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India’s Top Solar Power Plants — Blogger Kunal
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India’s vast landscape and abundant sunlight have made it a global leader in solar energy. Let’s explore the top solar power plants in India, each contributing to India’s clean energy revolution.
Bhadla Solar Park, Rajasthan
Covering desert expanses, this park boasts over 2.2 GW capacity, utilizing both concentrated solar power (CSP) and photovoltaic (PV) technology.
Pavagada Solar Park, Karnataka
Spanning 13,000 acres, it’s a testament to rural development, offering a reliable income to farmers while producing over 2 GW of clean energy.
Read More: Various Types of Sewage Treatment Plants Used in India
Rewa Solar Park, Madhya Pradesh
Known for its innovative auction system, it sets new standards for affordability with a capacity of 750 MW.\
Read More: Top 10 Real Estate Developers In Bangalore
Kurnool Ultra Mega Solar Park, Andhra Pradesh
With 1 GW capacity, it’s a beacon of Andhra Pradesh’s commitment to renewable energy and economic growth.
Read More: Top Real Estate Companies In Noida
Kamuthi Solar Power Project, Tamil Nadu
A marvel of engineering with 648 MW capacity, it demonstrates Tamil Nadu’s dedication to sustainability.
Read More: Best Real Estate Developers In Pune
Charanka Solar Park, Gujarat
Covering over 700 MW, it showcases Gujarat’s proactive approach to solar energy deployment.
Read More: Top 10 Real Estate Developers In Ghaziabad
Sakri Solar Plant, Maharashtra
Generating 125 MW, it fosters economic growth and social development in the Dhule district.
Read More: Real Estate Developers In Faridabad
Ananthapuramu Ultra Mega Solar Park, Andhra Pradesh
A massive 1.5 GW facility driving talent development and employment in Andhra Pradesh.
Dholera Solar Park, Gujarat
With a projected 5 GW capacity, it’s set to become one of the largest solar parks globally, promoting industrial growth and sustainability.
Read More: Real Estate Companies In Gurugram
Nuh Solar Power Plant, Haryana
Contributing 300 MW, it boosts economic development and environmental sustainability in Haryana.
Read More: Real Estate Developers In Haryana
Noor Abu Dhabi Solar Park, Rajasthan
A collaboration between India and Abu Dhabi, it generates 1.17 GW of clean energy, showcasing international cooperation in renewable energy.
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Tumkur Solar Park, Karnataka
Expected to reach 4 GW capacity, it demonstrates Karnataka’s leadership in solar energy deployment.
Read More: Real Estate Developers In Goa
Pavagada Solar Park Phase III, Karnataka
With a planned 2 GW capacity, it underscores Karnataka’s commitment to renewable energy expansion.
Read More: Residential Properties For Sale In Kharadi Pune
Mandsaur Solar Park, Madhya Pradesh
Providing 250 MW, it plays a vital role in mitigating climate change and meeting energy demands in Madhya Pradesh.
Read More: Top 10 Wastewater Treatment Companies In India
RRECL Solar Park, Rajasthan
With 1.1 GW capacity, it’s a prime example of Rajasthan’s dedication to sustainable energy development.
Read More: Read More: Top 20 Solar Power Plants In India
Nokh Solar Park, Rajasthan
Generating 1.3 GW, it showcases Rajasthan’s potential as a renewable energy leader.
Conclusion
These solar power plants not only contribute to India’s renewable energy targets but also foster economic growth, create job opportunities, and promote environmental sustainability. With ongoing advancements in technology and strategic planning, India is poised to become a global renewable energy powerhouse, leading the way to a cleaner and more sustainable future.
#Solar Power Plants#solar panels#solar power#solar cells#solar pv#solar energy#technology#blogger kunal
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India Most Attractive Global Market for Clean Energy, Says PM Modi While Launching 750 MW Solar Project in MP
India Most Attractive Global Market for Clean Energy, Says PM Modi While Launching 750 MW Solar Project in MP
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India has emerged as the most attractive global market for clean energy, Prime Minister Narendra Modi said on Friday.
Launching a 750 MW solar project in Rewa in Madhya Pradesh through video-conferencing, Modi also said the state will emerge as a major hub for clean and cheap power in the country.
“Solar energy is sure, pure and secure and the country is now among the top five solar…
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#750 mw solar plant in rewa#asia largest solar plant#kusum yojana#largest solar power plant in india#MP CM#Narendra Modi#peda#peda solar pump#peda solar pump subsidy 2020#pedasolarpump com#pm modi#rewa madhya pradesh#rewa power plant#rewa solar plant#rewa solar plant company#rewa solar power plant#rewa solar power plant recruitment 2020#rewa solar project#rewa ultra mega solar#rewa ultra mega solar limited#rewa ultra mega solar project#RIVA#rums#seci share price#solar plant rewa#world largest solar power plant#www.peda.gov.in solar pump
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Latest Renewable Energy News update & Conventional | Energetica India Magazine
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Tata Power Arm Gets LoA to Set Up 330 MW Solar Project in Madhya Pradesh
Utility giant Tata Power’s wholly-owned subsidiary TP Saurya Ltd (TPSL) has received a Letter of Award (LoA) from Rewa Ultra Mega Solar Ltd (RUMSL) to develop an aggregate 330 MW of capacity solar power projects in Neemuch Solar Park in Madhya Pradesh. The company had won this project, which comprised of two solar plants of 160 MW and 170 MW, through Tariff-based competitive bidding followed by an e-Reverse auction. The LoA has been received by Ashish Khanna, President - Renewables, Tata Power from Shivraj Singh Chouhan, Chief Minister of Madhya Pradesh in the presence of Hardeep Singh Dang, Minister of Department of New and Renewable Energy; Sanjay Dubey (IAS), Principal Secretary; Akash Tripathi (IAS), MD, MPPMCL and other key dignitaries. Commenting on receiving the LoA, Dr. Praveer Sinha, CEO & MD, Tata Power said, “we are glad to receive this prestigious order for development and operation of 330 MW Solar Project from Rewa Ultra Mega Solar in Madhya Pradesh. We have been progressively growing our portfolio of grid-scale solar plants across the country.” The electricity generated from these projects will be supplied to the Indian Railways and the Madhya Pradesh Power Management Company Ltd under the 25-years Power Purchase Agreement (PPA). TP Saurya had won this capacity in a bid finalised through reverse auction by RUMSL earlier. The company said that these projects are expected to be commissioned within 19 months from the date of execution of the PPA. Meanwhile, the total renewable capacity of Tata Power reached 4,361 MW with an installed capacity of 2,947 MW and 1,414 MW under implementation.
Get the latest news about renewable energy & solar energy, views & updates from everywhere in India on Energetica. Covering latest Industry information on Indian Solar, Wind, Hydro, EV & other Conventional Power News, Views, Opinion of the think-tankers.
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All you need to know about the Bidding Process for Procurement of Power
Written by Arun Mehta, pursuing Certificate Course in Electricity and Renewable Energy Laws offered by Lawsikho as part of his coursework. Arun works as a Specialist in Scheduling and Forecasting at Rewa Ultra Mega Solar Limited, Bhopal. Additionally, he has a MBA degree in Power Management.
Introduction
Prior to the Electricity Act, 2003, the entire electricity sector business was primarily confined to the government owned generation companies and state government owned electricity boards. The Act ushered in an era of liberalization, privatization, transparency and competition in the sector. Gradually, the sector witnessed a series of reforms such as unbundling of state utilities, privatization of generation, entry of private players in transmission and increasing competition in generation as well as retail supply of electricity. Increasing competition has yielded significant benefits in terms of capital costs and operational efficiency resulting in more cost effective power for consumers.
Earlier, since the State Electricity Boards handled the entire gamut of activities, power was procured either from state owned generating plants or central generating stations operated by CPSUs such as NTPC, NHPC and the tariff of electricity was mainly decided by the State Governments. Later, the task determining tariffs for procurement of electricity was given to the Central and State Regulatory Commissions through the Regulatory Commissions Act, 1998[1].
With the advent of Electricity Act, the sector witnessed immense private sector participation. Eventually, the sector has become so competitive that even the regulators (CERC and SERC) are gradually distancing themselves from tariff determination and adopting tariff discovered through market principles, i.e. though competitive bidding of power.
This article discusses the regulatory background, power market structure in India, various modes of power procurement and key features of the guidelines issued by the government for competitive procurement of power.
Throughout the article, the words “Act” and “discom” are synonymously used with Electricity Act, 2003 and distribution companies, respectively.
Regulatory Background
Relevant Provisions in the Electricity Act, 2003
The Electricity Act introduced key enabling provisions that have facilitated procurement of power through competitive bidding. As per Section 61 and 62 of the Act tariff determination is under the ambit of Central or State Regulatory Commission. However, the Act gives precedence to tariff determined through competitive bidding under Section 63, reproduced below:
“Section 63. Determination of tariff by bidding process
Notwithstanding anything contained in section 62, the Appropriate Commission shall adopt the tariff if such tariff has been determined through transparent process of bidding in accordance with the guidelines issued by the Central Government.”
Further, in Section 61, the following provisions support procurement of power through competitive bidding:
“Section 61. (Tariff regulations):
The Appropriate Commission shall, subject to the provisions of this Act, specify the terms and conditions for the determination of tariff, and in doing so, shall be guided by the following, namely: –
(b) the generation, transmission, distribution and supply of electricity are conducted on commercial principles
(c) the factors which would encourage competition, efficiency, economical use of the resources, good performance and optimum investments;
(e) the principles rewarding efficiency in performance;
(i) the National Electricity Policy and tariff policy “
The Act has also introduced various measures for opening up of the power market, which act as enablers in moving towards an electricity market based on commercial principles. Some of key measures that have encouraged a competitive power market are:
Delicensing of generation under Section 7 of the Act, with the exceptionof hydro projects, thereby encouraging private sector participation in generation.
Introduction of open access through which any entity, viz. generator, discom or industrial consumer can buy or sell power through the use of transmission or distribution network. Open access has been instrumental in bringing the sector from a monopoly operated by the State Electricity Boards to a vibrant and competitive sector. The Act gives the right of open access to industrial consumers for procurement of electricity from their own captive plants through the interstate or intrastate transmission network and also mandates the Central & State transmission utility or any transmission licensee to provide open accessto generators (above 250 MW for thermal, 50 MW for hydro and 5 MW for renewable sources)[2] or consumer above 1 MW[3]
Unbundling of state electricity boards into separate generation, transmission and distribution companies, thereby uncovering inefficiencies, promoting transparency and private sector participation in all the three segments. As per Section 172(c) of the Act, the assets, rights, liabilities etc. of State Electricity Boards established under the Electricity (Supply) Act, 1948 are transferred to the State Government, which prepares a transfer scheme as per Section 131 of the Act, through which the SEBs are unbundled.
National Electricity Policy and National Tariff Policy
The National Electricity Policy stipulates competition in the power market aimed at consumer benefits[4] and the National Tariff Policy aims to provide electricity to consumers at reasonable and competitive rates, ensure financial viability of the sector and attract investments and Promote competition, efficiency in operations and improvement in quality of supply[5].
Under its general approach to tariff, The National Tariff Policy of 2016 mandates procurement of power through competitive bidding. The relevant sections are quoted below:
“ 5.1 Introducing competition in different segments of the electricity industry is one of the key features of the Electricity Act, 2003. Competition will lead to significant benefits to consumers through reduction in capital costs and also efficiency of operations. It will also facilitate the price to be determined competitively. The Central Government has already issued detailed guidelines for tariff based bidding process for procurement of electricity by distribution licensees.
5.2 All future requirement of power should continue to be procured competitively by distribution licensees except in cases of expansion of existing projects or where there is a company owned or controlled by the State Government as an identified developer and where regulators will need to resort to tariff determination based on norms provided that expansion of generating capacity by private developers for this purpose would be restricted to one time addition of not more than 100% of the existing capacity.
5.3 The tariff of all new generation and transmission projects of company owned or controlled by the CentralGovernment shall continue to be determined on the basis of competitive bidding as per the Tariff Policy notified on6thJanuary, 2006 unless otherwise specified by the Central Government on case to case basis. “
Power Procurement in India
Power Market Structure in India
The present power market is a vibrant market with both government and private players in the generation sector (also called Independent Power Producers). The erstwhile State Electricity Boards (with the exception of Kerala SEB[6] and partly Himachal Pradesh SEB[7]) have now unbundled into State Generation, Transmission and Distribution Companies. Apart from these, there are industrial/commercial/captive open access consumers. The structure of the Indian power market is shown in the Figure below:
Figure 1: Structure of Indian Power Market [8]
Modes of Power Procurement
Power procurement by discoms can be classified as long, medium or short term based on the duration for purchase of power. Further, they can be classified as PPAs (bilateral or competitive bidding) and procurement from traders or power exchanges (short term, day ahead or contingency).
The usual mode of procurement of power is through long term PPAs of 25 years, where tariffs are determined based on rates discovered through reverse auctions. Typically, long term PPAs are the most preferred mode since they provide long term certainty and reduce risks to both generators as well as discoms. For the generators, the risk is reduced due to certainty of revenue for 25 years and for discoms, the risk is reduced in terms of constant source of power supply and less risk exposure to volatility in fuel prices.
The Ministry of Power released Guidelines for Determination of Tariff by Bidding Process for Procurement ofPower by Distribution Licensees in 2005, which defined two mechanisms of procurement of power through competitive bidding Case 1 and Case 2. Case 1 projects are those where the location, technology or fuel are not specified and most of the approvals, clearances, land acquisition for the project has to be carried out by the private developer. For Case 2 project, generally the location is specified, fuel, including the fuel linkages are established/facilitated by the government and various approvals, water availability etc. are facilitated by the government[9]. Thus, the risk with developer is higher in Case 1 projects and lower for Case 2 projects as some risk is shared by the government. Even the terminology for procurement of power is slightly different, Power Purchase Agreement for Case 2 projects and Power Supply Agreement for Case 1 projects, implying that the onus of procuring the power is on the discom/utility in the former, whereas in the latter the onus is on the developer to supply power.
The Power Procurement Process
The steps of power procurement process are outlined as follows[10]:
Preparation of Bid Documents
Site identification and land acquisition
Environment and Forest Clearance
Fuel arrangement and water linkage
Detailed Project Report consisting of all information related to the project, including hydrological, geological, meteorological and seismological data
Other related information
Bidding Process
Preparation of Bid Documents: The quantum of power to be procured is decided by the procurer (discom) on the basis of demand forecast available from the latest Electric Power Survey, published by the CEA, in case of deviation from the forecast, approval of the appropriate commission is sought. The bid documents are required to be prepared by the procurer in line with the Model Bidding documents issued in 2013 for DBFOT power projects for Case 2 projects[11] and DBFOO model documents for Case 1 projects[12].
Site identification and land acquisition: In Case 2 projects, as the site is pre-identified. Land acquisition and related clearances are required to be taken by the procurer prior to the issue of bid documents.For Case 1 projects, the site selection and land acquisition are required to be done by thebidder/developer, for which documentary evidence indicating land acquired and pending land is required to be submitted along with bidding documents.
Environment and Forest Clearance: Environment and Forest clearance (if applicable) is required to be taken by the procurer prior to issue of bid documents for Case 2 projects. For Case 1 projects, the proposal for environment/forest clearance is to be submitted by the bidder/developer.
Fuel arrangement and water linkages:For Case 2 bids, the fuel linkages, if available, are specified by the procurer prior to the issue of bid documents. For Case 1 projects, the bidder is required to have fuel linkage or coal block allocation or fuel supply agreement for gas which should typically suffice for the entire duration of the PPA.
Grid connectivity: For Case 2 projects, typically grid connectivity for long term access is the responsibility of the procurer. For Case 1 projects, grid connectivity is responsibility of the bidder. However, it would be the responsibility of the bidder in case bid documents do not specify grid connectivity.
Detailed Project Report: For Case 2 projects, detailed project report (or feasibility report) with details on site specifications, water availability, soil type, geological, hydrological and seismological information is made available to bidders before issue of bid documents, which bidders can ascertain through site visits. In Case 1 projects, the DPR is required to be submitted by the developer with the bidding documents.
Other related information: ln case the bidder is a trading licensee (power trader), it is required to submit a copy of the PPA signed with the generator for the required capacity. Availability of fuel and transmission linkages need to be ascertained by the trader, prior to bidding.
Bidding process: The bidding process for procurement under both Case 1 and Case 2 projects is a two stage process. The first stage is a Request for Qualification (RFQ) wherein the technical and financial credentials of the bidders are evaluated. Only those bidders who qualify the first stage then submit a financial (tariff) proposal in the Request for Proposal (RFP) stage. For thermal plants, the financial bid comprises of a fixed charge and a fuel charge (for some projects, especially renewable projects, the financial bid comprises only of a single tariff). The bidder quoting the lowest financial bid is awarded a Letter of Award, followed by signing of Power Purchase Agreement (Case 2 project) or Power Supply Agreement (Case 1 project).
Contents of RFQ and RFP documents
The Ministry of Power has released Model Bidding documents for Case 2 projects under DBFOT (Design Build Finance Operate and Transfer) and Case 1 projects under DBFOO (Design Build Finance Own and Operate). For both type of projects, the bidding process is a two stage process. A typical RFQ document has the following contents[13]:
Information about the utility, location of plant (for Case 2 projects), indicative project cost (only for Case 2 projects) and payment cost for the RFQ process
Information on the bidding documents including the RFQ, PPA and other documents issued from time to time
Brief description and schedule of the bidding process
Requirements on formation of SPV Financial, technical and operational eligibility requirements
Evaluation criteria for techno-commercial evaluation
Formats for submitting information relating to technical and financial parameters
On the basis of evaluation in the RFQ stage, in the RFP stage, selected bidders submit bank guarantee for bid security, legal documents including power of attorney for consortiums or joint ventures and financial bid which is either atwo-part tariff, i.e. fixed charge and fuel charge for thermal plants or a single part tariff. The bidder quoting the lowest tariff is selected. Further, the RFP contains rules for selection if multiple bidders quote the lowest tariff or lowest tariffs are quoted by different bidders for different capacities.
Power Purchase Agreements
Power Purchase Agreements (PPAs)are contracts signed between selected bidders and procurers. Usually, such agreements are capacity (MW) based, some renewable energy based projects also have energy (MU) based PPAs. The PPA plays an important role in ensuring cost competitiveness of power, since it not only contains payment related clauses but also clauses pertaining to obligations of the supplier and procurer, default events, liquidated damages applicable to both parties and force majeure clauses. The PPA minimizes developer risk through letter of credit and other payment security arrangements and also sets obligations through generation clauses. The key elements and features of a model PPA are as follows[14]:
Conditions Subsequent clause: Conditions Subsequent are conditions to be fulfilled by the seller/generator and the procurer within a certain period post signing of PPA. Conditions Subsequent for the seller include signing of fuel supply agreement, necessary clearances and permits, long term or medium term access as applicable and signing of EPC contracts for supply and erection of boiler, turbine and balance of plant. For the procurer, the Conditions Subsequent involves obtaining long term or medium term access to the grid, if applicable.
Contract Performance Guarantee: Contract performance guarantee is a bank guarantee submitted by the seller as a security which can be encashed by the procurer if the seller is unable to supply the contracted amount of power within a given period of time.
Guarantee of offtake: The offtake of power from the generating plant is guaranteed by the procurer up to the available or contracted capacity, whichever is lower.
Defining of injection and delivery points, open access, transmission charges and scheduling clauses for scheduling and dispatch of energy.
Billing and payment clauses, including Letter of Credit and escrow arrangements for payment security of seller.
Force Majeure clauses: Define force majeure events that are beyond the control of parties and the remedies available to the parties on occurrence of such events
Change in law clause: Allows pass through of increase in capital costs due to change in law which impacts the capital or operational costs substantially, for instance through an increase in tax rates.
Event of default clause: Provide for compensation, including termination compensation to either party on default from its obligations.
Conclusion
The power sector has evolved from a regulated state monopoly to an open market with more access to private players. While the market has certainly become more competitive, yet there are certain risks that need to be addressed. For thermal projects, certain factors such as fuel and land availability and payment delay by utilities are some of the risks that are still pertinent to developers. Such risks can be addressed through inputs and suggestions from the developers and incorporating them in the bidding documents. Achieving the objectives of efficiency, quality and reliability of power and optimum utilization of resources as set by the Electricity Act would require estimating and incorporating all possible risks and making the bidding documents as inclusive as possible.
[1]Section 13 (a) and Section 22(1) (a) of The Electricity Regulatory CommissionsAct, 1998 (repealed)
[2]Section 2 (1) (b) of (Grant of Connectivity, Long term Access and Medium term open access in interstate transmission and related matters) Regulations, 2009
[3]Kumar, S. (n.d.)Open Access, Retrieved from http://bit.ly/2SH1dMK
[4]Section 5.7 of National Electricity Policy, 2005
[5]Section 4.0 ,Objectives of the National Tariff Policy, 2016
[6]KSEB Limited Overview. (2015) Retrieved from http://www.kseb.in/index.php?option=com_content&view=article&id=50&Itemid=493&lang=en
[7] HPERC, History of HPSEBL, 4th APR Order for 3rd MYT Period (FY15-19) & Determination of Tariff for FY19 & True Up of FY16, Retrieved from http://bit.ly/2ABFhf1
[8]Tata Power Trading Company Ltd. (n.d.) Presentation on Power Procurement: Planning, Regulations and Practices.
[9] Forum of Regulators (2017). Competitive Tariff vis-a-vis Cost plus Tariff- Critical Analysis. Retrieved from http://bit.ly/2SBwl0a
[10] Ministry of Power (2005) Guidelines for Determination of Tariff by Bidding Process for Procurement of Power by Distribution Licensees
[11]Ministry of Power (2013) Guidelines for Procurement of Electricity from Thermal Power Stationssetup on DBFOT basis
[12]Ministry of Power (2013) Guidelines for Procurement of Electricity from Thermal Power Stations setup on DBFOO basis
[13] Ministry of Power (2013) Model Request for Qualification for Power Purchase Agreement for DBFOT Power Projects
[14] Standard Power Purchase Agreement for Procurement of Power Under Case – 1 Bidding Procedure Through Tariff Based Competitive Bidding Process, as per Guidelines issued by the Government of India for Determination of Tariff by Bidding Process for Procurement of Power by Distribution Licensees
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.
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All you need to know about the Bidding Process for Procurement of Power
Written by Arun Mehta, pursuing Certificate Course in Electricity and Renewable Energy Laws offered by Lawsikho as part of his coursework. Arun works as a Specialist in Scheduling and Forecasting at Rewa Ultra Mega Solar Limited, Bhopal. Additionally, he has a MBA degree in Power Management.
Introduction
Prior to the Electricity Act, 2003, the entire electricity sector business was primarily confined to the government owned generation companies and state government owned electricity boards. The Act ushered in an era of liberalization, privatization, transparency and competition in the sector. Gradually, the sector witnessed a series of reforms such as unbundling of state utilities, privatization of generation, entry of private players in transmission and increasing competition in generation as well as retail supply of electricity. Increasing competition has yielded significant benefits in terms of capital costs and operational efficiency resulting in more cost effective power for consumers.
Earlier, since the State Electricity Boards handled the entire gamut of activities, power was procured either from state owned generating plants or central generating stations operated by CPSUs such as NTPC, NHPC and the tariff of electricity was mainly decided by the State Governments. Later, the task determining tariffs for procurement of electricity was given to the Central and State Regulatory Commissions through the Regulatory Commissions Act, 1998[1].
With the advent of Electricity Act, the sector witnessed immense private sector participation. Eventually, the sector has become so competitive that even the regulators (CERC and SERC) are gradually distancing themselves from tariff determination and adopting tariff discovered through market principles, i.e. though competitive bidding of power.
This article discusses the regulatory background, power market structure in India, various modes of power procurement and key features of the guidelines issued by the government for competitive procurement of power.
Throughout the article, the words “Act” and “discom” are synonymously used with Electricity Act, 2003 and distribution companies, respectively.
Regulatory Background
Relevant Provisions in the Electricity Act, 2003
The Electricity Act introduced key enabling provisions that have facilitated procurement of power through competitive bidding. As per Section 61 and 62 of the Act tariff determination is under the ambit of Central or State Regulatory Commission. However, the Act gives precedence to tariff determined through competitive bidding under Section 63, reproduced below:
“Section 63. Determination of tariff by bidding process
Notwithstanding anything contained in section 62, the Appropriate Commission shall adopt the tariff if such tariff has been determined through transparent process of bidding in accordance with the guidelines issued by the Central Government.”
Further, in Section 61, the following provisions support procurement of power through competitive bidding:
“Section 61. (Tariff regulations):
The Appropriate Commission shall, subject to the provisions of this Act, specify the terms and conditions for the determination of tariff, and in doing so, shall be guided by the following, namely: –
(b) the generation, transmission, distribution and supply of electricity are conducted on commercial principles
(c) the factors which would encourage competition, efficiency, economical use of the resources, good performance and optimum investments;
(e) the principles rewarding efficiency in performance;
(i) the National Electricity Policy and tariff policy “
The Act has also introduced various measures for opening up of the power market, which act as enablers in moving towards an electricity market based on commercial principles. Some of key measures that have encouraged a competitive power market are:
Delicensing of generation under Section 7 of the Act, with the exceptionof hydro projects, thereby encouraging private sector participation in generation.
Introduction of open access through which any entity, viz. generator, discom or industrial consumer can buy or sell power through the use of transmission or distribution network. Open access has been instrumental in bringing the sector from a monopoly operated by the State Electricity Boards to a vibrant and competitive sector. The Act gives the right of open access to industrial consumers for procurement of electricity from their own captive plants through the interstate or intrastate transmission network and also mandates the Central & State transmission utility or any transmission licensee to provide open accessto generators (above 250 MW for thermal, 50 MW for hydro and 5 MW for renewable sources)[2] or consumer above 1 MW[3]
Unbundling of state electricity boards into separate generation, transmission and distribution companies, thereby uncovering inefficiencies, promoting transparency and private sector participation in all the three segments. As per Section 172(c) of the Act, the assets, rights, liabilities etc. of State Electricity Boards established under the Electricity (Supply) Act, 1948 are transferred to the State Government, which prepares a transfer scheme as per Section 131 of the Act, through which the SEBs are unbundled.
National Electricity Policy and National Tariff Policy
The National Electricity Policy stipulates competition in the power market aimed at consumer benefits[4] and the National Tariff Policy aims to provide electricity to consumers at reasonable and competitive rates, ensure financial viability of the sector and attract investments and Promote competition, efficiency in operations and improvement in quality of supply[5].
Under its general approach to tariff, The National Tariff Policy of 2016 mandates procurement of power through competitive bidding. The relevant sections are quoted below:
“ 5.1 Introducing competition in different segments of the electricity industry is one of the key features of the Electricity Act, 2003. Competition will lead to significant benefits to consumers through reduction in capital costs and also efficiency of operations. It will also facilitate the price to be determined competitively. The Central Government has already issued detailed guidelines for tariff based bidding process for procurement of electricity by distribution licensees.
5.2 All future requirement of power should continue to be procured competitively by distribution licensees except in cases of expansion of existing projects or where there is a company owned or controlled by the State Government as an identified developer and where regulators will need to resort to tariff determination based on norms provided that expansion of generating capacity by private developers for this purpose would be restricted to one time addition of not more than 100% of the existing capacity.
5.3 The tariff of all new generation and transmission projects of company owned or controlled by the CentralGovernment shall continue to be determined on the basis of competitive bidding as per the Tariff Policy notified on6thJanuary, 2006 unless otherwise specified by the Central Government on case to case basis. “
Power Procurement in India
Power Market Structure in India
The present power market is a vibrant market with both government and private players in the generation sector (also called Independent Power Producers). The erstwhile State Electricity Boards (with the exception of Kerala SEB[6] and partly Himachal Pradesh SEB[7]) have now unbundled into State Generation, Transmission and Distribution Companies. Apart from these, there are industrial/commercial/captive open access consumers. The structure of the Indian power market is shown in the Figure below:
Figure 1: Structure of Indian Power Market [8]
Modes of Power Procurement
Power procurement by discoms can be classified as long, medium or short term based on the duration for purchase of power. Further, they can be classified as PPAs (bilateral or competitive bidding) and procurement from traders or power exchanges (short term, day ahead or contingency).
The usual mode of procurement of power is through long term PPAs of 25 years, where tariffs are determined based on rates discovered through reverse auctions. Typically, long term PPAs are the most preferred mode since they provide long term certainty and reduce risks to both generators as well as discoms. For the generators, the risk is reduced due to certainty of revenue for 25 years and for discoms, the risk is reduced in terms of constant source of power supply and less risk exposure to volatility in fuel prices.
The Ministry of Power released Guidelines for Determination of Tariff by Bidding Process for Procurement ofPower by Distribution Licensees in 2005, which defined two mechanisms of procurement of power through competitive bidding Case 1 and Case 2. Case 1 projects are those where the location, technology or fuel are not specified and most of the approvals, clearances, land acquisition for the project has to be carried out by the private developer. For Case 2 project, generally the location is specified, fuel, including the fuel linkages are established/facilitated by the government and various approvals, water availability etc. are facilitated by the government[9]. Thus, the risk with developer is higher in Case 1 projects and lower for Case 2 projects as some risk is shared by the government. Even the terminology for procurement of power is slightly different, Power Purchase Agreement for Case 2 projects and Power Supply Agreement for Case 1 projects, implying that the onus of procuring the power is on the discom/utility in the former, whereas in the latter the onus is on the developer to supply power.
The Power Procurement Process
The steps of power procurement process are outlined as follows[10]:
Preparation of Bid Documents
Site identification and land acquisition
Environment and Forest Clearance
Fuel arrangement and water linkage
Detailed Project Report consisting of all information related to the project, including hydrological, geological, meteorological and seismological data
Other related information
Bidding Process
Preparation of Bid Documents: The quantum of power to be procured is decided by the procurer (discom) on the basis of demand forecast available from the latest Electric Power Survey, published by the CEA, in case of deviation from the forecast, approval of the appropriate commission is sought. The bid documents are required to be prepared by the procurer in line with the Model Bidding documents issued in 2013 for DBFOT power projects for Case 2 projects[11] and DBFOO model documents for Case 1 projects[12].
Site identification and land acquisition: In Case 2 projects, as the site is pre-identified. Land acquisition and related clearances are required to be taken by the procurer prior to the issue of bid documents.For Case 1 projects, the site selection and land acquisition are required to be done by thebidder/developer, for which documentary evidence indicating land acquired and pending land is required to be submitted along with bidding documents.
Environment and Forest Clearance: Environment and Forest clearance (if applicable) is required to be taken by the procurer prior to issue of bid documents for Case 2 projects. For Case 1 projects, the proposal for environment/forest clearance is to be submitted by the bidder/developer.
Fuel arrangement and water linkages:For Case 2 bids, the fuel linkages, if available, are specified by the procurer prior to the issue of bid documents. For Case 1 projects, the bidder is required to have fuel linkage or coal block allocation or fuel supply agreement for gas which should typically suffice for the entire duration of the PPA.
Grid connectivity: For Case 2 projects, typically grid connectivity for long term access is the responsibility of the procurer. For Case 1 projects, grid connectivity is responsibility of the bidder. However, it would be the responsibility of the bidder in case bid documents do not specify grid connectivity.
Detailed Project Report: For Case 2 projects, detailed project report (or feasibility report) with details on site specifications, water availability, soil type, geological, hydrological and seismological information is made available to bidders before issue of bid documents, which bidders can ascertain through site visits. In Case 1 projects, the DPR is required to be submitted by the developer with the bidding documents.
Other related information: ln case the bidder is a trading licensee (power trader), it is required to submit a copy of the PPA signed with the generator for the required capacity. Availability of fuel and transmission linkages need to be ascertained by the trader, prior to bidding.
Bidding process: The bidding process for procurement under both Case 1 and Case 2 projects is a two stage process. The first stage is a Request for Qualification (RFQ) wherein the technical and financial credentials of the bidders are evaluated. Only those bidders who qualify the first stage then submit a financial (tariff) proposal in the Request for Proposal (RFP) stage. For thermal plants, the financial bid comprises of a fixed charge and a fuel charge (for some projects, especially renewable projects, the financial bid comprises only of a single tariff). The bidder quoting the lowest financial bid is awarded a Letter of Award, followed by signing of Power Purchase Agreement (Case 2 project) or Power Supply Agreement (Case 1 project).
Contents of RFQ and RFP documents
The Ministry of Power has released Model Bidding documents for Case 2 projects under DBFOT (Design Build Finance Operate and Transfer) and Case 1 projects under DBFOO (Design Build Finance Own and Operate). For both type of projects, the bidding process is a two stage process. A typical RFQ document has the following contents[13]:
Information about the utility, location of plant (for Case 2 projects), indicative project cost (only for Case 2 projects) and payment cost for the RFQ process
Information on the bidding documents including the RFQ, PPA and other documents issued from time to time
Brief description and schedule of the bidding process
Requirements on formation of SPV Financial, technical and operational eligibility requirements
Evaluation criteria for techno-commercial evaluation
Formats for submitting information relating to technical and financial parameters
On the basis of evaluation in the RFQ stage, in the RFP stage, selected bidders submit bank guarantee for bid security, legal documents including power of attorney for consortiums or joint ventures and financial bid which is either atwo-part tariff, i.e. fixed charge and fuel charge for thermal plants or a single part tariff. The bidder quoting the lowest tariff is selected. Further, the RFP contains rules for selection if multiple bidders quote the lowest tariff or lowest tariffs are quoted by different bidders for different capacities.
Power Purchase Agreements
Power Purchase Agreements (PPAs)are contracts signed between selected bidders and procurers. Usually, such agreements are capacity (MW) based, some renewable energy based projects also have energy (MU) based PPAs. The PPA plays an important role in ensuring cost competitiveness of power, since it not only contains payment related clauses but also clauses pertaining to obligations of the supplier and procurer, default events, liquidated damages applicable to both parties and force majeure clauses. The PPA minimizes developer risk through letter of credit and other payment security arrangements and also sets obligations through generation clauses. The key elements and features of a model PPA are as follows[14]:
Conditions Subsequent clause: Conditions Subsequent are conditions to be fulfilled by the seller/generator and the procurer within a certain period post signing of PPA. Conditions Subsequent for the seller include signing of fuel supply agreement, necessary clearances and permits, long term or medium term access as applicable and signing of EPC contracts for supply and erection of boiler, turbine and balance of plant. For the procurer, the Conditions Subsequent involves obtaining long term or medium term access to the grid, if applicable.
Contract Performance Guarantee: Contract performance guarantee is a bank guarantee submitted by the seller as a security which can be encashed by the procurer if the seller is unable to supply the contracted amount of power within a given period of time.
Guarantee of offtake: The offtake of power from the generating plant is guaranteed by the procurer up to the available or contracted capacity, whichever is lower.
Defining of injection and delivery points, open access, transmission charges and scheduling clauses for scheduling and dispatch of energy.
Billing and payment clauses, including Letter of Credit and escrow arrangements for payment security of seller.
Force Majeure clauses: Define force majeure events that are beyond the control of parties and the remedies available to the parties on occurrence of such events
Change in law clause: Allows pass through of increase in capital costs due to change in law which impacts the capital or operational costs substantially, for instance through an increase in tax rates.
Event of default clause: Provide for compensation, including termination compensation to either party on default from its obligations.
Conclusion
The power sector has evolved from a regulated state monopoly to an open market with more access to private players. While the market has certainly become more competitive, yet there are certain risks that need to be addressed. For thermal projects, certain factors such as fuel and land availability and payment delay by utilities are some of the risks that are still pertinent to developers. Such risks can be addressed through inputs and suggestions from the developers and incorporating them in the bidding documents. Achieving the objectives of efficiency, quality and reliability of power and optimum utilization of resources as set by the Electricity Act would require estimating and incorporating all possible risks and making the bidding documents as inclusive as possible.
[1]Section 13 (a) and Section 22(1) (a) of The Electricity Regulatory CommissionsAct, 1998 (repealed)
[2]Section 2 (1) (b) of (Grant of Connectivity, Long term Access and Medium term open access in interstate transmission and related matters) Regulations, 2009
[3]Kumar, S. (n.d.)Open Access, Retrieved from http://bit.ly/2SH1dMK
[4]Section 5.7 of National Electricity Policy, 2005
[5]Section 4.0 ,Objectives of the National Tariff Policy, 2016
[6]KSEB Limited Overview. (2015) Retrieved from http://www.kseb.in/index.php?option=com_content&view=article&id=50&Itemid=493&lang=en
[7] HPERC, History of HPSEBL, 4th APR Order for 3rd MYT Period (FY15-19) & Determination of Tariff for FY19 & True Up of FY16, Retrieved from http://bit.ly/2ABFhf1
[8]Tata Power Trading Company Ltd. (n.d.) Presentation on Power Procurement: Planning, Regulations and Practices.
[9] Forum of Regulators (2017). Competitive Tariff vis-a-vis Cost plus Tariff- Critical Analysis. Retrieved from http://bit.ly/2SBwl0a
[10] Ministry of Power (2005) Guidelines for Determination of Tariff by Bidding Process for Procurement of Power by Distribution Licensees
[11]Ministry of Power (2013) Guidelines for Procurement of Electricity from Thermal Power Stationssetup on DBFOT basis
[12]Ministry of Power (2013) Guidelines for Procurement of Electricity from Thermal Power Stations setup on DBFOO basis
[13] Ministry of Power (2013) Model Request for Qualification for Power Purchase Agreement for DBFOT Power Projects
[14] Standard Power Purchase Agreement for Procurement of Power Under Case – 1 Bidding Procedure Through Tariff Based Competitive Bidding Process, as per Guidelines issued by the Government of India for Determination of Tariff by Bidding Process for Procurement of Power by Distribution Licensees
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.
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SgurrEnergy India Surpasses 33GW of Global Solar Project Consulting in March 2020
Global behemoth solar energy consultancy SgurrEnergy India is celebrating a series of astounding accomplishments in 2020 – in less than four years, they have tripled their consulting portfolio and crossed 33GW consulting landmark milestone.
To put that in perspective, in 2016, the company had completed a humble 9GW consulting experience with 300 customers. In March 2020, those numbers are a staggering 33GW global consulting with 550 customer and counting.
Arif Aga, founder and managing director of SgurrEnergy India said, “SgurrEnergy started its solar operations when the Indian and global solar sector was at its nascent stage and has been growing with the sector for more than a decade now. Our vision and proficiency in executing large-scale projects driven by innovation and effective project management to control costs have been the reason for top global developers in selecting SgurrEnergy to deliver the highest quality projects. The experience has been both enriching and inspiring.”
The company has come a long way since it began operations in 2007 and now has over 70 highly qualified engineering and solar experts on staff, the largest purely solar PV focused consulting company in Asia. They believe they arethe only consulting company in the sector to have been accredited with triple ISO Certification. SgurrEnergy is approved and certified by Lloyd’s Register and UKASfor ISO 14001:2015, ISO 45001:2018 and ISO 9001:2015.
SgurrEnergy has been involved in several landmark global solar projects. The company provided solar design &engineering services for one of the world’s largest solar project, a 648MW solar installation in India. Few of the recent solar projects includea 200MW in Bangladesh, 30MW in Ukraine, 200MW in Australia, 50MW in Ben Ban Solar Park, Egypt, 750MW Rewa Ultra Mega Solar Park in India, 40MW in Jordan, 10MW in Saudi Arabia and many more.
SgurrEnergy India has become one of the leading reputed solar engineering consultancy offering 360° services over the complete project lifecycle including feasibility studies, design & detailed engineering, quality management, construction management, O&M consulting, technical asset management, performance assessment and technical due diligence for pv power plants for developers, investors & lenders and EPC contractors.
Vetted by some of the solar industry’s foremost leaders in utility-scale project development, EPC, investors and lenders, SgurrEnergy India has met the high standards required by organizations like Engie,First Solar, Wartsila, Nextracker, IFC, Adani Power, ShapoorjiPallonji Group, Hero Future Energy,ReNew Power,Suzlon, ADB and many more. They are actively working on large scale utility projects in India, Bangladesh, Saudi Arabia, Sri Lanka, Afghanistan, Turkey, Egypt, Vietnam, Philippines, South Africa, Ukraine, Jordan, Australia, USA and many more countries; company is also rapidly expanding to Far East, Africa, Americas, Middle East and other Asian countries.
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7 World Biggest Solar Plants
Solar energy is one of the major alternatives sources of energy that is expected to help in significantly reducing our dependence on fossil fuels for power generation. In recent years, solar power plants are being increasingly installed by many countries across the world to cut harmful emissions and increase clean energy contribution to their energy mix.
Finite fossil fuels and vast availability of sunlight are the driving forces behind large scale adoption of solar energy in the past several years. Though their expensive to set up, solar farms hold a huge potential to reduce the use of coal for power generation. Recent advancements in energy storage technologies have boosted the confidence in reliability of solar energy as wholesale solar panel prices starts failing.
Here are the 7 of world’s largest solar plants:
Kurnool Ultra Mega Solar Park, India: The 1,000MW capacity solar park is a solar park spread over a total area of 5,932.32 acres in Panyam mandal of Kurnool district, Andhra Pradesh, India. The project is being implemented by a joint venture of the Solar Energy Corporation of India, Andhra Pradesh Power Generation Corporation and the New & Renewable Energy Development Corporation of Andhra Pradesh. SunPower, Softbank Energy, Azure Power and Adani Power were the companies that won contracts from Indian energy conglomerate National Thermal Power Corporation (NTPC) to develop the massive solar park.
Longyangxia Dam Solar Park, Qinghai: Located at the Longyangxia Dam hydropower station on the Yellow River in Gonghe County in Qinghai province, China, the 850MW solar park is spread over 9.16sq km of land. It has a capacity to generate enough electricity to power 200,000 households. The park was constructed a cost of about 6bn yuan (£721.3m). The Guardian reported that the project was built with a cost of about 6 bn yuan (£721.3m), with construction beginning in 2013.
Mohammed bin Rashid Al Maktoum Solar Park in Dubai: The 800MW Mohammed bin Rashid Al Maktoum Solar Park will be located on a 16km2 site and it will be delivered in three stages. Phase A, which is 200MW, is presently under construction and is scheduled for completion in next April. The 300MW Phase B is expected to begin in April 2019 and finally, Phase C is expected to start in April 2020. Masdar aims to further develop the Mohammed bin Rashid Al Maktoum Solar Park into the single largest site in the world with a capacity of 5GW by 2030. Total investment is estimated to reach $14bn. When complete, the solar plant could be able to offset as much as 6.5 million tonnes of carbon dioxide annually.
Rewa Ultra Mega Solar Park, India: The 750MW Rewa Ultra Mega Solar Park will be located in Madhya Pradesh, a state in central India. The project is led by Rewa Ultra Mega Solar, which is a joint venture between the Solar Energy Corp of India (SECI) and Madhya Pradesh Urja Vikas Nigam (MPUVN). The projects are expected to contribute to India's ambition of generating 100GW of solar energy by 2022 and to offset a million tons of greenhouse gas emissions. The project which comprises of three solar plants of 250MW each is being considered as one of the biggest single site solar projects in the world.
Solar Star Projects, California: The 579MW Solar Star project is currently one of the largest solar power project in the world, covering 3,230 acres. The Solar Star development includes two projects co-located in Kern and Los Angeles counties. Construction on the project was commenced in early 2013 by SunPower and was completed in June 2015. Solar Star projects will have more than 1.7 million monocrystalline silicon modules manufactured by SunPower. Southern California Edison signed two long-term power purchase contracts to purchase electricity generated from the projects.
Desert Sunlight Solar Farm, California: With an operating capacity of 550MW, Desert Sunlight Solar Farm is located in the Riverside County in California. Desert Sunlight Holdings, a subsidiary of First Solar was the developer of the solar-photovoltaic (PV) facility. The solar farm generates enough energy to power more than 160,000 homes and reduce 300,000mt of greenhouse emissions per year. It is owned by NextEra Energy Resources, GE Energy Financial Services, and Sumitomo Corporation of America. The facility features First Solar's thin film PV technology, which generates electricity with low visual impact, no air emissions, waste production or water use. Southern California Edison and Pacific Gas & Electric agreed to purchase 250MW and 300MW clean energy respectively from the solar plant for 20 years.
Topaz Solar Farms, California: Located in San Luis Obispo County, California, Topaz Solar Farms is a 550MW plant built by First Solar. The power generated from the plant is enough to meet electricity needs of 160,000 homes. Under a 25-year power purchase agreement, Pacific Gas and Electric Company agreed to purchase the electricity from the Topaz project about six years ago. The Topaz project, which features First Solar's advanced thin-film PV modules, offsets 377,000 metric tons of carbon dioxide per year.
The environmental benefits of solar farming are undeniable, but the financial benefits cannot be ignored either. There are numerous ways to finance solar farming, from investors to government subsidies, and the profit making potential only gets greater with the falling costs and increased financing options. Creating more solar energy to be released into the power grid reduces the amount of energy from non-renewable sources. Additional money can be made from selling renewable certificates. These can be sold to utilities or to individuals through the power utilities, and the result is a hefty profit to the solar farm owner.
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All That You Must Know About Captive Generation Plant
Written by Arun Mehta, pursuing Certificate Course in Electricity and Renewable Energy Laws offered by Lawsikho as part of his coursework. Arun works as a Specialist in Scheduling and Forecasting at Rewa Ultra Mega Solar Limited, Bhopal. Additionally, he has a MBA degree in Power Management.
What is Captive Generation?
A Captive Generating Plant is a power plant set up by any person, cooperative society or an association of persons (including companies) for generating electricity primarily for their own use. A generation plant is considered captive only if more than 51% of its electricity generated is used by the owner(s) for their own consumption and the minimum aggregate ownership (or individual ownership as the case may be) of the captive generating plant is at least 26%. Thus, in case there are multiple owners of a captive plant (also called group captive), they should satisfy the above requirement of a minimum of 51% energy consumption from the captive and collective ownership of at least 26%.
Why Captive Generation?
Electricity is one of the major inputs for any industry and industries require a consistent and reliable supply of electricity. For some industries, the quality of electricity (in terms of harmonics, voltage, and other technical parameters) is quite important. Further, reliable and quality supply at reasonable costs is another important factor for industries. Sometimes, these requirements cannot be aptly fulfilled by the state utilities. In such cases, going for captive power is the more feasible option. Captive power reduces dependability on the grid, reduces the cost of electricity which is an input to production processes and surplus electricity can also be sold to the grid, thus bringing in multiple benefits. Captive power plants have not only benefited the owners, but also the electricity utilities by supplying extra power when there has been a deficit in the power supply.
Types of Captive Generation
Captive power plants can be classified on the basis of various parameters. A typical classification is shown in the figure below.
Different types of industries have different choices on the type of captive plant they choose to set up. For instance, heavy industries such as steel, aluminium and smelting industries which are energy intensive, generally set up coal-based power plants. Sugar industries typically setup bagasse based plants in order to optimally utilize the waste product from their factories. Diesel generators are widely used by a variety of industries, including commercial facilities such as malls, office complexes, and hospitals. Diesel generators are also used for supplying peak power and backup power. Several industries are also using cogeneration plants in which the waste heat from the boiler is effectively utilized in heating applications, one example of such industry is Arvind Mills which is a textile industry. Renewable energy, especially wind and solar are becoming the most sought-after technologies for setting up captive projects. With RE, there are other associated benefits given by Central and State Governments which have made them an attractive option for investors. For instance, several textile manufacturers setup captive wind power plants under Ministry of Textile’s Technology Upgradation Fund Scheme, wherein they were provided a capital subsidy for setting up the captive plants. For solar rooftop systems, the capital subsidy of 30% on benchmark or project cost (whichever is lower) is provided by MNRE. Further, states have their own capital subsidy for the rooftop systems. Apart from the subsidies, easier financing, concessional import duties, excise duties and tax holidays are also provided for grid-connected solar systems. Another benefit being provided to the solar rooftop systems is net-metering, in which a bidirectional energy meter is installed at the user end and the surplus energy generated can be fed into the grid resulting in further saving on costs.
Benefits of Captive Generation
For energy-intensive industries, captive power provides a cheaper option than power from discoms, since the discoms charge additional surcharges and cross-subsidies from industries. The Electricity Act of 2003 is an enabler for a captive generation. Section 9(2) gives the right to open access to the captive generator and Sections 38, 39 and 42 provide that open access cross-subsidies and surcharge are not applicable to captive projects. Thus, this can be huge savings for the industries for which power is a major cost input. Captive power is also beneficial for the grid, especially in a power deficit scenario. The government has encouraged captive power generation to address the situation of power deficit which has considerably reduced. Captive power can also be used when there is no power supply from the distribution utilities. Hence, in case of load shedding, backup diesel generators can be used to supply captive power. For captive generators based on renewable sources, other benefits are also available such as Renewable Energy Certificates, discounted wheeling and banking charges, net metering and carbon credits under the CDM Mechanism.
Key factors for consideration while setting up Captive Generation Plant
While deciding to go for setting up a captive generation plant for a factory, the following aspects should be considered:
Type of load
The type of load depends on the purpose for which the industry is being set up. Heavy load intensive industries such as steel and aluminium have larger power requirements and already have access to coal. Coal-based thermal captive plants are used for such industries. Sugar factories typically use biomass or bagasse as fuel as it is the end product of sugar manufacturing process. Cogeneration is another technology which can be used if steam is also required in the industrial processes apart from electricity. An example of such industry is the textile industry in which the waste heat from a steam boiler can be used for further industrial processes. Diesel generators are another popular option used by several industries with lesser load requirements. Diesel generators have the advantage of being able to operate without any auxiliary power supply and are very reliable as standalone power sources, however, the fuel, i.e. diesel is often expensive and polluting.
Recently, renewable sources of energy such as wind, solar and biomass are also being used as captive sources by many industries. Though the efficacy of such captive plants for energy-intensive processes may be questionable due to the variability of the power supply, many less intensive industries including food industries, textile, and commercial offices etc. can benefit from captive renewable energy. Now, even heavy power usage industries such as Delhi Metro are buying solar power. Innovative contracting or bundling of renewable power with conventional power can facilitate the supply of power from renewable sources even to energy-intensive industries.
Land requirement
Land requirement for setting up a power project varies from technology to technology, hence land availability is a critical parameter in deciding the type of captive project. Land requirements for various types of power plants are tabulated below:
Financing
Typical financing options for captive plants include self-financing, loans and financing by equipment contractors. For smaller plants, self-financing is the preferred option as depreciation on assets can be used in saving taxes. The goal for the financing of captive plants differs from the Independent Power Producers in the sense that the key objective is to lower the cost of generation and not higher rates of return9. In certain cases, the financing is done by the equipment supplier companies, who do turnkey contracts (i.e. complete commissioning of the plant) and supply power to the captive consumer at negotiated rates. Tariff determination while supplying to a licensee: If some part of power from the captive plant is being supplied to a distribution licensee then the tariff is determined by the appropriate committee as per Section 62 (a) of the Electricity Act, 2003 or tariff may be determined competitively as per Section 63 of Electricity Act, 2003 1.
Connectivity /Open Access
The captive plant owner has to apply for connectivity to the grid to discom, STU or CTU as the case may be. For connectivity, the captive owner has to comply with the rules and regulations of CTU/STU and adhere to the grid codes prescribed by the Central/State Regulatory Commissions.
Charges to be paid for open access
Open access charges are the charges payable by the open access consumers to entities such as discoms or transmission licensees for access to their network. These charges do not include the generation tariff which is payable to the generator or supplier. Industrial consumers who use the grid for consumption of power from their captive plants have to pay the open access charges. However, unlike the usual industrial consumers, who are supplied power by the distribution licensee, the captive consumers save on cross-subsidy charges and additional surcharges levied by distribution licensee. The open access charges levied on a captive consumer are as follows16:
Wheeling Charge
Charges applicable for transmitting the power through discom’s network. Typically, the open access consumer is connected to the discom network at 33 kV or below. Hence, if both captive generation plant and load are connected to the same discom network of 33 kV or below, wheeling charges would be payable by the captive consumer. The wheeling charges are determined by the State Regulatory Commission in their tariff order.
Wheeling losses
These are the technical losses of the distribution network of 33 kV or below. The losses are determined by the State Regulatory Commission and apportioned to the open access to consumers on the basis of their energy draw.
State Transmission Utility (STU) charges
The STU grid usually operates at 66 kV, 132 kV or sometimes 220 kV voltages. In case the power from the captive generator flows through the state grid, STU charges are leviable to the captive consumer. These charges are also determined by the State Regulatory Commission.
STU losses
Similar to wheeling losses, STU losses are the losses of the state grid, which are approved by the State Regulatory Commission.
PoC charges and losses
These are charges and losses incurred if the power is being transmitted through the interstate grid. Charges and losses for the national grid are determined through a point of connection method. These charges are specified on a monthly basis by CERC and the losses are specified on a weekly basis.
Banking charges
Banking charges are payable by captive consumers who use the banking facility. Typically, in banking arrangements, the surplus energy generated by a captive user is used by the distribution licensee and the same amount of energy can be used by the captive user at a later time when the energy generation from the captive plant is insufficient. The distribution licensees charge for banking facility. Many states have given waiver in banking facility for renewable energy projects.
Concerns in a captive generation
Clearances and approvals
Clearances and approvals may be required by the captive generator. The major approvals required are environmental clearance and safety clearance from the Electrical Inspector.
Environmental Clearance
Environmental compliance by captive plants is a key issue since there are no set mandates for environmental clearance. Thermal plants are quite polluting and cause air, water, and land pollution. Non-compliance in terms of emissions and effluent disposal can lead to exacerbation of environmental problems. However, clearance from the environmental agencies such as MoEF, CPCB, and SPCB can result in higher costs and delays.
Electrical Inspector approval
For the safety of men and material, Electricity Act 2003 under Section 53, provides measures for a safety inspection by Electrical Inspector under the State or Central Government. Adherence to the rules, regulations and safety measures specified by the Electrical Inspectorate must be complied with for getting clearance from the Electrical Inspector.
Fuel availability
Fuel availability could be an issue for captive plants, especially if they do not have firm contracts or captive mines for sourcing coal, or have space constraints for fuel storage9. Price hikes in domestic or imported fuel prices could also impact the cost of electricity generated by the captive plant.
Efficiency
Captive plants may have low efficiency due to smaller size9 and domestic coal. Due to such inefficiency, there could be fuel scarcity in the country if captive plants become mainstream sources of power.
Human Resources
Captive power plants may lack skilled and trained manpower for the day to day operations of the power plant9. Employing skilled personnel can add extra costs to the tariff of electricity procured from such plants.
Conclusion
While captive generation certainly has benefits, careful consideration of the various factors such as technology, fuel, nature of load and cost to benefits need to be assessed for evaluation and selection of power procurement option. Captive generation can also play a supplementary role in supplying power to the grid and alleviating power shortages in the country.
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.
The post All That You Must Know About Captive Generation Plant appeared first on iPleaders.
All That You Must Know About Captive Generation Plant syndicated from https://namechangersmumbai.wordpress.com/
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All That You Must Know About Captive Generation Plant
Written by Arun Mehta, pursuing Certificate Course in Electricity and Renewable Energy Laws offered by Lawsikho as part of his coursework. Arun works as a Specialist in Scheduling and Forecasting at Rewa Ultra Mega Solar Limited, Bhopal. Additionally, he has a MBA degree in Power Management.
What is Captive Generation?
A Captive Generating Plant is a power plant set up by any person, cooperative society or an association of persons (including companies) for generating electricity primarily for their own use. A generation plant is considered captive only if more than 51% of its electricity generated is used by the owner(s) for their own consumption and the minimum aggregate ownership (or individual ownership as the case may be) of the captive generating plant is at least 26%. Thus, in case there are multiple owners of a captive plant (also called group captive), they should satisfy the above requirement of a minimum of 51% energy consumption from the captive and collective ownership of at least 26%.
Why Captive Generation?
Electricity is one of the major inputs for any industry and industries require a consistent and reliable supply of electricity. For some industries, the quality of electricity (in terms of harmonics, voltage, and other technical parameters) is quite important. Further, reliable and quality supply at reasonable costs is another important factor for industries. Sometimes, these requirements cannot be aptly fulfilled by the state utilities. In such cases, going for captive power is the more feasible option. Captive power reduces dependability on the grid, reduces the cost of electricity which is an input to production processes and surplus electricity can also be sold to the grid, thus bringing in multiple benefits. Captive power plants have not only benefited the owners, but also the electricity utilities by supplying extra power when there has been a deficit in the power supply.
Types of Captive Generation
Captive power plants can be classified on the basis of various parameters. A typical classification is shown in the figure below.
Different types of industries have different choices on the type of captive plant they choose to set up. For instance, heavy industries such as steel, aluminium and smelting industries which are energy intensive, generally set up coal-based power plants. Sugar industries typically setup bagasse based plants in order to optimally utilize the waste product from their factories. Diesel generators are widely used by a variety of industries, including commercial facilities such as malls, office complexes, and hospitals. Diesel generators are also used for supplying peak power and backup power. Several industries are also using cogeneration plants in which the waste heat from the boiler is effectively utilized in heating applications, one example of such industry is Arvind Mills which is a textile industry. Renewable energy, especially wind and solar are becoming the most sought-after technologies for setting up captive projects. With RE, there are other associated benefits given by Central and State Governments which have made them an attractive option for investors. For instance, several textile manufacturers setup captive wind power plants under Ministry of Textile’s Technology Upgradation Fund Scheme, wherein they were provided a capital subsidy for setting up the captive plants. For solar rooftop systems, the capital subsidy of 30% on benchmark or project cost (whichever is lower) is provided by MNRE. Further, states have their own capital subsidy for the rooftop systems. Apart from the subsidies, easier financing, concessional import duties, excise duties and tax holidays are also provided for grid-connected solar systems. Another benefit being provided to the solar rooftop systems is net-metering, in which a bidirectional energy meter is installed at the user end and the surplus energy generated can be fed into the grid resulting in further saving on costs.
Benefits of Captive Generation
For energy-intensive industries, captive power provides a cheaper option than power from discoms, since the discoms charge additional surcharges and cross-subsidies from industries. The Electricity Act of 2003 is an enabler for a captive generation. Section 9(2) gives the right to open access to the captive generator and Sections 38, 39 and 42 provide that open access cross-subsidies and surcharge are not applicable to captive projects. Thus, this can be huge savings for the industries for which power is a major cost input. Captive power is also beneficial for the grid, especially in a power deficit scenario. The government has encouraged captive power generation to address the situation of power deficit which has considerably reduced. Captive power can also be used when there is no power supply from the distribution utilities. Hence, in case of load shedding, backup diesel generators can be used to supply captive power. For captive generators based on renewable sources, other benefits are also available such as Renewable Energy Certificates, discounted wheeling and banking charges, net metering and carbon credits under the CDM Mechanism.
Key factors for consideration while setting up Captive Generation Plant
While deciding to go for setting up a captive generation plant for a factory, the following aspects should be considered:
Type of load
The type of load depends on the purpose for which the industry is being set up. Heavy load intensive industries such as steel and aluminium have larger power requirements and already have access to coal. Coal-based thermal captive plants are used for such industries. Sugar factories typically use biomass or bagasse as fuel as it is the end product of sugar manufacturing process. Cogeneration is another technology which can be used if steam is also required in the industrial processes apart from electricity. An example of such industry is the textile industry in which the waste heat from a steam boiler can be used for further industrial processes. Diesel generators are another popular option used by several industries with lesser load requirements. Diesel generators have the advantage of being able to operate without any auxiliary power supply and are very reliable as standalone power sources, however, the fuel, i.e. diesel is often expensive and polluting.
Recently, renewable sources of energy such as wind, solar and biomass are also being used as captive sources by many industries. Though the efficacy of such captive plants for energy-intensive processes may be questionable due to the variability of the power supply, many less intensive industries including food industries, textile, and commercial offices etc. can benefit from captive renewable energy. Now, even heavy power usage industries such as Delhi Metro are buying solar power. Innovative contracting or bundling of renewable power with conventional power can facilitate the supply of power from renewable sources even to energy-intensive industries.
Land requirement
Land requirement for setting up a power project varies from technology to technology, hence land availability is a critical parameter in deciding the type of captive project. Land requirements for various types of power plants are tabulated below:
Financing
Typical financing options for captive plants include self-financing, loans and financing by equipment contractors. For smaller plants, self-financing is the preferred option as depreciation on assets can be used in saving taxes. The goal for the financing of captive plants differs from the Independent Power Producers in the sense that the key objective is to lower the cost of generation and not higher rates of return9. In certain cases, the financing is done by the equipment supplier companies, who do turnkey contracts (i.e. complete commissioning of the plant) and supply power to the captive consumer at negotiated rates. Tariff determination while supplying to a licensee: If some part of power from the captive plant is being supplied to a distribution licensee then the tariff is determined by the appropriate committee as per Section 62 (a) of the Electricity Act, 2003 or tariff may be determined competitively as per Section 63 of Electricity Act, 2003 1.
Connectivity /Open Access
The captive plant owner has to apply for connectivity to the grid to discom, STU or CTU as the case may be. For connectivity, the captive owner has to comply with the rules and regulations of CTU/STU and adhere to the grid codes prescribed by the Central/State Regulatory Commissions.
Charges to be paid for open access
Open access charges are the charges payable by the open access consumers to entities such as discoms or transmission licensees for access to their network. These charges do not include the generation tariff which is payable to the generator or supplier. Industrial consumers who use the grid for consumption of power from their captive plants have to pay the open access charges. However, unlike the usual industrial consumers, who are supplied power by the distribution licensee, the captive consumers save on cross-subsidy charges and additional surcharges levied by distribution licensee. The open access charges levied on a captive consumer are as follows16:
Wheeling Charge
Charges applicable for transmitting the power through discom’s network. Typically, the open access consumer is connected to the discom network at 33 kV or below. Hence, if both captive generation plant and load are connected to the same discom network of 33 kV or below, wheeling charges would be payable by the captive consumer. The wheeling charges are determined by the State Regulatory Commission in their tariff order.
Wheeling losses
These are the technical losses of the distribution network of 33 kV or below. The losses are determined by the State Regulatory Commission and apportioned to the open access to consumers on the basis of their energy draw.
State Transmission Utility (STU) charges
The STU grid usually operates at 66 kV, 132 kV or sometimes 220 kV voltages. In case the power from the captive generator flows through the state grid, STU charges are leviable to the captive consumer. These charges are also determined by the State Regulatory Commission.
STU losses
Similar to wheeling losses, STU losses are the losses of the state grid, which are approved by the State Regulatory Commission.
PoC charges and losses
These are charges and losses incurred if the power is being transmitted through the interstate grid. Charges and losses for the national grid are determined through a point of connection method. These charges are specified on a monthly basis by CERC and the losses are specified on a weekly basis.
Banking charges
Banking charges are payable by captive consumers who use the banking facility. Typically, in banking arrangements, the surplus energy generated by a captive user is used by the distribution licensee and the same amount of energy can be used by the captive user at a later time when the energy generation from the captive plant is insufficient. The distribution licensees charge for banking facility. Many states have given waiver in banking facility for renewable energy projects.
Concerns in a captive generation
Clearances and approvals
Clearances and approvals may be required by the captive generator. The major approvals required are environmental clearance and safety clearance from the Electrical Inspector.
Environmental Clearance
Environmental compliance by captive plants is a key issue since there are no set mandates for environmental clearance. Thermal plants are quite polluting and cause air, water, and land pollution. Non-compliance in terms of emissions and effluent disposal can lead to exacerbation of environmental problems. However, clearance from the environmental agencies such as MoEF, CPCB, and SPCB can result in higher costs and delays.
Electrical Inspector approval
For the safety of men and material, Electricity Act 2003 under Section 53, provides measures for a safety inspection by Electrical Inspector under the State or Central Government. Adherence to the rules, regulations and safety measures specified by the Electrical Inspectorate must be complied with for getting clearance from the Electrical Inspector.
Fuel availability
Fuel availability could be an issue for captive plants, especially if they do not have firm contracts or captive mines for sourcing coal, or have space constraints for fuel storage9. Price hikes in domestic or imported fuel prices could also impact the cost of electricity generated by the captive plant.
Efficiency
Captive plants may have low efficiency due to smaller size9 and domestic coal. Due to such inefficiency, there could be fuel scarcity in the country if captive plants become mainstream sources of power.
Human Resources
Captive power plants may lack skilled and trained manpower for the day to day operations of the power plant9. Employing skilled personnel can add extra costs to the tariff of electricity procured from such plants.
Conclusion
While captive generation certainly has benefits, careful consideration of the various factors such as technology, fuel, nature of load and cost to benefits need to be assessed for evaluation and selection of power procurement option. Captive generation can also play a supplementary role in supplying power to the grid and alleviating power shortages in the country.
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