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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Forecasting and scheduling of renewable energy in India

Karnataka Electricity Regulatory Commission (KERC) has mandated Forecasting and Scheduling (F&S) for wind and solar assets in the state with penalties for deviation from the 1st of this month. The current regulations are applicable to all wind generators with a cumulative capacity of 10MW and above and all solar generators with an installed capacity of 5MW and above.

F&S2015

Why need F&S?

The concern raised by the lobby of wind developers might seem justified against penalties for deviations which add to the cost of energy, but a stringent F&S mechanism will only enable the grid to accept more Renewable Energy (RE).

F&S could reduce RE curtailment

Increasing RE will lead to local and system level congestion in the existing Indian grid and it will be essential to curtail wind and solar during those periods. Curtailment generally is attributed to the grid’s inability to absorb RE generation but what goes unnoticed is the surplus generation from RE that is beyond what is forecast and scheduled leading to a shortage of grid transfer capability. A significant part of RE curtailment is in fact considered economic in that case.

Adding flexibility to the system in the long run

  • Accurate F&S will lead to creating an economic system where utilities could offer tariff incentives to increase consumption during peak wind/solar generation periods.
  • It could also lead to efficient use of traditional power assets.
  • A better inter-state coordination in managing power demand and delivering other grid ancillary services will become a possibility. Regional co-ordination has been a key to the success of RE integration in US.

Regulatory dimension

The regulator’s objective of delivering energy at the lowest possible cost shall always remain. At times, the intermittent nature of RE has caused the thermal power plants to provide flexibility by operating at a lower PLF thereby adding to the cost of energy and not to mention associated emissions (which is against the climate commitments). The F&S regulation will enable to enforce a better grid discipline by managing congestion which will provide value to the generators in the long run.  The next step for the regulators at state level would be to narrow the deviations by reducing the band and increasing the penalties. There is also a need for synchronisation of intrastate and interstate F&S regulations for better accounting and settlement.

The F&S regulations are not new for RE in India, Indian Electricity Grid Code made provisions in 2010. The current regulations based on the proposal from CERC in 2015 have been under draft across a few states. Rajasthan, Gujarat and Tamil Nadu have even implemented F&S on a voluntary basis. Karnataka has once again led the way in official implementing a timely regulation (with penalties) although it is likely to lose again on the market to other states that come up with a better regulation like Tamil Nadu’s proposal of a narrow band of ±10% for wind and ±5% for solar. One thing for sure can be guaranteed, a better grid discipline.

What the union budget (2017-18) means for Renewable Energy?

Approaching the half-way mark of the 2021-22 targets for Renewable Energy (RE), there was huge expectation from the 2017-18 budget and after an above average budget the last time around (Read more) it was going to be a tough act to follow. The expenditure in the energy sector is slated to increase from 30,065Cr (INR Crore) in the current Financial Year(FY) to 36,718Cr. As there was no big bang announcements in the sector, the focus is shifted towards the financial outlays across projects where the subtle details are described.

Access to electricity

“Well on our way to achieving 100% village electrification by 1st May 2018”

The Deen Dayal Upadhaya Gram Jyoti Yojana (DDUGJY), the flagship scheme under rural electrification will see an increase in budget allocation from 3,350Cr (Estimate FY17) to 4,814Cr (FY18).  The allocation along with Integrated Power Development Schemes will be crucial in to achieve the 100% electrification target by 1st May 2018. The Integrated Power Development Scheme which envisages 24×7 power and efficient grid has a total budget  of 5821Cr for the coming fiscal.

Solar Power

solar

Interestingly the announcement of having 7000 railway stations powered through solar gained traction although the overall plan under the railway ministry is to achieve a cumulative target of 1GW. Second phase of solar park development to be taken up for 20GW capacity, which in likelihood is just going to be a preliminary selection in the coming year. Budget allocation of 5,497Cr up from 5,036Cr (although revised estimates for FY 17 peg at 4,360Cr) to Ministry of New & Renewable Energy (MNRE).

The ministry has proposed to add 10GW capacity in the FY with 4.5GW coming from financial aid like VGF (50Lakh/MW assumed) and the balance 5.5GW coming from other state policies.

Wind Power

windThe outlay for wind is capped at 400Cr down from 488Cr in the previous year although this is justified considering the Generation Based Incentive (GBI) ceases from 1st April 2017. The target for wind power is 4GW in the coming year.

In spite of  needing a significant development in RE, the budget has reduced the Research & Development (R&D) outlay from 446Cr to 144Cr with no technology specific announcements which is a big drawback.

Power Evacuationtx

In what could be cited as big plus in the budget is the financial commitment towards power evacuation especially the green corridors. It has seen a marked increase with MNRE and Ministry of Power together getting an allotment of 575Cr for the Green Energy Corridors. The target is to reach 8553CKMs (Circuit Kilometers) in the medium term with 350CKMs targeted in the coming fiscal.

Taxation

The Accelerated Depreciation (AD) as announced in the previous budget will be reduced to 40%. MAT credit is allowed to be carry forwarded up to a period of 15 years from the present 10 years.

The reduction in customs duty on solar module glasses was around in the media but what went unnoticed is the increase in excise duty.Solar tempered glass for solar modules see a nil Basic Custom Duty (BCD) while parts for manufacturing of solar tempered glass has a 50% reduction of Countervailing Duty(CVD) from 12.5% to 6%. All items of machinery required for fuel cell based power generating systems to be set up in the country or for demonstration purposes  and Balance of System (Bos) for bio-gas plants see a reduction in BCD  and CVD to 5% and 6% respectively (down from 10%,12.5%).

The excise duty rate for solar tempered glass has increased from 0% to 6% while the excise duty on the raw materials for manufacturing of solar module glass is reduced from 12.5% to 6%. Likewise the materials for fuel cell based power systems has also seen an excise duty reduction from 12.5% to 6%.

Although there is a significant onus on Make In India, the announced tax benefits are unlikely to benefit in the long run which hints at changes during Goods & Services Tax (GST) roll-out.

The tax on income from trading/transfer of carbon credits has been reduced to 10% from the existing 30%.

evOn the other side considering the active interest between RE companies and Electric Vehicles (EV) it is important to observe the outlay towards EV. The Faster Adoption and Manufacturing of Hybrid and Electric vehicle scheme (FAME)  has been extended with an outlay of 175Cr. The medium term goal being 2-3 million Electric/Hybrid vehicles. Specifically for this year the outlay is focused on establishing 200 charging stations, introduction of 1.5 Lakh vehicles including 200 electric buses.

In summary, the budget does promise an increase in funding across all programmes of the power and renewable energy ministry. The key question is, will the increased outlay translate to physical progress considering the massive RE targets.