CEE Jan-Mar 2012

MAJOR WIND POLICY DEVELOPMENTS Policy development Impact on sector Revision of IEGC • Fluctuations within + 30 per cent of the schedule will be borne by all users of the interstate grid, rather than through the imposition of unscheduled interchange charges. Therefore, project developers and host states will not be undu ly burdened by such fluctuations • The code allows fine-tuning of generation schedules to as close as three hours before actual generation. Establishment of RRF • It will keep an account of the charges payable by or receivable for scheduling renewables in the grid • Wind power plants are expected to achieve 70 per cent accuracy in forecasting their generation • Deviations within a +30 per cent range will be settled through the RRF • Other deviations will be settled between the host state and the wind farm in accordance with energy accounts issued by the regional power committee. Launch of REC • Market-based instrument to incentivise producers to generate electricity from renewable trading energy beyond the RPO limit • Wind (as a non-solar REC) has a price band of Rs 1,500 - Rs3,900 till March 31 , 2012 • As per the latest data, wind producers with a combined capacity of 803MW have been accredited under this scheme • Reduction of RPO targets by several states • Reasons cited include lack of transmission infrastructure (Tamil Nadu} and poor track record in meeting targets (Rajasthan) • Those opposed argue that these reductions defeat the purpose of the REC scheme, reducing its demand • Supporters argue that the states are right in exercising caution while setting the targets until teething issues are solved. Easier grid access • Renewable energy projects with individual capacities of less than 50 MW can collectively approach Power grid with an aggregate installed capacity of 50 MW and above for interstate grid access • This will improve market penetration and give smaller producers access to the REC scheme. Competitive bidding • For ensuring the security of bidders, the norms propose a letter of credit backed by a (draft introduced in credible escrow mechanism December 2010) • A provision for procuring subsidized power over the state regulator-specified tariffs has been made • Bidding will comprise evaluation of a single request for proposal • The norms mandate the sharing of carbon crdit proceeds between the developer and the beneficiaries, with 10 per cent transfer to the beneficiaries every year (starting from the second year) until the mix becomes 50:50. Direct Tax Code • Will phase out acceleration depreciation benefits enjoyed by developers, which has been (announced in 2010 postulated as one of the reasons for high capacity addition in 2010-11 and to be • Accelerated depreciation has been a major success; as of March 2011 , 308 projects implemented from aggregating 587.11 MW were registered under this scheme. April1 , 2012) • In comparison, only 58 projects of 409.8MW capacity were registered under the GBI scheme • Future growth of the Indian wind sector will depend on the success of GBI following the introduction of the Direct Tax Code. Source: Renewable Watch Research Courtesy: Renewable Watch, Nov. 2011 , P37. 60