fuels to channelise MSW . . . . . . . . 29 Brookfield Asset Management takes owner-operator route . . . 46

The Northeast focuses on tapping renewables . . . . . . . . . . . 62

Volume No. 8 Issue No. 9

EDITORIAL

EDITORIAL PUBLISHING Alok Brara

EDITOR-IN-CHIEF

There is increasing discontent in the renewable energy space about transmission capacity addition not keeping pace with power generation growth. About 15 GW of solar projects are under construction and another 7 GW of wind projects have been bid out.

Nandita S. Kochhar

EDITORIAL OPERATIONS Mudita Mehta (Senior Director) Devangshu Datta (Consultant) Shyama Warner (Consultant)

EDITORIAL Rama Sudhakar Patnaik (Consultant) Sayantanee Ghosh (Sr. Subeditor) Sugandha Khurana (Sr. Subeditor)

RESEARCH Associate Director: Dolly Khattar Associate Director: Ashay Abbhi Research Associate: Anukriti

BUSINESS DEVELOPMENT Raman Dev Narang (Deputy CEO) Mohit Shrimal (Manager)

DESIGN Joybroto Dass (Art Director) Jaison Jose (Sr. Graphic Designer)

ADMINISTRATION Jose James

CIRCULATION

The impact of inadequate transmission infrastructure is visible in the lower participation across recent tenders. There have been a number of cases of bid due date extensions of tenders issued by various agencies. SECI’s recent 2 GW wind tender witnessed an undersubscription of 800 MW. This was followed by NTPC postponing a number of its solar and wind power tenders and GUVNL cancelling its 500 MW wind tender. As the various ministries, government agencies and transmission companies try to resolve this issue, one key area that needs to be further explored is decentralised renewable power generation. Decentralisation ensures that generation, especially of solar power, takes place close to the load centres. Therefore, solar plants in an industrial township would be used for captive consumption and the extra energy would be supplied back to the grid. In this way, such consumers will become “prosumers” – producing as well as consuming electricity. This will not only help minimise grid-level losses but also reduce the pressure on the central grid. In this regard, recent moves by industrial and commercial conglomerates such as Walmart, Facebook, Google, Infosys, Microsoft and Amazon to start shifting to rooftop solar power in India seem to be a step in the right direction. Walmart India has installed rooftop solar plants at 17 of its Best Price stores, which meet 33 per cent of their energy requirement. In the next two years, the company aims to meet 40-50 per cent of its energy demand through solar energy. Similarly, Amazon India has decided to set up 8,000 kW of rooftop solar installations by end-2018 at its fulfilment centres and sorting facilities across the country. And this is just the beginning. As the rooftop model is adopted at the bottom of the pyramid, by SMEs, building complexes and individual households, the real benefits of locally generated solar power will be realised.

Sumita Kanjilal

PHOTOGRAPHY Pallee

PRINTING/PROCESSING IPP Ltd

OFFICE B-17, Qutab Institutional Area, New Delhi 110 016 Phone +91-11-4103 4600-01 Fax +91-11-2653 1196 Email: info@indiainfrastructure.com Website: renewablewatch.in Image courtesy: shutterstock images

July 2018 ● Renewable Watch ● 3

CONTENTS

Companies

Prices Plummet

NTPC’s clean energy strategy beyond 2022

Impact of new Chinese policy on Indian the solar market

Wind Woes

Spotlight

Tepid response to SECI’s 2 GW auction

Solar power in India

CONTENTS NEWS BRIEFS TRENDS AND DEVELOPMENTS Prices plummet: Impact of new Chinese policy on the Indian solar market

Wind woes: Tepid response to SECI’s 2 GW auction Risk assessment: Impact of competitive bidding on the wind power segment Digitalising operations: Growing role of IT in renewables Waste value: Promoting refuse-derived fuels to channelise municipal solid waste Balanced growth: Managing the impacts of solar parks on biodiversity Tender update: Recent issues and bid extensions

20 24 26 28 29

“We are focused on India’s wind needs”: Interview with GE’s Gilan Sabatier Brookfield Asset Management: Building its portfolio through the owner-operator route FINANCE Changing funding needs: Moving beyond traditional financing models in the solar segment

42 44 46

SPOTLIGHT: SOLAR POWER IN INDIA Solar trends: Challenges persist despite favourable policies 50

Regulatory focus: Enabling provisions needed to ease renewable energy procurement Still stressed: Discoms continue to grapple with financial challenges Sluggish growth: Implementation challenges continue to plague the segment Efficient operations: Emerging solar O&M practices

PERSPECTIVE

Building capacity: Big tenders, new challenges and 36 emerging opportunities in the solar segment Views of SECI’s Jatindra Nath Swain: “Tariffs are expected 40 to reduce further” 4 ● Renewable Watch ● July 2018

COMPANIES NTPC Limited: Clean energy strategy beyond 2022

52 53 54 56

CONTENTS

Views of J.N. Swain “Tariffs are expected to reduce further”

State Focus Nurturing the Northeast

CONTENTS An emerging opportunity: Solar-wind hybrids attract attention Microgrid solution: Electrifying villages through decentralised generation Legal angle: Understanding EPC contracts to avoid litigation Enabling ecosystem: NESM aims to boost indigenous manufacturing of energy storage systems

58 59 60 61

STATE FOCUS: THE NORTHEAST Nurturing the Northeast: Focus on tapping the region’s vast renewable potential to improve power supply

WORLD VIEW Towards decarbonisation: Integrating Europe’s energy networks

UP AND COMING A promising start

Rohit Bajaj, IEX Bhajan Pratap Singh, DERC Pranay Mundra, Gensol Engineering Private Limited

74 74 75 75

EVENT WATCH

DATA AND STATISTICS

Tender results: Winners across recently auctioned solar capacities

PROJECT WATCH Progress update: Plants of 1 MW and above capacity

PHOTOGALLERY Sector snapshots

6 ● Renewable Watch ● July 2018

PEOPLE B. Seshukumar, APEPDCL

FORM IV Publisher: Alok Brara Printer: Alok Brara Owner: India Infrastructure Publishing Private Limited Editor: Alok Brara Printing Press: International Print-o-Pac Limited, C-4 to C-11, Hosiery Complex, Phase-II Extension, Noida 201305 Place of Publication: B-17, Qutab Institutional Area, New Delhi 110 016

NEWS BRIEFS

National News Policy

he Ministry of Power has amended the competitive bidding guidelines for the procurement of power from grid-connected solar photovoltaic (PV) projects. Under the new guidelines, the land acquisition period and the time frame for achieving financial closure for the projects has been increased from seven months to 12 months from the date of execution of the power purchase agreement (PPA). In addition, the time frame for project commissioning has been increased from 13 months to 21 months from the date of PPA execution, whereas for the commissioning of projects of 250 MW and above capacity outside a solar park, it has been increased from 15 months to 24 months. The ministry hopes that the extensions will ensure timely project execution and fewer disputes between the developers and procurers on account of time constraints or delayed project commissioning.

he Ministry of New and Renewable Energy (MNRE) has announced the targets for tapping the country’s offshore wind potential. The targets have been set at 5 GW by 2022 and 30 GW by 2030. This announcement was made after the first ever expressions of interest (EoIs) invited for an offshore wind project received a positive response from developers. These EoIs were invited by the National Institute of Wind Energy (NIWE) in April 2018. According to studies, there is a high offshore wind potential in southern regions of the peninsula and along the western coast.

he Gujarat government has announced the Wind-Solar Hybrid Power Policy, 2018. As per the policy, developers can set up wind power plants on land that is currently in use for solar power generation. Similarly, a solar power project can be set up on the land being used for wind farms. The existing transmission lines can be utilised for the proposed renewable energy projects. These projects are classified into two categories, A and B. Type A projects include existing or under-construction solar or wind projects, which can be converted into hybrid projects by developers. Type B projects include new wind-solar hybrid projects that have not yet been registered with the Gujarat Energy Development Agency. Type B developers will have to set up dedicated lines for power evacuation up to the receiving end station of the Gujarat Energy Transmission Corporation at their own cost. 8 ● Renewable Watch ● July 2018

The electricity generated from such hybrid wind and solar units will be exempted from power duty. The new policy also has a provision for 50 per cent electricity duty exemption for the sale of power to a third party. For hybrid captive plants, it provides total exemption from cross-subsidy surcharge and additional surcharge, and 50 per cent relief in wheeling charges and distribution losses. The benefits and rebates will be applicable for a period of 25 years or the life cycle of the project.

he Gujarat government has launched the Suryashakti Kisan Yojana for farmers. Under the scheme, farmers can generate electricity and sell the surplus to power distribution companies. As per the scheme, farmers with an existing electricity connection will be given solar panels, depending on their load requirements. The state and central governments will provide a 60 per cent subsidy on the cost of the project. Farmers will be required to bear 5 per cent of the cost, while 35 per cent will be provided to them as an affordable loan with interest rates of 4.5-6 per cent. The duration of the scheme is 25 years, divided into two periods of seven and 18 years. For the first seven years, farmers will receive Rs 7 per unit of energy sold to discoms, while for the subsequent 18 years they will get a rate of Rs 3.50 for each unit. The project aims to benefit about 2.6 million farmers with power connections.

he Himachal Pradesh government has announced a subsidy of 10 per cent or Rs 4,000 per kW, whichever is less, for all state consumers and institutions installing rooftop solar power plants on their buildings. This will be provided in addition to the central government subsidy. This step has been taken by the state government to promote the adoption of rooftop solar by consumers in hilly areas to meet their energy requirements. The subsidy amount will be directly deposited in the bank account of the consumers by HIMURJA.

Regulations

he Central Electricity Regulatory Commission (CERC) has issued the draft regulations for deviation settlement mechanism and related matters for 2018. According to the regulations, forecasting and power procurement planning by the utilities should be improved. In addition, area control error should be monitored along with deviations. A “gate closure” concept should be introduced for better optimisation of the scheduled despatches. The CERC has suggested the linking of the deviation settlement mechanism price vector with the existing market-discovered prices in the day-ahead market. The number of time slots should also be increased in the power exchange market to provide adequate opportunities to participants.

he MNRE has issued an order to extend the commercial operation date (COD) of solar PV projects affected by the imposition of the goods and services tax (GST) and related issues. The MNRE order comes in response to requests from developers seeking an extension in the scheduled COD of solar PV projects, citing temporary business disruption and subsequent delays in project

NEWS BRIEFS commissioning because of GST introduction from July 1, 2017. The COD extension is allowed for a period of up to two months. Only those projects that have an overlap in their COD and the two-month period from July 1, 2017 to August 31, 2017 are eligible to claim this extension.

he MNRE has notified new benchmark costs for off-grid solar PV systems, grid-connected rooftop solar projects, solar pumps and solar lighting systems for financial year 2018-19. These new benchmark costs will be applicable to all implementing agencies involved in the development of projects awarded under the off-grid and decentralised solar programme. They will also be valid for agencies that are involved in developing rooftop solar and smallscale solar power projects but that have not yet issued the work orders or letters of award (LoA).

he MNRE has amended the guidelines for the implementation of the viability gap funding (VGF) programme for solar PV projects aggregating 750 MW of capacity under the National Solar Mission Phase II. As per the amendments, mandatory registration with the state nodal agency will not be required for projects implemented by the Solar Energy Corporation of India (SECI). Earlier, it was required to register with the state nodal agency and obtain approval for project implementation. However, this process was time-consuming and delayed project commissioning. The amendment is expected to save a significant amount of time for developers.

he MNRE has issued a series of guidelines for conducting tests on solar PV modules. These tests are to be conducted by test labs for the compulsory registration of modules with the Bureau of Indian Standards as per the Solar Photovoltaics Systems, Devices and Component Goods Order, 2017.

he Maharashtra Electricity Regulatory Commission (MERC) has approved the tariffs proposed by Maharashtra State Electricity Distribution Company Limited (MSEDCL) for the long-term procurement of 500 MW of wind power to fulfil its non-solar renewable purchase obligations (RPOs). In March 2018, MSEDCL had auctioned 500 MW of grid-connected wind power capacity to meet its nonsolar RPO. Two bidders, Adani Green Energy Limited and KCT Renewable Energy Private Limited, had quoted the lowest tariff of Rs 2.85 per kWh to develop 75 MW of wind projects each. Inox Wind Limited, Mytrah Energy Private Limited and Hero Wind Energy Private Limited had quoted a tariff of Rs 2.86 per kWh to develop 50 MW, 100 MW and 75.6 MW respectively. While Torrent Power had bid for 146 MW, it was awarded only 124.4 MW of the remaining capacity. The request for selection (RfS) bids for the projects had been invited by MSEDCL in December 2017.

ERC, in its order, has clarified that solar power generators cannot simultaneously use both open access and net metering facilities for a project. The commission also ruled that net metering benefits will be limited to rooftop solar installations of up to 1 MW 10 ● Renewable Watch ● July 2018

only. For generators having project capacities of 1 MW and above, net metering will not be provided and open access rules will apply. The MERC order came in response to a petition filed by CleanMax Solar seeking net metering permission for a 991 kW rooftop solar PV project on the premises of Asahi India Glass Limited in MIDC-Taloja, Maharashtra. The commission rejected the petition stating that net metering and open access were two different sets of arrangements for different consumers and required separate regulatory frameworks.

ERC has passed a ruling stating that net metering for rooftop solar projects can be availed of by installations of up to 1 MW only. The ruling came in response to a petition filed by Bharat Electronics Limited (BEL), a Government of India enterprise under the Ministry of Defence, requesting clearance for the implementation of a 3 MW net metered solar power project at the Ordinance Ammunition Factory in Khadki, Pune. As per MERC’s regulations, BEL’s 3 MW captive solar project falls under the category of open access. Thus, BEL will be treated as an independent power producer availing of open access. The company will have to pay appropriate open access charges such as wheeling charges, a cross-subsidy surcharge, and Maharashtra State Load Despatch Centre (MSLDC) fees. However, these additional charges could impact the viability of the project. The commission has also rejected a similar petition from Maharashtra Metro Rail Corporation.

Projects

ECI has invited RfS bids for the development of 2,500 MW of interstate transmission system (ISTS)-connected wind-solar hybrid power projects under Tranche I. SECI has fixed a ceiling tariff of Rs 2.93 per kWh for the tender. As per tender guidelines, a single bidder is allowed to bid for a minimum capacity of 200 MW and a maximum of 500 MW. The minimum project size that can be developed at a single location is 50 MW. In case of a shortfall in generation, the developers will have to pay a compensation to SECI. In case of overgeneration, SECI will purchase the excess power generated at the PPA tariff. SECI will sign the PPA with successful hybrid project developers for a time period of 25 years from the PPA signing. The projects are expected to be implemented on a build-own-operate (BOO) basis. The last date for bid submission is August 8, 2018.

total of six companies have won the bids for implementing 2,000 MW of ISTS-connected solar power projects tendered by SECI. ACME has won the bids to develop 600 MW of capacity by quoting the lowest tariff of Rs 2.44 per kWh, while the Shapoorji Pallonji Group has won 250 MW capacity at a tariff of Rs 2.52 per kWh. Hero Future Energies and Mahindra Susten have won bids to develop 250 MW each by quoting Rs 2.53 per kWh. Azure Power quoted Rs 2.53 per kWh to develop 600 MW capacity. Mahoba Solar (Adani), which submitted bids for 500 MW, has been allotted only 50 MW. SECI had invited these bids in January 2018. The ISTS-connected solar power projects will be implemented in eight

NEWS BRIEFS packages of 250 MW capacity each on a BOO basis. SECI will sign PPAs with the successful bidders for a 25-year period within three months from the date of issue of the Letter of Intent (LoI).

ECI has invited RfS bids for the development of 2,500 MW of ISTSconnected wind power projects under Tranche VI. This is a global tender, in which limited liability partnerships (LLPs) are not eligible to participate. A single bidder can bid for a minimum of 50 MW and a maximum of 300 MW. The projects are required to be designed for interconnection with the Central Transmission Utility (CTU) network at voltage levels of 220 kV or above. The developers will be responsible for the maintenance of the transmission system up to the interconnection point. They will also be responsible for obtaining all the approvals, permits and clearances required, including those required from state governments. The projects will be developed on a BOO basis and the successful bidders will enter into 25year PPAs with SECI. The time frame for commissioning the project has been set at 18 months from the effective date of the PPA. A developer will be allowed a maximum of 27 months to commission the project.

he SECI has issued a tender on behalf of the Military Engineer Services for the development of two 1.5 MW solar power projects with battery energy storage systems (BESS) at Tangtse and Durbuk in the Leh district of Jammu & Kashmir. The successful bidder will also be responsible for providing O&M services for a period of 10 years. The O&M contract will include the supply and storage of all mandatory spare parts and consumables, and repairs and replacements of any defective equipment during the period.

ECI’s 2 GW Tranche V wind tender has been undersubscribed by 800 MW. The tender was launched in May 2018. Reportedly, bids for an aggregate capacity of only 1,200 MW have been received against the tendered capacity of 2 GW. According to Mercom India, ReNew Power, Adani Green, Sprng Energy and Alfanar have each submitted bids for 300 MW of capacity.

ECI has auctioned 3 GW of solar PV capacity, which was tendered in February 2018. ACME emerged as the lowest bidder by quoting a tariff of Rs 2.44 per kWh. It will develop 600 MW. Azure Power won 300 MW by quoting a tariff of RS 2.64 per kWh. Rutherford Solar Farms (Canadian Solar) quoted Rs 2.70 per kWh and will develop 200 MW. Both Adani Green and ReNew Power quoted a tariff of Rs 2.71 per kWh for developing 300 MW and 500 MW respectively. SBE Renewables (SoftBank) also quoted a tariff of Rs 2.71 per kWh for 1,800 MW of capacity, however, it was awarded only 1,100 MW. A total of 12 bidders had submitted technical bids totalling 5.1 GW against the tendered capacity of 3 GW.

total of 35 companies have submitted EoIs for the development of 1,000 MW of commercial offshore wind farms in India, off the coast of Gujarat. These include Van Oord India Private Limited. Orstead;

12 ● Renewable Watch ● July 2018

Greenko Clean Energy Projects Private Limited in a joint venture (JV) with Senvion; the Alfanar-Senvion JV; Sterlite Power Grid Ventures Limited-GE T&D India Limited JV; Copenhagen Infrastructure Partners-Greenko Wind Projects Private Limited (Greenko Wind)Siemens Gamesa JV; SembCorp Green Infra Limited-Senvion JV; consortium of Torrent Power and Vaayu (I) Power Corporation Limited; Inox Wind India Limited; Mainstream Renewable Power Limited; and Park Wind. National Institute of Wind Energy (NIWE) had invited the EoIs for the same in April 2018.

TPC Limited has invited bids for development of the 22 MW Kayamkulam floating solar PV project at the Rajiv Gandhi combined cycle power plant in Kayamkulam, Kerala. The scope of work involves design, engineering, manufacturing, supply, packing and forwarding, transportation, unloading, storage, installation and commissioning of the grid-connected project, along with comprehensive operations and maintenance (O&M) of the plant and the transmission system for a period of three years from the date of completion of the trial run.

ajasthan Electronics and Instruments Limited (REIL) has reinvited bids for the implementation of 50 MW of grid-connected rooftop and small-scale solar power projects for government buildings in different states and union territories of India. A single project can comprise several rooftop units though the minimum size of each project would have to be above 1 kW. The scope of work involves site survey, design, manufacture, supply, erection, testing and commissioning along with the setting up of an associated power evacuation and transmission systems. The developer will also provide warranty and operations and maintenance (O&M) for a period of 25 years. Incentives will be provided to developers setting up projects on government buildings and institutions. The projects will be implemented under the renewable energy service company model and the last date for bid submission is July 28, 2018. According to REIL, the projects have been retendered as a result of the new benchmark costs for grid-connected rooftop solar PV projects determined by the MNRE. The new costs will now be applicable to the tender.

ailway Energy Management Company Limited (REMCL) has tendered 54 MW of wind power projects to be developed in Maharashtra. The projects will be developed on a BOO basis and power will be procured by Central Railway for a 25-year period. The upper tariff ceiling for this tender has been fixed at Rs 2.93 per kWh. This is a global tender in which LLPs are not allowed to participate. As per the tender guidelines, a single bidder is eligible to bid for the entire capacity tendered. The wind projects must be designed for interconnection with the CTU transmission network for interstate transmission and the state transmission utility for intra-state transmission. The time frame for commissioning the project has been set at 12 months from the effective date of the PPA and the developer will be allowed a maximum of 27 months to commission the project

NEWS BRIEFS after encashing the performance bank guarantee.

arnataka Renewable Energy Development Limited (KREDL) has awarded a total capacity of 500 MW to developers for setting up projects located at the Pavagada solar park. The Fortum Corporation and Tata Power Renewable Energy Limited have won a capacity of 250 MW each by quoting a tariff of Rs 2.85 per kWh. The LoAs were issued to the companies on June 28, 2018 and PPAs would be signed within one month from this date. This capacity is part of the 650 MW tender that was reissued by KREDL in April 2018, to be developed at the Pavagada solar park. The decision on the remaining 150 MW capacity is still awaited.

he Karnataka Urban Water Supply and Drainage Board has invited EoIs to set up floating solar power projects over reservoirs in three regions of Karnataka–Manvi, Sirguppa and Ballari city. The board intends to lease 60-70 acres of area for a total period of 30 years through urban local bodies in the cities. The projects would be developed under the BOO model on a revenue sharing basis. The power generated from the floating solar plants will be sold to Karnataka Power Transmission Corporation Limited. According to the tender guidelines, interested developers with prior experience of setting up similar projects can submit their proposals after paying a sum of Rs 5,900.

aharashtra State Power Generation Company Limited (MSPGCL) has invited request for proposal (RfP) bids for the implementation of 750 MW of grid-interactive solar PV power plants at various locations in the state. As per the tender document, MSPGCL has given a “greenshoe” option wherein the project developer can produce an extra 250 MW of solar power at the lowest quoted tariff. MSPGCL has fixed Rs 3.25 per kWh as the ceiling tariff for the tender. A single bidder can bid for the entire tendered capacity. To be eligible for bidding, a bidder has to bid for a minimum project size of 2 MW at a single location. In addition, all bidders will have to identify the land required for their projects at a distance of 3 km from a substation. MSPGCL has also provided a list of substations for bidders. MSPGCL will sign PPAs for 25 years with successful bidders at the tariff rate discovered through the reverse bidding.

total of nine companies have won bids for implementing 1,000 MW of solar PV projects in Uttar Pradesh. Mahoba Solar and Maheshwari Mining and Energy have won 250 MW and 20 MW of capacities respectively by quoting the lowest tariff of Rs 3.48 per kWh. Meanwhile, ACME Solar, Feynman Solarfarms and Sukhbir Agro Energy have won 150 MW, 50 MW and 50 MW respectively at a tariff of Rs 3.54 per kWh. Rays Power Infra, Eden Renewable Jasmin, ACME Solar, Azure Power, Hero Solar Energy and Feynman Solarfarms have won 50 MW, 50 MW, 150 MW, 160 MW, 50 MW and 20 MW respectively at Rs 3.55 per kWh.

ourteen companies have submitted technical bids for the development of the 200 MW grid-connected PV project in Odisha. These

14 ● Renewable Watch ● July 2018

are Sukhbir Agro Energy Limited (25 MW), Eden Renewable Varenne Private Limited (50 MW), Jyoti Infrastructure Private Limited (20 MW), Mender Solar Private Limited (25 MW), Tepsol Photovoltaic Private Limited (50 MW), Aditya Birla Renewables Limited (75 MW), Gupta Power Infrastructure Limited (20 MW), Mahindra Susten (100 MW), Grewal Associates Private Limited (30 MW), Essel Infraprojects Limited (100 MW), Giriraj Renewable Private Limited (100 MW), Azure Power India Private Limited (100 MW), Hero Solar Energy Private Limited (100 MW) and ACME Solar Holdings Limited (50 MW). With this, the tender issued by Grid Corporation of Odisha in April 2018 has been oversubscribed by 845 MW.

Finance

ourth Partner Energy has raised an investment amount of $70 million from The Rise Fund, a global impact investment fund managed by TPG Growth. For this transaction, Investec, along with KPMG, acted as the adviser to Fourth Partner Energy and Shardul Amarchand Mangaldas provided diligence and legal advisory services to The Rise Fund and TPG Growth. The company plans to use this investment to strengthen its position in the renewable energy sector and accelerate its growth through the renewable energy service company (RESCO) model across the industrial, commercial and public sectors. Fourth Partner is expected to utilise the funds to fulfil its target of managing over 1 GW of distributed solar assets by 2022. In addition, this will allow the company to deliver new solutions and expand its operations in Southeast Asia, the Middle East and Africa.

CME Solar Holdings has announced plans to re-evaluate its proposed initial public offering (IPO). As per media sources, the organisation is likely to downsize the IPO from Rs 22 billion to Rs 10 billion-Rs 15 billion. In October 2017, ACME had filed a draft red herring prospectus with the Securities and Exchange Board of India (SEBI) for a Rs 22,000 million IPO at a face value of Rs 10 per share. ICICI Securities, Citigroup Global Markets India, Deutsche Equities India and Link Intime India Private Limited were appointed to manage the IPO. Currently, Deutsche Equities India has made its exit from the consortium. ACME is now planning to sell a portion of its assets and resubmit the draft prospectus with the revised numbers to SEBI.

unRoof, an Indian solar rooftop start-up, has raised an amount of Rs 16.6 million in the second round of angel funding from the I3N (intellecap impact investment network). The funding was led by representatives from the Asian Development Bank, L’Oreal (UK & Ireland), Paipal Ventures, Dalberg Advisors and a group of IIT Kharagpur alumni based in the US. According to ZunRoof, the company’s sales run rate is approximately Rs 411.6 million and the funds raised in this round will be deployed to triple the sales in a 12-month time frame. In addition, part of the funds will be used to scale up technology, especially the internet of things (IOT)-based sense and monitoring devices developed by the company. ■

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NEWS BRIEFS

International News

development, the World Bank has approved a $40 million credit to Madagascar under the International Development Association (IDA) programme for boosting governance and operations in its power sector. The fund will help the implementation of the performance improvement plan of JIRAMA (Jiro sy rano malagasy), a state-owned electric utility, under the Madagascar Electricity Sector Operations and Governance Improvement Project.

he National Energy Administration (NEA) of China has decided to discontinue feed-in tariffs and released the 2018 Wind Farm Construction and Management Rules, detailing the auctioning system for future wind power projects. Henceforth, all onshore and offshore wind farms will go through competitive bidding processes based on the cost of construction and power prices. The government has also set an upper tariff ceiling for the projects. While the increase in competition is expected to reduce wind power tariffs, the equipment costs will be passed on to the entire supply chain.

he African Development Bank (AfDB) has approved a $27.78 million project to secure a loan from Société Générale de Banque in Côte d’Ivoire, Crédit Agricole Corporate and Investment Bank. The funds will be utilised for helping Zola EDF Côte d’Ivoire (ZECI), an African solar power kit supplier, to provide solar home systems to approximately 100,000 rural households based on a pay-as-you-go basis. It is the first large-scale local currency financing model for the off-grid renewable energy segment in Africa. The Grameen Crédit Agricole Foundation will also participate in the funding of ZECI, while monitoring the environmental and social rules. AfDB will act as a partial credit guarantor by covering part of the guaranteed loan facility. This project will also benefit AfDB’s High 5S vision called Light Up and Power Africa.

he Asian Development Bank (ADB) has raised Euro 600 million for supporting climate change mitigation and adaptation projects by issuing a seven-year green bond. The bond has a coupon rate of 0.35 per cent payable annually. The green bond will mature on July 16, 2025. Proceeds from this bond will be used for non-concessional operations. The transaction was managed by the Bank of America Merrill Lynch, Citi and Credit Agricole CIB. According to ADB, the green bond issue achieved a strong market share of nearly 90 per cent in Europe, the Middle East and Africa, and 10 per cent in Asia. By investor type, 39 per cent of the bonds went to central banks and official institutions, 12 per cent to banks, and 48 per cent to fund managers, insurance, pension funds and others.

DB has announced a loan of $20 million to Bangladesh under its Power System Efficiency Improvement Project for the development of off-grid solar solutions in the country. In addition, the bank will provide a $25.44 million grant to develop off-grid solar pumping for agricultural irrigation – $22.4 million from the Scaling up Renewable Energy in Low Income Countries Programme and $3 million from the Clean Energy Fund for Outputbased Aid under the ADB-administered Clean Energy Financing Partnership Facility.

he World Bank has announced a $500 million fund to develop two solar power plants along the Khyber Pass in Sindh, Pakistan. The Sindh Solar Energy Project will support independent power producers in building 400 MW of new solar power capacity. The project is expected to cost $100 million and the World Bank will also provide grants to private sector companies for the installation of solar home systems in around 200,000 households. In a separate 16 ● Renewable Watch ● July 2018

ndia has announced an upcoming partnership with Suriname to develop solar energy projects in Suriname. Reportedly, India will support Suriname by providing a concessional funding of $20 million to set up a solar project, which will cater to the power needs of 49 cluster villages in the country. At the International Solar Alliance (ISA) conference held in New Delhi in March 2018, Dési Bouterse, president of Suriname, presented the Instrument of Ratification on the Framework Agreement on the Establishment of the ISA.

he Public Investment Fund (PIF) of Saudi Arabia has acquired a 15.2 per cent stake in the International Company for Water and Power Projects (ACWA Power). ACWA Power is a developer, owner and operator of power generation and water desalination plants. While HSBC acted as the sole financial adviser to PIF, JP Morgan acted as the sole financial advisor to ACWA Power. PIF will now become a 15.2 per cent direct shareholder in ACWA Power. If the 9.78 per cent ownership of PIF’s wholly owned subsidiary, Sanabil Direct Investments Company, is considered, the state company will directly and indirectly represent a 24.98 per cent equity interest in ACWA Power. The proceeds will be used to support ACWA Power’s growth strategy and investment plans.

innish energy developer Fortum has won a Russian Capacity Supply Agreement (CSA) auction to set up 110 MW of solar capacity. In the same CSA auction, the Fortum-Rusnano wind investment fund, in which Fortum has 50 per cent ownership, won the contract to set up 823 MW of wind power capacity. For the solar project, Fortum will receive a guaranteed power price of Euro 150 per MWh, and for the wind power project, it will receive a guaranteed power price of Euro 60-Euro 90 per MWh for 15 years. Both projects are expected to be commissioned 2021-22.

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osnia’s autonomous Serb Republic has rolled out a tender for the construction of a 65 MW solar power project in the south-eastern region of the country. The project will be located near Ljubinje and generate 104 GWh of electricity per year to be sold in the open market. It is estimated to cost 150 million Bosnian marka or about $89.4 million and will cover an area of 80 hectares. The project developer will be responsible for the construction of substations, power units and access roads, the installation of solar panels, inverters and transformers, laying of transmission lines, installation of safety and security systems, etc. In addition, the project operator will hold a 50-year concession to operate the project.

he Armenia Renewable Resources and Energy Efficiency Fund has awarded a contract to Fotowatio Renewable Ventures (FRV), a developer of renewable energy utility-scale projects, to set up a 55 MW solar photovoltaic project in the country. The Masrik-1 plant is expected to power 21,400 homes. It will be spread over an approximate area of 100 hectares. The project will contribute towards the reduction of greenhouse gas emissions by preventing the release of about 54,000 tonnes of CO2 into the atmosphere each year. FRV is expected to begin construction in early 2019 and commission the project by end 2020.

G Electronics, a South Korean electronics company, is planning to develop a 500 MW solar module manufacturing unit in Huntsville, Alabama, US. To this end, the company will invest $28 million in the facility, which, in turn, would help create 160 job opportunities. Reportedly, LG will build the new factory with two production lines in an existing building on the company’s 48 acre campus in Huntsville. The facility will manufacture n-type solar panels and is expected to start operations in early 2019.

olar cell and module manufacturer Hanwha Q CELLS has signed a multiparty MoU, under which it will supply rooftop solar modules at various gas stations across South Korea. The company will provide these panels to gas stations that are members of the Korea Oil Station Association. The projects will save land space by utilising the unused space of gas stations’ rooftop, which are typically taller than other adjacent structures in South Korea. In addition, these rooftop projects will be connected to the distributed generation system. According to preliminary estimates, all 13,000 gas stations in Korea can install rooftop solar to generate 300 MW, which could be sufficient to meet the electricity demand of 90,000 households every year. Reportedly, gas station owners can receive renewable energy certificates by installing solar.

ingli Green Energy, a Chinese solar panel manufacturer, has been delisted from the New York Stock Exchange (NYSE) due to the company’s inability to meet the listing standards under Section 802.01B of the NYSE manual. Reportedly, Yingli was unable to maintain a minimum average global market capitalisation of $50 million over a consecutive 30-day trading period. In addition, Yingli’s stockholder equity was found to be less than $50 million. 18 ● Renewable Watch ● July 2018

nlight Renewable Energy has secured a 525 million shekel ($145 million) funding to set up Israel’s largest wind energy project. The 96 MW project will cost an estimated 660 million shekels. The financing was led by Hapoalim, an Israeli Bank, with the other participants being Harel Insurance and Phoenix Holdings. The project will be developed by Enlight and its partners in Golan Heights, an Israeli-controlled region near the Syrian frontier, over a period of two years. Enlight has signed agreements with General Electric for the supply of wind turbines and the operation of the wind farm for 20 years.

iemens Gamesa has signed a contract to supply 92 turbines with a combined capacity of 289 MW for 10 wind farms across Spain. The company will provide 58 units of its SG 3.4-132 model, 28 units of its SG 2.6-114 model and six units of its SG 2.1-114 model to five developers that were awarded wind projects in auctions recently held in the country. As per the contract, Siemens Gamesa will also operate and maintain the new facilities. The turbine delivery is expected to begin in October 2018.

he Japanese government has announced a plan to boost renewable energy generation in the country. Under the plan, 22-24 per cent of the country’s energy needs will be met by renewable sources by 2030. Currently, this figure stands at around 15 per cent. Japan’s energy policy also envisions nuclear energy meeting over 20 per cent of the country’s energy needs by 2030.

talian energy firm Enel SpA has hired Rothschild & Co. to sell two solar and one wind farm in north-eastern Brazil. The plants are located in the states of Bahia and Piaui, and have a total capacity of about 540 MW. Of this, around 450 MW comprises solar power and 90 MW is wind power. In June 2018, Enel acquired a majority stake in power company Eletropaulo Metropolitana Eletricidade de Sao Paulo SA, after paying around $1.5 billion, to become Brazil’s largest electricity distributor.

he government of Flanders, Belgium, has approved a draft decree allowing energy companies to sell electricity to each other under a “direct line” model (Directe lijn), starting January 1, 2019. The new rules would improve power purchase agreement signing conditions among private companies, and boost the development of commercial and industrial renewable energy projects. Also, electricity buyers will be exempt from paying grid fees or charges.

he World Bank has approved funds for a $19.95 million project aimed at improving electricity access and supporting renewable energy expansion in the Solomon Islands. The project will help the government in boosting renewable energy generation and reducing the reliance on expensive, imported fossil fuels. The project will focus on providing electricity connections to households, small businesses, and community infrastructure such as schools and health centres throughout Honiara and surrounding towns, and is expected to benefit over 9,300 rural residents. ■

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Prices Plummet Impact of new Chinese policy on the Indian solar market By Dolly Khattar

n May 31 this year, a mere two days after the end of the 12th SNEC International Photovoltaic Power Generation Conference, the world’s largest solar conference and a central gathering of all Chinese photovoltaic (PV) manufacturers, the National Development and Reform Commission, Ministry of Finance and National Energy Administration of China announced a nationwide solar subsidy cut that resulted in Chinese solar stocks crashing. Specifically, the government issued the 2018 Solar PV Generation Notice, imposing a 10 GW cap on capacity for distributed generation projects, and suspending arrangements for utility-scale projects that were to be set up during 2018. This is a steep drop from last year’s installation of 19 GW of distributed generation projects (out of 53 GW of all PV projects set up in China in 2017). The notice encourages the local governments to come up with more solar-supportive policies to reduce non-technological costs and as a result,

20 ● Renewable Watch ● July 2018

to reduce the need for solar subsidies from central and local governments. The notice further states that feed-in tariffs (FiTs) for renewable energy projects as well as the subsidy for off-grid distribution generation projects would be reduced by CNY 0.05 per kWh with effect from May 31, 2018. The energy subsidy for off-grid distribution generation systems would be CNY 0.32 per kWh after the reduction. Finally, the notice emphasises that the marketisation of China’s solar industry is crucial. This includes further implementation of bidding processes for power purchase (of newly built utility-scale solar projects), project acquisition and project development (for utility-scale and distributed generation projects). It urges the local governments to enforce regulations that encourage fair competition in the local solar markets. This sudden, stringent move by the

world’s largest solar PV market, both in terms of project development and manufacturing, is difficult to ignore. Before delving into its impact on the global PV market and, more specifically, on the Indian solar segment, it is important to highlight the reasons that pushed the Chinese government to make this decision. As indicated by officials at a press meeting organised by the issuing agencies, there were four key reasons for the notice. One, the central government was concerned about the present insufficiency of transmission infrastructure. Two, the central government is facing budget shortfalls resulting from the large pre-existing solar subsidies. Three, the central government intends to shift more responsibility for further development of the solar industry to local governments. Four, the government hopes to transition China’s solar industry from quantity-oriented to quality-oriented. If observed closely, India is also facing similar issues. The country’s flagship renewable energy programme is headed for rough weather on account of procedural wrangles amongst government agencies, including transmission utility Power Grid Corporation of India Limited (Powergrid) and planning body Central Electricity Authority (CEA). Work on transmission corridors for future green energy projects has not taken off and is pushing the Solar Energy Corporation of India (SECI) as well as state nodal agencies to slow down future bidding for wind and solar projects. The impact is already visible. SECI’s latest tender for 2,000 MW of wind energy capacity has been undersubscribed by 800 MW, and there is a chance that the tender may be scrapped altogether, as a lack of transmission infrastructure continues to plague clean energy players. Several other SECI and state-level tenders have been postponed, as developers are hesitant to invest in projects without visibility on the transmission side. Much like in China, the renewable push in India has largely been led by the central government. A significant majority of the renewable capacity has been set up via

T R E N D S & D E V E LO P M E N T S central government tenders, as most of the state-level tenders face issues pertaining to the creditworthiness of offtakers. However, this trend is gradually changing with a number of state governments launching their individual solar programmes. The tariffs quoted under state-level tenders are sometimes much higher compared to those quoted under SECI-issued tenders. Take, for instance, the results of two recent tenders – a 3 GW tender issued by SECI and a 1 GW tender issued by Uttar Pradesh New and Renewable Energy Development Agency (UPNEDA). The lowest tariff quoted under the SECI tender was Rs 2.44 per kWh, while in the case of UPNEDA, it was Rs 3.48 per kWh. Some may argue that the key reason for the higher tariff under the UPNEDA tender is higher land prices, compared to greater economies of scale achieved by setting up a project under a solar park model, which was adopted by SECI. But it is important to give considerable weightage to the poor financials of the state discoms for developers to arrive at the quoted tariff. Another parallel between Chinese and Indian solar segments pertains to the transition from quantity-oriented to quality-oriented development. In its bid to achieve the 175 GW target by 2022, the Indian government needs to ensure that there are stringent checks on quality control. The only exception pertains to decentralised generation, and that too partially. The Indian rooftop segment, which was earlier being driven by a subsidy-led model, is beginning to witness sizeable growth, led by industrial and commercial consumers that receive no government subsidy. The residential segment, however, is yet to witness significant growth. These are all signs that the government needs to review its renewable goals and strategies, including its target to develop capacity for indigenous solar manufacturing. At present, the installed capacity for solar cell production – which is the basic and most essential building block for solar power generation – is 3.1 GW. The installed capacity for the production of solar panels

(or modules), which are produced by assembling solar cells, is 9 GW. An interesting point to note is that the 21 GW capacity of solar power deployed so far has been largely attained using imported solar cells and solar panels, defeating the entire purpose of achieving energy security. Further, the country must upgrade the existing transmission and distribution infrastructure to accommodate both utility-scale and rooftop solar power plants efficiently. Problems notwithstanding, the country’s renewable energy sector appears ready to grow considerably, with a large number of domestic and international developers and investors placing their bets on this market. For these developers and investors, the “China effect” will definitely be beneficial. For domestic manufacturers, on the contrary, the impact is likely to be detrimental.

Impact on equipment prices and tariffs An immediate consequence of the Chinese policy will be a steep reduction in demand in their domestic solar market, which will result in a decline in the global average selling price of solar modules, given that China is the world’s biggest solar market. According to Bloomberg New Energy Finance, manufacturing overcapacity in China is estimated to result in a 35 per cent global module price decline in 2018. However, the expected decline in the global average selling price for modules in the second half of 2018 could stimulate growth in demand in 2019 and 2020, which could then slow down a further decline in module prices. Moreover, it is important to understand that China is not just a module

manufacturing country; it also has a significant amount of investment capital, solar PV accompanying equipment such as racking and inverters, and a number of solar experts. As a result, the impact of the government’s decision on the global solar industry could be much more than just a decline in module prices. With the project development freeze in China’s domestic market, billions of dollars of capital and several thousands of development personnel deployed for domestic Chinese solar projects will now be seeking new markets outside the country. This could, in turn, affect the global prices of professional services and project investments. The accompanying racking systems, inverters and other equipment produced for the domestic solar projects will also now be looking for demand in markets outside China, which could lead to a change in global prices of this equipment as well. In India, the impact is already visible in the tariffs quoted by developers in the latest auction conducted by SECI. After a brief lull, caused by concerns surrounding a rise in imported module costs due to a proposed safeguard duty, solar developers have regained their competitive aggression. The auction for 3 GW of interstate transmission system (ISTS)-connected solar PV projects witnessed the lowest tariff of Rs 2.44 per kWh. Solar tariffs hit an all-time low for the first time in May 2017, with a tariff of Rs 2.44 per

Solar equipment price trends in China May 9, 2018

May 30, 2018

June 27,2018

Mono-silicon

$19.46-19.91 per kg

$17.96 per kg

$13.47-16.46 per kg

Poly-silicon

$18.86-19.16 per kg

$15.72 per kg

$11.23-13.47 per kg

Mono-Si wafer

$0.63 per piece

$0.49-$0.52 per piece

Multi-Si wafer

$0.51-0.52 per W

$0.45 per piece

$0.34-0.37 per piece

Mono-Si PV cell

$0.24 per W

$0.23-0.24 per W

$0.18-0.19 per W (general) $0.2-0.21 per W (high-efficiency)

Multi-Si PV cell

$0.2 per W

$0.13-0.15 per W

Mono-Si module

Up to $0.4 per W

$0.39-0.4 per W

$0.37-0.39 per W

Multi-Si module

$0.36-$0.37 per W

$0.27-0.30 per W

July 2018 ● Renewable Watch ● 21

T R E N D S & D E V E LO P M E N T S unit recorded at a SECI-conducted auction for 500 MW of capacity at the Bhadla Solar Park (Phase III), Rajasthan. Thereafter, tariffs had been climbing steadily due to the rising cost of solar panels - 80 per cent of which are imported from China - as well as fears of a hefty 70 per cent safeguard duty proposed to be imposed by the Indian government to protect local solar manufacturers. The tariff rose to a high of Rs 2.94Rs 3.54 per kWh at an 860 MW auction conducted by the Karnataka Renewable Energy Development Limited in February 2018. However, the possibility of China’s export prices for PV modules plunging in the wake of its recent policy move to slow down the pace of solar capacity addition, coupled with a recent regulatory decision by the MNRE to allow pass-through of extra costs due to any duty hikes, seem to have enthused players in the solar sector to quote lower tariffs. ICRA has estimated that every 8-cent-per-watt decrease in module prices (due to cheaper Chinese imports) would lower the capital costs of Indian developers by about 13 per cent. Other factors have also contributed to a decline in solar tariffs. A recent study conducted jointly by the Council on Energy, Environment and Water and the International Energy Agency states that solar projects are receiving a boost owing to the greater size of capacities being put up for auction. This has helped developers to manage the risks related to land acquisition and the availability of evacuation infrastructure. The lowering of these risks, besides aiding the achievement of economies of scale through large project sizes in solar parks, has also contributed to the significant decline in tariffs.

On the flipside While China’s decision to scale down its solar energy targets and subsidies seems to have a positive impact on solar capacity building, for manufacturers in India, it comes as yet another blow, as they are already facing an onslaught of cheap imports from China. Domestic manufacturers say they are concerned about the ripple effect of further dumping by Chi22 ● Renewable Watch ● July 2018

nese manufacturers in India, once their internal demand is met. The Indian Solar Manufacturers’ Association had filed a safeguards petition in 2017 to look into solar imports from China and Malaysia. However, a decision is still pending. Recently, the Directorate General of Trade Remedies (DGTR) - earlier known as the Directorate General of Safeguards - heard the proposals and suggestions of stakeholders on the issue; it is expected to take a call on the matter soon. While domestic solar manufacturers are in favour of these duties, developers, which rely heavily on imported products, are otherwise inclined. From what it seems, it is highly unlikely that these duties will be imposed. In a submission before the DGTR on June 22, the European Union (EU) has questioned the need for the loss-laden Indian solar cell manufacturing industry to further ramp up capacity while 22 per cent of the existing capacity is lying idle. Further, in a recent interaction with a news channel, Amitabh Kant, chief executive officer, NITI Aayog, stated, “I am not a great believer in protectionism. I am a believer in globalisation and a believer in India being an integral part of the global supply chain. If you are not competitive, do not try and manufacture something (in an area) where you are not going to be competitive. If you are not competitive in solar manufacturing, do not attempt that, and rather get into an area where you will be globally competitive. And if you want to be competitive, then make sure that you do it in size and scale.” In light of this, it is unlikely that the government will adopt a protectionist policy for domestic manufacturers. The only ray of hope for the domestic manufacturing segment is the 5 GW solar manufacturing capacity request for service (RfS) floated by SECI in May 2018. The manufacturing capacity will be linked to ISTS-connected solar PV projects for an aggregate capacity of 10 GW. However, setting up manufacturing units as well as solar PV projects simultaneously will be a tough task for the majority of Indian players. As per the RfS, bidders selected by

SECI will have to submit two separate performance bank guarantees (PBGs) per project, at the rate of Rs 2.2 billion per GW for solar manufacturing and Rs 4 billion per 2 GW of solar PV projects, within 30 days of issuance of the letter of intent (LoI). Successful bidders will have to pay Rs 10.6 million per project in addition to the 18 per cent goods and services tax to SECI towards administrative overheads, liaising with state authorities, discoms, state transmission utilities or the central transmission utility, pre-commissioning and commissioning expenses within 30 days of issuance of the LoI. Under these conditions, SECI is turning to cash-rich Chinese manufacturers for realisation of this tender. SECI and the Indian embassy in China recently organised a seminar, “Business Opportunities in Solar Sector in India” in Beijing, aimed at promoting the RfS amongst prospective Chinese investors. The Chinese manufacturers and investors may partner with existing domestic manufacturers for the tender.

The way forward On the whole, the timing of China’s decision to cap and halt solar power development in their domestic market has been favourable for the Indian market, as the Indian government is looking to scale up capacity addition. More than 25,000 MW of tenders are currently awaiting auction and tariffs are expected to fall further. Industry experts believe that this is, in fact, a golden time to book modules and lock in margins. However, the government needs to be prudent on several fronts. First and foremost, attention must be given to the parallel development and upgradation of the country’s transmission infrastructure. Another area that needs to be looked at is qualityoriented growth. The quality control order for solar products introduced by the MNRE, which will be enforced from August 2018, is a necessary step to secure the quality and reliability of renewable power in the country. Finally, it is important to effectively devise and implement policies and regulations at both the central and state levels, to ensure the all-round development of the sector. ■

T R E N D S & D E V E LO P M E N T S

Wind Woes Tepid response to SECI’s 2 GW auction By Khushboo Goyal

fter the success of its past four wind auctions, the Solar Energy Corporation of India (SECI) released its fifth tender, in May 2018, to encourage wind capacity addition. A capacity of 2,000 MW of inter-state transmission system (ISTS)connected wind power projects was tendered with a submission deadline of July 10, 2018. Bids were invited for capacities ranging from 50 MW to 300 MW, to be developed on a build-own-operate basis, as in the case of the previous tenders. While the aim was to leverage the decline in wind tariffs and facilitate the use of cheaper wind power for meeting the renewable purchase obligations of discoms, the tender met with a lukewarm response. Contrary to expectations, the tender was undersubscribed by 800 MW. This was in stark contrast to the previous wind capacity auctions conducted by SECI, which saw a general trend of oversubscription. However, the recent tranche of auctions saw only four bids of 300 MW each by ReNew Power, Adani Green, Sprng Energy and Alfanar, against a tendered capacity of 2,000 MW. The lowest tariff quoted by the bidders in this auction was Rs 2.51 per kWh, the same as the lowest tariff discovered in the last SECI auction in April 2018. However,

Bidders under SECI’s 2 GW wind tender (Tranche V) Developer

Capacity (MW)

ReNew Power

300

Adani Green

300

Sprng Energy

300

Alfanar

300

24 ● Renewable Watch ● July 2018

ing the rules for the grant of connectivity to the ISTS. There is some discontent in the industry due to the implementation of deviation charges as well as wheeling and transmission charges for large-scale integration and transportation of wind energy through the grid. In addition, frequent payment delays by discoms, owing to their poor financial health, impede the revenue flow of developers. In light of these issues, SECI has decided to postpone the pre-bid meetings of two more tenders – the 2,500 MW ISTS-connected wind power projects (Tranche-VI) tender and the 2,500 MW wind-solar hybrid power projects tender.

the lowest tariffs quoted in two recent auctions by SECI were slightly higher than those quoted in the third auction, conducted in February 2018, in which wind tariffs dipped to Rs 2.44 per kWh. The recent auction results indicate a gradual stabilisation in the wind market, with bidders becoming more cautious in bidding in the hope of improving their returns. The undersubscription has created a predicament for SECI. So far, it has not declared the bid results and is contemplating whether to continue with the allocation or cancel the tender. According to sources, the primary reason for the lack of participation in this auction is that the current transmission infrastructure is not equipped to deal with the significant wind capacity additions planned in the short term. Developers are already complaining of massive delays in getting access to power evacuation bays for their projects. Certain instances of grid curtailment have also been reported due to connectivity issues. With delays foreseen in the completion of the green energy corridor, transmission issues will only get compounded as the gestation period of a transmission project is longer than that of a wind project. Further, there is a lot of confusion regard-

The impact of the results of the SECI Tranche V tender is also visible on state-level wind tenders. A day after these results, Gujarat Urja Vikas Nigam Limited (GUVNL) cancelled its tender for 500 MW of wind projects. The capacity was tendered by GUVNL under Phase II of its programme for the procurement of wind power through competitive bidding. Shortage of transmission is believed to be one of the key reasons for the annulment. The new tender is likely to be released after two months. Meanwhile, there is a growing interest of investors in solar power development, which is partly responsible for the decreasing share of wind in the total energy mix. In fact, this was one of the reasons that prompted the government to phase out feed-in tariffs and move to an auction regime for allocating wind power projects in the first place. While competitive bidding provided the necessary trigger to raise the competitive bar for the wind power segment in the short term, longterm issues still remain to be addressed. Going forward, the government needs to focus on addressing these challenges on an urgent basis in order to ensure active participation of developers in future auctions. The increased risks associated with wind energy projects may lead to a loss of investor confidence in the segment, and impact future capacity additions. ■

T R E N D S & D E V E LO P M E N T S

Risk Assessment Impact of competitive bidding on the wind power segment By Khushboo Goyal

he last seven rounds of bidding, four undertaken by the Solar Energy Corporation of India and one each by the states of Tamil Nadu, Gujarat and Maharashtra, proved to be quite successful. A total wind capacity of 7.5 GW was tendered in these auctions. In a span of just 15 months, wind power tariffs reached a new low of Rs 2.43 per kWh, resulting in improved wind power offtake. This has also boosted the confidence of developers and discoms alike. Although the consecutive wind capacity auctions have witnessed a positive response and mega auctions have been planned for meeting the countryâ&#x20AC;&#x2122;s wind capacity targets by 2022, the segment continues to face multiple risks that need to be mitigated in order to ensure maxi-

26 â&#x2014;? Renewable Watch â&#x2014;? July 2018

mum growth. Renewable Watch has identified the key risks faced by the industry, and grouped these under four categories on the basis of their severity and the duration of impact.

Category I risks Risks that have a high, long-term impact on segment growth as well as the concerned stakeholders are grouped under Category I risks. z High entry barriers for small players: While most of the small players do not have the required credentials to qualify for bidding in the large capacity tenders, the players that do qualify have to quote very low tariffs to stay ahead in the race, which impacts their profits. Smaller players also do not have access to low-cost financing, unlike large companies. These

factors make competitive bidding an unviable option for these players. Thus, they either take a hit on their margins or get acquired by a larger company when unable to survive. Providing concessions or launching separate auctions for smaller capacity players can help prevent the monopolisation of the wind sector and promote greater competition. Inadequate transmission infrastructure: The existing transmission system in the country is not capable of integrating large amounts of renewable energy, particularly wind, into the grid. Many bid openings have been postponed recently due to the unavailability of adequate transmission infrastructure. In some cases, wind developers have to wait for prolonged periods to get access to power evacuation bays. The delays in the cen-

T R E N D S & D E V E LO P M E N T S tral government’s Green Energy Corridor project for improving transmission infrastructure and longer gestation periods of such projects in comparison to wind projects will prolong these issues.

Risk profile of wind projects in competitive bidding Short-term impact

Low severity

Category II risks

Category IV risks

PPA renegotiation

Absence of competitive capital

Trajectory restriction

Category II risks Risks that have a high, short-term impact on wind capacity additions are grouped under Category II risks. z Power purchase agreement (PPA) renegotiation: The last few wind auctions saw the discovery of lower tariffs, prompting certain discoms to renegotiate tariffs on previously signed and approved PPAs. Some of these projects were approved during the feed-in-tariff (FiT) regime, when project costs were much higher, and a reduction in tariffs would make the projects unviable for the developers. In many cases, tenders have been cancelled as developers did not agree to the renegotiated tariff, leading to conflict in the entire segment. However, stable tariff levels and uniform laws for PPA enforcement will reduce the risk impact in the future. z Trajectory restriction: Under the FiT regime, all developers willing to set up capacity and sell wind power to discoms were eligible to do so, whereas in competitive bidding, only the lowest bidders can develop wind power capacity. This has limited the capacity development opportunities for developers. Competitively discovered tariffs are much lower than FiTs, and will therefore reduce the developers’ profit margins. This will, in turn impact the manufacturers, which will have to decrease their product prices to drive sales volumes and stay in the competition. As per the government’s trajectory, roughly 10 GW of wind capacity will be auctioned each year, which is expected to increase project visibility and reduce the impact of lower wind tariffs and sales in the near future. z Increased transmission charges: The Ministry of Power has passed an order to remove all interstate wheeling and transmission charges for wind projects commissioned up to March 2022. However, many states are planning to implement new and increased charges for intrastate

High severity

Increased transmission charges Long-term impact

Category I risks

Category III risks

High entry barriers for smaller players

Payment defaults

Inadequate transmission infrastructure

RPO non-compliance

Source: Renewable Watch Research

transmission, wheeling and banking of wind energy. While the central government’s order will provide some visibility to developers and investors, the removal of concessions by states will make the intra-state transfer of wind energy more expensive. The increased charges could discourage developers from implementing projects in such states though these tariffs will stabilise after sometime and ultimately help in grid improvement, which is beneficial for developers.

Category III risks Risks that have a low, but long-term impact on the involved stakeholders are grouped under Category III risks. z Payment defaults: Payment delays due to the poor financial health of discoms, resulting in a payment backlog of as high as five months, affect the financial strength of wind developers that rely on these revenues to pay off debts and run their assets. These payment delays affect the credit worthiness of discoms, resulting in decreasing investor confidence, which also leads to higher interest rates. While the Ujwal Discom Assurance Yojana is helping various state discoms improve their financial health, its progress is rather slow. Payment security mechanisms for developers are expected to resolve this issue to some extent. z Renewable purchase obligation (RPO) non-c compliance: Under the competitive bidding regime, only a few discoms are making efforts to comply with the government’s non-solar RPO target of 10.25 per cent for 2018-19, due to lack

of penalties for non-compliance. There is also no incentive for overachieving the RPO target. The impact of non-compliance is likely to last in the absence of penalties and incentives.

Category IV risks Risks that have a low and short-term impact on wind sector development are grouped under Category IV risks. z Absence of competitive capital: Many Indian companies do not have access to lower interest financing and longer loan tenures as compared to their international competitors, who also have a larger capacity to absorb the risks. Hence, only a handful of domestic companies are able to compete with international players by quoting low tariffs without reducing the project viability. However, with improved visibility of wind projects, more developers are securing low interest financing for their projects, which is expected to further improve in the future.

Conclusion In 2017-18, 1.8 GW of wind power capacity was added, significantly lower than the 5.5 GW of capacity additions in 2016-17. This is because certain risks continue to hamper segment growth. While the transition from the FiT regime to competitive bidding has resolved the biggest risks pertaining to tariff and demand uncertainties, the risks categorised above continue to impact the segment. If these are not resolved on an urgent basis, it might get difficult for the government to meet its 60 GW wind capacity target by 2022. ■ July 2018 ● Renewable Watch ● 27

T R E N D S & D E V E LO P M E N T S

Digitalising Operations Growing role of IT in the renewable energy sector By Khushboo Goyal

he increasing integration of renewable energy has raised several concerns in the power generation industry. This is because renewable energy is variable and intermittent in nature, and thus, needs backup options based on conventional power or large energy storage systems. In addition, the decreasing costs of renewable energy, decline in power demand, the evolving regulatory scenario and inadequate infrastructure pose major challenges for the power sector. With digitalisation, power generating stations can be made more flexible, allowing them to switch from one resource to another as per the electricity demand, through advanced analytics. It can also help in improving plant efficiencies on a real-time basis, leading to enhanced equipment life and improved data visibility. Data storage and smart sensors can assist in project planning and plant operations to ensure cost-competitiveness. In this way, digitalisation can address the challenges of integrating renewable sources into the grid, improve power plant efficiency, lower operational expenses, reduce unplanned outages and extend the operational life of assets.

Evolution of digitalisation In India, most substations are connected to the state grid or the national grid, from where generation data can be tracked. The distributed nature of renewable energy projects makes the data tracking process challenging as an integrated communications network for all renewable energy projects require a large capital investment. Hence, industry stakeholders are using the internet, a cost-effective digitalisation solution, in a variety of ways to 28 ● Renewable Watch ● July 2018

integrate renewables into the grid with advanced forecasting and monitoring techniques. Self-detection and rectification of faults in an electrical network is the main objective of a smart grid. Digitalisation is not a new concept in the sector as new technologies are constantly being adopted to find innovative solutions for improving system efficiency and optimising renewable energy portfolios based on advanced asset management. In fact, the sector has progressed tremendously in terms of digitalisation technologies, moving from computer-based systems to databases to communication networks and servers, and now finally to the internet of things (IoT), cloud-based platforms, advanced analytics, predictive data analytics, asset performance management software, smart sensors and intelligent forecasting solutions.

Technology application The renewable energy sector relies on the latest technologies in grid operations such as control systems for power generation units, supervisory control and data acquisition and substation automation for optimising the existing assets and managing a variety of resources. These technologies

have several applications in the sector. IoT, for instance, can help in the collection and analysis of data generated from a large number of small grid-connected rooftop solar plants in a city. This data can be used for forecasting and managing the power supply in the city to produce the generation and supply patterns. This in turn will lead to improved scheduling of rooftop solar power and ensure smooth grid operations. Digitalisation also makes a grid more intelligent, which helps in reducing the transmission and distribution losses, and predicting customer behaviour for optimised power supply. Apart from advanced forecasting and intelligent communication, these technologies drive innovation in the manufacturing industry and the design of site-specific products at cost-competitive prices. Microgrids, which are a combination of two or more resources such as solar, diesel generator and energy storage, can be programmed to work in both gridconnected and islanded mode depending on the power demand in the area.

The way forward While ICT solutions provide many benefits to the sector and unlock a number of opportunities, they also pose various threats in terms of data privacy and security. Power utilities have become more susceptible to cybersecurity threats, putting their assets and the customers’ confidential information at risk. Going forward, utilities will need to be more cautious and manage the risks faced by physical assets and the enormous data volumes. ■ Based on presentations by Kiran Nair, Head, Technology and Digital Innovation, Mytrah Energy; and Vinay Gupta, Head, Data Analytics, Suzlon Energy

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Waste Value Promoting refuse-derived fuels to channelise municipal solid waste By Anukriti

ut of the 62 million tonnes of waste generated annually in the country, over 80 per cent is disposed at dumpsites in an unhygienic manner. With the growing urban population, environmental concerns and stressed resources, there is an urgent need to address the issues preventing the effective and efficient disposal of India’s municipal solid waste (MSW). Waste-to-Energy (WtE) technologies provide new and sustainable methods for generating electricity while helping to get rid of MSW. The process of converting MSW into electricity or gas is possible through technologies such as incineration, biomethanation, etc. Each type of energy generation technology uses different components of MSW such as dry waste, wet waste, food waste or sewage, which acts as a “fuel” for electricity or heat production. One such variety is refuse-derived fuel (RDF), which is typically used in incinerationbased WtE plants. RDF is derived from combustible waste, which is a fraction of solid waste like plastic, wood, pulp or organic waste, and is produced by drying, shredding, dehydrating and compacting solid waste. RDF can be employed as a fuel substitute in boilers of conventional thermal power plants or cement kilns and can be burnt to generate steam and electricity. According to a 2014 report by the task force on WtE, untapped waste could have a potential to generate 440 MW of power in India from 32,890 tonnes per day (TPD) of combustible wastes including RDF. As per a recent study undertaken by the Indian Council for Research on Inter-

national Economic Relations, there were only eight RDF production plants operating in the country, with a total capacity to process around 3,330 TPD of waste. Renewable Watch takes a look at the WtE segment with a focus on RDF as an upcoming and clean energy generation technology...

Production of RDF Similar to a coal-based power plant, the quality and calorific value of fuel is essential for maintaining the performance of a WtE plant. Typically, the calorific value of Indian waste is 7.3 megajoule per kilogram (MJ per kg) compared to the calorific values of 10 MJ per kg in Europe, Japan and the US. This makes RDF suitable for the treatment of unsorted MSW, which has a low calorific value. Any RDF-based WtE plant’s output efficiency is linked directly to the degree of waste segregation. Waste with a high calorific value needs to be separated from wet waste, recyclable waste and noncombustible waste to ensure proper incineration and to regulate emissions. Further, due to a high percentage of inerts, it becomes necessary to process the waste to make it suitable for use as fuel. Worldwide, MSW-to-energy generation has

been found to be quite successful in areas with high levels of segregation at the source due to a number of factors. Segregation at the source not only increases the heat content of RDF but also reduces labour, additional equipment and the transportation of waste costs. In addition, it allows for faster processing and transport of the waste. The production of RDF from MSW involves two components – sorting and shredding. Sorting is done to remove recyclable waste such as glass and plastics, iron, aluminium, organic waste, and non-inflammable and high moisture containing waste. The sorting process can be manual or mechanical and is based on the density and/or size of the material. In addition, sorting is done using processes such as particle screening, gravity separation, infrared screening and magnetic separation. The remaining waste, which is high in calorific value, is called RDF and is further crushed and sized suitably for efficient combustion. RDF can then be processed into briquettes, pellets or fluff, as per the requirement of the furnace. Incineration-based WtE projects require less time for fuel processing and provide a simpler power generation solution, July 2018 ● Renewable Watch ● 29

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Number of MSW-based WtE projects under various stages of implementation in India 7 6 5 4 3 2 1

Source: Renewable Watch research

unlike biomethanation. The municipal corporations are, therefore, open towards the adoption of this technology. As of April 2018, there were only 8 RDF-production plants in the country. However, many municipalities have announced plans to set up RDF production and WtE plants, and are in the process of conducting feasibility studies.

Policy support for RDF-based power generation WtE projects have gained momentum over the past few years after the announcement of the Swachh Bharat Mission (SBM) and the Smart Cities Mission. Under SBM (urban), the Ministry of Housing and Urban Affairs is offering a grant/viability gap funding equal to 35 per cent of the total project cost for MSW management projects to provide a thrust to the segment. This involves waste collection, segregation, transportation and disposal including energy recovery. One of the key promoters of WtE has been the national tariff policy, which has mandated discoms to procure 100 per cent of the power produced from all WtE plants at the tariff determined by the appropriate state commission. The Central Electricity Regulatory Commission has issued the terms and conditions for determining power tariffs from renewable energy sources, under which the generic tariff 30 ● Renewable Watch ● July 2018

Announced

Awarded

Completed

Stalled

West Bengal

Uttar Pradesh

Telangana

Tamil Nadu

Rajasthan

Punjab

Odisha

Maharashtra

Mizoram, Sikkim, Meghalaya, Nagaland

Madhya Pradesh

Kerala

Karnataka

Jharkhand

Jammu & Kashmir

Haryana

Gujarat

Goa

Delhi

Andhra Pradesh

Bidding Under Construction

determined for WtE plants using RDF is Rs 7.9 per kWh. Following this, several states have come up with their own tariffs owing to which ULBs are gradually taking interest in WtE generation through RDF. The Solid Waste Management (SWM) Rules, 2016 have also given a huge impetus to RDF-based power generation. As per the rules, all non-recyclable wastes with a calorific value of 1,500 kCal per kg or more cannot be disposed in landfills but should be used in WtE plants for preparing RDF and can be used for cogeneration of electricity and heat in cement or thermal power plants. Moreover, the SWM Rules mandate that preprocess and post-process rejects should be removed from the processing facility on a regular basis and should not be allowed to pile at the site. The capacity building programme on the implementation of SWM Rules, 2016 states that all industrial units using fuel and located within 100 km of a solid waste-based RDF plant shall make arrangements within six months from the date of notification of the rules to replace at least five per cent of their fuel requirement by RDF.

Outlook Like several other advanced treatment technologies, RDF plants have also met with initial failures and large-scale adoption of the technology is yet to take-off.

Currently, the cost of segregating mixed streams of incoming wastes is very high. In addition, many of the waste processing plants have capacities lower than the waste brought to the plant each day, while a significant number of facilities often operate at capacities lower than the design capacity. This has led to waste accumulation in urban centres, creating problems for local residents and resulting in backlash and protests from them. Emission concerns and hygiene are among the common issues that are raised against the setting up of WtE plants. The opposition to the waste management project in Noida’s (Uttar Pradesh) Sector 123 is the latest example where people have protested against a sanitary landfill site due to its proximity to residential areas, open dumping practices and the absence of an established waste segregation or processing plant. Further, the high ash content in Indian MSW post incineration also makes the fuel undesirable. However, with proper segregation measures and stricter implementation of SWM Rules, and increasing awareness among citizens, RDF-to-energy plants are slowly gaining momentum. As per realistic estimates, the municipal waste generated currently in the country has a potential to support 88 power plants of 5 MW each based on incineration, gasification or pyrolysis technologies. According to industry estimates, by 2020-21, about 580,080 TPD of waste generated can be converted into RDF, which can be used as a substitute for coal and lignite to fire industrial boilers. The number of WtE power plants in the country is estimated to increase to 215 by 2031 and 556 by 2050, generating at least 2,780 MW of power. As of May 31, 2018, there are around 48 MSW-based WtE projects under various stages of implementation in India and an increasing number of municipalities are inviting bids to set up waste processing and RDF-to-energy power plants. The recent trends, therefore, indicate that there is a large scope for the growth of the WtE segment. ■

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Balanced Growth Managing the impacts of solar parks on biodiversity By Anita Khuller

ith the Government of India promoting solar parks in a big way, the clearing of large areas of land for solar power facilities can adversely affect native vegetation and wildlife, causing a loss of habitat and interference with rainfall and drainage. Therefore, the feasibility study stage is extremely important. Additional third-party studies should be referred to during this stage, to further understand and identify the best practices and processes for sustainable solar park development. Once a site has been identified, a detailed project report is undertaken that covers the potential environmental impacts of the proposed solar park facility, and identifies key mitigation measures to be taken up by the project developer before the park is set up. Some lending agencies have their own environmental safeguards and standards, which need to be followed. These requirements usually include assessing impacts, planning and managing impact mitigations, preparing environmental assessment reports, disclosing information and undertaking consultation, establishing a grievance mechanism and monitoring and reporting redressal. They also include particular environmental safeguard requirements pertaining to biodiversity conservation and sustainable management of natural resources, pollution prevention and abatement, occupational and community health and safety, and conservation of physical cultural resources. A project is given the green signal if it is expected to have a limited number of potentially adverse environmental and social impacts, if the impacts are not unprecedented, and if they are limited to the project

area and can be successfully managed using good management practices. In India, as per the Environmental Impact Assessment (EIA) Notification of 2006 and amendments thereof, several infrastructure development sectors require an environmental clearance (EC) from the Ministry of Environment, Forests and Climate Change (MoEF&CC) before a project is initiated. Solar photovoltaic (PV) power projects are exempt from the EC requirement, as per the ministry’s notification dated May 2011. However, while this is true for individual solar PV projects, the MoEF&CC has not specified the requirements for multiple solar PV projects (that is, the category of solar park development). A solar park could be defined as a large, centrally administered industrial park consisting of a cluster of individual solar PV power plants, under the category of industrial estate/parks. Under this category, if the total area of the park is within 500 hectare and does not house a Category A or B industry, then a prior EC is not necessary. Some of the large infrastructure development projects (including solar parks) may also be considered under the category of Townships and Area Develop-

ment Projects, depending on the area. Here too, an EC will not be necessary. It is, however, recommended that the exact site boundaries and locations of all proposed solar park sites be verified visà-vis reserves/demarcated forest areas as well as wildlife (avian fauna) areas, officially procured from the forest authorities. The proposed site can fall under the Coastal Regulatory Zone (CRZ) but as per the CRZ Rules, 2011, CRZ clearance is necessary. Beyond the key environmental clearances mentioned above, the development and operation of the solar parks could warrant certain other environmental regulatory requirements, such as those for air/water/ noise pollution, wildlife/forest preservation, existing land use (farmland, fisheries, cattle grazing, for example), waste management and access roads.

Potential environmental impacts Each solar park project envisages three distinct phases – construction, operations and decommissioning – for which environmental issues are relevant. The major activities during the construction of roads, transmission corridors, pooling stations and water pipelines include earthwork excavation, material movement, the construction of buildings, the provision of infrastructural facilities like stormwater drains, sewerage lines, septic tanks, electrical and communication networks, etc. The support activities include the employment of labour, material transport, use of construction equipment, etc. These are expected to cause minor environmental problems during the construction and operational phases of the project.

Water sourcing and consumption Large amounts of water are required during the construction (including for labour camps) as well as operational (panel washing/maintenance) phases of the project, which can be met using ground water abstraction. An impact assessment is required to understand the potential impact July 2018 ● Renewable Watch ● 31

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Potential environmental issues Project stage

Key environmental issues

Construction

– Land degradation due to dumping of construction waste – Material sourcing (aggregates and metal) from authorised quarries – Felling of trees and removal of vegetation, leading to soil erosion and affecting the stability of slopes in undulating topography – Abstraction of ground water for construction, affecting the water availability to existing land use – Obstruction of natural drainage channels due to dumping of construction waste and excavation spoil – Increase in dust emissions causing air pollution from site clearance, excavation, raw material transportation, storage of excavation spoil, use of fuel wood in labour camps, etc. – Generation of noise from construction equipment – Increase in concentrations of harmful elements in the atmosphere from burning of fuel in construction equipment, material movement vehicles and cooking in labour camps – Soil contamination due to improper management of construction waste, spills and leaks, absence of sanitation provisions in labour camp – Runoff from construction activities, stockpile areas for debris and excavation spoil affecting water quality of surrounding waterbodies – Temporary breeding habitats for mosquito vectors of disease – Land and ground water pollution due to absence of or inadequate sanitation facilities at labour camps, and a solid waste collection/disposal facility

Operations

– Glare impact on avian fauna (birds), particularly in areas close to plantations, vegetation or forests – Generation of hazardous waste in the form of damaged solar PV panels, waste oil from maintenance activities of electrical installations – Release of SF6 from electrical substations connected to the solar parks – Waterlogging during monsoon due to ineffective drainage channels – Soil erosion at sites with undulating topography – Water consumption for washing and maintenance – Generation, treatment and disposal of sewage and wash-water

Decommissioning – Largely similar to the construction phase, with more emphasis on segregation and disposal of various waste streams from the dismantling of infrastructure and equipment – Restoration of land to as-before status will be important if alternative land use is not being considered. This may involve vegetation and tree plantation

on local water tables and the possible replenishment of ground water using rainwater harvesting schemes (possibly as part of the local state agency’s corporate social responsibility). Water efficient mechanisms such as low volume, high pressure spray nozzles and recycling of water on site for panel washing can be used to further optimise water consumption.

Disruption of drainage channels and soil erosion For sites that are located on hilly terrain and involve the removal of large trees/vegetation, some adverse environmental impact can be expected due to the disruption of existing natural drainage patterns 32 ● Renewable Watch ● July 2018

(causing waterlogging in other areas) as well as associated soil erosion due to the exposure of soil. Water runoff from between the installed panels on slopes is expected to carry soil sediment, leading to their deposition on lower contours. The proposed access roads could also cut across several non-perennial (monsoon-based) drainage channels and would require the construction of an adequate number of cross-drainage structures to mitigate the adverse impacts on the surface runoff. A detailed hydrological study may be required to assess the impacts on surface

drainage and to identify the precise location and number of cross-drainage structures. Natural streams may need to be diverted to suitable downstream channels, which could be used for ground water recharging or wells.

Removal of vegetation and trees for construction The likely potential impacts related to the construction of new access roads to reach the proposed sites are the physical disturbance of soil and vegetation, and the creation of a physical barrier across a drainage channel that could potentially affect the hydrological and ecological functionality of the area. It must be ensured that no additional access roads are made other than those proposed as per the block layout, as this could disturb the ground cover leading to increased dust suspension and soil erosion. A detailed tree survey is recommended to ascertain the exact environmental impact and determine costs for cutting and for compensatory plantations.

Disturbance to avian fauna Avian fauna (birds) in the region can be impacted either by a glare effect (although the glare from PV panels is much less severe than that from mirrors used in concentrating solar power projects), or by the destruction of their nesting/perching/feeding habitats due to the removal of vegetation and large trees on and around proposed sites for the solar park. A quick review of the reference guide published by the Bombay Natural History Society (BNHS), Important Bird Areas (IBA), would indicate the presence of any threatened or endangered species in the vicinity of the proposed sites. However, even local bird species may be adversely affected, considering the required removal of vegetation at certain sites. It is recommended that an assessment of bird habitat utilisation be carried out for relevant sites while conducting the tree survey for the removal of vegetation. Mitigation measures could then be planned on the basis of this study.

T R E N D S & D E V E LO P M E N T S Impacts due to new transmission lines While most of the power generated in solar parks is evacuated using existing transmission infrastructure, some new lines are expected to connect the sites with existing power distribution infrastructure. Depending on the routes of these alignments, land use along the right of way (RoW) may be affected in case there is a presence of any sensitive environmental components such as waterbodies, forests or vegetated areas, or hilly topography. An impact assessment would need to be carried out to ascertain the specific environmental impacts possible due to these lines, and to determine the requirement of alternative routes as well as mitigation measures.

Waste generation and disposal Waste management could be a challenge considering the hilly and complex terrain at certain sites. During the construction as well as operational phases of the project, various hazardous waste streams such as waste oil, oil filters, grease and oil-laden cotton rags, discarded spares and parts from equipment (during maintenance, etc.), along with packaging material (such as plastic, paper, cardboard and wooden pallets) of panels are likely to be generated. If not segregated, stored and recycled/treated/disposed of in a sound manner (as per regulatory requirements), these could lead to the contamination of land around the site. Construction of sewage treatment plants/ septic tank systems may also be required. Further, for the health and safety of the staff and labour working on-site, an occupational healthcare centre (medical facility with relevant infrastructure) would need to be established at the location.

Lower GHG emissions Greenhouse gas (GHG) emissions are largely responsible for global climate change and the rise in temperatures. Wh-

ile there are six major GHGs, carbon dioxide (CO2) is considered the most important indicator of climate change, due to its large contribution. The recent emission factor for CO2 (based on a mix of conventional power generation technologies) released by the Central Electricity Authority (CEA) is reported as 0.82 tonnes CO2 per MWh generated. As compared to conventional power generation (based on fossil fuels), solar PV-based power generation has a much smaller footprint in terms of GHG emissions. However, solar PV projects are not completely emission-free. Some activities that contribute to GHG emissions are the removal of vegetation/trees, emissions at the time of manufacturing of PV panels and other equipment, transportation-related vehicular emissions, leakage emissions of sulphur hexafluoride (SF6) from electrical substations, and other indirect emissions associated with construction and operation of power plants. The savings expected from the proposed solar park sites (for an estimated generation) could accordingly be worked out based on the utilisation factor (percentage), annual generation at each site, auxiliary consumption and degradation over their operating life.

Roles and responsibilities It is important to identify specific roles and responsibilities for various stakeholders involved in the project. This will allow an environmental management plan and mitigation measures to be suitably put in place based on relevance and feasibility. Decisions also need to be taken as to which party will pay for which cost component.

Regular monitoring To ensure that the mitigation measures and management plans implemented are adequate and effective, a periodic auditing and monitoring mechanism should be established. This would include measurement of atmospheric and environmental parameters such as noise, air quality, soil quality, as well as health and safety indicators. Third-party auditors/monitoring agencies could be engaged to submit reports

every six months. Corrective actions could be taken on the basis of these reports. Periodic disclosure will need to be made to all stakeholders to communicate the project performance with regard to environmental, health and safety issues and actions.

Conclusion Going forward, solar parks will play an increasingly important role in power generation. As part of its efforts to reduce the production cost of solar power and promote the use of clean energy, the Ministry of New and Renewable Energy rolled out the Development of Solar Parks and Ultra Mega Solar Power Projects scheme on December 12, 2014. The scheme was conceived along the lines of the Charanka solar park in Gujarat, which was the firstof-its-kind, large-scale solar park in India, with contiguous developed land and transmission connectivity. Land in rural areas is being increasingly used to build these solar parks. This will increase the requirement for land as well as the associated ecological impact on biodiversity. On the other hand, solar parks will make an important contribution to future energy supply and may provide a refuge for plants and animals. In order to balance the pros and cons of setting up such parks, land use needs to be carried out responsibly. Local communities should be empowered to identify suitable land that minimally impacts the climate and biodiversity, is in line with legal requirements and has been acquired in cooperation with local stakeholders. Guidelines set by the government or the Solar Energy Corporation of India, the nodal agency responsible for the solar park scheme in India, could help foster case-by-case decisions. The PV industry, environmental organisations and decision-makers should engage in a dialogue on ecologically responsible solar power plants. It is important to anticipate potential conflicts, propose solutions, and help increase acceptance of solar PV as a key source of energy. â&#x2013; July 2018 â&#x2014;? Renewable Watch â&#x2014;? 33

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Tender Update Recent issues and bid extensions Key tenders issued in June 2018 Tendering agency SECI – Tranche I of 2,500 MW ISTSconnected wind-solar hybrid power projects NTPC Limited – 22 MW Kayamkulam floating solar PV project

Location Across India

NTPC Limited – 21 MW Gandhar solar PV project

Gujarat

NTPC Limited – 15 MW Ramagundam solar PV project

Telangana

Kerala

REIL – 50 MW grid-connected rooftop Across India and small solar power projects

CEL – 10 MW grid-connected solar PV projects

Maharashtra

BHEL – Consultancy work for 75 MW Charanka solar PV power project NREDCAP – 15 MW grid-connected rooftop solar PV projects

Gujarat

Andhra Pradesh

KUWSDB – three floating solar projects Karnataka (over reservoirs in Manvi, Sirguppa and Ballari city) MPUVNL – 26 MW grid-connected rooftop solar PV projects

Madhya Pradesh

NMC – 42 MW solar PV projects

Maharashtra

34 ● Renewable Watch ● July 2018

Details Bid submission deadline is August 8, 2018. – SECI will sign PPA with hybrid project developers for a period of 25 years, as per the provisions of the PPA. – Projects are expected to be implemented on a build, own and operate (BOO) basis. Bid submission deadline is August 21, 2018. – Scope of work involves designing, engineering, manufacturing, supplying, packing and forwarding, transportation, unloading, storage, installation and commissioning of grid-connected project at the Rajiv Gandhi combined cycle power plant in Kayamkulam in Kerala along with comprehensive O&M of the plant and transmission system for a period of three years from the date of successful completion of trial run. Bid submission deadline is July 26, 2018. – Bids have been invited under the open category (non-DCR category). – Scope of work involves designing, engineering, manufacturing, supplying, packing and forwarding, transportation, unloading, storage, installation and commissioning of grid-connected solar PV plant on turnkey basis. It also includes comprehensive O&M of the plant for a period of three years from the date of successful completion of trial run. Bid submission deadline is July 30, 2018. – Bids have been invited under the open category (DCR category). – Scope of work involves designing, engineering, manufacturing, supplying, packing and forwarding, transportation, unloading, storage, installation and commissioning of grid-connected solar PV plant on a turnkey basis. It also includes comprehensive O&M of the plant for a period of three years from the date of successful completion of trial run. Bid submission deadline is July 28, 2018. – Bids were reinvited on June 25, 2018. – Scope of work involves site survey, design, manufacture, supply, erection, testing and commissioning along with associated power evacuation and transmission system including warranty and O&M for 25 years. – The projects will be implemented under the RESCO model. Bid submission deadline was July 13, 2018. – CEL reissued bids on June 25, 2018. – Scope of work includes designing, engineering, supplying, constructing, erecting, testing and commissioning, and 10 years of O&M of the projects. Bid submission deadline was June 11, 2018. – Bids were invited for providing chartered structural engineering services for design, validation and optimisation of module mounting structure for the 75 MW Charanka grid-connected solar power project. Bid submission deadline was July 5, 2018. – Scope of work involves designing, manufacturing, supplying, erecting, testing and commissioning, including warranty and O&M of the projects. – Successful bidder will have nine months from the date of award of contract to commission the project. EoI submission deadline was June 30, 2018. – KUWSDB intends to lease 60-70 acres of land for a period of 30 years through ULPs. – Projects would be developed on BOO model on a revenue-sharing basis. – Power generated from floating solar plants will be sold to KPTCL. Bid submission deadline was July 12, 2018. – Scope of work involves designing, engineering, supplying, installing, testing and commissioning, along with a comprehensive O&M for 25 operational years under the RESCO model. – Estimated cost of the project is Rs 1,418.28 million. Bid submission deadline was July 6, 2018. – NMC reinvited bids on June 22, 2018, which were earlier issued in May 2018.

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Key tenders issued in June 2018 Tendering agency

Location

Details – Scope of work involves designing, engineering, manufacturing, supplying, installation, testing, commissioning, and O&M of cumulative capacity of 42 MW on a deferred payment basis. – Time for completion of the work is 240 days at an estimated cost of Rs 3 billion. OREDA – 6 MW grid-connected Odisha Bid submission deadline was July 2, 2018. solar PV project – RfS bids were invited for developing the project at HAL, Sunabeda, Odisha. – Scope of work involves designing, erecting, testing, synchronising and commissioning of the project. It also involves O&M for a period of 25 years. – The project would be established on a BOOT basis. HAL will enter into PPA for solar power purchase from the developer for a period of 25 years. Cases of bids’ due date extention Details Tendering agency Across India RfS bid due date for implementation was extended from June 5, 2018 to June 26, 2018. Bids for the same were invited in February 2018. SECI – 3,000 MW ISTS-connected Andhra RfS bid due date was extended from June 5, 2018 to June 14, 2018 and further to June 22, 2018. Bids for the same were solar power projects Pradesh invited in January 2018. SECI – 750 MW Kadapa solar Assam RfS bid due date for selection has been further extended from June 13, 2018 to July 4, 2018. Bids for the same were invited PV projects in February 2018. SECI – 70 MW Amguri solar PV project Uttar Pradesh RfS bid due date for selection of solar power developer for implementation has been extended from June 21, 2018 to July 6, 2018. Bids for the same were reinvited in April 2018. SECI – 150 MW Rihand dam floating Karnataka Bid submission deadline has been extended from July 2, 2018 to July 23, 2018. Bids from SDOs for the same were invited solar power projects on May 16, 2018. SECI – 10 MW solar PV project Across India The bid submission deadline was extended from June 4, 2018 to June 18, 2018. Bids for the same were invited in March at DRDO 2018. NTPC Limited – 2,000 MW ISTSAcross India Bid submission deadline was further extended from June 7, 2018 to June 21, 2018. Bids for the same were invited in March connected solar power projects 2018. NTPC Limited – 2,000 MW ISTSAndaman Bid submission deadline for project development has been extended from June 28, 2018 to July 17, 2018. Bids for the connected wind power projects & Nicobar same were invited on March 10, 2018. Islands NTPC Limited – 17 MW Manglutan Tamil Nadu Bid due date for borrowing Rs 20.52 billion as loan from 33 banks/ financial institutions was extended from June 12, 2018 to solar power project June 27, 2018. NCL India Limited – 709 MW solar Kerala EPC bid due date was extended to June 26, 2018 and has been further extended to July 26, 2018. Bids for the same were PV project invited in April 2018. NHPC Limited – 8 MW Agali wind Across India RfS bid due date for the appointment of a consultant for providing transaction advisory services for implementation of the power project project was extended from June 22, 2018 to July 2, 2018. Bids for the same were invited in May 2018. REMCL – Consultant for developing Maharashtra The bid submission deadline for development of the project was extended from June 20, 2018 to June 25, 2018. Bids for the rooftop solar projects for Indian Railways same were invited in May 2018. CEL – 100 MW grid-tied solar Maharashtra RfS bid due date for power procurement from the project was extended from June 5, 2018 to June 21, 2018. MSEDCL will PV projects enter into PPA with bidders selected based on this RfS for solar power purchase for a period of 25 years. MSEDCL – 1,000 MW solar power Odisha Bid submission deadline has been extended from June 7, 2018 to July 3, 2018. projects under the Mukhyamantri Agricultural Solar Feeder Scheme GRIDCO Limited – 200 MW gridChhattisgarh Bid submission deadline has been extended till further notice. Bids from SDOs for the same were invited on April 27, 2018. connected solar PV projects CREDA – 50 MW solar PV project Delhi RfS bid due date for implementation of the project was extended from June 25, 2018 to July 2, 2018. Bids for the same were invited in May 2018. IPGCL – MW grid-connected rooftop West Bengal EoI due date was extended from June 8, 2018 to June 15, 2018. solar PV projects IIT Kharagpur – 5.5 MW solar power plant BHEL: Bharat Heavy Electricals Limited; BOO: build, own and operate; BOOT: Build-own-operate-transfer; CEL: Central Electronics Limited; CREDA: Chhattisgarh State Renewable Energy Development Agency; DCR: Domestic content requirement; DRDO: Defence Research and Development Organisation; EoI: Expression of Interest; GRIDCO Limited: Grid Corporation of Odisha; HAL: Hindustan Aeronautics Limited; IPGCL: Indraprastha Power Generation Company Limited; ISTS: Interstate transmission system; KPTCL: Karnataka Power Transmission Corporation Limited; KUWSDB: Karnataka Urban Water Supply and Drainage Board; MPUVNL: Madhya Pradesh Urja Vikas Nigam Limited; MSEDCL: Maharashtra State Electricity Distribution Company Limited; NMC: Nashik Municipal Corporation; NREDCAP: New and Renewable Energy Development Corporation of Andhra Pradesh Limited; O&M: Operations and maintenance; OREDA: Odisha Renewable Energy Development Agency; PPA: Power purchase agreement; PV: photovoltaic; RESCO: Renewable Energy Service Company; REIL: Rajasthan Electronics and Instruments Limited; REMCL: Railway Energy Management Company Limited; RESCO: Renewable energy service company; SECI : Solar Energy Corporation of India; SDOs: Solar developers and operators; ULPs: Urban local bodies

July 2018 ● Renewable Watch ● 35

PERSPECTIVE

Building Capacity Big tenders, new challenges and emerging opportunities in the solar segment The solar industry has been facing several issues since the announcement of the National Solar Mission in 2010. The industry picked up pace in the past year as a result of competitive tariffs and the tender pipeline announced by the Ministry of New and Renewable Energy (MNRE). However, the possible levy of a safeguard duty and the unavailability of adequate transmission infrastructure are deterring developers from participating in the new tenders. Domestic module manufacturing is insufficient to meet the current demand at competitive prices; however, it is essential for the segment’s growth. At Renewable Watch’s recent “Solar Power in India” conference, key developers discussed the current state of affairs in the segment, the challenges and the market outlook… What is your outlook for the Indian solar market? Do you think India will be able to achieve its targets? Sujoy Ghosh In terms of achieving the overall target for solar, I think it is a question of “when” and not “if”. Therefore, given the macro energy scenario, a capacity addition of 100 GW or more is doable but we have to see if this will be set up by 2022 or if it will spill over. Two key issues preventing the achievement of the target are liquidity of funds and the availability of a transmission system for utility-scale solar. P. Vinay Kumar I choose to be an optimist here. Five years ago, we never thought of setting up the capacity we have today. Likewise, MNRE’s tender volume of 30 GW or more might look unfeasible now. Given the development scenario, China could have a big impact on reaching our goals. The recent drop in Chinese allocations could be beneficial for India in terms of module availability at low prices. So, it will be easier to get close to MNRE’s targets with a combi-

nation of available capacity and low tariffs. Gaurav Sood I think the government has set a very ambitious target. The Solar Energy Corporation of India (SECI) is planning to tender 5-6 GW of capacity in each quarter, which is a positive development. Of course, there are quite a few challenges too. The number of players available to absorb this capacity is important. Currently, all the large independent power producers have a pipeline of 500 MW to 1 GW, which needs to be executed over a 12 to 24-month period and a huge capital investment. While GW-scale tenders are great for capacity addition, availability of capital to set up this capacity has to be looked at. The existing players are already finding ways to raise substantial equity. Many companies have opted for initial public offerings and perhaps more are lined up. In addition, there are transmission as well as land availability challenges. So far, solar capacity addition has been good because most of the development took place in solar parks. However, if land has to be

acquired by developers themselves, the pace of capacity addition would automatically slow down. In addition, developers will have to set up transmission infrastructure to evacuate power, which will be time consuming. The tenders may be bid out, however, the on-ground implementation of projects will surely face challenges, which will ultimately be reflected in the installed capacity. What is your expectation in terms of actual capacity addition over the next few years? P. Vinay Kumar I would say that we could achieve the commissioning of about 80 per cent of the 30 GW target set by the MNRE. A professor at Stanford, Tony Seba has introduced the concept of “God parity”. According to this concept, by 2030, the cost of generation through solar is going to be so low that it is going to be less than the cost of transmission. At this point of “God parity”, the entire conventional model of the power sector could become redundant. It would make sense to generate power at

Sujoy Ghosh

P. Vinay Kumar

Gaurav Sood

Country Head, India,

Managing Director,

Chief Executive

First Solar Power

Renewables,

Officer, Sprng Energy

India

Brookfield Asset Management, India

36 ● Renewable Watch ● July 2018

PERSPECTIVE the point of consumption and, therefore, save up on transmission costs. While this is a far-fetched scenario, it reiterates the fact that tariffs are falling day by day. Gaurav Sood I think we could have a capacity addition of 10-12 GW a year. Over the past few months, SECI and NTPC have released many large tenders. However, I do not know how this capacity will be evacuated. For the first few initial large tenders, the capacity could be evacuated but, down the line, things may get worse unless the country enhances its transmission capacity. What is your view on the uncertainty related to the safeguard duty? Sujoy Ghosh I think any sort of duty will definitely discourage manufacturing as has already been seen in the US and Europe. When the US and Europe levied duties on imported panels, the solar industry went bankrupt. I think a similar situation will arise in India because levying duties will drive the cost of energy upwards and lead to a lower demand. Currently, India does not have the necessary supply chain and the ecosystem to create a product competitive with Chinese prices. This could probably happen in the future if the government comes out with a manufacturing policy and provides incentives to lower the cost of capital and taxes. P. Vinay Kumar The government has given a pass-through to the developers for compensating them through a hike in tariff in case a safeguard duty gets imposed. However, the increase in tariffs could be an issue for the industry. Discoms buy solar power because of its affordability and sustainability. If the solar tariffs go up while the power deficit is narrow, the demand for solar power will reduce. Gaurav Sood The safeguard duty, aims to promote domestic manufacturing. This is a key

goal of the government and any country with such an extensive renewable energy programme should have a strong domestic manufacturing industry. Therefore, we have to assess if levying safeguard duties is the best way of achieving this goal, particularly in a price sensitive market like India. We already have tenders linked with domestic manufacturing capacities. In addition, public sector units are already looking at setting up projects with domestic content requirement. So there are alternative methods that could prove to be more effective than implementing a safeguard duty, considering the current domestic manufacturing industry. Once domestic manufacturing scales up and reaches the required level, India could levy duties. But in the current scenario, imposition of duties could be detrimental. What is your view in terms of equipment price movements over the next few years? Sujoy Ghosh I think, given the overcapacity in China, the low efficiency multi-crystalline polysilicon modules would be available at prices that are viable for clearing the inventory. Therefore, developers with contracted capacities could be in a position to ask for lower module prices. Once the inventory is liquidated, the supply chain could shift predominantly to monocrystalline and higher efficiency technologies. China accounts for about 90 per cent of the worldâ&#x20AC;&#x2122;s module supply chain, due to which they had control over the global pricing of power for some time. However, the cutback in subsidies in China is going to have a long-term impact on the pricing power of some Chinese manufacturers. So, while a dramatic decline will be seen in the 30-odd GW of inventory, by 2020, stability would most likely return. P. Vinay Kumar The cutback in subsidies in China will most likely result in a 35 per cent drop in the prices of polysilicon modules in 2019, followed by a 15 per cent drop in 2020.

Gaurav Sood The cutting back of subsidies by China is going to have a short-term impact, which will level out in the long term. The demandsupply situation resulting from the subsidy cutback will help clear inventories in the short term, leading to price pressure. But in the long term, prices will reduce driven by efficiency improvements. What is the importance of having domestic manufacturing or localisation? Can the government actually succeed in what it is trying to do? Sujoy Ghosh This debate has existed since the solar industry started, the choice is between creating a local supply chain protected under duties and creating a market with abundant competitively priced solar energy. Both of these are mutually exclusive, and creating comparative tariffs is counter intuitive to creating a duty-driven incremental supply chain. P. Vinay Kumar In the ongoing anti-dumping investigation, the Ministry of Finance will give a final directive based on a larger viewpoint, which is beyond the narrow confines of petitioners. The solar module manufacturing segment has many downstream jobs, which will be at stake if the market gets stalled. In our attempt to protect the interests of a few manufactures by imposing the safeguard duty, we should not neglect the interests of the entire sector. Gaurav Sood The downstream industry is less capex intensive, which makes its development easier. However, securing investments becomes challenging when going upstream as visibility for the supply situation is unclear at present. An enabling environment with clear incentives is required in the current over-supply situation, along with clear off-take commitments. Has there been any improvement in discom bankability? Has there been an increase in the receivables? July 2018 â&#x2014;? Renewable Watch â&#x2014;? 37

PERSPECTIVE

Sujoy Ghosh Both the amount and age of receivables is increasing along with the pool of receivables. However, discoms have an obligation to pay NTPC first, and then, the remaining is paid to the rest. It is a warning trend that could become the single biggest issue wherein growth of the sector would be impeded. P. Vinay Kumar In some states, the receivables time period has come down from eight months to barely about two to three months now. However, the trend is especially worrisome in the southern states where a bulk of the renewable capacity is installed. While the delayed payment period for wind has gone up to seven to eight months, for solar, it is slightly less. Gaurav Sood SECI and NTPC auctions usually get aggressive bids as investors see more bankability in these projects. Investors are very particular about which discoms to target, and mostly leave out the Crated discoms. However, the receivable cycle has been increasing in even the good discoms, which is a source of concern for everyone. 38 â&#x2014;? Renewable Watch â&#x2014;? July 2018

What are the two things the government could do to improve the current situation? Sujoy Ghosh Apart from fixing the leaks in the distribution system, the other thing is to look at quality standards. This should not be limited to the implementation of the BIS certificate on modules, but include the whole gamut of standards - technology, construction, decommissioning, health and safety, and other aspects. Second, we need to address the time mismatch between the required transmission capacity and the upcoming solar generation capacity. Solar projects are set up faster as compared to the transmission capacity. Transferable development rights can be created so that developers can work in advance towards transmission planning. This should alleviate the challenge in terms of paucity of transmission. If started today, it will come into market maybe two years down the line, because it takes two years to build a long high voltage interconnect. With the developers actually committing to building the high voltage interconnection ahead of a PPA, this can be a sure shot way of addressing the problem.

P. Vinay Kumar The first thing would be to look at the structure of the power purchase agreements (PPAs). The PPA structure, as it stands now, has essentially helped lower tariffs in the midst of increasing competition. But there is much more that solar can do, even without the help of storage. In the absence of ancillary service markets in India, PPAs should be reframed to look at things solar power can do to support grid flexibility. The second task would be to resolve transmission issues. The only way to do this is to bundle the tender with the transmission capacity available. Otherwise, the entire bidding engine will be stalled, ultimately affecting the upcoming solar capacity. Gaurav Sood First, handholding is required for transmission connectivity agreements as well as land, as the developers are taking a lot of risks on various factors and these tariffs are really not appropriate for the risk being taken. And if these risks really pan out, it is going to affect developers and will eventually hit the overall appetite of investors. Second, the project pipeline needs to be looked at with respect to the larger scheme of things, that is, the overall demandsupply dynamics in the country. â&#x2013;

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PERSPECTIVE

Views of SECI’s Jatindra Nath Swain “Tariffs are expected to reduce further” The year 2018 has been a positive one for the solar power segment, with the installed capacity achieving a milestone of 22 GW. Tendering activity has been at an all-time high, with about 30 GW of solar capacity tendered by the Solar Energy Corporation of India (SECI) and other state-level agencies in the first half of the year. At the 11th annual Solar Power in India conference organised by Renewable Watch, Jatindra Nath Swain, managing director, SECI, spoke about the planned solar trajectory, tariff trends, the key challenges and the way forward. Excerpts…

Jatindra Nath Swain Managing Director SECI

“De-risking of solar projects in the form of early PPAs and payment security mechanisms have contributed to lower tariffs.” 40 ● Renewable Watch ● July 2018

ECI was established in 2011 as an implementation arm of the Ministry of New and Renewable Energy (MNRE) to work towards the National Solar Mission. SECI’s work actually began in 2015 with an increase in the solar power target from 20 GW to 100 GW by 2022. A bundling scheme was then introduced under which more expensive solar power was to be bundled with cheaper thermal power and sold to the discoms. This was followed by the viability gap funding (VGF) scheme, under which a fixed tariff was set and developers were asked to bid for any VGF that was required to make the targeted tariff operative. However, by the beginning of 2017, the VGF scheme lost its relevance, since the tariffs for most of the bids were way below the targeted tariff levels. Low solar tariffs began with the Rewa project and then went on to become a trendsetter for the Bhadla project. The declining cost of solar equipment, primarily of solar modules due to high market expectations, led to a fall in tariffs. It was also partly driven by greater transparency in bids. Other factors like de-risking of solar projects in the form of early power purchase agreements (PPAs) and payment security mechanisms also contributed to lower tariffs. This trend was seen in the second bid for the Bhadla project as well, despite confusion regarding the safeguard or anti-dumping duties. The entire confusion led to many tenders being postponed, out of which a few are finally being auctioned now, including SECI’s 2 GW tender. The recently concluded bids for solar parks saw

slightly higher tariffs of around Rs 2.72 per unit as in the case of NTPC’s Anantapur and Rs 2.82 per unit in SECI’s Pavagada solar parks. The Uttar Pradesh solar park bids saw higher tariffs mainly due to issues of accessibility, terrain and lower solar insolation. However, going forward, solar tariffs are expected to follow a downward trend provided no major policy or regulatory changes take place. SECI has extended the project completion timeline to 21 months for regular projects and 24 months for larger projects in non-solar park areas to address the difficulties faced by developers in aggregating land, getting connectivity and obtaining approvals. Tariffs are expected to reduce further once the uncertainty in project completion is cleared. The ministry has set a trajectory for installing 30 GW of ground-mounted solar both in 2018-19 and 2019-20 so that the target of 100 GW can be reached by 2022, with a project completion time of 18-24 months. Out of the 30 GW per year, SECI has been mandated to deliver about 18 GW while NTPC will cover 6-10 GW and some of the capacity will be bid out by various states. The remaining capacity will come through schemes that are still in the pipeline, like KUSUM (Kisan Urja Suraksha evam Utthaan Mahabhiyan) or the central public sector undertakings scheme, with an average of 3-4 GW scheduled to be tendered out every year. As far as participation is concerned, the group of developers that keep bidding in SECI’s tenders are expected to stay. SECI now intends to

PERSPECTIVE include an upper limit of 50-60 per cent of the total bid capacity, depending on the way the transmission has to be led, keeping in mind the limits or parameters laid down by connectivity. The upper cap is kept to ensure more participation, instead of just one or two parties. However, it will be driven by the MNRE’s directive in the future. SECI has also received enquiries from a few new parties, mostly from abroad, which may like to participate in the bids. Some manufacturers have also come forward either directly or in collaboration with developers with whom they would like to participate in future tenders. There are two major constraints to be considered in the solar project space – land and connectivity. There is significant transmission potential and unused capacity of the central transmission utility and bids are mostly called for the available substation capacity. However, recently, Rajasthan, Western Uttar Pradesh and Gujarat have become more popular because inter-state transmission charges have been waived and solar insolation is considered to be better in these areas. Normally, setting up a new transmission network takes 24-36 months. However, SECI has been requesting the power ministry to shorten the implementation time of laying the transmission network. Aggregation of land in some states is a challenge, primarily because of the land ceiling acts. The main objective of these acts, promulgated in 1961, was to ensure that land was available for agriculture to a larger chunk of the working population. Most of the state acts are similar, since they all followed from the central act. Since most of the solar projects are situated on dry unirrigated land, the limits of the ceiling vary from 50 acres to 60 acres

for a single entity. Solar projects usually exceed this limit, thus needing a ceiling exemption, which is quite challenging to obtain in some states like Karnataka and Maharashtra. The entire process is cumbersome and difficult. It starts with the developer providing a list of landholdings that are to be acquired above the ceiling limit. Since land records are less than perfect, there is often confusion about the identity of the owner or a change in litigation, which sends the whole proposal back for verification. Apart from land and connectivity, there is a third constraint of demand. Energy demand might not be enough for installing 100 GW of solar. So far, low tariffs have led to a good response from the states and most of SECI’s tender capacities have been booked. However, this may change in the future when greater capacities are offered by SECI and NTPC, while demand remains the same. Lower tariffs will mitigate the issue of lack of demand to some extent only. However, there needs to be a marketing initiative in the form of giving firm power, even though it has been a sellers’ market so far. This may be in the form of trying to bundle it with battery storage in order to provide

“SECI has extended the project completion timeline to 21 months for regular projects and 24 months for larger projects in non-solar park areas to address the difficulties faced by developers.”

peak power to consumers and improve the marketability of the product. The MNRE’s official statistics for rooftop solar installation indicate that 1 GW has been installed, while industry sources claim this figure to be 2 GW. An explanation for this could be that some large industrial and commercial installations do not get reported to the MNRE since they do not take any subsidy. The MNRE is in the process of revamping the rooftop solar implementation plan from 40 GW to 10-15 GW in the next two to three years. This is attributed to issues like ignorance of the distribution companies about the impact of solar installations and limited sanctions for rooftop projects. Other issues include the possibility of too many players in the market. Customers also have some apprehensions regarding performance issues over a period of 20-25 years. This is mainly a problem with the small rooftop sector, since the larger sector is more inclined towards doing proper due diligence. SECI expects that when people see more being set up in their neighbourhood, the demand for solar rooftops down the line may pick up. Some discoms, like the one in Kerala, are taking the initiative to conduct bids for rooftop solar projects, while others are expected to follow. SECI will continue to participate in the rooftop segment, more specifically in larger rooftops. While some programmes are currently up and running, any new initiatives will depend on the MNRE’s upcoming policies. ■ July 2018 ● Renewable Watch ● 41

COMPANIES

NTPC Limited

NTPC has been one of the few companies in India promoting floating solar power plants. It has commissioned the country’s largest floating solar plant of 100 kW at the Rajiv Gandhi Combined Cycle Power Plant in Kayamkulam, Kerala, and has also launched an EPC tender to develop a 22 MW project at the same location. The Maharatna category company will finance this project through its internal resources. A 1 MW floating solar project at Kawas is also in the planning stage. Although the company has not been very active in the wind segment, it tendered 2 GW of wind power projects in March 2018 to benefit from the interstate transmission system (ISTS) charge waiver.

Clean energy strategy beyond 2022 By Anukriti

TPC Limited is making rapid strides in the renewables space to meet its green energy commitment. As of March 2018, NTPC’s total installed generation capacity stood at 53.6 GW, of which 870 MW was solar and 50 MW was wind. Apart from setting up its own fleet of solar and wind power projects, NTPC has commissioned over 3,483 MW of capacity in developer mode under the National Solar Mission. In addition, it has set up an 8 MW small-hydro power project at the NTPC Singrauli campus, Uttar Pradesh.

The NTPC solar auctions have witnessed some of the lowest tariffs in the country. The average tariff reduced to Rs 2.72 in the recently concluded Anantapuramu, Andhra Pradesh, auction from Rs 3.15 per kWh seen at the Kadapa solar plant auction in April 2017.

Growth Plan 2032 NTPC has announced an ambitious growth plan till the year 2032. It plans to set up about 130 GW of generation capacity, of which 32 GW will come from renewables. Of the 53.6 GW of total installed capacity, only 0.92 GW is from renewable energy sources. Thus, in a span of 14 years, the company aims to increase the share of renewables from 1.7 per cent to 24.7 per cent. According to the company’s roadmap, 10 GW of solar capacity will be added by 2022 and it will be increased to 30 GW by 2032. However, coal will continue to be the main source of energy generation, with a 65.4 per cent share by 2032.

Tendering delays

across the country. In the EPC mode, solar projects worth 127 MW are being tendered in the Andaman & Nicobar Islands (25 MW with energy storage systems), Kawas (65 MW), Auraiya (22 MW) and Kayamkulam (15 MW). In addition, the company is developing about 376 MW of solar capacity at its existing stations.

Installed capacity in 2018 (%) Hydro: 1.5

Gas: 7.5

NTPC’s growth plan also includes achieving a market share of 25 per cent in ancillary services and energy storage and 10 per cent in the e-mobility business in India.

Renewable: 1.7

42 ● Renewable Watch ● July 2018

Projected capacity for 2032 (%) Nuclear: 1.5

Hydro: 3.8 Renewable: 24.6 Gas: 4.6

Solar project pipeline Currently, around 2.75 GW of solar capacity is being tendered in developer mode. Of this, 750 MW will be set up in Anantapuramu and 2,000 MW in solar parks

While the company has been making concerted efforts to develop a solar portfolio, it has faced some issues with solar projects tendered at the end of 2017. In January 2018, the company decided to cancel the 250 MW solar tender with domestic content requirement that was launched in October 2017, to comply with the World Trade Organization’s ruling that prevented India from tendering projects only for domestically manufactured panels. In addition, due to the confusion regarding the

Coal: 89.3

Source: NTPC Limited

Coal: 65.4

Source: NTPC Limited

COMPANIES levy of safeguard duties on solar power equipment, developers could not bid at low tariffs. Thus, NTPC like many other central and state agencies had to extend the bid submission deadlines. The problem is expected to be resolved with the recent rulings of the Madras and Delhi High Courts as well as the changes in the competitive bidding guidelines made by the Ministry of New and Renewable Energy. Besides, NTPC has been repeatedly running into problems with its 750 MW Pavagada Solar Park tender. The project was retendered in March 2017 after a one-year delay due to an insufficient transmission network. Since the reissue of the tender, anti-dumping investigations and GST uncertainties have caused further delays. In January 2018, it was reported that the company was planning to cancel the auction due to the ongoing issues between NTPC and Karnataka Renewable Energy Development Limited.

New initiatives NTPC has taken many initiatives to promote the upcoming energy technologies. One such key initiative has been the development of charging infrastructure for electric vehicles (EVs). The company is looking to acquire a pan-Indian licence to set up EV charging stations. It has issued a tender for the development of EV charging infrastructure in Jabalpur, Madhya Pradesh, and recently commissioned a charging station at the Talcher Super Thermal Power Station in Odisha. It has also installed a “Solar Tree” at the NTPC Power Management Institute, Noida, with tracking features, for EV charging. The company has also set up a research wing called the NTPC Energy Technology Research Alliance (NETRA), which is working on a variety of energy technologies to improve generation and transmission. Since NTPC is going big in the floating solar segment, one of the important NETRA projects has been aimed at reducing the cost of floaters used in such plants by 60 per cent to reach Rs 16 million per MW. NTPC is also diversifying into the rooftop solar

Operational solar power projects (as of December 2017) Project

State

Capacity (MW)

Projects implemented at existing NTPC sites Dadri

Uttar Pradesh

Port Blair

Andaman & Nicobar Islands

Faridabad

Haryana

Ramagundam

Telangana

Talcher Kaniha

Odisha

Unchahar

Uttar Pradesh

Singrauli

Uttar Pradesh

Rajgarh

Madhya Pradesh

Anantapuramu

Andhra Pradesh

250

Bhadla

Rajasthan

260

Mandsaur

Madhya Pradesh

Greenfield projects

Total

250 870

Source: NTPC Limited

segment. The company is setting up a 1.5 MW rooftop solar power system at Kudgi and has signed an MoU with ISRO to forecast solar insolation in the country. NTPC has taken measures to bring down the tariffs in its upcoming solar tenders. To this end, it has reduced the operations and maintenance contract period to three years from 10 years. Further, to utilise its existing transmission line capacities, NTPC is offering ISTS-based grid connectivity for solar projects through its generating switchyards.

Future plans The company is reportedly planning to raise Rs 160 billion for the expansion of its

power generation capacity. The company seems to be on the right track to achieve the targeted capacity in the coming years. Since January 2018, it has already tendered almost 935 MW of solar and 2 GW of wind power capacity. In addition to setting up new capacities, NTPC’s future plan includes the procurement of renewable energy through open access. This will help the company reduce the variable charges associated with thermal power, thus lowering the energy costs incurred by it. Following the success of its diversification strategy in India, NTPC is now planning to expand its operations and enter the international markets. Currently, the company is looking at the East African and Southeast Asian countries. In the Middle East, NTPC is targeting Oman and Egypt as the key markets. To conclude, NTPC has adapted well to the changing energy sector and is working to reduce its operational costs. NTPC’s initiatives, such as Growth Plan 2032, can serve as a model for thermal power generators across the world, encouraging them to generate clean energy while still owning and operating coal-and gas-based power plants, and contributing towards emission reduction. ■ July 2018 ● Renewable Watch ● 43

COMPANIES

“We are focused on India’s wind needs” Interview with GE’s Gilan Sabatier The evolving wind energy landscape in India has opened up an interesting mix of challenges and opportunities for original equipment manufacturers (OEMs). Renewable Watch recently spoke to Gilan Sabatier, general manager, business operations, South Asia, GE Onshore Wind, about the company’s response to an evolving wind market, the key focus areas and its future plans for India. Excerpts... How has the introduction of competitive bidding changed the country’s wind energy landscape?

er the lowest LCoE. It is the equation solved for just one outcome – what is the cost of each kWh being generated.

The transition to a competitive bidding regime is not unique to India. This is the trend in other geographies as well and marks an evolution towards a more competitive regime. In India, it has rendered the overall sector more competitive. The intent is to make sure that there is a level playing field while trying to achieve the lowest cost of electricity possible for consumers.

With 20 GW of capacity to be auctioned over the next two years, how does GE plan to tap this opportunity and tackle competition?

The auction regime is today’s reality. Therefore, it is up to the participants to adapt to this new reality. This essentially translates into the need to bring the best technology, comprehensive solutions and financing to be able to win in this new framework. This is the trajectory we are on, both as a company and as a participant.

bine gives customers as much as 20 per cent increased production under the same wind conditions, creating a technological differentiating factor. We have expanded to balance of plant as a turnkey offering for our customers.

Where do wind industry manufacturers’ profit margins stand currently?

With competition increasing, do you expect capital costs to reduce? If so, by how much?

We need to continue to deliver competitive solutions. That is the reality facing the entire supply chain, including OEMs. GE has adapted to the new normal by putting an emphasis on innovation and low-cost, high-output solutions.

The name of the game is levellised cost of energy (LCoE). Effectively, what we are aiming at, and what we believe the industry needs to aim for is the lowest cost of electricity. So, it becomes an equation amongst the capex, the output generated and the cost to actually finance that capex. We need to reason on all these levels to deliv-

How are you planning to bring these innovations to India? GE is uniquely positioned because of its strong presence and large installed base. We have developed a new low wind speed turbine that is designed in India, for Indian wind conditions. It is a 2.5 MW machine, with a 132 metre rotor. Our tur44 ● Renewable Watch ● July 2018

The past 24 months have shown that the region is evolving. The target is quite clear in terms of achieving 60 GW by 2022. Considering the present installed base, we need to maintain the annual level of auctions as specified by the Ministry of New and Renewable Energy, to hit the target. Fundamentally, what we, as participants, care about is not only the volume but also the frequency of the auctions. Meanwhile, certainty and visibility over the next couple of years in terms of volume are important so that we can make decisions about technology and investments. What, according to you, will be the auction trajectory beyond 2020? Will we go beyond 10 GW per year or will the figure reduce? Targets are useful and auctions are a means to achieve those targets and secure big volumes. Onshore wind will welcome new and more ambitious targets. Our responsibility is to make sure that the technology is kept as competitive as it can be vis-à-vis other sources of

“The next technology frontier that we are going to be focusing on is hybrids. The main purpose is to try to increase the number of hours that renewable energy can be generated for, and ultimately have 24x7 renewable power.”

COMPANIES generation. If wind energy is a competitive source, there will be a natural incentive to make sure that we have as much deployment of it as possible. Which states are likely to conduct auctions in the coming years, given that we have so far had auctions in only Gujarat, Tamil Nadu and Maharashtra? Each state determines its energy requirement, leverages learning from other windrich states and strategises accordingly. It would be good to have clarity on volumes and for states to specify their auction plans. It is not so much about which states are in and which are out, but about giving the industry visibility on what the potential is likely to be in those states. What are the trends in technology innovations and what will be GE’s focus areas? Technology improvement allows one to increase competitiveness. Having the best turbine offering is critical and that is what we strive for consistently. The other side of the technological argument is that renewable energy is still intermittent. The next technology frontier that we are going to be focusing on is hybrids. Hybrids could mean solar and wind together; solar, wind and storage; and even wind and storage. The main purpose of this innovation is to try to increase the number of hours that renewable energy can be generated for, and ultimately have 24x7 renewable power. That can be done by leveraging the hours of the day when there is no wind but the sun is shining, or vice versa. These are

“The transition to a competitive bidding regime is not unique to India. This is the trend in other geographies as well and marks an evolution towards a more competitive regime. In India, it has rendered the overall sector more competitive.” the natural complementarities that one can capture. In addition, with a good storage solution, one could capture power when it is not needed and reinject it into the grid when required, allowing one to have despatchable renewable energy. We are bringing in GE’s best in terms of innovation for India to be able to, over time, offer firm renewable power. How has GE’s offshore experience been in other parts of the world? What has been the cost experience in terms of pricing and tariffs? What are the learnings for India? Offshore wind is one of the fastest growing segments in renewable energy today. It has moved beyond being Europe-centric to a global renewable source of energy. What was once a niche technology is now becoming a well-established global offering, with very few players offering the required technology. GE recently announced the most powerful offshore turbine in the world, a 12 MW turbine with over 100 metre long blades. This is the right time for India to leverage offshore wind power. It has potential and will benefit from all the technological advantages that have been developed in other regions. However, there is still a lot of work to be done on pro-

ject execution and technology suitability. But, overall, it is very promising and something that we are keeping a keen eye on to actively participate in. We are actively promoting the 12 MW offshore wind turbine in Europe and the US. The right technology depends on the wind conditions. As we learn more about which are the projects being developed, we will bring the technology that is the most suited for India. Which are some of the emerging markets for GE aside from India? The next frontier is Southeast Asia. Countries like Vietnam, Thailand, the Philippines and Indonesia are the ones where renewables, wind in particular, are going to play a major role. Indian players are well placed to enter these regions and apply their learnings to develop projects. We are also investing significant amounts in the region, in technology and in increasing our industrial footprint. It is one of the key focus areas for us globally. What are your future plans for India, in particular in manufacturing? GE has been in India for a hundred years and has a substantial wind footprint. We will continue to make investments in technology, supply chain and talent at our manufacturing units. What are your expectations from India for 2018 and 2019? We are hopeful that the auctions that are announced will happen in due course. We have been getting tremendous feedback from customers on our products. ■ July 2018 ● Renewable Watch ● 45

COMPANIES

Brookfield Asset Management Building its portfolio through the owner-operator route By Ashay Abbhi

large number of domestic and global players in the clean energy space are entering the Indian renewable energy sector. Large undeveloped capacities, falling capital costs and tariffs, and the improving regulatory scenario are some of the factors that have contributed to the exponential growth of the sector. As a result, international investors are seeing it as an attractive investment opportunity with significant returns in the long run. Brookfield Asset Management is one such organisation that has recently expanded its footprint into the Indian renewable energy space. A Canadian alternative asset management fund, Brookfield has an overall portfolio of $285 billion across the globe. Established in 1899, the company has a presence across more than 30 countries

46 ● Renewable Watch ● July 2018

with assets in the real estate and infrastructure sectors, including renewable energy. It has been an active participant in the Indian asset management space since 2009, acquiring prime real estate in the country along with toll road assets. It has a large presence in the global renewable energy market as well, with over 17 GW of installed capacity across 840 generation facilities in the hydro, wind and solar power segments.

Current portfolio Brookfield entered the Indian renewables market with a portfolio of about 300 MW, which it acquired as part of its takeover of SunEdison’s yieldco, TerraForm Global, in December 2017. The latter had assets worth 952 MW in Brazil, China and India, among other countries. The 300 MW of

renewable energy capacity was set up by SunEdison and later sold to TerraForm Global. According to Vinay Kumar, managing director, renewables, Brookfield Asset Management, the company’s initial growth in the country will be through inorganic means, and later a growth team will undertake organic project development. Brookfield is for now focusing on growing through mergers and acquisitions in the Indian renewable energy space. It is mainly targeting operational assets owned by large companies as well as smaller ones, including independent power producers (IPPs), existing funds and Indian corporates. Brookfield’s key differentiating factor, according to Kumar, is that it is looking to acquire a controlling stake in the asset or buy it out entirely, and not own only a

COMPANIES part of it. The aim is to operate the asset on its own instead of giving it to a thirdparty operator. As such, Brookfield belongs to a separate class of investors known as owner-operators. Brookfield’s Indian team consists of around 40 people, maintaining 200 MW of solar assets and 100 MW of wind power plants across the states of Madhya Pradesh, Gujarat, Rajasthan and Tamil Nadu.

Development opportunities In a market where the entry barriers are low and exit barriers even lower, sustainability becomes a significant question for a project developer or investor. On the flip side though, this provides an opportunity for large investment funds such as Brookfield to absorb the projects of outgoing entities to build its own portfolio. The choice of asset depends on the project profile and the investment horizon of the exiting investment funds, according to Kumar. There are close-ended funds, wherein the investor exits from the project after a specific tenor, and there are pension funds that tend to stay on for longer durations. So, inherently, given the model the sector has for recycling capital, assets will continue to be bought and sold, providing opportunities to new players like Brookfield, with deep pockets and vast sector experience, to carve a niche for themselves in the market. The Indian renewable energy market has also transformed to welcome newer business models. Earlier, funds focused only on project development, whereas now project acquisition and development have emerged as key trends. So far, funds have been largely active in the project development space, mostly as passive investors, while project-level operations are carried out by the promoters and IPPs. According to Kumar, Brookfield is working towards an alternative business model that combines the acquisition end with the operation end of market development. While the company will not enter the competitive bidding space right away, it will purchase and operate existing assets. Moving for-

Brookfield is working towards an alternative business model that combines the acquisition end with the operation end of market development

energy market exist in the form of policy ambiguity and differences between states and the centre as well as among states. Moreover, the implementation of policies varies across states, making it difficult to standarise the business across the country. Further, interest rates are increasing, and account for the largest share in the total renewable generation cost, ultimately impacting tariffs.

Future plans ward, it is likely to enter the project development space by bidding for utility-scale, open access and rooftop projects as well.

Sector perspective The solar and wind power segments have achieved parity in terms of tariffs, both falling to levels as low as Rs 2.44 and Rs 2.43 per unit, respectively. However, Kumar is of the opinion that the tariff parity may be theoretical. The wind power financial model is significantly different from the solar power model. While solar tariffs are extremely sensitive to engineering, procurement and construction costs, wind power tariffs are sensitive to the plant load factor (PLF). Wind capacity has so far been concentrated in high-wind areas, where high PLFs have led to lower tariffs for the same returns. At present, wind tenders are being released for project development in highPLF states such as Maharashtra, Gujarat and Rajasthan, much to the disappointment of other states such as Telangana and Andhra Pradesh. The high-PLF states will be the focus areas for Brookfield as well. According to Kumar, solar tariffs are expected to fall further on account of the lowered Chinese target. This will lead to an oversupply in the market. It is expected that panel costs will fall by 35 per cent by 2019 and 15 per cent annually from 2020 onwards. Tariffs will fall from Rs 2.90 per unit at present to Rs 2.40 per unit. Wind power tariffs, on the other hand, are likely to remain steady as the high-PLF sites that were bid in the initial tenders will no longer be available. The challenges in the Indian renewable

With the acquisition of TerraForm Global, Brookfield acquired assets in multiple countries including India and China. At present, the company is focusing on building capabilities only in these two countries, which, according to Kumar, are its growth engines. Considering the immense potential for asset growth in these countries, Brookfield has not restricted itself to a target. It is also in the process of selling the TerraForm Global assets in other countries such as Malaysia, Thailand, South Africa and Uruguay. China provides significant opportunity for fund management companies. Brookfield has plans to expand its presence in the Chinese market as a project developer and operational asset owner. According to Kumar, the country has been installing 50-55 GW of renewable energy capacity every year and is a huge market for reselling of assets, and Brookfield is expected to leverage this opportunity. The company has entered into a joint venture partnership with one of China’s largest warehouse owners to set up rooftop solar plants on all its warehouses across the country, presenting an opportunity of about 1.5 GW, an indication of the business scale available in China. In India, given that about 80 GW of solar and 30 GW of wind power are yet to be developed to reach the 175 GW target by 2022, the opportunities for a large asset management fund are numerous. Even beyond 2022, Kumar says, the domestic renewable energy market will continue to grow at a steady pace as the low cost of energy will sustain capacity development. ■ July 2018 ● Renewable Watch ● 47

FINANCE

Changing Funding Needs Moving beyond traditional financing models in the solar segment By Ashay Abbhi

ith the evolution of the solar power segment comes the need for capital and financing for the targeted capacity of projects. As business models transform to cater to the prevailing lowtariff conditions, the need to move away from traditional financing tools to innovative low-cost sources of capital gains traction. The present set of challenges in the solar power segment is expected to deepen as greater capacity is added each year, which, in turn, affects the risk profile of projects. This indicates a stronger need for tools that can factor in payment security and power offtake risks to yield better returns from solar power plants. It is estimated that about $100 billion of capital would be required to reach the country’s renewable energy target of 175 GW by 2022. The target now stands revised to 227 GW, which will require additional funds to be channelled into the sector. Along with availability, it is access to

48 ● Renewable Watch ● July 2018

this capital that will be instrumental in developing the capacity to meet these ambitious targets. One of the primary responsibilities of financiers is to make available low-cost funds for developers in order to ensure low tariffs, higher returns and sustained investor interest.

Segment status According to Khekiho Yeptho, deputy general manager, technical services, Indian Renewable Energy Development Agency (IREDA), the National Solar Mission (NSM) has not only promoted solar power development in the country, but has also provided access to a large amount of capital for the development of these projects. This is reflected in the large size of solar portfolios owned or financed by most financial institutions across the country. In the past five years, with IREDA’s experience as one of the foremost leaders in solar financing, no project has been a non-performing asset.

The schemes that began during the market’s initial growth phase have now evolved significantly. For instance, Yeptho says that IREDA started the rooftop loan scheme in 2015 for small rooftop projects being developed at the time. This has now grown into two separate types of schemes for smaller and bigger players. Meanwhile, a line of credit is also being initiated by IREDA. It is interesting to note that with the increasing scale of projects, the financing tools have also changed, with different terms and conditions for large and small projects. According to Sitesh Sinha, assistant vicepresident, PTC India Financial Services, even during the initial years of the NSM, when tariffs and risks were high and projects were few, funding was being provided. The experience gained from those projects was used to create better financial tools to cater to the growing demand in the sector. The stringent norms for collateral and payment penalties levied by financial

FINANCE institutions were relaxed as the time and experience in the solar segment increased. Moreover, there is increasing competition even in the financial lending and investment market for solar power, thereby creating opportunities for developers to gain access to competitive capital. The projects that were installed as part of Phases I and II of the NSM have undergone refinancing a few times. Interest rates have increased, but for these projects they have remained below 10 per cent. The current trend of refinancing is, therefore, here to stay in the solar power market as the bankers have tested the benefits of the model.

Financial challenges The solar power segment has a unique set of financial challenges in the Indian market that often impede growth. Access to capital as well as its availability continues to be a key issue in the sector. The subsidies provided in the rooftop solar space are not disbursed fast enough, further aggravating the issues. According to Yeptho, rooftop solar can contribute significantly to the achievement of the government’s target. However, a faster pace of auctions and other government interventions are needed to match developer interest. According to Vikas Bansal, executive vicepresident, corporate finance infrastructure banking, Yes Bank, it is the joint responsibility of the developer and the investor to prevent solar power assets from falling into the category of stressed assets, a route being taken by many assets in the power generation sector. In the context of the rooftop segment, there is a serious lack of standardisation across business models, power purchase agreement terms, locations and debt financing conditions, among others. Even with a strong interest in the market, the numbers indicate that solar rooftop uptake has been limited, with access to finance still being a key barrier for developers. According to Vijay Nirmal, programme manager, US-India Clean Energy

Finance, Climate Policy Initiative, most of the installed capacity in India is in the capex mode where the installations are owned by consumers. Meanwhile, the thirdparty sale model has not gained enough traction, contrary to industry expectations. A major contributing factor for this is the apparent lack of creditworthiness of the power offtaker in the third-party arrangement. The perceived lack of credit-worthiness of discoms also impedes sector growth by increasing the risk profile of projects and thus increasing the cost of finance. One of the largest potential segments for rooftop solar – micro, small and medium enterprises – are largely unable to participate in the solar growth on account of such challenges.

Policy uncertainties With projects now being supported by the Solar Energy Corporation of India (SECI), there are fewer regulatory issues in the rooftop solar segment. According to Yeptho, there may be challenges that crop up with time as the quantum of projects being installed increases every year. At present, the reluctance of discoms to approve projects is a regulatory issue that some developers have to face. This is expected to become easier with the introduction of the Sustainable Rooftop Implementation for Solar Transfiguration of India scheme, wherein the discoms have been appointed as the nodal agencies for rooftop solar approvals and a performance-linked incentive has been made available to them. Net metering remains an issue despite it being theoretically present in 29 states. Nirmal says that approvals for net metering take longer than the gestation period

The sector is waiting to see the outcome of the upcoming IPOs by leading solar power companies

of the project. Uncertainties owing to the recent draft policy of the Ministry of New and Renewable Energy, which proposes to withdraw subsidies for certain sectors, may hamper a further scale-up of rooftop solar in these sectors. Sinha believes that tariff is the biggest challenge in the solar segment. As the tariff falls with each new tender, the challenge for financiers becomes more pronounced, given that their exposure in the project is directly related to the revenue and the tenor for which the investor chooses to remain in it. Moreover, the operational issues related to the delay in commissioning by agencies such as SECI or NTPC Vidyut Vitran Nigam also dampen investor interest. As the certificate of commissioning and the first tranche of revenues are delayed, the developer faces a liquidity crunch.

Emerging instruments According to Nirmal, traditional financing instruments like domestic debt financing still remain largely untapped for the rooftop solar segment, while issues in access to capital have made stakeholders move to alternative sources of financing. Municipal solar bonds are ideal for small rooftop developers that do not have the financial strength to issue bonds. Here, municipalities are financial aggregators and provide a line of credit through the issuance of bonds and a capital lease mechanism to selected developers. However, since municipalities are not incentivised or mandated to perform this non-core activity, little interest can be seen at their end. In addition to this, credit guarantee schemes, initial public offerings (IPOs) and green bonds have emerged as important financial instruments. The sector is waiting to see the outcome of the upcoming IPOs by leading solar power companies. In conclusion, it is important to understand that the country’s solar power financing needs are huge. While new financial instruments are being introduced in the market, their success remains to be seen. ■ July 2018 ● Renewable Watch ● 49

SPOTLIGHT

SOLAR POWER IN INDIA

Solar Trends Challenges persist despite favourable policies

ndia has become the third largest solar power market in the world. High capacity tenders and additions have become the trend as the country progresses towards the 100 GW target by 2022. Over the past three years, solar power capacity has increased at a compound annual growth rate of over 100 per cent. In 201718, the solar segment recorded the highest capacity addition among all power generation sources, surpassing thermal capacity addition for the first time. The short gestation period and wide resource availability are the key advantages of solar power over other renewable and conventional sources of generation. Renewable Watch recently organised its Eleventh Annual Conference on Solar Power in India. The following section presents key highlights of the conference.

Policy environment The growth has been supported by favourable government policies aimed at removing the bottlenecks in project development, transmission and project allocation, and reducing the cost of solar power projects. To this end, the procurement of projects and equipment has been made increasingly transparent. The government has set up solar parks on a plug-and-play basis to provide developers with ready transmission lines. Meanwhile, green energy corridors are being developed across the country to increase the transmission capacity in order to cater to future demand, created by 175 GW of renewable energy. The recent policy move of exempting solar power from interstate wheeling and transmission charges till 2022 has further increased the confidence of power producers even as some states have begun to levy these charges for intra-state transmission. 50 â&#x2014;? Renewable Watch â&#x2014;? July 2018

Meanwhile, tax incentives in the form of holidays have reduced the cost of developing these projects. Further, capital cost subsidies in the form of viability gap funding and central financial assistance have been introduced to plug the project finance gaps in the rooftop solar segment as well as solar projects for rural areas, etc. However, poor discom bankability continues to plague the segment. Another bottleneck that has often impeded the growth of the segment is the cumbersome process of obtaining approvals and permissions.

Development trends Over the past few months, the Indian solar segment has witnessed skewed growth, driven primarily by the southern states. Key among the high-growth states are Telangana, Andhra Pradesh, Karnataka and Tamil Nadu. However, the other high-growth states of Gujarat, Madhya Pradesh and Rajasthan have lagged in capacity addition. As per the solar project pipeline, Tamil Nadu is in the lead, followed by Andhra Pradesh. Meanwhile, tendering activity has been unpredictable over the past two years. The number of new tenders released every quarter has varied significantly, from as low as one tender in the second quarter of 2017 to 13 tenders in the first quarter of 2018. The capacity being tendered has also seen a similar trajectory. While the second quarter of 2015 saw around 5 GW of solar

power capacity being tendered, less than 1 GW of capacity was tendered in the third quarter of 2016. The largest capacity of more than 5.5 GW was tendered in the first quarter of 2018. Solar power tariffs have seen a steep fall in the past year. While they remained stable during January-September 2016, the next 16 months saw a decline of 44 per cent in solar power tariffs, reaching levels as low as Rs 2.44 per unit. The funds provided for project development in the solar power segment are dominated by private equity (PE) investors and large international developers. PEbacked developers account for 23 per cent of the total installed capacity, second only to Indian corporates with a share of 43 per cent. Independent power producers account for 21 per cent of the total installed capacity, while public sector units (PSUs) have a 7 per cent share. For the capacity in the pipeline, the share of corporate entities is likely to shrink to 29 per cent, while that of PSUs and IPPs will increase to 18 per cent and 27 per cent respectively.

Challenges and conclusion The solar power segment faces critical challenges that need to be resolved in order to achieve streamlined growth. These include an inadequate and unstable grid, poor quality and construction of assets that are unable to withstand natural phenomen, low investment in research and development, and a myopic view of ancillary services and the structure of energy markets. In a nutshell, the long-term growth predictions on the basis of commercial viability make India an attractive solar power market. However, a long-term vision and stability are required, along with an increased focus on innovation to address the new set of challenges arising with the increased renewable energy capacity. Given the current market trends, it is expected that the solar power segment will grow at an average of 9.5-10 GW per annum till 2021. â&#x2013; Based on a presentation by Vinay Rustagi, Managing Director, BRIDGE TO INDIA

SPOTLIGHT

SOLAR POWER IN INDIA

Regulatory Focus Enabling provisions needed to ease renewable energy procurement

ndia is progressing towards its 2022 renewable capacity target of 175 GW. A 19 per cent year-on-year growth in renewable capacity addition was recorded during 2012-18. However, the sector cannot rely only on distribution companies to meet this target, and will have to develop captive power and open access capacity. Commercial and industrial consumers account for about 50 per cent of the total electricity consumption, which has been increasing at a compound annual growth rate of 4 per cent.

Procurement mechanisms There are three primary routes for the procurement of green power – captive or group captive models, power purchase agreements (PPAs) with third parties under open access and renewable energy certificates (RECs). Renewable energy procurement includes captive and open access. The alternative would be conventional power procurement, which is offset by the purchase of RECs. However, the states are reluctant to buy power at the average power purchase cost mode in addition to buying RECs. Meanwhile, the major driver for captive renewable power has been the waiver of cross-subsidy surcharge (CSS). In open access, however, more charges need to be paid, a major part of which includes CSS.

Wheeling and banking Open access was introduced to promote competition and open up the market for electricity trade. However, the segment faces challenges such as inadequate banking facilities. The Rajasthan Electricity Regulatory Commission (RERC) determined the transmission charges for solar power projects commissioned between 52 ● Renewable Watch ● July 2018

April 2015 and March 2018, or for a capacity of 2,000 MW, at a rate equal to 50 per cent of the normal transmission tariff as applicable to conventional power for a period of 25 years. For this, no subsidy was provided by the Rajasthan government. According to RERC, 2 per cent banking charges shall be payable in kind and the unutilised banked renewable power can be bought back by generators at 60 per cent of the high tension industrial energy tariff. However, more than 10 per cent of unutilised banked energy will lapse.

Grid integration As the industry gears up for a significant increase in solar and wind generation to achieve the 2022 target, grid integration is likely to become a major challenge for the ramped-up capacity. Owing to the variability and intermittency of these sources, there is likely to be a mismatch between demand and supply, which will need to be managed throughout the day and across seasons. There is also a dearth of flexible power generation sources. Thus, there is a need for sufficient primary, secondary and tertiary reserves to ensure grid stability.

Forecasting and scheduling In order to encourage discipline and grid stability, forecasting and scheduling regulations have been issued by the centre and a few states such as Rajasthan, Karnataka and Telangana. Many states have released the draft regulations but are yet to finalise them. According to the regulations, all solar power generators in a state with a capacity above 5 MW must be connected to the state grid through pooling stations or solar parks. This is necessary for better forecasting and scheduling of

the power generated from these plants.

Key issues and the way forward The key issues faced in renewable energy procurement pertain to policy and regulations, connectivity and financing. Regulatory issues include inadequate benefits and inconsistencies in the policy and regulatory regime across states, delays in getting net metering approval, higher open access charges, additional surcharge and banking charges. Changes in the policy and regulatory landscape can significantly impact project returns and new project developments. For instance, the lack of banking facilities brought the wind sector in Tamil Nadu to a standstill. Locations with high untapped renewable potential often have poor grid availability and connectivity. The limited capacity of distribution transformers also remains a concern. The rapid decline in tariffs with the introduction of competitive bidding has affected the financial viability of projects. This makes raising funds a challenge for developers. Project progress may even be hampered by local issues related to land acquisition and leasing. On the commercial front, the state discoms are reluctant to part ways with high-paying consumers. This leads to the imposition of high open access charges in the form of additional surcharge and cross-subsidy surcharge. In addition, the financing strength of discoms has not improved despite government initiatives such as the Ujwal Discom Assurance Yojana. Therefore, appropriate enabling provisions should be introduced to the existing regulatory framework. ■ Based on a presentation by Vaibhav Singh, Associate Director, Energy, PricewaterhouseCoopers

SOLAR POWER IN INDIA

Still Stressed Discoms continue to grapple with financial challenges

he financial well-being of discoms is critical not only for ensuring a strong power distribution system in a country but also for capacity generation and unhindered power supply. However, a number of discoms are facing financial challenges despite several initiatives by the government to revive them.

Key issues affecting discoms The major challenge for discoms is the rising power purchase cost. The power purchase cost accounts for almost 70 per cent of the total cost. Therefore, an increase in the purchase cost, mostly due to the rising cost of fuel and dependence on expensive imported fuel, significantly impacts the total cost. There is a wide gap between the approved and the actual cost, with the latter being more than the former in all cases. This discrepancy hinders the flow of information to customers. A number of discoms have high aggregate technical and commercial losses, averaging over 25 per cent across most states. Another challenge pertains to coal freight rationalisation. The central government has rationalised the coal freight charge by decreasing it for distances more than 700 km, and increasing it for distances from 200 km to 700 km. Further, a surcharge of Rs 55 has been imposed for loading coal on trains, thereby increasing coal prices, which, in turn, has driven up the cost of generation and tariff rates. Coal India Limited, in January 2018, revised the thermal grade coal prices upwards by 4-18 per cent, thereby increasing the generation costs.

Update under UDAY The Ujwal Discom Assurance Yojana (UDAY) is under implementation in 27 states and four union territories. So far under

the scheme, states and discoms have issued bonds worth about Rs 2,320 billion, which accounts for 85 per cent of the total bond value to be issued, as per the MoUs signed with respect to refinancing discoms’ debts. Of this amount, about Rs 2,090 billion worth of bonds have been issued for discom debt takeover and Rs 230 billion towards the leftover debt. The main drawback of the scheme has been its slow progress in reducing the aggregate technical and commercial (AT&C) losses, due to which the operational and financial profile of several discoms continues to suffer. The current loss levels continue to remain significantly high in several states such as Bihar, Haryana, Jammu & Kashmir, Madhya Pradesh, Rajasthan and Uttar Pradesh as compared to the target fixed for 2018-19. However, the loss levels of discoms across the country decreased in 2017-18, aided by the reduction in interest cost following the debt refinancing under UDAY. This trend is likely to continue in 2018-19.

Procurement of solar power There has been a significant reduction in solar and wind power tariffs, which has been a huge positive for the discoms. The solar power tariffs discovered through the reverse auction process would considerably improve the cost competitiveness for future projects and, in turn,

SPOTLIGHT reduce the procurement cost and the renewable purchase obligation (RPO) compliance cost for discoms. In fact, solar tariffs have fallen below Rs 3 per unit, excluding the grid balancing cost, and are more competitive than conventional power tariffs. However, the incremental impact of the solar RPO on the average tariff at an all-India level is limited, given the falling solar power tariffs. ICRA has analysed the impact of purchasing solar power at the average tariffs of discoms on an all-India basis. The solar RPO is assumed to increase from 4.75 per cent in 2017-18 to 10.5 per cent in 2021-22 based on the trajectory approved by the Ministry of Power. The average solar power tariff is assumed to decrease from Rs 5.50 per unit in 2017-18 to Rs 3.50 per unit in 2021-22. The procurement cost from nonrenewable energy sources is assumed to escalate by 3 per cent per annum, while the energy demand is likely to grow by 5 per cent during this period. The study concludes that the average cost of procurement of non-renewable energy-based power will become higher than the cost of procurement from renewable sources. However, the overall impact on the retail tariff of discoms is expected to be limited.

The way forward Reduced procurement prices of solar power along with lowered tariffs are a huge positive for the discoms. However, the share of such solar power projects in the market is very small, thus it may take a few more years for the decreased tariffs to create a meaningful impact on the procurement prices. Meanwhile, the amendment to the National Tariff Policy wherein penalties have been introduced for unscheduled load shedding has come hard on the discoms. The draft also focuses on introducing prepaid smart meters, which will automatically cut off power supply once the credit limit is surpassed. These may prove beneficial for customers but not for the discoms per se. ■ Based on a presentation by Sabyasachi Majumdar, Senior Vice-President, ICRA Limited July 2018 ● Renewable Watch ● 53

SPOTLIGHT

SOLAR POWER IN INDIA

Sluggish Growth Implementation challenges plague rooftop solar By Khushboo Goyal

he rooftop solar segment in India has witnessed sluggish growth over the past year, with the installed capacity reaching only 1.2 GW as of June 2018. To achieve the installed capacity target of 40 GW by 2022, roughly 10 GW of capacity additions will be required each year. However, with the current pace of growth, only 10.8 GW of rooftop solar capacity is expected to be installed by 2021, as per BRIDGE TO INDIA estimates. In contrast, in the utility-scale ground-mounted solar power segment, 21.1 GW of capacity has already been installed against the targeted capacity of 60 GW. Roughly, 9.6 GW of ground-mounted solar capacity was added in 2017-18, whereas in the rooftop solar space, a small capacity addition of 352.8 MW was recorded during the same period.

sumer segment in the rooftop space. The public sector has not seen much growth despite strong mandates and incentives from the government. The only exception in this case is Delhi, where the public sector is the largest consumer, most likely due to the strong central government presence. The present trend of low capacity addition in rooftop solar is surprising, considering that the majority of the states have comprehensive rooftop solar policies. In addition to this, almost all states have net metering regulations for rooftop solar installations, and a few have both gross metering and net metering regulations in place. Hence, it is not the lack of policies and regulations but a lack of proper implementation that is impeding the growth of rooftop solar in the country. Further, significant delays in obtaining approvals for net metering connections are driving even willing customers away from installing large systems, with many of them now opting for smaller systems only to reduce their bills. The financially weak state-owned discoms are reluctant to provide approvals for rooftop projects and net metering for C&I customers as they are the highest revenue earn-

Current status Maharashtra has emerged as the leader in the rooftop solar space, followed by Tamil Nadu, Rajasthan and Karnataka, while Andhra Pradesh, Punjab, Telangana and Uttar Pradesh lag far behind. It is interesting to note that the commercial and industrial (C&I) sectors form the biggest con-

Installed rooftop solar capacity as of September 2017 (MW) 237 Commerical

Industrial

Public sector

190

129

125 95

103

102 77

73 55

Andhra Pradesh

Delhi

Gujarat

Haryana

Source: BRIDGE TO INDIA

54 ● Renewable Watch ● July 2018

Karnataka

Maharashtra

Punjab

Rajasthan

Tamil Nadu

Telangana

Uttar Pradesh

ers for the discoms. At the same time, residential consumers are often discouraged by the high upfront costs of these projects.

Government interventions The Ministry of New and Renewable Energy introduced the SRISTI (Sustainable Rooftop Implementation for Solar Transfiguration of India) scheme as part of Phase II of the rooftop solar scheme. The government is making efforts to address the challenges plaguing the rooftop solar segment and streamline the process of rooftop solar installation. Under this scheme, central financial assistance (CFA) subsidies have been withdrawn for high-paying customers that is, the commercial, industrial, government and social sectors. Interestingly, the C&I sectors have been assigned the highest rooftop solar target of 20 GW, against the total of 40 GW by 2022, while a small target of 5 GW each has been determined for the other sectors.

The way forward State governments have begun to take interest in this segment as seen from the recent string of tenders announced by various government agencies. This is a deviation from the general trend seen previously, where the majority of the rooftop solar capacity was tendered by a central organisation. No major tender activity has happened in the C&I space as the economic feasibility of rooftop solar for this consumer category makes tenders immaterial. With access to low-cost capital and growing project viability, rooftop solar development is slowly picking up pace. However, for rapid growth, the operational processes need to be better streamlined and standardised for customers. Further, the central and state governments should focus on outreach and capacity building programmes for greater participation, and develop different target strategies for various consumer segments and clusters. Going forward, an enabling policy and regulatory environment is needed to promote innovative business models. ■ Based on a presentation by Balawant Joshi, Managing Director, Idam Infrastructure Advisory

Highlights of 2017

Organisers:

Smart Utilities

th Annual Conference on

150 + PARTICIPANTS 50 + POWER UTILITIES Sponsorship opportunities open for 2018

Digital Future: New Utility Requirements, Promising Technologies and Best Practices

September 6-7, 2018, The Grand, Vasant Kunj, New Delhi Lead Sponsor*:

Supported by:

Utility Partner:

*Lead and cosponsor slots are available

AGENDA: Key Trends and Outlook

Smart Metering Update

Update on Key Government Programmes

IOT, Big Data and Cloud

Utility Perspective

Focus on Renewable Energy

Regulatory Perspective

Asset Management

Update on Smart Grid Initiatives

Cybersecurity Requirements

Communication Technologies IT-OT for Grid Monitoring IT-OT for Renewable Integration E-Mobility Requirements Artificial Intelligence and Blockchain Technology

There will be dedicated segment-specific tracks on generation, transmission and distribution. These will cover areas such as communications, data analytics, real-time monitoring, asset management, regulatory compliance, management information systems and smart grid.

A key highlight of the conference is the major participation by public/private utilities. Some of these include:

For delegate registrations and sponsorship opportunities, contact: Priyanka Singh Tel: +91-11-46012775, 41034615, 9811755907

Deavanjan Ranjan Tel: +91-11-46038152, 41034615, +91-8585900089

SPOTLIGHT

SOLAR POWER IN INDIA

Efficient Operations Emerging solar O&M practices

olar plants are built to last ideally for 20-25 years. On completion of the engineering, procurement and construction (EPC) period, developers need to ensure seamless operations and maintenance (O&M) activities for sustained energy generation over the project lifetime. Traditionally, these services were not given the importance they deserved, with the primary focus being on module cleaning and grass-cutting. Over the years, however, O&M services have evolved much beyond site maintenance and the scope of activities is growing continuously. It includes a services such as monitoring and supervision of the plant, maintenance, energy forecasting and outage scheduling, and ancillary services. The cost of O&M services has also declined over the past few years and this trend

56 â&#x2014;? Renewable Watch â&#x2014;? July 2018

is expected to continue. The continuous reduction in cost is due to the sectorâ&#x20AC;&#x2122;s shift towards digitalisation and advanced techniques, and away from traditional manual practices as manpower is expensive. While manpower still constitutes a major portion of the overall cost, its share has been declining gradually. The increase in plant size and availability of better tools is also leading to efficiency gains, which further reduce the costs associated with O&M services. Machinebased cutting and jack-based tilting are replacing manual grass-cutting and tilting. Cloud-based monitoring and module temperature reduction techniques are also contributing to the technological advancements in O&M. The solar O&M model is also evolving. Globally, there has been a rise of thirdparty solar O&M service providers.

These specialised service providers are able to deliver more value to solar investors and owners as they use a more structured approach, and customised technologies and solutions to provide better O&M. These third-party O&M companies are either stand-alone service providers or a carveout of the existing EPC players. Despite advancements in technologies and the emergence of new business models, solar plant O&M is not free from challenges. The most common issues faced at the sites are related to product and weather. Cable burnouts, rusting of structural elements, waterlogging, theft, etc. are a few other challenges. Going forward, the time intervals for forecasting and scheduling will become shorter for all grid-connected solar projects, which will make O&M requirements even more stringent.

SPOTLIGHT

SOLAR POWER IN INDIA

Cost trends O&M costs roughly constitute 1 per cent of the aggregate capital cost. There is a downward trend in O&M cost globally and it is expected to further decrease in the coming years. Currently, the cost stands at Rs 320,000 per MWp, which is expected to fall to about 25 per cent of the current cost in the next 10 years. By 2028, the O&Mcost is estimated to stand at Rs 80,000 per MWp. At present, expenditure on manpower, including technical, security and, cleaning, tilting and grass-cutting costs, constitutes 70 per cent of the overall O&M cost. The remaining 30 per cent costs are accounted for by tools, HV maintenance, consumables and spares and, transport and housing. Salaries paid to technical and non-technical staff account for almost 37 per cent of the total O&M costs. The cost of cleaning, tilting and landscaping is another major head under the total cost. As the O&M segment becomes more technology driven, the composition of the total cost is likely to shift away from personnel to digital in the years to come. As per estimates, the share of personnel in the total cost will come down to 17 per cent and the expenditure on digital equipment will comprise more than 50 per cent of the total cost by 2028.

Performance monitoring Fault rectification l Reduce downtime l Service supervision

Myth

l l

Module cleaning Vegetation control

Energy forecasting Outage scheduling l Power quality monitoring

Energy yield reporting Performance reporting l Maintenance reporting l Equipment’s history reporting

Monitoring and supervision

Grid connect and regulation

Reporting

Site maintenance Module cleaning Vegetation control l Reduce downtime l Service supervision

Spares and provisions Corrective l Predictive l Preventive l Equipment upkeep

Warranty management Authorities interface l Insurance management l Accounting l Revenue collection

Source: L&T presentation

Site maintenance

based tilting respectively.

Challenges and the way forward One of the key challenges facing the segment is the inadequate attention to O&M. If the plant is not maintained properly, a developer can lose up to 15 per cent of the returns. In addition to poor water availability, there are several geographical and environmental challenges such as heavy rains and sandstorms, which lead to equipment malfunctioning. For better operational efficiency, identifying module defect and degradation, undertaking soil management, cleaning bird droppings, studying the behaviour of different module technologies, and improving grid availability and vendor support are important.

Plant maintenance

Ancillary services

There have been various technical advancements to combat some of the aforementioned challenges. Dust abatement system like wind fence can be used to reduce the dust over the module surface, which would lead to greater generation and a lower cleaning cost. Scary balloons and faces can be used to control bird dropping.

Going forward, further enhancement in technology will bring about major changes in the O&M sector. Cloud-based monitoring and an automated module cleaning system will drastically reduce the dependence on manpower and hence the associated costs. New business models create further opportunities in O&M. With profit sharing models, independent power producers breakdown (%) can transfer more risk to the O&M 7. HV maintenance: 2.5 operator.

The reduction in aggregate cost is expected on account of improvement in the efficiency of personnel overtime. The per megawatt technical manpowCost er requirement has come down to 2. Transport and housing: 5 MW per person and should 39,143 (8.7) reach 10 MW per person by 2019. This increase in efficiency is a 1. Salaries: 164,531 (36.5) result of the increasing size of projects. Along with this, personnel are better trained and equipped with better tools. Better tech3. Security: niques are being utilised for clean55,641 (12.3) ing and landscaping. Tractor/ 4. Cleaning, tilting and Tanker-based cleaning is moving landscape: 154,688 (34.3) towards robot-based cleaning. Manual grass-cutting and tilting are also being replaced with Source: Solarig Gensol presentation machine-based cutting and jack-

6. Consumables and water: 2.3

5. Tools, apparel and PPEs: 2.9

In sum, it is important that photovoltaic plants are maintained properly so as to maximise energy yields and prolong their life. Optimal operation services must strike a balance between maximising generation and minimising cost. ■ Based on presentations by Puneet Jaggi, Director, Solarig Gensol, and Rajesh Gajjar, HeadO&M, L&T Solar July 2018 ● Renewable Watch ● 57

SPOTLIGHT

SOLAR POWER IN INDIA

An Emerging Opportunity Solar-wind hybrids attract attention

riving India’s renewable energy growth, both solar and wind power are on the path to convergence. Owing to the complementary nature of the two sources of energy, solar-wind hybrid systems are more likely to provide consistent power supply and, therefore, achieve better grid stability. As a result, hybridisation will lead to the optimal utilisation of available resources as well as transmission infrastructure. With the aim of boosting solar-wind hybrids, the Ministry of New and Renewable Energy (MNRE) recently issued the National Wind-Solar Hybrid Policy. The policy seeks to promote greenfield hybrid projects as well as brownfield expansions of existing wind or solar projects to convert them into hybrid power plants. According to the policy statement, no additional connectivity or transmission capacity charges will be levied by the respective transmission entities for the hybridisation of existing wind or solar projects. Battery storage can be added to the hybrid project to reduce the variability of output power from a windsolar hybrid plant. Additionally, all fiscal and financial incentives available to wind and solar power projects will be made available to hybrid systems. Among the states, Gujarat is leading on the hybrid power policy front and has released its Wind-Solar Hybrid Policy along the lines of the central policy.

Case studies The market for solar-wind hybrids is at a nascent stage and various studies are being conducted to analyse the scope of the technology. The challenge of adding new capacity to existing power plants without an increase in transmission capacity has often been discussed. 58 ● Renewable Watch ● July 2018

A study was carried out by Gensol Engineering to understand the effect of adding solar capacity to an existing wind farm. Three hybridisation scenarios were considered for capacity addition to the 300 MW of wind power at an existing site to analyse the comparative loss in energy, keeping the transmission capacity constant. The study concluded that an addition of 50 per cent or 150 MW of solar capacity would not cause much overloading of power, with negligible energy loss of 0.04 per cent as a result of the backing down of the plant. Meanwhile, adding 225 MW of solar capacity would lead to a probable loss of energy of 0.33 per cent and a further addition of 300 MW of capacity would lead to an energy loss of only 1.89 per cent. Hence, the backing down of power, which may be necessary due to the limited transmission capacity of the existing power plant, does not lead to substantial energy losses in any of the cases. The benefits of utilising the existing power infrastructure (transmission lines and substations) to its full extent, therefore, clearly overshadow the estimated loss of energy that may result from hybridisation. Another case was studied to analyse the shadow effect of wind turbines over a

solar power plant at a proposed solarwind hybrid power plant with capacity of 22.5 MW in Jamgoda Hills, Madhya Pradesh. Post the study, 2.87 MW of solar capacity was removed due to shadow impact, and a total of 16.5 MW of solar capacity was proposed. Reduction in evacuation costs with the use of AC and DC coupled systems were also analysed. It was concluded that in a DC coupled system, AC switchgear and cable installation are not required, leading to a 20-25 per cent reduction in costs. In comparison, in an AC coupled system, savings in evacuation infrastructure lead to a 10-15 per cent reduction in costs.

The way forward With more hybrid tenders coming up, the solar-wind hybrid market is expanding. In April 2018, Hero Future Energies commissioned India’s first large-scale hybrid project in Karnataka, adding 28.8 MW of solar energy to an existing 50 MW wind farm. The Solar Energy Corporation of India has announced plans to issue a tender for the development of 2 GW of solar and wind energy capacity. A lack of clarification over the selection of technologies under hybrid schemes and regarding the cost of excess energy exported to the grid are hindering the development of the sector. Expensive energy storage technology is also a significant challenge faced by the segment. Going forward, a robust regulatory framework for metering methodology, forecasting and scheduling, grant of connectivity and sharing of transmission lines for windsolar hybrid systems is required. ■ Based on a presentation by Anmol Jaggi, Founder, Gensol Engineering

SPOTLIGHT

SOLAR POWER IN INDIA

Microgrid Solution Electrifying villages through decentralised generation

ndia achieved its ambitious goal of 100 per cent village electrification in April 2018. As per the Ministry of Power’s definition, a village is considered to be electrified when at least 10 per cent of its households and all its public places are electrified and basic infrastructure, like distribution transformers, is in place. Hence, 100 per cent village electrification is by no means a true reflection of the power scenario in the country. This is evident from the fact that a large percentage of India’s population still has no access to electricity. So far, 87 per cent of the Indian households have access to electricity while the remaining households are scheduled to be electrified by the end of this year, a plan that seems highly unrealistic at present. Decentralised generation units such as microgrids are a feasible option for providing electricity access to households in such remote locations. In fact, the unavailability of power in several remote locations and unreliable power supply in urban regions make India an attractive market for off-grid and grid-connected microgrid solution providers. While the majority of households rely on diesel generators for power backup, microgrid solutions based on solar photovoltaic (PV) with energy storage are being increasingly adopted in many areas of the country.

Islands, remote communities, industrial or commercial establishments, defence establishments and certain urban communities can benefit from such solutions. Apart from providing access to electricity, solar microgrids result in operational savings through reduction in conventional power use, reduce investments in transmission and distribution infrastructure, and help meet renewable purchase requirements. A solar microgrid when coupled with energy storage provides round-the-clock power, even when solar radiation and grid power are not available. Commercial establishments can reduce their electricity bills by using the stored solar power when the tariff is higher. Rapidly declining battery prices, combined with increasing solar deployment, have made microgrids a viable solution that can deal with the intermittent solar generation.

Microgrid deployment

Applicability of solar microgrids

Large-scale microgrid deployment faces certain constraints. These include the capital-intensive nature of the projects, policy fluctuations, implementation challenges and lack of awareness. In addition, consumers in rural areas who get highly subsidised grid power are reluctant to pay for the more expensive microgrid power. No economically feasible model has been developed so far that can be replicated all over the country.

A solar microgrid consists of one or many solar PV generation units and can be coupled with an energy storage solution, a diesel generator, or other energy sources. It can be operated either connected to the main power grid as well as in islanded or self-sustaining mode. Typically, microgrids do not have power transmission capabilities and are not geographically spread out.

To address some of these challenges, the Ministry of New and Renewable Energy issued a draft national policy for renewable energy mini-and microgrids in 2016, with the aim to develop up to 500 MW of capacity in the private sector by 2021. The draft policy proposed the regulation of prices for microgrid projects while provid-

ing tariff determination flexibility to operators. It allowed provisions for single-window clearances for regulatory approvals and right of way, and for the availability of information on taxes and exemptions. It also directed the formation of local village committees to ensure greater adoption, payment collection and faster dispute resolution. The policy, though a step in the right direction, has still not been finalised.

The way forward Apart from addressing power availability issues, microgrids can become a source of additional revenue for remote communities as surplus power can be sold to the main grid. However, the successful implementation of microgrids depends on the business model, which needs to provide clarity and stability to investors. Going forward, an enabling policy and regulatory environment is required to exploit India’s huge potential for microgrids, and address the power concerns in remote areas. ■ Based on a presentation by Sandip Sinha, Vice-President, Microgrids, ABB India July 2018 ● Renewable Watch ● 59

SPOTLIGHT

SOLAR POWER IN INDIA

Legal Angle Understanding EPC contracts to avoid litigation

n a scenario of reducing solar power tariffs, there are increasing instances of reneging on old deals and renegotiation of contracts. As such, there is a growing focus on litigation and legal issues, underlining the importance of clearly defining and adhering to all clauses in a contract.

Litigation issues A developer faces various legal issues at different stages of solar project development. The first issue arises during the bidding process. Each project is different and so are the legal requirements associated with it. This is reflected in the tariff variations across projects. All of this must be kept in mind while bidding for tenders. Further, there are legal issues pertaining to land procurement, which delay the process. These are especially troublesome for stand-alone projects. In order to ensure the smooth transmission and evacuation of power from the project, adequate infrastructure and licences should be in place. Obtaining permits and consents for solar projects has become easier now as they do not require environmental clearance any more. Another obstacle pertains to the procurement of funds. Increased stress in the financial market has led banks to tighten their purse strings. Developers must ensure that the project agreements they enter into are bankable, which implies the proper allocation of risk among the stakeholders involved.

Contractual framework The contractual framework for a solar project includes agreements for engineering, procurement and construction (EPC), financing, operations and maintenance, power purchase, and grid interconnection. The EPC contract is the most important in 60 ● Renewable Watch ● July 2018

the structural components do not qualify as “immovable property” and thus would not be classified under the “works contract”. An EPC contract could be classified as a “composite supply” contract and attract a 5 per cent GST rate if the solar power equipment is the principal supply. Meanwhile, import duties play a key role in contract structuring. These include customs duty, safeguard duty and anti-dumping duty, which can alter the overall contract structure.

Implementation challenges

the entire process. Under this arrangement, the contractor is responsible for activities related to the design, procurement, construction, commissioning and handover of the project to the end user or owner. An EPC contract can be divided into two categories – split and turnkey contracts. Split contracts can be further categorised as supply contracts, erection and services contracts along with wrap/ umbrella contracts. The primary consideration for an EPC contract is its structuring, which is a tax-led decision that involves assessing if the goods and services tax (GST) on solar equipment is less than the that on services. Before the GST regime, there was a larger list of split contracts. In fact, lender preferences from a tax perspective are still inclined towards a split contract with a full wrap.

Role of GST and import duty Electricity has been kept outside the purview of GST, which means that the output is not taxable. However, there exists a tax on inputs under this regime, which leads to an increase in the project cost. While there is a tax rate of 5 per cent on solar power equipment, a tax of 18 per cent is imposed on services. To resolve the confusion regarding the tax rates, the Ministry of New and Renewable Energy communicated its understanding of GST via a memorandum issued in April 2018. The highlights of the memo specified that

One of the challenges in EPC contract implementation pertains to cost and time overruns. To keep the overruns in check, specific targets should be set along with scheduled commissioning dates based on power purchase agreements. Time extension should be allowed exclusively in case of policy or legal changes or other delays. Contract variations should be restricted to a minimum to avoid time overruns. Damages for delays should be liquidated and corresponding security should be put in place. In the event of non-compliance, the contractor is liable to pay performance liquidated damages. However, the contractor has limited rights to rectify and perform retests. The EPC contract must also include provisions for a detailed takeover of the plant. Warranties for defects and a longer defect liability period should also be in place. Another essential consideration in the EPC contract is force majeure, which limits the consequences to only suspension and extension of time. A change in law may dictate who will bear the responsibility (typically borne by the developer). In this case, the time and cost extensions would be limited to the appropriate commission’s findings. Insurance requirements form an additional aspect, which is commercially agreed upon in the contract. The termination of the EPC contract needs to be conducted smoothly, which involves ensuring the completion of termination payments. ■ Based on a presentation by Pallavi Bedi, Partner, Luthra & Luthra

SPOTLIGHT

SOLAR POWER IN INDIA

Enabling Ecosystem NESM aims to boost indigenous manufacturing of energy storage systems By Anukriti

he 60 GW of renewable energy currently installed in India has been developed in the recent past, and the full impact of its variable and intermittent nature is yet to be clearly seen. However, the country is already facing problems with the management of grid frequency. While the frequency has largely remained within the operating band for more than 75 per cent of the time, it has been outside the band for over 20 per cent of the time. Customized Energy Solutions (CES) estimates that with the target of 100 GW of solar power to be installed by 2022, the country could have a “double peak” or a “camel curve” rather than just a single peak curve, which could present multiple challenges to keep the grid frequency at stable levels.

National Energy Storage Mission The government has announced its plans to achieve 100 per cent electric vehicle (EV) sales by 2030. To this end, the country will require a strategy designed to overcome its relatively weak initial position in the battery manufacturing space, while increasing its share in the global battery production market over time. To achieve this, the National Energy Storage Mission (NESM) will be kick-started for deploying energy storage systems at the transmission and distribution levels for large-scale renewable energy-based power plants. In addition, energy storage systems to support micro- and minigrids will also be promoted. The mission has a three-stage solution approach, wherein stage one is aimed at creating an environment for battery manufacturing growth, stage two will focus on scaling up supply chain strategies, and stage three will work towards scaling up of battery cell manufacturing. A key objective of the NESM is to create an enabling policy and regulatory framework that encourages deployment, innovation and further cost reduction of energy storage technologies through multiple strategies. Another important goal will be to facilitate market-

led technology deployment across multiple applications and geographies. The government will also facilitate the setting up of large-scale integrated electric storage and EV manufacturing clusters that can include manufacturing components and power electronics associated with batteries. Another important feature of the mission would be to set up a national portal of storage projects, including regular monitoring of performance, costs and manufacturing, aspects that are crucial for knowledge sharing and dissemination.

Outlook

According to CES estimates, by 2020, there will be at least three companies globally with over 50 GWh and 5-10 companies with over 10 GWh of annual production capacity of lithium-ion batteries. Since consumers have no ability to Meanwhile, new estimates by CES show resolve grid frequency on their own, this over 400 GWh of total projected manufacpart of operations needs to be managed turing capacity in 2020. While India is tarby grid operators in a synchronised grid. geting only a small share of this (5-10 The frequency issues can largely be GWh) by 2020, it has set a target of 50 addressed by the allocation of alternative GWh by 2025, which could give a major flexible resources such as hydropower, boost to the segment since battery manugas-based generation and electrical enerfacturing represents a huge economic gy storage. Currently, grid balancing is opportunity for India. Though the country done mainly through power curtailment is at a nascent stage of battery and to some extent through manufacturing, the scale of its thermal power plants. However, Conventional grid vs energy storage for balancing renewable energy Conventional grid market opportunity is eliciting 20 per cent of the carbon diox– Manages renewable variation by fossil generator’s varying output strong interest from leading doide emission reduction and up – Decreases efficiency – Increases fuel consumption mestic and international comto 100 per cent of nitrogen oxide – Requires more maintenance – Increases emissions panies. As a result, battery proemission reduction expected duction in the country could from wind and solar power ramp up quickly, with manufaccould be lost because of rampturers’ confidence in the future ing of fossil-fuel plants, accordmarket growth. ■ ing to a recent sudy. Therefore, Energy storage – Store energy when supply exceeds load; Based on a presentation by electrical energy storage soluinjects energy when load exceeds supply – High round trip efficiency Dr Rahul Walawalkar, tions can prove to be a good – Low operating cost – Frees up generation capacity – Zero direct emission President and Managing alternative for providing gridSource: India Energy Storage Alliance – Near instantaneous response Director, CES balancing services. July 2018 ● Renewable Watch ● 61

STATE FOCUS

THE NORTHEAST

Nurturing the Northeast Focus on tapping the region’s vast renewable potential to improve power supply By Khushboo Goyal

he north-eastern region of the country comprising eight states – Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura - is blessed with abundant natural resources. The region has roughly 40 per cent of the country’s total hydropower potential along with abundant fossil fuels for thermal power generation. However, the political sensitivity of the region coupled with the inaccessibility of remote areas and unfavourable climate conditions has hampered the development of conventional power infrastructure in the entire region. Moreover, the per capita energy consumption of the region is amongst the lowest in India. In recent years, various technological advancements have prompted an improvement in the existing infrastructure and

62 ● Renewable Watch ● July 2018

development of new power projects, which has partially resolved the power supply situation. The total installed power capacity of the region stands at 5 GW as of May 2018, of which Assam has 1.5 GW and Sikkim has 1 GW, with the remaining 2.5 GW distributed amongst the six other states. The energy supply deficit for the entire northeastern region was 2.7 per cent for 201718, while the peak power deficit was 4.1 per cent. Sikkim had a 0.1 per cent energy supply deficit and no peak power deficit, emerging as the lead performer.

Renewable energy adoption The region’s geographical constraints make it difficult to develop large thermal projects, and even more difficult to install transmission infrastructure for supplying power to remote locations. Small localised renewable energy-based projects are

more feasible in these locations, due to the abundance of resources especially for solar and small-hydro power. In fact, the north-eastern states are slowly moving towards the development of renewables to encourage clean energy, and are becoming more self-reliant in the energy sector. Realising the huge potential of renewable energy in the Northeast, the Ministry of New and Renewable Energy (MNRE) is giving special attention to its development in the region’s eight states. To this effect, a separate budget has been allocated for various renewable energy programmes in these states. In fact, 10 per cent of the budgetary support for the deployment of biogas plants, solar systems, remote village electrification, small-hydro projects, wind energy systems and energy parks has been allocated to these states as per

STATE FOCUS

THE NORTHEAST the MNRE’s annual report for 2017-18. Corresponding to this, an amount of Rs 680.9 million was released in the past year against the revised estimate of Rs 3,940 million from the gross budgetary support for this region.

Renewable energy targets and potential in the Northeast Solar Potential (MWp)

Potential (MW)

Target till 2022 (MW)

8,650

2,065

500

Assam

13,760

663

202

Development of solar

Manipur

10,630

105

100

Small solar-based units like rooftop solar, stand-alone systems, solar pumps and systems for off-grid applications, which are more practical to develop in these remote locations and can work without grid connectivity, are being more widely installed rather than large ground-mounted solar plants.

Meghalaya

5,860

161

230

Mizoram

9,090

169

Nagaland

7,290

182

Sikkim

4,940

267

Tripura

2,080

105

Solar rooftop: In order to achieve the rooftop solar target, the MNRE is implementing a grid-connected rooftop and small-scale solar power plant programme for the installation of 4.2 GW of rooftop solar capacity across India by 2019-20, with a financial outlay of Rs 50 billion. This scheme provides central financial assistance amounting to 70 per cent of the benchmark project cost for the special category north-eastern states, while achievement-linked incentives are provided for the government sector. To this end, Manipur has notified its solar rooftop policy and most of the states have notified their net metering regulations. The MNRE has sanctioned 60 MWp of such projects

Arunachal Pradesh

Small hydro

Target till 2022 (MW)

Source: Ministry of New and Renewable Energy (MNRE)

in the north-eastern states, of which 30 MWp was sanctioned in 2017-18 (as of December 2017). Solar Cities programme: Eight cities have been selected for the Solar Cities programme in the Northeast, and master plans have been developed for all of them. Of these, Aizawl and Agartala are being developed as pilot projects, for which a total of Rs 25 million has already been allocated. Solar lighting: To tackle the issue of widespread kerosene use for lighting purposes, especially in rural areas, the MNRE sanctioned the Solar Study Lamp Scheme in 2017-18, under which solar study lamps would be distributed to school-

Installed renewable energy capacity across the north-eastern states (as of January 2018) Ground-mounted solar (MW) Arunachal Pradesh

Rooftop solar (MW)

Small wind energy hybrids (kW)*

Small-hydro power (MW)*

4.39

10.00

104.61

Assam

12.45

24.00

201

34.11

Manipur

1.33

5.72

5.45

Meghalaya

0.06

–

31.03

Mizoram

0.20

3.86

36.47

Nagaland

0.50

–

30.67

Sikkim

0.01

–

16.01

Tripura Total *As of December 2017 Source: MNRE

5.09

0.50

140

52.11

24.03

44.08

413

310.46

going children across the selected states including Assam. Similarly, under the Atal Jyoti Yojana Programme, solar LED street lights in rural, semi-urban and urban areas will be installed in the unelectrified areas of Assam.

Focus on small hydro The north-eastern states have significant small-hydro power potential due to their hilly terrain and ample rainfall. Arunachal Pradesh has the highest potential, followed by Sikkim, Meghalaya and Mizoram. To utilise this optimally, the MNRE has been giving special attention to the region in the form of a higher level of financial support for the development of small-hydro projects.

Policy and regulatory support Assam, Mizoram and Manipur have been proactive in renewable energy development and have created the necessary policy and regulatory framework to support this. The other states in the region still have a lot to do for large-scale renewable development to be possible. Assam: The Assam Electricity Regulatory Commission (AERC) has issued draft open access regulations for the year 2018, for all consumers that have a contract demand of 1 MW or more and require open access for the long term (seven years), medium term (five years) and short term. All open access customers will have to install special energy meters for energy accounting and remote July 2018 ● Renewable Watch ● 63

STATE FOCUS

THE NORTHEAST

Details of solar parks sanctioned in the Northeast State

Solar power park developer (SPPD)

Location of land identified

Arunachal Pradesh

Capacity (MW) 30

Arunachal Pradesh Energy Development Agency (APEDA)

Tezu township, Lohit district

Assam

APGCL

Amguri in Sibsagar district

Manipur

Manipur Tribal Development Corporation Limited

Bukpi village, Pherzawl District

Meghalaya

Meghalaya Power Generation Corporation Limited

Thamar, West Jaintia Hills district, and Suchen, East Jaintia Hills district

Mizoram

Zoram Energy Development Agency

Vankal, Mizoram

Nagaland

Directorate of New and Renewable Energy

Ganeshnagar (12 MW), Dimapur district, and Jalukie (11 MW) Paren district

Source: MNRE

terminal units for real-time monitoring. The charges for net metered solar photovoltaic (PV) systems will be in accordance with AERC’s Grid Interactive Solar Photovoltaic Systems Regulations, 2015. The AERC regulations provide for the generation and supply of renewable energy from minigrids (10 kW to 500 kW of installed capacity) and microgrids (up to 10 kW of installed capacity) in the state’s rural areas. The electricity generated from these systems will contribute towards the renewable purchase obligation (RPO) of the state.

ernment will provide Rs 115 per watt. For minigrids of 10-500 kW, an incentive of Rs 99 per watt is offered. In addition, the Joint Electricity Regulatory Commission for Manipur and Mizoram issued draft regulations for a forecasting, scheduling and commercial mechanism for deviation settlement. The regulations apply to all wind and solar power projects connected to the state grid, including those connected through pooling stations and selling power within or outside the state.

Mizoram: The Mizoram government unveiled its Solar Power Policy, 2017, with a target of developing 80 MW of solar projects to meet its RPO of 10.5 per cent by 2022. This includes setting up both rooftop and ground-mounted projects. The policy also offers incentives for decentralised solar power projects. For microgrids of up to 10 kW, the state gov-

Assam has emerged as the leader in the development of renewable energy, with supporting policies and regulations, and a slew of tenders and new projects on the way. Recently, Assam Power Distribution Company Limited (APDCL) issued tenders for an aggregate 100 MW of gridconnected solar PV capacity in the state. The projects are to be set up under four

64 ● Renewable Watch ● July 2018

Assam at the forefront

tenders of 25 MW each in different districts, and the developers have to bid for an entire 25 MW block. The upper tariff ceiling for each tender has been set at Rs 4.48 per kWh. All the projects are to be developed on a build-own-operate basis. APDCL will be the offtaker and enter into a 25-year power purchase agreement with each of the successful bidders. The deadline for the submission of bids was March 4, 2018. Another tender was issued by the Solar Energy Corporation of India for 70 MW of grid-connected solar PV capacity to be developed at the Amguri solar park in Sivasagar, Assam. The capacity was tendered on behalf of Assam Power Generation Corporation Limited (APGCL), and the bid submission deadline was March 14, 2018.

The way forward Currently, the installed renewable power capacity in the region is quite low, with a share of roughly 7 per cent of the total power capacity. This has been mainly due to the cost concerns and locationrelated challenges of the region. The situation is now rapidly changing as the cost of solar power has come down significantly in the past two years. There is greater awareness amongst state departments as well as the general public about the adoption of renewables. That being said, customised incentives and support from the central and state governments will be required in order to encourage public as well as private investments in renewable power generation, and bring this region at par with the rest of the country. ■

COMPETITIVE BIDDING FOR WIND PROJECTS Key Trends, Risks, Alternatives and Outlook India Infrastructure Research (a sister division of Renewable Watch magazine) has released a special report on “Competitive Bidding for Wind Projects”. From the discontinuation of generation-based incentives (GBIs) and phase-out of the accelerated depreciation (AD) benefit starting April 1, 2017, to the replacement of the feed-in tariff (FiT) mechanism with competitive bidding, the past one and a half years have been quite eventful for the wind power sector. On the one hand, the withdrawal of GBIs and the AD benefit led to the highest-ever wind capacity addition (about 5.5 GW) in 2016-17, while on the other, the transition from FiTs to auctions led to the discovery of all new wind tariffs of sub-Rs 2.50 per kWh. Already, five auctions have been conducted by the Solar Energy Corporation of India (SECI) and two state nodal agencies while many more are lined up for the coming year. As more capacity gets auctioned, new trends are emerging in the Indian wind power space. The overall industry structure is changing and the funding scenario is also maturing with new financing instruments being explored by players. The policy and regulatory framework is also evolving to accommodate as well as facilitate sector growth. The report has distinct chapters on the following topics: z

Wind Sector Overview

Policy and Regulatory Framework

Experience of Completed Wind Tenders

Upcoming Wind Tenders

Risks and Challenges

Alternative Wind Power Selling Options

Impact of Competitive Bidding on Industry Structure and Consolidation

Changing Cost Economics

Financing of Competitively Bid Projects

Impact on Capacity Addition and Investment (2018-2023)

ble ila a v a now

The report is priced at Rs 50,000 (plus 18% GST) or USD 1180. The report is available in a PDF format.

To order a copy, please send a cheque or draft payable to “India Infrastructure Publishing Pvt. Ltd.” and mail to:

Priya Sen, Information Products India Infrastructure Publishing Pvt. Ltd., B-17, Qutab Institutional Area, New Delhi 110016, India Tel: +91-11-4579 8613, 41034600, 41034601; Fax: +91-11-26531196 Mobile: +91-99 00 644 996 | Email: priya.sen@indiainfrastructure.com | Website: www.indiainfrastructure.com

WORLD VIEW

Towards Decarbonisation Integrating Europe’s energy networks By Aanchal Mittal

urope continues to be a leader in energy transition, which gets reflected in its ambitious renewable energy and decarbonisation targets. By 2030, renewable energy will constitute 50 per cent of the continent’s total electricity generation and by 2050, Europe’s electricity system will be fully decarbonised. It has been widely acknowledged by several European heads of states that a well-interconnected and integrated trans-European energy grid is a fundamental prerequisite for achieving the European Union’s (EU) energy and climate objectives in a cost-effective way. Over the past few years, the European Commission (EC) has undertaken several measures in the form of legislations and policy initiatives to ensure that the pace of energy transition stays on track. A key legislation adopted recently in this regard was the “Clean Energy for All Europeans” package – one of the most advanced legal frameworks for clean energy transition enabling investments in the segment. To ensure that the development of Europe’s energy infrastructure continues in a timely manner to support this energy transition, the trans-European energy networks (TEN-E) framework was put in place. Renewable Watch gives an update on the progress made so far in integrating and modernising Europe’s energy transmission networks as well as in achieving the interconnection targets (excerpts from EC’s “Communication on Strengthening Europe’s Energy Networks” published in November 2017). It also provides a synopsis on the level of investment expected to take place in electricity transmission over the next decade or so.

66 ● Renewable Watch ● July 2018

TEN-E policy, CEF and PCI Since its adoption in 2013, the TEN-E framework has helped identify and realise projects essential for well-connected networks across member states and the internal energy market. Alongside, the Connecting Europe Facility (CEF) was created to financially support the development of the trans-European energy, transport and telecommunication networks. Under this, the EU will extend Euro 30.4 billion as funding over a period of six years (201420) to speed up projects and attract private investment in the energy (Euro 5.35 billion), transport (Euro 24.05 million) and digital infrastructure (Euro 300 million) sectors. Further, a list of projects of common interest (PCIs) was created in 2013 (to be updated every two years), comprising key infrastructure projects, especially cross-border projects, to help link the energy systems of EU countries. These projects benefit from accelerated planning and permit granting, improved regulatory conditions, increased public participation via consultations and increased visibility to investors. Select PCIs also benefit from the CEF funding.

In November 2017, the EC published its third list of 173 PCIs – 106 electricity transmission and storage, four smart grid deployment, 53 gas, six oil and four cross-border carbon dioxide networks. The new PCI portfolio allows the integration of renewable energy and its transportation over longer distances while maintaining a high level of security of supply. The selected PCIs also include 15 electricity storage projects, including some based on compressed air technology. These projects will result in better interconnection, smarter grids and improved storage options, thus providing more flexibility and grid stability and allowing better management of peak loads, both locally and transregionally. Around 30 energy infrastructure PCIs have been completed or are likely to become operational by end 2018. Further, of the 173 projects that are part of the third PCI list, 47 are scheduled to be completed around 2020. A key priority that is yet to be achieved is the synchronisation of the electricity grids of the three Baltic states’ with the continental European network. Currently, a study in this regard is being carried out by the transmission system operators of Lithuania, Latvia, Estonia and Poland, along with the European Network of Electricity Transmission System Operators. Another focus area for the EU energy market is the integration of the Iberian Peninsula with the European mainland. While the INELFE (Interconexión Eléctrica Francia-España) project between Spain and France was commissioned in 2015, a lot more still needs to be done. The Biscay Bay line – a new electricity inter-

WORLD VIEW

Overview of PCIs by sector PCIs from the first and second lists to be completed during 2013 and 2018 Electricity 22

Smart grids

Gas

Oil

Carbon capture and storage

Total

Not applicable

Smart grids

Gas

Oil

Carbon capture and storage

Total

173

Smart grids

Gas

Oil

Carbon capture and storage

Total

PCIs included in the third list Electricity 106

PCIs from the third list expected to be completed by 2020 Electricity 31

*: Projects to be completed include projects that are either about to obtain a permit or are already under construction and which can realistically be completed by the end of the indicated period. Source: EU’s “communication on strengthening europe's rnergy networks”, November 2017

connection between Spain and France comprising a 280 km submarine section and two converter stations – needs to be commissioned by 2025 and thus must be given the highest priority by the regulatory and permit granting authorities. In addition, development works on the proposed interconnector between Spain and Portugal must also continue to ensure its commissioning by end 2018. However, many PCIs (including both electricity and gas) are still not on track, with around half of the projects currently facing delays (in permitting process) or being rescheduled because of uncertainty related to commercial viability or future demand. During the period 2014-16, 74 PCIs benefited from the CEF programme. Of the Euro 5.35 billion energy budget, grants for works and studies worth Euro 1.6 billion have already been allocated. Going forward, the CEF plans to concentrate more on electricity and smart grid projects, focusing on the integration of renewable energy across borders, as well as innovation, digitalisation and smartening of the grid. The success of the TEN-E framework is now being witnessed. The TEN-E regulation has led to accelerated permit granting, and the approval of projects is now more streamlined and expedited. Further, the regulatory measures under the TEN-E framework have accelerated the implementation of important PCIs. So far, 18 gas and six electricity PCIs have benefit-

ed from the cross-border cost allocation decisions and three projects have received investment decisions issued by the national regulatory authorities. However, as per the EU, the potential of the TEN-E Regulation is yet to peak as national authorities need to further reinforce TENE rules to ensure the timely implementation of PCIs.

Interconnection targets In 2002, the EC set a 10 per cent interconnection target (defined as import capacity over installed generation capacity in a member state) to be achieved by each member state by 2020. The implementation of PCIs has resulted in many member states achieving these targets. Today, 17 member states have already crossed the 10 per cent interconnection target. This has resulted in improving trade and lowering wholesale prices in these countries. Further, seven more member states – Bulgaria, Germany, France, Ireland, Italy, Portugal and Romania – are expected to reach the 10 per cent target by 2020 through the completion of PCIs currently under construction. However, several countries including Spain, the UK, Ireland, Poland and Cyprus are not expected to reach the 10 per cent target by 2020. These countries will achieve their targets as various interconnection projects (Portugal-Spain, Spain-France, Ireland-France, etc.) come online. In May 2014, the EC extended the inter-

connection target to 15 per cent by 2030. Following this, an expert group was formed to advise on the achievement and operationalisation of the 2030 target. As per the report submitted by the group in November 2017, different metrices and thresholds are required to assess the need for interconnections, given the rapidly changing energy context. The new approach for setting interconnection targets is based on the underlying principle of maximising social welfare. As per the report, the new interconnectors should help exploit the benefits of market integration by enabling better prices for customers, meet the electricity demand on the national markets and possibly offer to supply renewable power to the neighbouring member states. As per the report, the development of additional interconnections should be considered if any of the following three thresholds is triggered: z Minimising price differentials: Member states should aim to achieve a yearly average of price differentials that is as low as possible. The expert group recommends Euro 2 per MWh between relevant countries, regions or bidding zones as the indicative threshold to consider developing additional interconnectors. z Ensuring that electricity demand, even through imports, is met in all conditions: In countries where the nominal transmission capacity of interconnectors is below 30 per cent of their peak load, options for further interconnectors shJuly 2018 ● Renewable Watch ● 67

WORLD VIEW

Member state interconnection levels in 2017 and 2020 (%) Country

Interconnection levels in 2017

Expected interconnection levels in 2020

Austria

Belgium

Bulgaria

Croatia

102

Cyprus

Czech Republic

Denmark

Estonia

Finland

France

Germany

Greece

Hungary

Ireland

Italy

Latvia

Lithuania

Luxembourg

109

185

Malta

Netherlands

Poland

Portugal

Romania

Slovak Republic

Slovenia

132

Spain Sweden United Kingdom

Source: EU’s “communication on strengthening europe's energy networks”, November 2017

ould be urgently investigated. Enabling export potential of excess renewable production: In countries where the nominal transmission capacity of interconnectors is below 30 per cent of their renewable installed generation capacity, options for further interconnectors should be urgently investigated.

The expert group recommends that any project related to interconnection capacity, which can help the member states reach any of the two 30 per cent thresholds, must apply for inclusion in the Ten-Year Network Development Plan (TYNDP) and future lists of PCIs. In addition, countries above the 30 per cent but below the 60 per cent thresholds with relation to their peak loads and 68 ● Renewable Watch ● July 2018

renewable installed generation capacity are requested to investigate options for establishing further interconnections. The EC has also recommended that all member states take into account the new approach and thresholds in view of reaching the 15 per cent interconnection target when drafting their integrated national energy and climate plans.

Investment requirement As per the EC’s report on “Investment Needs in Trans-European Energy infrastructure up to 2030 and Beyond”, around Euro 296 billion in capital expenditure is projected to take place in the domains of electricity transmission, gas transmission, storage, oil supply connections, carbon

networks and power-to-gas grid injections in the EU28 region by 2030. An expenditure of around Euro 188 billion in is expected to be undertaken in electricity transmission, of which Euro 36 billion is for projects slated for commissioning by 2020. Of the Euro 152 billion investment expected during 2021-30, about 50 per cent will be for projects that are at a very early stage of analysis are under consideration. Only 19 per cent has been invested in projects that have made clear progress and are in the permitting phase or even partly under construction. In the EU28 region, about 35 per cent of the total investment forecast is for offshore projects, while the remaining 65 per cent is for onshore investments. Investment in electricity transmission is expected to peak in 2025 and 2030, due to the higher number of large projects to be commissioned in these years. In 2025, several interconnectors around Belgium, between France and Spain, and inside Germany are slated for commissioning. The 2030 investment requirement includes a substantial share of offshore interconnectors and large direct current corridor projects within Germany.

Conclusion The timely creation of a well-integrated and modern energy infrastructure is the key to ensure that the EU’s energy transition progresses as envisaged. The policy and regulatory measures put in place by the EC to boost investment in building the physical energy infrastructure through initiatives such as TEN-E guidelines, PCI and CEF have started to deliver results. While progress has been promising, the majority of the critical infrastructure links are yet to be completed. To accelerate the delivery of these projects, commitment at all levels – political, technical and financial – needs to be ensured. Achieving the 2020 and 2030 electricity interconnection targets is also critical if Europe has to fully exploit its renewable energy potential while ensuring security of supply and competitiveness. ■

UP AND COMING

Up and Coming Harvesting water from the atmosphere It is estimated that fresh water makes up only 2-3 per cent of the total water resources on earth, with most of it frozen in the form of glaciers and ice caps. The rapid increase in global population has stressed the world’s available water resources, and cities like Cape Town in South Africa, and Shimla in India are both facing a severe water crisis. While desalination could be an alternative to using surface water, it is restricted by geography and is an expensive process that consumes a large amount of electricity. As a solution to this problem, a team of scientists from UC Berkeley, USA has developed a prototype for a water harvester that can collect water from the atmosphere using sunlight and a water absorber, which is a highly porous material called a metal-organic framework (MOF). The water harvester collects drinkable water from dry desert air over the course of an entire day and night. For this purpose, it uses the MOF that absorbs water during the night, and through solar heating during the day, releases it to be condensed and collected. MOFs are solids with so many internal channels and holes that a mere sugar-cube-sized water absorber could have an internal surface area that is equivalent of six football fields. Its surface area can easily absorb gases or liquids and quickly release them when heated. The structure of the harvester can be described as a box placed inside another box. The inner box holds a 2-squarefoot bed of MOF grains that are open to the air for absorbing moisture. The outside box is a two-foot plastic cube with a transparent top and sides. The top is left open at night to let air flow in, allowing contact with the MOF. It is then closed during the day so the box can heat up like a greenhouse to drive water back out of the MOF. The released water condenses on the inner surface of the outer box and falls to the bottom, where it can be collected with a pipette. Various types of MOFs are already being tested for applications such as absorbing water, packing more gas into the tanks of hydrogen-fuelled vehicles, absorbing carbon dioxide from smokestacks and storing methane. The advantage of such a device is that it can extract water even in areas with low levels of humidity. That, coupled with its low operational costs, makes it ideal for inhabitants of arid regions. The device also functions well at ambient temperatures without electricity and so it does not depend on a specific location to be able to operate.

The current MOFs being used (MOF-801) are made of zirconium, which can be expensive. They can extract about 200 ml of water for every kilogram of MOF. However, the team has developed a new aluminium-based MOF (MOF-303), which is 150 times cheaper, and has been proven to show that it can absorb twice as much water as the MOF-801. The researchers are expecting the per kilogram amount of water absorbed daily by the new MOF to be about 400 ml, or about 1.5 cups of water. The research team recently conducted a field trial in Scottsdale, in the Arizona desert, to test the device outside the laboratory. The humidity levels in the region can vary from 40 per cent at night to 8 per cent during the day. The practical demonstration showed that the amount of water harvested could be scaled up by simply adding more of the water absorber inside the device. In the next phase, the team will test the aluminium-based MOF in Death Valley, California, during the summer, where day-to-night temperatures can vary from 43o to 21o Celsius, with the humidity at night dropping to as low as 25 per cent. The industry has shown active interest in this technology and there are reportedly several start-up companies interested in taking this technology from the lab to the market using the cheaper aluminium-based MOF. The team is also collaborating with King Abdul Aziz City for Science and Technology in Riyadh, Saudi Arabia, as part of their joint research at the Centre of Excellence for Nanomaterials and Clean Energy. Although the technology is still being tested on a smaller scale, a commercial-scale prototype could be ready in a few years as a result of the recent advances made in MOF technology. ■

July 2018 ● Renewable Watch ● 69

PROJECT WATCH

Progress Update Plants of 1 MW and above capacity Project developer/Nodal agency

Location

Utility-scale solar Solar Energy Corporation of India (SECI)

Across India

SECI

Across India

SECI (on behalf of Military Engineer Services)

Tangtse and Durbuk, Leh, Jammu & Kashmir

NTPC Limited

Rajiv Gandhi combined cycle power plant, Kayamkulam, Kerala

Central Electronics Limited

Sangli district, Maharashtra

Gujarat Urja Vikas Nigam Limited

Across Gujarat

Uttar Pradesh New and Renewable Energy Development Agency

Across Uttar Pradesh

Maharashtra State Power Generation Company

Across Maharashtra

Karnataka Renewable Energy Development Limited

Pavagada Solar Park, Karnataka

Odisha Renewable Energy Development Agency

Hindustan Aeronautics Limited premises, Koraput, Odisha

The juwi Group

Belgaum district, Karnataka

Tata Power Renewable Energy Limited

Ananthapuramu Solar Park, Andhra Pradesh

Lightsource BP

Wagdari, Maharashtra

Rooftop solar Rajasthan Electronics and Instruments Limited

Across Rajasthan

New and Renewable Energy Development Corporation of Andhra Pradesh

Across Andhra Pradesh

Madhya Pradesh Urja Vikas Nigam Limited

Across Madhya Pradesh

CleanMax Solar

Amity University campuses in Jaipur, Manesar and Gwalior

Floating solar Karnataka Urban Water Supply and Drainage Board

On reservoirs in Manvi, Sirguppa, and Ballari city

Wind-solar hybrid SECI

Across India

Wind SECI

Across India

Railway Energy Management Company

Across Maharashtra

70 â&#x2014;? Renewable Watch â&#x2014;? July 2018

PROJECT WATCH

Progress Update Plants of 1 MW and above capacity Capacity (MW)

Project status

2,000.0

Bids invited

–

3,000.0

Bids invited

–

3.0

Bids invited

–

22.0

Bids invited

–

10.0

Bids invited

–

500.0

Bids invited

–

Results released

–

750.0

Bids invited

–

250.0

Results released

–

Bids invited

–

135.0

Commissioned

–

100.0

Commissioned

–

60.0

Commissioned

–

50.0

Bids invited

–

15.0

Bids invited

–

22.0

Bids invited

–

1.8

Commissioned

–

EoIs invitied

–

2,500.0

Bids invited

–

2,500.0

Bids invited

–

54.0

Bids invited

–

1,000.0

6.0

Expected/Actual date of completion

July 2018 ● Renewable Watch ● 71

PHOTOGALLERY

Sector Snapshots

Raj Kum ar Singh , Ministe Renewa r of State ble Energ Minister y (sixth for Pow of Hima er and N from left chal Pra ew and ), and J at the “ desh (six ai Ram Power a Thakur, th from nd New Chief right), w & Rene ith othe wable E r dignita nergy” c ries onferen ce in Sh imla

A.K. Jun eja, Exe cutive D irector, confere NTPC, a nce on “ t Renew Solar Po able Wa wer in In tch's dia”

72 ● Renewable Watch ● July 2018

ration e inaugu ce at th n j Sahib ie n d a u a Rakab G sses the ra re a d w d d a t at Guru ar Singh lar plan Raj Kum oftop so ro w Delhi W e N M in of a 1.5

rgy olar Ene (MD), S r nce to c re e fe ir n D o India” c anaging Swain, M “Solar Power in th a N e Jatindra dia, at th tion of In Corpora

PHOTOGALLERY

(From le ft) Sujoy Ghosh, P. Vinay Country Kumar, Head, F MD, Ren India; a irst Sola ewables nd Gaura r Power , Brookfi v Sood, India; eld Asse C h ie t Manag f at the “ Executiv ement, Solar Po e Office wer in In r, Sprng Energy, dia” con ference

Dr Vipin Sharma Develop , Directo ment Ag r Genera ency, at l, Maha the “So rashtra lar Pow Energy er in Ind ia” confe rence

ation, Organis ents and ” tm s ia e d v In In Power in Head of MD and e “Solar , th a t n a a h g d an akin Satish M ital, spe nce rce Cap confere Eversou

ess nt, Busin -Preside e ntech ic a V le r C io Director, ew, Sen i, th h a s M o ohit J s R a visory; Anuvrat ft) Thom cture Ad olar; Dr u S (From le REC tr s s r, a lu to fr p c m , Idam In and Dire ment, A D p r, M lo la e i, o v h S r, Jinko e s e D Jo ent, REC s Manag alawant ubcontin nal Sale S ss io Solar; B e n g e in ia s d R u r B Head, In r, India is, Senio Kumar, rence ingh Ba Manage fe S r n r o io e c n d ” e n S ia ra, ushpe er in Ind nk Mish India; P lar Pow nd Maya the “So t a Solar; a i, e w ua ment, H Develop

July 2018 ● Renewable Watch ● 73

PEOPLE

B. Seshukumar Director, Operations, Eastern Power Distribution Company of Andhra Pradesh Limited

. Seshukumar, director, operations, Eastern Power Distribution Company of Andhra Pradesh Limited (APEPDCL), brings to the table nearly four decades of experience. He joined the erstwhile Andhra Pradesh State Electricity Board in 1979 and steadily ascended the ladder to assume his current position as director in 2015. In this role, he oversees the technical aspects of the discom, maintenance of the existing infrastructure and procurement of material and equipment. He has also served as managing director of Anakapalle Rural Electric Cooperative Society Limited and worked at the AP Industrial Infrastructure Corporation for short periods. According to Seshukumar, the demand for power will go up with GDP growth, investments in industries and intensive electrification. However, the demand growth may slow down due to energy efficiency, demand-side management measures, and transmission and distribution loss reduction. He notes that some of the key challenges in Andhra Pradesh’s power sector are optimal

ohit Bajaj, vice-president, business development, Indian Energy Exchange (IEX), brings to the table over 24 years of experience in power plant operations, strategic planning, commercial activities, and management of regulatory affairs. Since 2014, he has been associated with the IEX, where he has been responsible for exploring new market segments and opportunities in power trading, renewable energy certificates and energy saving certificates as well as managing the exchange’s membership vertical. Prior to joining the IEX, he was a whole-time director with National Energy Trading and Services, leading its power trading business. Earlier, he has worked with Lanco Amarkantak, the Avantha Group, Reliance Industries and Jindal Stainless. Bajaj feels that since the exchanges provide flexibility in buying and selling, and offer transparent, reliable and competitive prices, they have become the most preferred option for shortterm power procurement, and more and more participants, amongst both state discoms and open access consumers, are relying on them. Commenting on the key trends emerging in the power trading segment, Bajaj says, “With improvements on the supply side, many states have realised that long-term power purchase agreement (PPAs) are not required beyond the baseload. Also, with the availability of adequate interregional transmission capacity, there is no requirement for longer-duration contracts to secure transmission capacity. Therefore, discoms are incremen-

74 ● Renewable Watch ● July 2018

power procurement for reducing power purchase costs and avoiding stranding of assets. “Industrial consumers now prefer open access, which impacts discoms’ revenue. Time-of-day (ToD) tariff incentives can help in providing power to such consumers at a competitive rate,” he says. He further deliberate on the importance of digitalisation in the sector, especially with the emergence of renewables. As per Seshukumar, “APEPDCL wants to be the model digital utility in India.” Notably, the utility has been using digital technologies to improve its efficiency and is also planning to use data analytics, blockchain, etc. to enhance its offerings to consumers. Seshukumar’s most memorable assignment in the organisation was as a special officer for the Godavari Mahapushkarams 2015 in East and West Godavari. He stayed at Rajahmundry for the entire period of the Mahapushkarams, and set up a special monitoring cell for the supply position, material, generators and mobile vans. Seshukumar follows a flexible style of management, adjusting it to meet the needs of his team. “I assess the situation and the team before deciding what action to take to get the best results,” says Seshukumar. In order to maintain a work-life balance, Seshukumar spends time with family and friends, never missing an important event. In his spare time, he likes to watch sports. He also hopes to travel across India some day and deepen his knowledge of its diversity. ■

Rohit Bajaj Vice-President, Business Development, Indian Energy Exchange

tally opting for the short-term market, which is evident from the fact that hardly any PPAs have been signed during the past five years. Further, with the exponential growth in renewables and their concentration in a few states, short-term trading through exchanges will see a huge fillip.” Looking back, Bajaj feels working on assignments relating to the operationalisation of disputed PPAs, tariff-related disputes, etc. have been a great learning experience since these involve a detailed understanding of regulations and the commercial impact on businesses. For a healthy work-life balance, Bajaj spends over an hour on fitness early morning. He likes to spend quality time with his family during weekends and plans outdoor activities such as swimming, biking, and playing football and table tennis. He enjoys watching movies, with The Godfather being his favourite. He is also fond of reading and has recently finished reading Sapiens A Brief History of Humankind. ■

PEOPLE

hajan Pratap Singh is a member of the Delhi Electricity Regulatory Commission (DERC). He is a graduate in mining engineering from the Indian School of Mines, Dhanbad, where he also pursued a certification course in industrial engineering. In addition, he holds a certification in influence and negotiation strategies from Stanford University, USA. Singh’s professional journey started in 1974 with a brief stint at the Indian Iron and Steel Company, before he moved to Bharat Coking Coal Limited. Thereafter, he spent a large part of his career with NTPC Limited, which he joined in 1981. Over the course of 28 years, he moved up the ladder to become director, projects, in 2009. Singh played a pivotal role in the formulation of NTPC’s strategy for fuel security and in the acquisition and development of fuel assets. Under his leadership, NTPC commissioned 9,960 MW of capacity in a span of three years, which was about 24 per cent of the company’s total installed capacity at that time. In fact, the company added 4,170 MW of capacity in a single year (2012-13), which remains unmatched till date. Singh also introduced a webbased project monitoring system in the company, which was developed in-house. As director, Singh also had additional charge of NTPC’s hydro business, and served as chairman of Bhartiya Rail Bijlee Company Limited and NTPC SCCL Global Ventures Private Limited. In 2014, he was appointed member, DERC, and since 2016,

Pranay Mundra President, Gensol Engineering Private Limited

ith nearly two decades of experience in the power sector, Pranay Mundra’s knowledge spans across feasibility assessment, contract and vendor management, project execution and project management. The initial part of his career was spent working in the power transmission domain. During this time, he worked with Sterlite Power for about seven years. He then moved to the renewable energy industry, joining Suzlon Energy, where he looked after infrastructure development across India. When the company diversified into solar in 2014, Mundra got involved in business development, project execution and operations. After nearly 10 years at Suzlon Energy, Mundra joined Gensol Engineering as president. In this role, he is involved in transforming Gensol from a pure solar company to a renewable energy solutions provider by diversifying into areas like wind and energy storage. He is also focusing on international business development. With technology advancements and declining equipment prices, Mundra is optimistic about the renewable energy sector,

Bhajan Pratap Singh Member, Delhi Electricity Regulatory Commission has also been carrying out the chairman’s duties. Singh has issued four tariff orders for the period 2014-19, all of which have been consumer friendly. In a progressive move in the e-mobility space, he formulated a tariff for battery charging. He has also played a key role in making legal systems and provisions more consumer friendly. This includes improving the consumer grievance redressal mechanism and creating a legal aid cell. He has also been instrumental in formulating regulations on net metering. Singh has been the recipient of various awards, including the India Smart Grid Forum Innovation Award 2018 for innovative policies and regulations promoting renewable energy and smart grids. Two of his projects – Simhadri and Dadri – received the JICA President Award and the IPMA World Congress Project Excellence Award respectively. Singh’s academic inclination is reflected in his association with institutions such as the Ambedkar Institute of Technology and the Central Institute of Mining and Fuel Research. ■

which, in his view, has become a good alternative to thermal power. He believes that with the global push towards renewable energy, what is being witnessed in India is just the start of a shift towards clean energy. A strong advocate of energy storage solutions, he says, “It makes more economic sense to set up energy storage integrated solar plants locally in remote areas than install transmission lines to supply power from a far-off location. The challenge with energy storage in India is that the industry is still at a nascent stage with a lack of proper energy management systems that can take care of a combination of dynamic loads as well as intermittent generation patterns of renewables.” With a vision of making Gensol an end-to-end renewable energy solutions provider, Mundra’s roadmap for the company is to strengthen its consulting and engineering expertise to become a leader in India as well as the Middle East and Africa. The company is also aiming to achieve more growth in the operations and maintenance domain, and to explore artificial intelligence. His most memorable assignment was developing a 210 MW solar project in Telangana. His involvement in every aspect of the project, right from site identification to commissioning, gave him a lot of satisfaction. Mundra is an electrical engineer with an MBA in marketing. His management style is focused on proper planning and organisation with a strict adherence to deadlines. Mundra likes to spend his spare time with his family and engaging in physical activity. ■ July 2018 ● Renewable Watch ● 75

EVENT WATCH

Upcoming Events World Renewable Energy Technology Congress & Expo

Wind Power in India August 27-28, 2018 New Delhi, India

August 21-23, 2018 New Delhi, India

Brazil Windpower 2018

Biofuels and Bioenergy

August 28-30, 2018 Rio de Janeiro, Brazil

September 4-6, 2018 Zurich, Switzerland

Renewable Energy India Expo 2018 September 18-20, 2018 Greater Noida, Uttar Pradesh

Global Wind Summit 2018

China Wind Power 2018

Windaba 2018

September 25-28, 2018 Hamburg, Germany

October 17-19, 2018 Beijing, China

November 6-7, 2018 Cape Town, South Africa

Intersolar India

Windergy 2019

December 11-13, 2018 Mumbai, India

February 2019 New Delhi, India

India Smart Utility Week 2019

76 ● Renewable Watch ● July 2018

March 12-19, 2019 New Delhi, India

DATA AND STATISTIC S

Tender Results Winners across recently auctioned solar capacities Results of UPNEDA’s 1,000 MW solar tender Winning developer

Capacity won (MW)

Final tariff (Rs per kWh)

250

3.48

Mahoba Solar (Adani) Maheshwari Mining & Energy ACME Solar

150

3.54

Feynman Solarfarms (Canadian Solar)

3.54

Sukhbir Agro Energy

3.54

Rays Power Infra

3.55

Eden Renewable Jasmin

3.55

ACME Solar

150

3.55

Azure Power

160

3.55

20* (50)

3.55

Hero Solar Energy Feynman Solarfarms (Canadian Solar) *The company bid for 50 MW but won only 20 MW. Source: Uttar Pradesh New and Renewable Energy Development Agency (UPNEDA)

Results of SECI’s 750 MW solar tender for the Kadapa Solar Park, Andhra Pradesh Winning developer

Capacity won (MW)

Final tariff (Rs per kWh)

SB Energy (SoftBank)

250

2.70

Sprng Soura Kiran Vidyut (Actis)

250

2.70

Ayana Renewable (CDC Group)

250

2.71

Source: Solar Energy Corporation of India (SECI)

Results of KREDL’s 650 MW solar tender Winning developer

Capacity won (MW)

Final tariff (Rs per kWh)

Fortum Corporation

250

2.85

Tata Power Renewable Energy Limited

250

2.85

Note: The decision for the remaining 150 MW of tendered capacity is yet to be taken. Source: Karnataka Renewable Energy Development Limited (KREDL)

Results of SECI’s 2,000 MW pan-India solar tender Winning developer

Capacity won (MW)

Final tariff (Rs per kWh)

ACME Solar

600

2.44

Shapoorji Pallonji

250

2.52

Hero Future Energies

250

2.53

Mahindra Susten

250

2.53

Azure Power

600

2.53

50* (500)

2.54

Adani – Mahoba Solar (UP) * The company bid for 500 MW but won only 50 MW. Source: SECI

78 ● Renewable Watch ● July 2018

“Early Bird” discount ends on August 7, 2018 Register Now and save 20 per cent

8th Annual Conference on

WIND POWER IN INDIA

Big Volumes, Low Tariffs and New Market Dynamics August 27-28, 2018, Shangri-La’s The Eros, New Delhi Agenda/Sessions:

Key Trends and Outlook

Role of Digitalisation

Mnre's Perspective

Emerging Financing Practices

Revising the 2022 Wind Target

New Technologies and Innovation

Evolving Policy and Regulatory Framework

Wind-solar Hybrids

Transmission Challenges and Requirements

Offshore Wind

Organisers:

Co-sponsor so far*:

*Lead and Co-sponsor slots available

For delegate registrations and sponsorship opportunities, contact: Raymol Reji Tel: +91-11-41034616, 41034615, 9582232031

Mansi Taneja Tel: +91-11-46560424, 41034615, +91-9910032924

Conference Cell, India Infrastructure Publishing Pvt. Ltd., B-17, Qutab Institutional Area, New Delhi 110016. Fax: +91-11-26531196, 46038149. E-mail: conferencecell@indiainfrastructure.com