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Renewable Purchase Obligation

India May Withdraw Support For Renewable Energy By 2022

written by saurabh

Indian government’s think tank has proposed in the National Energy Policy to withdraw all incentives available to the renewable energy sector to be withdrawn gradually with none available from 2022.

According to media reports, quoting senior government officials, market forces will be allowed to determine the price and position of renewable energy sources within the Indian power mix after 2022. The government believes that with prices already falling to below conventional energy prices the renewable energy sector would not require any support for long.

India has set a target to have 175 gigawatts operational renewable energy capacity by March 2022, a target that will most certainly be missed by a considerable margin.

Wind and solar power projects currently enjoy policy benefits but no major direct financial benefits, except rooftop solar power projects. Transmission of electricity from wind and solar power projects has been exempted from the levy of inter-state transmission charges.

Additionally, theoretically, wind and solar power project enjoy ‘must run’ status – utilities must procure electricity from solar and wind energy projects even if they have to shut down thermal power projects. This directive from the Ministry of New & Renewable Energy, however, is not always followed as several state utilities have been reported to forced wind and solar power developers to back-down on generation.

Utilities across India are also obligated to procure a set minimum percentage of renewable energy. The government may abolish that requirement as well after 2022. This could prove disastrous for the renewable energy sector as even today an overwhelming majority of utilities fail to meet their renewable energy procurement targets.

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07/30/2017 0 comment

Renewable Energy

Indian Aluminium Major NALCO Plans 150 Megawatt Renewable Energy Park

written by saurabh

Government-owned National Aluminium Corporation (NALCO) is planning to set up 150 megawatts renewable energy project.

The Minister for Power, Coal and New & Renewable Energy in India recently announced that NALCO is looking to set up the project in the state of Odisha. The company is currently looking for a suitable project site and wants land allocation by the state government to be expedited.

The renewable energy park is expected to host solar as well as wind energy projects. NALCO operates several aluminium plants into Odisha and the power generated from the renewable energy park will likely be used for captive use. This will help the company meet its renewable purchase obligation.

India aims to have at least 15% of its total electricity consumption coming from renewable energy sources by 2022, including 8% from solar energy only.

Several government-owned companies are looking for develop renewable energy projects following a diktat from the central government. The long list of such companies include Coal India, NTPC, Indian Railways, NLC, Indian Oil Corporation and Oil India.

Last year, NALCO had announced plans to invest Rs 700 crore in renewable infrastructure. The company already operates wind energy projects in Rajasthan and Andhra Pradesh.

04/23/2017 0 comment

Renewable Energy

500 Megawatts Solar Tender In India’s Tamil Nadu Undersubscribed Yet Again

written by saurabh

The latest solar power tender issued in the state of Tamil Nadu is in stark contrast to the one issued for the Newa solar power park. The former has, once again, received a poor response from the project developers.

The Tamil Nadu Generation and Distribution Corporation (TANGEDCO) had floated a tender for 500 megawatts solar PV power capacity. The tender received bids by 22 project developers willing to set up 300 megawatts capacity. The poor response is poles apart from the 10 times oversubscription for the 750 megawatts Rewa solar power park.

The poor response it ironically still better than that received for the 500 megawatts tender previously issued by TANGEDCO. In November 2016, the tender attracted 20 bids of just 122 megawatts. The utility had no choice but to scrap the tender. Project developers were unable to purchase land for their projects due to lack of funds owning to the demonetisation drive of the Indian government.

The improved funding situation seems to have been the only reason for the relative increased interest of the developers. Lack of adequate transmission infrastructure and poor financial health of the utility remain the major concerns of bidders. The threshold tariff for this tender was also reduced by 14.7%, from Rs 5.10/kWh (7.6¢/kWh) to Rs 4.35/kWh (6.5¢/kWh), although developers have 12 months to commission the projects, an increase from 10 months.

According to government estimates, an installed capacity base of 2.5 GW will be required to meet the 5% solar RPO target in 2017-18. TANGEDCO, however, expects that only 1.6 GW solar power capacity would be operational by that time, thus leaving a shortfall of 900 MW.

02/22/2017 0 comment

Renewable Energy

Indian Thermal Power Sector Feels The Pinch Of Renewable Energy Surge

written by saurabh

Experts in the Indian power sector feel that the huge capacity addition planned in the renewable energy sector could spell doom for the thermal power sector.

India plans to have an operational renewable energy capacity of 175 GW by March 2022. The Central Electricity Authority reports that thermal power projects are currently operating at plant load factor of 50% and once large-scale renewable energy projects the PLF could fall even further.

These are real concerns for several thermal power project developers and operators. The Ministry of New and Renewable Energy has announced plans to add upto 17 GW solar power capacity every year till 2022. The government has also given ‘must run’ status to wind and solar power projects which means that utilities will have to acquire electricity from these projects even if demand falls. In order to match the falling demand the utilities must first shutdown thermal power projects and make savings on coal and greenhouse gas emissions.

The central government is also trying to persuade states to strictly implement the Renewable Purchase Obligation that require utilities to acquire a set minimum percentage of their electricity from renewable energy projects; there is a separate RPO for solar power as well.

If RPO targets are implemented judiciously the procurement from renewable energy projects will increase significantly while procurement from thermal power projects will very likely fall. This will further impact the performance of thermal power plants.

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09/24/2016 0 comment

Renewable Energy

Indian Wind Power Companies See Surge In Generation

written by saurabh

Good monsoon and improved availability of transmission capacity for power evacuation resulted in significant increase in revenue and profits for the wind energy companies in India.

According to media reports, companies like Indowind, Gamesa India and Orient Green Energy have reported sharp boost in revenue due to jump in wind power generation. Tamil Nadu, which hosts the largest wind energy capacity in India experienced massive surge in wind power generation during the monsoon season.

Wind energy generation in Tamil Nadu was so high that the state government had to ask the central government to allocate additional transmission resources to supply the surplus electricity to other states.

Record capacity addition in the last financial year also led to the increased power generation in the first quarter of this financial year. Substantial changes in the incentives regime for wind energy projects are expected from beginning of the next financial year, April 2017; as a result, project developers are looking to make full use of current incentives regime and install as much capacity as possible before April 2017.

Another incentive for the developers to generate more electricity is the increase renewable purchase obligation targets and comparatively stricter compliance. Several state regulators have given directions to utilities to increase procurement of renewable energy and meet their respective RPO targets.

09/20/2016 0 comment

Renewable Energy

Dedicated Renewable Energy Trading Platform Planned In India

written by saurabh

India’s largest power trading platform Indian Energy Exchange is planning to set up a dedicated trading platform for renewable energy.

In a recent interview, officials of Indian Energy Exchange (IEX) stated that they are planning to introduced a dedicated power exchange for renewable energy projects. The officials stated that since the government plans to have 175 GW renewable energy installed by March 2022, project developers will likely look to have multiple options to sell their electricity.

The idea of a dedicated renewable energy trading platform will work only if private sector project developers look to set up projects outside the tenders floated by the state and central governments. Developers winning such tenders have to sign long-term power purchase agreements leaving them with no alternate options to sell electricity. This sometimes becomes a financial hurdles for the developers as not all off-takers are of sound financial condition to make regular payments to the developers.

The success of a renewable energy trading platform will be a challenge as distribution companies in India are not buying renewable energy certificates which help them meet their renewable purchase obligation. Several million of such certificates currently remain unsold with distribution companies not heeding to the pleas of the Ministry of New & Renewable Energy to rapidly increase the purchase of these certificates.

Indian Energy Exchange is looking to promote this dedicated platform as an alternate avenue for project developers to sell electricity and keep their project financial viable in case long-term agreements do not provide the desired revenue.

08/20/2016 0 comment