Cement, Energy & Environment

( , - f The CERC Tariff Regulations: The CERC issued regulations "for tariff determination for different renewable energy projects including wind power projects . It was expected that the subsequent state tariff regulations and the resultant tariffs would follow the principal and methodology followed in CERC's renewable tariff regulations. Apart from developing the cost and other financial parameters, the CERC tariff regulations also provided for the indexation of tariff and the tariff based on different wind zones. The indexation was introduced to adjust the capital cost variations during the control period of tariff orders and is based on steel and cement indices. Since the plant load factor (PLF) of a wind power project is dependent on the wind resource, the CERC regulations introduced wind zone-based tariff to capture the variation in annual generation for projects located in different wind resource areas. The Rural Electrification Corporation (REC) Mechanism: As a tool to meet the RPO, the REC Mechanism addresses the requirement of optimal utilization of resource concentrated in particular states without putting any cost burden on the consumers of the state in a market friendly manner. In the REC mechanism, the electricity The National Electricity Policy, formulated by the Ministry of Power, in pursuance of the_provisions of the E.lectricity . Ast;~?_9.0~/provi_de,~ 9tr~.~!i§rfY ,,;)~~; dete.·r,rninatiC,nipJjpefc.e_p)~ge:J~r '· · ;.· ~: •• -•• '~~-- < ... --.t._ ••.-:;.-•• ~ ... .:......~-:~.;.--·~.r···-!-',.l., ......... ~!'·~~ .... '..;~,, •• .,~ot . "~\. ''+'' ~~newable ROWEHi ' J:!r~,c~rement generated from a renewable power project like wind power is sold to the local utility at the average pooled cost of power procurement of that utility. Besides, the project also receives an REC that can be sold to any utility, which in turn uses the REC to meet its renewable obligation. The CERC and some states have already issued necessary regulations recognizing RECs as a tool used by the utilities to meet their renewable purchase obligations (RPO) . The two crucial aspects of the REC mechanism are the enforcement provision of RPO and the floor price for RECs . The two aspects, in a sense, are linked to each other. The Central Electricity Regulatory Commission (CERC) has declared new floor and forbearance price for REC (solar and non solar) for the control period of financial year 2012-2017. Having these regulations and orders in place for the REC mechanism, the market model for wind projects is set to change from the long-term PPA with a preferential tariff to a market-dependent pricing system for electricity as well as RECs. If the obligated entities fail to fulfil the RPO as mentioned in the Regulations and also do not purchase the certificates, the CERC may direct them to deposit a certain sum determined on the basis of the shortfall in units of RPO into a separate fund. The fund so created will be utilized for the purchase of the certificates. Open Access: As per the Electricity Act 2003, anyone can have an open access to the grid for exchange of power with payment of necessary charge for use of the grid infrastructure. Open access, i.e. captive use of wind power or sale to a third party, is a major component of the wind power market today. Historically, since the guidelines were issued by MNES in 1993-94, the concessiona l open access charges have helped to develop this market segment. In the case of wind power, the power can be wheeled for own consumption and sold to another consumer. For such a transaction, necessary transmission and wheeling charges, and cross-subsidy surcharge (for sale of power to any consumer) are required to be paid. In states like Maharashtra and to some extent Gujarat the state commissions have made the actual open access charges applicable to wind projects. Wind turbine technology During the last one decade, India has witnessed a shift to bigger wind turbines as a result of improved infrastructure and better economics. The average size of a wind turbine has increased from 0.77 MW in 2004 to 1MW in 2009 and the MW-class turbines now comprise over half of the new wind power capacity installed in the country. This progress is also leading many wind farm owners to consider repowering of old wind power plants as an option to maximize utilization of available resource potential on land. Since most of the Class I sites have been explored , developers are left with putting up wind farms in Class II and Class Ill sites . Designing a wind project on such sites and achieving higher generation remains a challenge. Besides, acquisition of private land, obtaining forest clearances, development of infrastructure on complex terrains, implementation of evacuation infrastructure, identification of new sites for development and scheduling and forecasting wind power generation are some of the bottlenecks faced by this sector in India. 27