Regulatory initiatives for Promotion of Solar Thermal Power

Regulatory initiatives for Promotion of Solar Thermal Power in Gujarat Dr. Ketan Shukla, Secretary (Indian Foreign Service) Gujarat Electricity Regulatory Commission April 2011 1

Renewable Sources of Energy In the context of climate change issues and ever increasing demand for electricity, the renewable sources of energy hold special importance. The Electricity Act, 2003 also emphasis need for promotion and development of renewable sources of energy The Tariff Policy of Govt. of India mandates the State Commissions to fix the preferential tariffs for electricity generated from renewable sources and to fix a minimum percentage for purchase of energy from such sources 2

Solar Power Potential High Solar Isolation levels in India The North Western Part of India (Gujarat & Rajasthan) gets high levels of solar radiations, almost throughout the year Solar Radiation Map of India 3

Solar Power Policy and GERC Regulatory Features Eligible Unit Any company / corporate body /association / body of individuals Sale Fixed tariff SPV Projects ( Rs. /k. Wh) Solar Thermal Projects ( Rs. /k. Wh) Tarirff 15. 00 for first 12 years 5. 00 from the 13 th year to 25 th year 11. 00 for first 12 years 4. 00 from the 13 th year to 25 th year Open Access /Third party Sale Allowed, No cross subsidy charges Wheeling At 66 KV: Transmission charges and losses as applicable to normal Open access consumer. Below 66 KV: Transmission charges as applicable to normal Open access consumer and transmission and wheeling losses @ 10 % of the energy fed to the grid. Power Evacuation Transmission line 66 KV and above to be provided by state utility from the bus bar of the generator 4

Brainstorming meeting 07. 02. 2009 conducted by GERC Experts from SERC, NLDC, MNRE, CEA, WISE Important Conclusions- – Power generated from solar is mostly infirm and cannot be scheduled – Such infirm injection cannot be a major threat to grid stability – Possible to bring down capital cost – Requirement for database related to solar radiation – Planning required for Grid Connectivity – Helpful in reducing peaking demand 5

Tariff Order dated 29. 01. 2010 Tariff for 25 years– Project commissioned 31. 12. 2011 before Solar Thermal– First 12 years = Rs. 11 per k. Wh and remaining period Rs. 4 per k. Wh Solar PV– First 12 years = Rs. 15 per k. Wh and remaining period Rs. 5 per k. Wh 6

GERC order dated 22. 01. 2009 Government of India had issued guidelines for Generation Based Incentives (GBI) for grid interactive solar based generation plants – where it was mentioned that preference would be given to the projects from the State where the SERC have announced or in process of announcing tariff for Solar power In response to that the GERC had issued order on 22. 01. 2009 allowing Discom to purchase solar power @ Rs. 3. 37 per k. Wh and the developer can claim GBI upto Rs. 11. 63 per k. Wh GBI for PV project and Rs. 8. 63 per k. Wh GBI for Solar thermal Project under Go. I Scheme Two proposals in this regard forwarded by the state Government to MNRE 7

Some Aspects of GERC Tariff Order of 29 January 2009 A single-part generic levelised tariff CSP plant tariffs - are 11 Rs /k. Wh during the first 12 years of commercially operating the plant & then 4 Rs/k. Wh for the 13 years that follow. The control period for the order is 2 years, since the gestation period for Solar PV is about 6 months and that for Solar Thermal Projects is 18 -24 months. The tariff takes into account the benefit of accelerated depreciation under the Income Tax Act. Those who do not take advantage of the depreciation factor have to approach the Commission for project specific tariff. Tariff order also addresses technical & commercial issues such as transmission, wheeling charges, security deposit, sharing of CDM benefits etc. Solar Generation kept out from the purview of Availability Based Tariff (ABT) and given ‘Must Run’ status 8

Assumptions considered Description Capital Cost per MW Solar Thermal Project Rs. 13 Crore Capacity Utilization Factor 25 % & Aux. cons. 10% O & M as % of capital cost 1% Insurance as % of NA 0. 35 % Depreciation –first 10 years 6% Depreciation- Remaining 2% Return on Equity Tax – first 10 years MAT 14 % 16. 995 % Tax- remaining 33. 99 % Interest on Term Loan 10. 75 % Interest for Working Capital (WC Req= 1 month O & M and 1 month receivables) 11. 75 % 9

For different RE sources – Tariff rates GERC Order No. 2 / 2010 dated 29/01/2010 Order 1 of 2010 dated 30/01/2010 RE Source Tariff Rate Capital Cost per MW Rs. 1300 Fixed Tariff of Rs. 11 per Unit for first 12 years and Rs. Solar Lakhs per Thermal 4 per Unit for the next 13 years. MW Solar PV Wind Fixed Tariff of Rs. 15 per Unit for first 12 years and Rs. 5 per Unit for next 13 years Rs. 3. 56 per Unit for project life of 25 years Rs. 1650 Lakhs per MW Rs. 500 Lakhs per MW Single Part Tariff: Rs. 4. 49 per unit with accelerated Depreciation Order 5 of 2010 dated 17/05/2010 Biomass Single Part Tariff: Rs. 4. 54 per Unit without accelerated Depreciation For developers adopting two part tariff, the Commission has determined the two-part tariff for Biomass based projects to be commissioned during the years 2010 -11, 2011 -12 and 2012 -13 separately. Rs. 4. 54 Lakhs per MW Single Part Tariff: Rs. 4. 65 per unit with accelerated Depreciation Single Part Tariff: Rs. 4. 71 per Unit without accelerated Depreciation Order 4 of 2010 Bagasse based dated For developers adopting two part tariff, the Commission has determined the two-part co-gen 31/05/2010 tariff for Bagasse based co-gen projects to be commissioned during various years of the Rs. 444 Lakhs per MW Control period. 10

GERC’s Renewable Purchase Regulations GERC (Power Procurement from Renewable Sources, Regulations 2005 – – – 2006 -07 2007 -08 2008 -09 : : : 1. 0 2. 0 % % % RPPO Year 2010 - 11 Solar Total 0. 25% 2011 - 12 0. 50% Regulations Notified 1. 00% – Specific RPPO for Solar 2012 - 13 – For Renewable Energy Certificates (REC) GEDA is the nodal agency – notified by GERC 5% 6% 7% 11

Progress of REC Implementation § GEDA have started implementation of REC § Hand on Training at NLDC Source Nos MW Remarks Wind 8 83. 50 8. 8 MW accreditated Bagasse 4 14. 00 Not Eligible Solar PV 1 00. 10 Details awaited Solar Thermal 1 01. 50 Details awaited Biogas/Other 2 00. 945 Details awaited TOTAL 16 100. 045 § Application Processing Fees : Charged as per CERC guidelines 12

Promoting the CSP projects Level of revenue for CSP projects needs to be adequate to encourage private-sector investment and provide a stable investment climate – This can be achieved by Feed-in tariffs Production tax credits, or Public benefit charges specific to CSP Use of Long term power purchase agreements or similar longterm contracts with credit-worthy off-takers, or equity ownership by public organizations, will build confidence among investors and financial institutions. Co-ordination with participating neighboring countries, states or regions with preferential tariff schemes will allow CSPbased electricity imports from high solar radiation areas and thereafter lower electricity costs. 13

Initiation by Government State Solar Power Policy 2009 announced Under the Solar Power Policy 2009, the State Govt. allotted 968. 5 MW of Solar Power Capacity to 84 national and international project developers – Out of 968 MW, the share of Solar Thermal Technologies is 25 MW Government of Gujarat declared Gujarat Power Corporation Limited (GPCL) as Nodal Agency for development of Solar Power Parks in Gujarat. Clinton Climate Initiative (CCI) have initiated announced to implement a 3, 000 MW Solar Park Project in the state. 14

Developed plan to strength the transmission network and infrastructure for power evacuation of large capacity solar power projects Introduced Master course on Solar Energy at Pandit Dindayal University, Gandhinagar and interaction of industries with ITI’s to introduce new curriculum for solar energy 15

Overall view of major Gujarat site/s and Narmada Canal network 16

Gas Grid network of Gujarat 17

Solar Energy – Advantage Gujarat Solar radiation : 5. 5 to 6. 0 k. Wh/Sq. m/day with 330 sunny days / year Land : 14. 40 Million Acres of uniquely positioned waste land in area of high solar radiation Water: Narmada water available in Northern part of state having high solar radiation Transmission grid : Gujarat have densest transmission network Infrastructure: 74, 000 Km long road network Gas Grid: 2200 Kms long gas grid Cut Transportation costs for conventional fuels Distributed Generation – so helps in reducing T&D Losses 18

Gujarat: The Investors Destination: VGGIS 2010 -11 Summary of Mo. Us signed during VGGIS 2011 No Sector Solar Equipment 1 Manufacturing Wind Power 2 Generation Tidal Power 3 Generation & Other TOTAL Mo. Us Capacity Investment Employment (Nos. ) (MW) (Rs. Crore) (Nos) 36 2440 22346 27500 28 5071 33576 10142 2 66 250 7761 5367 61289 2440 40082 Source: GEDA 19

Gujarat: The Investors Destination: VGGIS 2010 -11 Summary of Certificate issued during VGGIS 2011 (Non MOUs) No Sector Mous (Nos. ) Capacity Investment (MW) (Rs. Crore) 1 Solar Power Generation 7769 99487 2 Biomass Energy Projects 16 892 4629 3 Hydro & Other Energy 141 20 2148 5510 177 10809 109626 TOTAL Source: GEDA 20

Gujarat : PPA signed for Solar Power Projects under Solar Power Policy - 2009 Nos Developers Capacity (MW) Phase 55 First Phase allotment. 396. 500 26 Second Phase allotment. 562. 00 81 Total 958. 500 As on 31/12/2010 Source: GEDA 21

Major Allottee Details (178 MW) Sr 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Name of the Allottee ------------------------Z f Steering Gear (India) Ltd N K G Infrastructure Ltd. Alex Astral Power Ltd. Azure Power (Haryana) Ltd. Sun Edison GSPC Pipavav Power Co. Ltd. G M R Gujarat Surana Telecom Corner Stone Energy Kiran Energy GETCO E I Technology Emami Cement GPCL Roha Energy Saumya Construction Avtar Solar Technology -------PV PV PV TPV Power Eva. PV PV PV TPV PV PV MW -------5 10 25 5 5 20 --1 10 5 25 2 5 Area in Sq. mt. ----------1, 52, 981 2, 64, 967 6, 000 1, 60, 199 5, 09, 507 1, 02, 627 5, 00, 000 1, 49, 550 6, 03, 078 3, 77, 196 20, 300 2, 06, 645 99, 522 7, 50, 000 1, 50, 000 22

Pending Applicants Details Sr. No. ----1 2 3 4 5 Name of Applicant Technology ---------------------AES Solar Energy Gujarat. Ltd. Sun Clean Renewable Energy Lanco Infrastructure Visual Percept Solar Projects Inspire Solar Energy Ltd. --------PV PV PV TOTAL MW Capacity -----15 25 25 25 15 Area in Sq. Mtr. --------3, 00, 000 6, 000 5, 000 4, 60, 000 105 MW 23

Status of solar power projects v. Commissioned Projects: §One 5 MW solar power project of M/s. Lanco § 1 MW Solar Power Project at Pandit Deendayal Petroleum University. v On going Projects : §Installation of PV modules for 7 MW project are under progress § Another 12 projects of total 135 MW capacity are under advance stage of implementation §Tender under finalization for 1 MW solar power plant at Ash Dyke of Gandhinagar Thermal Power station. 24

Solar City - Gandhinagar v 170 k. W grid connect Solar Photovoltaic Power Systems (installed at 17 Go. G Buildings –Sachivalaya) v 125 nos. of 1 k. W Roof top systems at Govt. bungalows. v 175 nos. of 250 lpd SWHS on Govt. residential bungalows & 12, 500 lpd SWHS on Govt. Buildings. v 65 Solar Street lights in 9 Parks. v Installation of 8 Energy Efficient pumps at Charedi Water Works. v 590 Energy Efficient Street Lights as a Demonstration Project & Energy Efficient LED Lighting on “Ch” and “J” Roads, Ministers Enclave, Gandhinagar. v Mobile Demonstration for awareness generation s in Schools. v Replaced 3750 bulbs with CFLs and replaced 10, 000 ordinary tube lights with T-5. 25

Gujarat Solar Park § Land : 2024 ha ( 1080 ha Go. G, 944 ha Pvt ) § Approx. Capacity: 500 MW § Land Allotment: Solar Photovoltaic : 2 ha / MW § Solar Thermal : 3 ha / MW § Fees / Charges : § § Processing Fee: Deposit : Allotment Price: Development Charge: Rs. 25000 / MW Rs. 5 lacs / ha Rs. 18. 5 lacs / ha Rs. 8 -12 lacs / ha 26

Solar Park at Patan Phase I: Location - Village Charanka, Taluka Santalpur, Dist Patan Objective - Dedicated > 500 MW Solar power Generation Area - Approx 2456 Ha land (including Govt. & Private land) Phase II: Location - Villages Harsad, Soneth, Morwada, Dungla, Dabhi & Navapura, Taluka Vav, Dist Banaskantha Objective – Solar Power Generation, R & D Facility, Manufacturing Hub & Capacity building Area – Approx 1205 Ha Government Waste Land 27

Some Reflections Gujarat has taken significant initiatives in the past to harness solar energy GERC is the first State Regulatory Commission to issue a comprehensive tariff order on solar energy GERC is the first SERC to provide for Renewable Energy Certificates in its Regulations on procurement of energy from renewable sources GERC tariff appears to be lower than what was expected by potential investors at the national level; First project for REC Mechanism has been registered in Gujarat 28

Sun is present everywhere, his countless rays reaches all places, Sun is the force, The destroyer of darkness & bestows happiness & wealth Sun infuses life and removes all problems - Aditya Hridyam

THANK YOU 30

Back 31

Solar Radiation Map of India Back 32