Proactive
solar energy policy and smart governance is the need of the hour to realize the
vision of 3000 MW in TN by 2016
V. PONRAJ
Scientist & Public policy Expert
The
current installed capacity of power generation in India stands at around
223,000 MW (223 GW). Coal accounts for about 56%, Hydro around 18%, Gas around
9% of the total installed capacity. Share of renewables have increased over the
past, from 2% in 2003-04 to 6% in 2006-07 and now to 12% in 2012-13.
Solar
energy potential is highest (6000 million GWh of energy per year) in the
country among various other renewable energy options. As compared to this, the
present level of generation of electricity in 2008-09 from all resources was
0.7 million GWh. The states that have the maximum isolation are Rajasthan and
Gujarat. In addition, the states such as Andra Pradesh, Chhattisgarh, Madhya
Pradesh, Maharashtra and Tamil Nadu also enjoy good insolation levels. Most of
these states are in regions where the unmet electricity demand as well as the
growth in demand for electricity is high.
Majority
of these states have come up with solar policies to promote solar power. Based on the policy the highest installed
capacity states are Gujarat (824 MW), Rajasthan (517 MW), Maharashtra (164 MW).
The
other states who started the solar energy initiative, but not taken off as
expected due to their solar energy policy issues and governance challenges are:
Andra Pradesh (23 MW), Tamil Nadu (17 MW), Jharkhand (16 MW), Odisha (13MW).
As on
30th Apr 2013, nineteen states are cumulatively generating 1645 MW
from Solar, which consists of 590 MW comes from National Solar Mission, State
policies account for 829 MW, 108 MW from other schemes and REC Scheme generates
around 118 MW. [Source: IREDA, NVVN]
The
national level Solar RPO (Renewable Purchase Obligation) target is to achieve
3% by 2022 from 0.25% in 2013 that means the country would need ~ 35,000 MW of
Solar capacity. This tariff policy stipulates SPO target of 0.25% by 2013,
which will increase to 3% by 2022. The
following states: Chhattisgarh, Gujarat, Goa, Jharkhand, Madhya Pradesh,
Meghalaya, Rajasthan and UP has achieved higher tariff policy target by 2013. Ten
states such as AP, Bihar, HP, Karnataka, Kerala, Maharashtra, Manipur, Mizoram
and Nagaland have achieved the target equivalent. Eleven states including Tamil
Nadu (0.05%), Assam (0.15%), Delhi (0.15%), Haryana (0.05%) has achieved very
lower level SPO target.
[Source:
Demand as per CEA Power supply position 2012-13]
Only
Tamil Nadu, Assam, Delhi falls under low compliance and Low RPO levels with
respect to SPO Compliance as on 2012-13 is the primary concern. In Gujarat RPO regulations are not applicable
on captive as well as open access consumers. Karnataka it is seems generating
company opting for REC Scheme shall sell the electricity generated by it to
ESCOMs of the state as the polled cost of power purchase. In Punjab, Maharashtra
and Jharkhand they have allowed to carry forward of RPO to subsequent years. In
Bihar, if solar certificates are not available in a particular year, then in
such cases, additional non-solar certificate shall be purchased for fulfillment
of the renewable Purchase Obligation (RPO). State should provide for adequate
provisions for solar purchase in their ARRs. The RPO regulations need to be
harmonized as far as possible between states to send out consistent messages
and improve investment climate.
Reduction
in Solar PV cost from Rs. 15 crore per MW in 2010-11 to Rs. 8 crore per MW has
resulted in to the reduction in solar tariff from Rs. 17.91 per Kwh in 2010-11
to 8.75 per Kwh in 2013-14.
In the
same manner Solar thermal production cost from Rs. 14.2 crore per MW in 2010-11
to Rs. 12 crore per MW in 2013-14 has resulted into Rs. 15.31 per Kwh and Rs.
11.9 per Kwh in the respective years.
Introduction
of competitive bidding has brought down tariffs significantly, to below the
Solar REC floor price. REC floor price
is Rs. 9.3 /Kwh. Solar PV tariff in Gujarat is 8.63 per Kwh, Tamil Nadu has
revised the tariff to 6.48/Kwh for first year which on levelised basis works
out to be Rs. 8.28/Kwh arrived at by considering current CERC discount rate of
13.10%. Mr. Anish De from AF-Mercados EMI, enlisted the challenges in Solar REC based
projects such as: Lack of clarity on Solar REC price post 2017, solar REC price
higher than solar Feed-in-Tariff, Reducing trading volumes due to lack of
compliance, lack of clarity regarding applicability of REC mechanism for solar
rooftop installations.
Out of
the total solar REC projects capacity accredited 157 MW, the highest capacity
registered is 67.75 MW by Rajasthan and 1.055 MW by Tamil Nadu ranking the lowest.
The
states such as Gujarat (824 MW) and Rajasthan (517 MW) have achieved higher
compliance and high RPO levels through their proactive Solar energy policy have
generated higher solar power. The states who fared very low compliance and low
RPO target levels failed to generate solar power, they are Tamilnadu (17 MW),
Assam, Delhi (2.5 MW).
TAMIL
NADU Solar policy – an analysis and solution for revival
Tamil Nadu has the highest installed renewable
energy capacity (7,979 MW by Sep 2012) in India. As per Central Electricity Authority report
out of the total capacity addition of 32,713 of renewable energy sources –
wind, solar and small hydro – Tamilnadu is expected to add 22 percent of the
total addition during the end of the 12th five year plan in
2017. Tamil Nadu will continue to lead
in generation of power from renewable sources with capacity addition of 7,353
MW by 2017.
Renewable energy contributes around 41% of the
total installed capacity of the state. Among renewable energy, wind energy is
predominant in the state having a total installed capacity of 7,134 MW (as of
Sep 2012, TEDA) which is about 37% of the entire wind energy capacity of India.
Solar
power can significantly address power shortage issues. Power procurement
through competitive bidding will help states to fulfil their solar RPO targets
at reasonable costs, and complement initiatives like Jawaharlal Nehru National
Solar Mission (JNNSM) Phase –II. Variety of compliance options such as Solar
Power procurement, REC (Renewable Energy Certificates) procurement, and direct
compliance by large consumers can make compliance practicable. Active policy
and regulatory interventions are required for ensuring market development,
implementation of financeable business modes, compliance. Consistency in
regulations of states and proactive and investor friendly policies on RPO, REC,
Net Meeting for rooftop and other related aspects would be highly desirable.
The
states such as Gujarat (824 MW) and Rajasthan (517 MW) have achieved higher
compliance and high RPO levels through their proactive Solar energy policy have
generated higher solar power. The states who fared very low compliance and low
RPO target levels failed to generate solar power, such as Tamilnadu (17 MW),
Assam, Delhi (2.5 MW).
Challenges
in TN Solar Policy 2012
Tamil
Nadu Solar Policy aims to achieve 3000 MW of installed capacity by 2015
comprising of 1500 MW from utility scale, 350 MW for rooftops and remaining
1150 MW to be achieved through projects under REC mechanism. It was reported that the TANGEDCO issued a
tender for power purchase of 1000 MW solar capacity but received very look warm
response from the bidders due to the concerns such as payment security and
honoring the commitment, non-availability of
GRID connection for evacuation of generated power based on the past
track record of TANGEDCO. Applications
received for 730 MW, but it seems LOI has been issued to more than 200 MW in
Jan 2013. TN
State is gearing up to signing power purchase agreements for 698 MW. Even
though the tariff negotiated in TN is on par with the standard and also due to
the 5% annual escalation till the 10th year, but the credibility,
grid infrastructure and delay in decision making are the major concern to the
developers. It seems the PPA has not
been issued for more than a year even after the selected developers submitted
Rs. 7 Lakh per MW for allotment, 30 lakhs as Performance Guarantee for each MW,
and arrange 5 acres of land for each MW, and pay a lakh for completing Load
Flow study through TNEB. Since the PPA
is not been issued for the last 1 and half year by TANGEDCO, the solar power
generation is not seeing the light on the other side of the tunnel yet and put
the pressure on the developers to loose on the financial front that the project
may not be bankable.
By the
time TANGEDCO issues and sign the PPA, the developers need another 240 days to
commission the solar power plants. That means if everything goes well, we may
see the commissioning of 700 MW by June 2015. But the question is, will the government
be able to provide a Grid infrastructure for evacuation before June 2015 and
remove the bottlenecks in the Solar policy and bring back the confidence in
payment commitment, grid infrastructure, making farmers as partners in
providing land to bring down the cost of solar power generation, so as to
attract the investors towards Tamil Nadu and fulfill its commitment to generate
3000 MW by 2015. Also the TEDA, Ministry
of Power, industry and all the stakeholders has to work together in an
integrated way to achieve the target set by the Tamil Nadu Chief Minister,
which is totally missing. The main issue here is communication gap between TEDA
and Ministry of Power due to delay in taking correct decisions, issue of PPA
avoiding inordinate delay in obtaining permission from the Chief Minister at
right time and modify the solar energy policy which is bankable and financially
viable to the upcoming industry and at the same time ensuring the 3000 MW power
generation is possible at least by 2016 to realize the vision of the Chief
Minister.
Solar
Power Purchase Obligation: TN Solar Policy also mandates 3% SPO
requirement till Dec 2013 and 6% SPO requirement from 2014. But actually, as of
now Tamil Nadu is far below in achieving SPO compliance stands at 0.05%, whereas
the targets are mind boggling. SPO is not taking off in TN, since it got into a
legal tangle due to the non-exemption of wind power as a renewable power, since
majority of industry are using wind power.
Also carbon trading is applicable only within Tamil Nadu against the
by-law of carbon trading mechanism practiced worldwide. Hence, necessary policy
modification to suit the local needs is essential to achieve the SPO target in
Tamil Nadu.
REC
Mechanism: As of Sep
2013, Tamil Nadu has total 5 MW of grid connected solar energy projects
registered under REC mechanism (REC registry website), whereas Rajasthan has 83 MW, Madhya Pradesh
– 53 MW, Maharashtra – 28 MW, Andra Pradesh – 5.75 MW, Odisha – 2.5 MW,
Chhattisgarh – 2 MW. At this stage, the registered solar capacity is very low as
compared to the wind capacity (Total registered capacity under REC mechanism
for wind energy in Tamil Nadu is 844 MW as on Sep 2013.). However, it is
expected to increase considering increasing awareness for solar sector,
decreasing cost of solar panels, favorable government’s policy and the ever
increasing energy shortfall in the state.
Domestic
sector solar power generation policy is also not attracted the
people since it was mentioned based on generation based incentive where
as people expected loan and subsidy. The local conditions are not suitable for
generating 1 Kwh considering the power consumption of invertor, power cut
scenario and other challenges are not suitable to generate 1 Kwh roof top,
hence it has also become non-starter. It would have taken off if is encouraged
to have more than 5 kwh roof top systems at the households and ensures the grid
connectivity with smart metering facility.
Solar
powered Green housing policy is also hampered due to the
inherent weakness and danger in the solar policy stipulation such as making the
vendor responsible for any theft in the house, forcing the vendor to take insurance
against the normal business and very low pricing and biased specification.
Solar
park development is another attractive feature under this
policy, but it has also not attracted the industry due to lack of clarity in
the policy, non-transparency in the approval cycle, and lack of investor
friendly policy.
Suggestions
In order to realize the dream of the
Chief Minister of Tamil Nadu to have 3000 MW of solar power realizable by 2016.
The following immediate actions are needed.
1. TN Solar policy 2012 has to be immediately
optimized to encourage the industry and investors by bringing transparency and
decision making faster. Proactive and
growth oriented administrative mechanism need to be in place at TEDA.
2.
A new dispensation mechanism needs to be setup
to hear all the stakeholders and compare the proactive policies from other
states which encourages the solar power generation and its industrial growth,
SPO compliance, transferable REC mechanisms and Net metering.
3. Restoring the credibility of TANGEDGO and
payment mechanisms, activating the GRID infrastructure connectivity which is
not taking off for the last 3 years has to be accelerated.
4.
Not able to sign the PPA for more than 1 and
half years itself is a witness for the collapse of a Single window system –
which has to be revamped with an efficient administrative setup.
5. Solar Policy has to be modified and to be made
as investor friendly and people friendly so as to ensure its immediate implementation
of the following:
a.
Converting all the beneficiary who consumes free
power homes to be provided with solar power systems fitted with smart metering
facility with the maximum of 100 units from the conventional electricity.
b.
Providing Solar power to the diesel pump sets
for agriculture as an incentive to the farmers.
c.
Strict compliance of all government buildings,
educational, police and judicial institutions, village and town panchayat
institutions to implement solar power for their requirements in lights and AC
requirements through BOOT model by fixing a cost per unit which is viable to
the industry to implement.
d. Encouraging the solar power park to be
established along the coastal area to generate 2000 MW of solar power which
will help to generate 2000 Million litres of RO water per day.
Intervention
of the Tamil Nadu Chief Minister on the above mentioned issues is very much
essential and needed to activate her vision at this stage to achieve 3000 MW by
2015 to be at least realizable by 2016.
V. PONRAJ
Scientist & Public policy expert
vponraj@gmail.com
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