RENEWABLE ENERGY FRAMEWORKMANISH

MANVENDARMAYANK

IMPLEMENTATION IN ONE STATE

AND

POLICIES

What WE gonna learn?

How we gonna achieve Renewable targets?Analyse the existing constitutional and regulatory framework in the renewable sectorFinancial factors that affect RE viability in india

Where we Are?

4

Renewable Energy Targets• 100 GW of solar

• 60 GW of wind• 10 GW of bio-energy

• 5 GW of SHP

India targets by 2022:

Total target : 175 GW by 2022

Increased focus on SHP, bio-

energy, new & emerging

technologies

Setting up RE manufacturing bases in India

10

Policy and Regulatory Structure• Umbrella act for electricity generation,

transmission, distribution and trading activities as well in India

• It forms the basis for :• National Electricity Policy, 2005• National Tariff Policy, 2006• National Electricity Plan by Central

Electricity Authority (CEA)• Determination of Preferential Tariff for

different RE sources• Open Access Regulations• Renewable Energy Policy

Electricity Act, 2003:

TIMELINE

Existing policy and regulatory support

planned initiatives

Incentives available

Financing Renewable

Energy

Land Availability

for Renewable

Energy Projects

Clearances required

for setting RE projects

Power Sale Options

National RE Law and/or Policy

•Establish targets Identify financial support required for achieving targets Undertake integrated energy resources planning Take a programmatic approach•A restructured and enforceable RPO •A mandatory net metering (NEM)/feed-in tariff (FiT)

WHAT IT STATES:-

MAJOR BODIESMinistry of New and Renewable Energy

Sardar Swaran Singh

National Institute of Bio-Energy

ROLE OF VARIOUS BODIES

STATE LEVEL BODIES

JUST AN OVERVIEW

MNRE

Nodal ministry of the Government

of India (GoI) AIM:

Develop and deploy New and

renewable energy for supplementing

the energy requirements of

the country.

Conducts resource

assessments for RE and supports

R&D in RET.

IREDA (Indian Renewable Energy Development Agency) Financial assistanc

e

Provides loans and also

channels funds and other

initiatives to promote

renewable energy.

IREDA is registered as a non-banking

financial company and arranges its

resources through market borrowing and lines of credit from bilateral and

multilateral lending agencies

MOP & MOEF

Responsible for:

The national electricity policy and national tariff

policy, both of which play a key role in promoting

procurement of renewable energy-based power.

The Ministry of Environment and Forests (MoEF) is responsible for providing environmental clearances for renewable

energy projects

Support Mechanism for Renewable Power In India

State RE policies a.Electricity in concurrent list;b.State level renewable and solar

policiesDemand supply gap tocontinue to affect

power availability

Exemptions and other incentives

RPOs & RECs

a. Expected to increase in coming 2-3 years due to lack of present investments in power sector

a. 100% exemption in Excise Duty for many RE project components.

b. Concessional Customs Duty of 5% for selected RE project components, AD, GBI, Capital Subsidy

c. 10 year tax holidayd. State Policiese. RPOs targets to be doubled soonf. RPOs adopted by 26 SERCsg. REC mechanism launched to fulfil the RPO

obligationsAccelerated

Depreciation (AD) and Generation based incentive

Feed in Tariffs/ Preferential Tariffs Capital subsidy of

25 % for manufacturing.

a. Key instrument for success of wind in India

a.Preferred by developers because it enhances project bankability.

b. Introduced by almost all states for RE technologies 1

5

RE POLICY TIMELINE

DETAILS OF INSTRUMENTS HELPING RE GROWTH

NAME OF INSTRUMENTS

WHO PROVIDES? OBJECTIVE APPLICABILITY

Capital Subsidy MNRE Provide a subsidy to bring down upfront investment costs

-Demonstration projects in Small Hydro, Biomass and Wind Power - Solar power applications

Indirect Taxes - Cess, Exemption from VAT/ Sales Tax & Electricity Duty, Exemption from Import/ Excise Duty, Accelerated Depreciation (AD) Ministry

Ministry of Finance, State Governments

Lower the gap between RE based power and conventional power

- AD only for wind and solar Technology Neutral in case of other interventions

NAME OF INSTRUMENTS

WHO PROVIDES? OBEJCTIVE APPLICABILITY

Direct Tax exemptions/ Tax Holidays

Ministry of Finance Provide direct tax exemptions which incentivize RE based power generation

Technology Neutral

Interest Subsidies MNRE Provide a subsidy on interest to reduce cost of capital and in turn life cycle cost of projects

- Demonstration projects in Small Hydro, Biomass and Wind Power (till 2006)

- - Solar power applications currently

NAME OF INSTRUMENTS

WHO PROVIDES? OBEJCTIVE APPLICABILITY

Production Subsidies (GBI)

MNRE Provide an incentive for production of power

Solar & Wind

RE Funds State Governments and State Nodal Agencies

Provide low cost funds to promote investments in RE

Technology Neutral

NAME OF INSTRUMENTS

WHO PROVIDES? OBEJCTIVE APPLICABILITY

Demonstration Projects and R&D Grants

MNRE Showcase technology development with the aim of inviting investments

Technology Neutral

Carbon Trading Ministry of Environment and Forests

Provide a financial incentive for carbon mitigation, thereby encouraging clean power generation

Technology Neutral

State RE Policies (including issues such as development of transmission networks to connect RE projects, and wheeling & banking, Third Party Sale)

State Governments Provide a policy framework for encouraging RE investment in the state

Technology Neutral

FINANCIAL BENEFITS

Type of regulation Primary responsibility

Objective of the regulation

Applicability

Tariff related

Feed in Tariffs (FIT)/ Preferential Tariffs Technology Neutral

SERCs Provide an assured price for RE projects feeding into the grid

Technology Neutral

Terms and conditions for determination of tariff

CERC Provide an assured price for RE projects feeding into the grid

Technology Neutral

Renewable Purchase Obligations

SERCs Provide a target of RE share in power generation and distribution to encourage RE generation

Technology neutral or technology specific depending on state

Feed-in tariff

An economic policy •To promote active investment in and production of renewable energy sources.

•FIT typically make use of long-term agreements and pricing tied to costs of production for renewable energy producers.

•OFFERS long-term contracts and guaranteed pricing, producers are sheltered from some of the inherent risks in renewable energy production.

The Generation Based Incentive (GBI)

This is offered by the Indian Renewable Energy Development Agenda (IREDA) to power producers using renewable energy for

generation. In this tariff is approved by the State Electricity Regulatory Commissions in

various states. The incentive is disbursed to the power producer twice a year and only applies to power producers that do not use the accelerated/enhanced

depreciation benefits under the Income Tax Act.

Renewable Energy CertificateREC represents the

attributes of electricity generated from

renewable energy sources.

These attributes are unbundled from the physical electricity and the two products (the renewable

attributes embodied in the certificates and the electricity

generated) may be sold or traded separately.

A REC represents one MWh of electricity generated from renewable

sources. RECs can be used by obligated entities to demonstrate compliance

with regulatory requirements such as Renewable Purchase Obligations(RPO).

Renewable Purchase ObligationObligated entities are primarily electricity distribution companies, captive consumers, and open access users. RECs are issued to companies that produce power from renewable sources and opt not to see it at a preferable tariff to a distribution company.

The Renewable Regulatory Fund (RRF)

Regulations require wind and solar projects that meet certain criteria to forecast and schedule

their power on a day-ahead basis.

The wind/solar generators shall be responsible for forecasting their

generation up to accuracy of 70%. Therefore, if the actual generation is

beyond +/- 30% of the schedule, wind/solar generator would have to

bear the UI charges.

For actual generation within +/- 30% of the schedule, no UI would

be payable/receivable by Generator, The host state, shall

bear the UI charges for this variation, i.e. within +/- 30%.

However, the UI charges borne by the host State due to the wind/solar generation, shall be shared among all the States of the country in the ratio of their peak demands in the previous month based on the data

published by Central Electricity Authority (CEA), in the form of a regulatory charge known as the Renewable Regulatory Charge operated through the Renewable

Regulatory Fund. This fund shall be operated by National Load Dispatch Centre.

POLICIES AND FRAMEWORK

10

Policy and Regulatory Structure

•Umbrella act for electricity generation, transmission, distribution and trading activities as well in India•It forms the basis for :•National Electricity Policy, 2005•National Tariff Policy, 2006•National Electricity Plan by Central Electricity Authority (CEA)•Determination of Preferential Tariff for different RE sources•Open Access Regulations•Renewable Energy Policy

Electricity Act, 2003:

National RE Law and/or Policy

•Establish targets Identify financial support required for achieving targets Undertake integrated energy resources planning Take a programmatic approach•A restructured and enforceable RPO •A mandatory net metering (NEM)/feed-in tariff (FiT)

WHAT IT STATES:-

According to Elec. Act 2003.

Section 86(1) (e), “The State Commission shall promote co-generation and generation of electricity from renewable sources of energy by providing suitable measures for connectivity with the grid and sale of electricity to any person, and also specify, for purchase of electricity from such sources, a percentage of the total consumption of electricity in the area of a distribution license”

Section 3 (1), The central Government shall, from time to time, prepare the National Electricity Policy and Tariff Policy, in consultation with the State Governments for developing the power system based on optimal utilization of resources such as coal, natural gas, nuclear, hydro, and renewable sources of energy.

Section 4, The central Government shall, after consultation with the State Governments, prepare a national policy, permitting stand-alone systems (including those based on renewable sources of energy) for rural areas.

Cont..

•“Promote Co-generation and generation from Renewable sources of energy by providing suitable measures for connectivity to Grid and sale of electricity to any person, and also specify, for purchase of electricity from such sources, a percentage of total consumption of electricity in the area of distribution licensee.”

Section 86(1)(e) of

EA 2003 mandates the SERC

to:

National Electricity Policy 2005

The National Electricity Policy 2005 stipulates that

progressively the share of electricity from non-conventional

sources would need to be increased;

Such purchase by distribution companies

shall be through competitive bidding

process;

Considering the fact that it will take some time before non-conventional technologies compete, in terms of

cost, with conventional sources, the commission may determine an

appropriate deferential in prices to promote these technologies.

• Para 6.4 of the Tariff Policy stipulates: “Pursuant to provisions of S 86(1) (e) of EA 2003, Appropriate Commission shall fix minimum percentage for purchase of power from RE sources taking into account availability of such sources in the region and its impact on retail tariffs.”

National Electricity Plan,2016

National Rural Electrification Policy 2006

For villages/habitations where

grid connectivity would not be

feasible or not cost

effective, off-grid solutions

based on stand-alone systems may be taken up for supply of electricity.

Where these also

are not feasible

and if only alternative

is to use isolated lighting

technologies like solar

photovoltaic, these may be

adopted.

However, such remote villages

may not be

designated as

electrified.

Draft renewable energy policy – MNRE 2015

FEATURES:• An act to promote development and utilization of renewable

and sustainable sources of energy, stabilize emissions of greenhouse gases, diversify energy supplies, safeguard energy security, ensure that energy development is ecologically sustainable, protect environment and to realize the goal of sustainable development.

• Enactment supplementing other legislation in the area;• Thrust for development of the sector;• Emphasis to mainstream developmental and promotional

measures (for renewable energy)• Policy goal is to achieve sustainable development

National Renewable Energy Act 2015

• 1. Institutional Structure: The constitution of decision-making and advisory bodies in the government, which ensure the development and implementation of a stable and conducive policy regime to facilitate investments for development of renewable energy sources.

• 2. Supportive Eco–System: The development of conducive ecosystem, which promotes the utilization of RE sources and permits investments. This includes, RE Policy and Plan, Resource assessment, policies on testing, monitoring and verification, and indigenous manufacturing of components.

• 3.Economic and Financial Framework: Constitution and operation of National and State level funds to support achieving of the objectives of this Act.

• 4. RE Applications: This section covers the application of the above described framework to two main categories of renewable sources:• a. Distributed Renewable Energy Applications

and Energy Access• b. Grid connected Renewable Electricity

This Act is

broadly classified into the

following sections:

Considerations in Act:

An Act to promote the production of energy from renewable energy sources,

in order to reduce dependence on fossil fuels, ensure energy security and

reduce local and global pollutants, keeping in view economic, financial, social

and environmental considerations, and for

matters connected therewith or incidental thereto.

WHEREAS it is expedient to increase the proportion

of renewable sources of energy in India‘s energy

mix,and to reduce the reliance on fossil fuels, in order to

achieve economic and environmental objectives;

AND WHEREAS it is necessary to facilitate a

transition from fossil fuels to renewable sources of

energy with an appropriate legal,

regulatory and institutional framework.

Some common clauses

• A particular focus of this Act is Decentralised Renewable Energy and some facilitating and coordination related aspects with regard to grid connected renewables to bring in synergy and harmony in RE development.

• The proposed RE Bill is written with consideration of provisions in other existing legislations such as Electricity Act, 2003, polices thereunder, and other relevant acts such as Environment Protection Act 1986, Land Acquisition, Rehabilitation and Resettlement Act, 2013.

• It also has linkages with NAPCC and its missions such as NMEEE, National Solar Mission and other missions such as National Electric Mobility Mission, National Wind Energy Mission and Waste to Energy Mission. Other key linkages are with National Manufacturing Policy and National Skill Development Programme.

JNNSM(JAWAHARLAL NEHRU NATIONAL SOLAR MISSION)

The National Solar Mission is a major initiative of the Government of India and State Governments to promote ecologically sustainable growth while addressing India s energy security challenge.

It will also constitute a major contribution by India to the global effort to meet the challenges of climate change.

The National Action Plan on Climate Change also points out: India is a tropical country, where sunshine is available for longer hours per day and in great intensity.

Solar energy, therefore, has great potential as future energy source. It also has the advantage of permitting the decentralized distribution of energy, thereby empowering people at the grassroots level .

Based on this vision a National Solar Mission is being launched under the brand name Solar India .

The Jawaharlal Nehru National Solar Mission was launched on the 11th January, 2010 by the Prime Minister.

Proposed Roadmap

National Electricity Plan 2016

The objectives of this plan are to:

Promote generation of electricity from Renewable sources;

Promote Hydroelectric Power generation including Pumped Storage Projects (PSP) to

provide adequate peaking reserves, reliable grid operation and integration of variable

renewable energy sources;

Capacity Addition Programme from Renewable Energy SourcesFor The Period 2017-22

• Scenario I (Base Case)–175,000 MW Renewables- 100,000 MW Solar, 60,000 MW Wind, Biomass – 10,000 MW and Small Hydro 5000 MW

• Scenario II –150,000 MW Renewables - 80,000 MW Solar, 55,000MW Wind, Biomass –10,000 MW and Small Hydro 5000 MW

• Scenario III –125,000 MW Renewables - 60,000 MW Solar, 50,000MW Wind, Biomass –10,000 MW and Small Hydro 5000 MW

Solar park schemeSolar parks are

concentrated zones of development for solar

power generation

projects, demarcating an area that is well characterized,

properly infra-structure and where the

project risks are minimized & clearances are facilitated.

As per the National Schemeon Draft Solar

parks, MNRE will setup 25 solar parks of capacity

sizes between 500 MW to 1000 MW. It will provide

support of INR 20,00,000/MW to the

park development agencies.

National offshore wind policy

ministries and agencies.

Transmission infrastructure

This involves development of a network specifically for wheeling of RE power.

Green energy transmission corridor: It proposes a high capacity transmission system that will evacuate renewable power from RE rich states to load centres and make

make pockets of RE generation grid interactive. It will be integrated with the existing grid and foster

reliable forecasting of RE based generation and reduce evacuation losses

The R&D activities in the field of New and Renewable energy

RECOMMENDATIONS

CEA recognized Training Institutes spread all across the country, may be strengthened with Distribution/Lineman training along with training in renewables such as Solar, Wind, Small Hydro etc. for Training in these areas to all concerned.

NTP 2016 KEY POINTS FOR RE SECTOR

RPO

To promote renewable energy, it is proposed to increase solar RPO to 8% by 2022.

Solar RPO will not apply to power sourced from hydro power plants. Currently solar RPO is below 1% in most states.

It is imposed by law on some entities to either buy electricity generated by specified ‘green’ sources, or buy, in lieu of that, ‘renewable energy certificates (RECs)’ from the market. Renewable generation obligations (RGOs) are introduced for new coal/lignite based thermal plants that will need to establish or procure a certain percentage of renewable energy to meet their RPO.

The modalities of both the RPO and RGO will be determined by the State electricity regulators.

TRANSMISSION OF POWER

Transmission Of Power Inter-State transmission charges and losses for

renewable power (wind/solar) have been

exempted.

This will encourage inter-state power transmission

but the exemption is applicable only to wind

and solar power, and not for other renewables like small hydro and biomass.

RPO TARGETS

IMAGE FOR RPO TARGETS FRO DIFFERENT STATES

HYDRO POWER

For the growth of hydropower generation capacity, hydro power

projects will be awarded under cost-plus basis and they are exempted from competitive

bidding till 2022.

A cost-plus model promises assured returns over the investment made. For

existing hydro power projects, the power purchase agreement will

extended by 15 years beyond the existing 35 years.

TAX INCENTIVES

REMARK THIS IS OLD DATA

NON-TAX INCENTIVES

RPO

KEY HIGHILITES OF RECENT POLICIES

Accelerated

Depreciation (AD) available

to the wind

sector stands at

80 per cent.

AD is one of the crucial financial

incentives which has

contributed to the renewable energy sector

being recognized as

a very attractive and

lucrative sector in

India.

However, it would now be

reduced from 80 per cent to 40

per cent starting April 2017. The

government should take

suitable measures to

restrict or eliminate the rise of cost for

developers. This is also critical to

ensure envisaged wind

capacity addition targets are met.

GBI

GBI for the past few years has been responsible for ensuring that the wind power projects remain

attractive to the investors.

WHAT IS IN DILEMMA?

Government is yet to finalize the solar manufacturing policy. The said policy will accelerate growth of the sector by reducing cost of solar panels, other equipment, and

overall solar tariff, and by developing a solar ecosystem in the country. This policy is also critical from the perspective of achieving 100 GW of installed solar energy target.

HOW GST AFFECTS?

With the implementation of Goods and Services Tax (GST), the tax benefits availed by the

renewable energy sector are bound to disappear. This will raise cost of production of renewable based energy. To have as less of an impact as

possible, Renewables (especially solar and wind) should be kept in the lowest tax bracket of GST.

FUND FROM COAL

The basic objective of imposing “The Clean Energy Cess” was to support the development of renewable

energy sector in the country. The cess was doubled to Rs 400 per tonne in the budget announcements in Feb

2016.

DUTY REDUCED

• Solar tempered glass that goes into manufacturing of solar cells, panels and modules from 5% to zero.

NEF ISSUES

One continuing area of uncertainty is the role of the National Environment Fund (NEF).

The cess on coal remained unchanged at Rs400/tonne. While the total cess collected (projected up to 31 March 2017) was a mammoth Rs54,336 crore, only Rs25,810 crore have been transferred to NEF. Of this, under half (Rs12,427 crore) has been spent on renewable energy projects.

While nearly all of the budgetary allocation to renewables in 2017-18 will be from NEF, the budget could have clarified the proportion of the cess that would be transferred to NEF.

GST AGAIN

Another uncertainty is how the goods and services tax (GST) will impact renewables. Researchers at the

Council on Energy, Environment and Water (CEEW) find that if solar components were categorised based on current levied tax rates (including exemptions and subsidies), GST would impact solar tariffs minimally. However, if preferential tax benefits to renewable

energy were not accounted, then GST could raise utility scale solar tariffs by as much as 9.5%, hampering

progress.

STATE POLICIES IN BRIEF

TAMILNADU RE POLICY

INCENTIVES

OTHER BENEFITS

RAJASTHAN

RAJASTHAN NODAL AGANECY

NODAL AGENCY- RAJASTHAN RENEWABLE ENERGY COPORATION LTD (RREC)

SOLAR POLICY

POLICY DIRECTIVES TO PROVIDE

CONCESSIONAL TRANSMISSION

CHARGES TO SOLAR POWER PROJECTS.

THE STATE GOVERNMENT OF

RAJASTHAN ISSUED THE FOLLOWING

POLICY DIRECTIVE TO THE RERC UNDER SUB-

SECTION(1) OF SECTION 108 OF THE

EA-2003.

“ The RERC may fix the transmission tarrif of STU for

Solar power projects to be commissioned during the period

01.04.2015 to 31.03.2018 or for a capacity of 2000 MW, whichever is earlier, at a rate equal to 50%

of normal transmission tarrif (Rs. Per MW) as applicable to

conventional power for a period of 25 years, for which no subsidy

shall be providd by the state Government”.

POLICY OF PROMOTING GENERATION OF ELECTRICTY FROM WIND, 2012

Wind Power Plants for direct sale of power to

Discom(s) of Rajasthan:

Wind Power Plants for direct sale of power to

Discom(s) of Rajasthan upto year

2012-13:

The State will promote setting up of wind power

plants of unlimited capacity for direct sale to Discoms of Rajasthan upto year 2012-13

on the preferential tariff determined by RERC.

Cont…

• Wind Power Plants for direct sale of power to Discom(s) of Rajasthan for the years 2013-14 onwards:

• The State will promote setting up of wind power plants for direct sale to Discoms of Rajasthan on the tariff determined through competitive bidding process for the years 2013-14 onwards.

• The target under this category for the year 2013-14, 2014-15 and 2015-16 will be as follows:-

Cont..

Year 2013-14 2014-15 2015-16

Wind power plants to be set up for direct sale to Discoms of Rajasthan

300 MW 400 MW 500 MW

CAPTIVE POLICY

Utility Grid Power Projects for captive use/third party sale within

the State of Rajasthan:

CAPTIVE POLICY

Utility Grid Power Projects for captive use/third party sale within the State of Rajasthan:

FOREIGN INVESTORS

Enercon (Germany)Vestas (Denmark)Applied Materials

(USA)

THANKYOU