Will Wind-Solar hybrid projects take off?

In the run-up leading to a record installation of wind and solar projects in India 2016 saw a slew of major announcements from the Government. One of the policies that received much fanfare was the announcement of Wind-Solar Hybrid policy. However, its been well over an year and yet there seems to be no final regulation on that front.

Highlights from draft national wind-solar hybrid policy (2016)

  • Wind-solar hybrid capacity target of 10GW.
  • The policy envisages wind-solar hybrid integration at both the DC and AC side.
  • Hybridization of existing wind/solar project permitted provided the total capacity is within the evacuation limit.
  • Tariff for power generated could be FiT fixed by state regulators or discovered through competitive tariff.
  • All fiscal incentives available for wind/solar to be provided for hybrid projects.

Following up on the announcement at the national level, Andhra Pradesh (AP) released its draft wind-solar hybrid policy in 2016. AP govt. went ahead with finer definitions of capacities and other functional modalities but, there is no update on the final policy yet.

  • Target of 3000MW of wind-solar hybrid capacity by 2019-20.
  • System integration permitted in pooling sub-station or co-injection after inverter.
  • The hybrid policy also to look at other emerging technologies like energy storage systems.
  • At locations where wind density is higher, solar capacity to be lower and vice versa.
  • APTRANSCO to consider evacuation based on ampacity rather than MVA/MW connectivity.
  • No additional charges to be levied if additional wind/solar capacity is below the sanctioned transmission capacity.
  • Policy envisages both DC and AC integration. Also supports existing/allotted projects to be integrated as hybrid project.
  • Capacity split between wind and solar to be in the ratio 1:0.6 to 1:1.5
  • Wind and solar generation to be metered separately and paid based on the tariff set by state regulator for different voltage levels at project site.
  • 25 year exemption of transmission, distribution and cross subsidy charges for captive/ open access.
  • Must run status for hybrid projects. (Read more about the latest issue with must-run status)

solarAnother state, Gujarat,  released a draft version of wind-solar hybrid policy in early 2017 but is yet to be finalized. Gujarat, unlike AP lacked clarity even in the draft policy. The basic requirement of allowing wind and solar to use the same evacuation system was being challenged with metering allowed only at the pooled sub-station level. Globally, wind-solar hybrid projects have taken off pretty well (read more about a project by juwi). In India, NTPC has taken the lead role with a project ongoing near its thermal plant in Karnataka which was won by Siemens-Gamesa, 2MW wind and 1.37MW of solar. (Read more)

In order to enable large scale development of wind-solar hybrid projects, there is a need for clarity on the tariff (and metering) considering the recent low tariffs in India (More on solar tariffs in India). Power evacuation has to be on a common transmission line unlike the one proposed by Gujarat state. Its high time the regulators open up the forums for discussion on the draft policies and finalise the regulations, until then the hybrid projects are likely to stay grounded.

 

 

 

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Must-run or merit order despatch?

The proposed regulations from the Madhya Pradesh state electricity regulator (draft regulation) has brought the debate of merit-order vs must-run for Renewable Energy (RE) projects to main stream yet again. Incidentally, the draft National Energy Policy (NEP) proposed by NITI Aayog hints at withdrawal of must-run status for RE in the long run leading up to 2040( Read Why NEP is missing the big picture?). The draft NEP also proposes to withdraw other RE oriented benefits like non-levy of inter-state transmission charges.

Indian Electricity Grid Code (IEGC)

” All renewable energy power plants, except for biomass power plants, , and non-fossil fuel based cogeneration plants whose tariff is determined by the CERC shall be treated as ‘MUST RUN’ power plants and shall not be subjected to ‘merit order despatch’ principles”.- IEGC, 2010

The point of debate will be, are the current solar and wind tariffs determined by CERC for this regulation to hold good?

The 4th amendment of IEGC in 2016 brings back the discussion on ‘Merit order despatch’ however, it is only referenced to highlight the need from a technical minimum operation of thermal power plants.

The proposed amendment to the MP state government order on ‘Cogeneration and Generation of Electricity from Renewable Sources of Energy’ proposes, “The generation from Co-generation and Renewable Sources of Energy shall be subject to “Scheduling” and “Merit Order Despatch Principles” as decided by the Commission from time to time.”

The NREL study ‘ Greening the Grid’ clearly argues for a case of must-run for renewable energy projects or to radically shift to a merit-order despatch that considers production costs and not tariffs. The variable costs of existing fossil fleet is less considering they are paid an annual fixed availability cost. The study further recommends having an limit on annual curtailment hours embedded in the PPA to protect RE developers.

GTG

RE curtailment in 2022 could be between 8-16GW. (NREL)

What is required?

Merit order at regional & national level based on production costs and not just variable tariffs!

Regional coordination of resources will result in low variable cost resources from one state to displace expensive generation in other states. It is likely to happen considering a large part of recent ‘record-breaking’ renewable energy projects are slated in to come only in a few states in India. The NREL study concludes that having merit-order with scheduling and despatch optimized at regional and national level could result in a savings of 2.8% (₹ 6300CR) and 3.5% (₹7800CR) respectively by 2022 under the 175GW RE scenario.

Policy makers should envisage an alternate to merit-order despatch that is based on production costs and not just variable tariffs which will boost the confidence of RE developers who currently hedge their financial risks to anticipated curtailment.

Karnataka solar rooftop PV regulation

RooftopElectricity markets have always witnessed a tussle between the utilities and the regulators, Karnataka state is no different. The electricity regulator has always been among the first in the country in implementing progressive policies in the Renewable Energy (RE) sector. However, the progress of all the plans has been disheartening and in most cases it is due to lack of co-operation from the utility in the state. A case in point is the solar rooftop projects, in spite of having the highest Feed-in Tariff (FiT) of ₹ 9.56/kWh in the country in 2013, there was a lack of adoption for well over a year. The reason, Distribution Companies (DISCOMs) came up with an implementation plan nearly a year after the order.

Karnataka Electricity Regulatory Commission (KERC) has recently drafted a regulation to address the concerns of domestic residents living in apartment complexes with shared roofs and electrical connections. The proposed regulation intends to offer existing solar rooftop owners in shared roofs an option to increase their capacity and also new residents who wish to install a bigger system by aggregating the contract demand of multiple households in the building.

Proposed Regulations

The proposed regulation aims to fill all the gaps existing in the current system which hinders adoption of solar rooftop system in residential complexes. The proposed tariff at Average Pooled Power Purchase cost (APPC) which is currently at ₹ 3.97/kWh for BESCOM will raise eyebrows considering the FiT is at ₹ 7.08/kWh for domestic consumers.

Will the regulations have a positive impact?

  • The regulation is likely to have a positive impact because it removes the regulatory hurdle currently preventing residential complexes in implementing the system.
  • Residential complexes tend to install solar as a way to reduce their energy bills and hence the type of metering or tariffs wouldn’t matter much.
  • The regulation would however impact early adopters who will have to surrender their individual Power Purchase Agreements (PPA) if the complex as a whole is going for a bigger system in the common roof.

Overall, the regulation is definitely a good step but I believe there are technical challenges like metering involved in the implementation phase which only the DISCOMs can solve. I had a conversation with a regulator in KERC prior to the drafting of this regulation discussing issues related to solar rooftop in the state. He clearly admitted that at their level they can only bring in the best-fit regulation considering all stakeholders in mind but the final implementation is out of their purview. The comments to this draft regulation are open till 5th July post that there could be a revised regulation coming up.

Check the proposed regulation:Here