bridge to india_india solar policy brief_tamil nadu
TRANSCRIPT
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7/27/2019 Bridge to India_india Solar Policy Brief_tamil Nadu
1/18 BRIDGE TO INDIA, 2012 1
TAMIL NADUSOLAR POLICY
3,000 MWtargeted installed capacity
o solar power by 2015
304 MWsolar renewable purchase
obligation by 2015
2,247 MW17.5%
` 80.9 billionincome o DISCOMs in 2011
` 820/kWhLCOE o diesel power
` 7/kWhLCOE o solar power
current electricity prices/kWh
07
` 2.54
` 7.00` 5.50
` 5.75
APPC
COMMERCIAL
INDUSTRIAL
RESIDENTIAL
15 MWinstalled capacity osolar power in 2012
1,9002,100 kWh/m2solar irradiation per year
212 hourspower outages per day
8.9 m MWh/year10.5%
`
INDIASOLAR
POLICYBRIEF
The Tamil NaduSolar Policy
BRIDGE TO INDIA 2012
A detailed analytical outlook
on the opportunities and
risks under the
Tamil Nadu State Solar Policy
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November 2012, New Delhi
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This policy brie has been published
on December 7th 2012, and will be
updated as regulations change.
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CONTENTS1. Overview 01
2. Utility scale projects 1,500 MW 03
High Tension HT customers through Solar Purchase Obligation
500 MW
03
Distribution companies DISCOMS through competitive bidding
1,000 MW
04
3. Rootop solar systems 350 MW 07
4. REC o take 1,150 MW
5. Policy summary 10
6. Glossary o terms 12
7. About the authors 13
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B
RIDGETOIND
IA,2012
Source: BRIDGE TO INDIA
TAMIL NADU SOLAR POLICY3,000 MW
RENEWABLE ENERGYCERTIFICATE REC
PROJECTS
UTILITY SCALEPROJECTS
SOLAR PURCHASEOBLIGATION SPO
PROJECTS
High Tensionconsumers (33kV+) / SPOobligated entities
SPO o 3%/6%Frequent poweroutagesHigh cost odiesel
No penaltystructure toenorce SPOsNot all SPOs willbe bankable PPAsignatories
DISCOM(TANGEDCO)
FiT with stateProject sizesexpected at 5-50MWPro-active and
responsivemanagement bystate authorities
PPA bankabilityFiT auctionprocessunpredictable
Open-Access consumersDISCOMsRPO obligated entitiesSPO obligated entities
High returns under theREC mechanismNo size restriction oprojects
Enorcement o RPOs(demand or RECs)Medium-term pricing oRECs (bankability)Overall supply/demand oRECs in India
DISCOM(TANGEDCO)
Net meteringGenerationBased Incentive(GBI) availableRising power
costs
Little clarity onprocess as yetTechnicalchallenges(powerevacuation)
DISCOM(TANGEDCO)
Net meteringRising powercosts
Little clarity onprocess as yetTechnicalchallenges(powerevacuation)
COMPETITIVEBIDDING
PROJECTS
PRIVATEROOFTOPPROJECTS
GOVERNMENTROOFTOPPROJECTS
ROOFTOPPROJECTS
1,500 MW1,150 MW
50 MW1,000 MW500 MW 300 MW
350 MW
OFFTAKERS
OURVIEW
OPPO
RTUNITY
RISKS
MEDIUM TO HIGHlikelihood orealisation
MEDIUMlikelihood orealisation
LOWlikelihood orealisation
HIGHlikelihood orealisation
HIGHlikelihood orealisation
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1. OVERVIEW
B
RIDGETOINDIA,2012
Source: BRIDGE TO INDIA
The Tamil Nadu Solar Energy Policy
2012 was announced in October 2012,making Tamil Nadu the seventh Indian
state out o 28 to announce a solar
policy. The operative period o thepolicy is rom 2012 to 2015, duringwhich it targets to add 3 GW o solar
power. No breakup between photovol-taic (PV) and concentrated solar power
(CSP) projects has been given.
Tamil Nadu already has signicant
experience with the generation andtransmission o renewable energy as
it has the highest installed capacity or
wind power in India (over 40% o totalinstalled capacity; a total o 6,613MWin December 2011)3.
At the same time, the state has a
signicant energy decit. The total
---------------------1 The original policy document envisaged 1,000 MW rom HT consumers and 500 MW rom salesthrough the TANGEDCO. The TANGEDCO portion had subsequently been increased to 1,000 MW. We
are assuming that this will lead to an equivalent reduction o the HT customer share (leaving theoverall target intact). TANGEDCO will also sell the procured power to the SPO obligated entities.2 To download the policy ollow the link given in the Policy Details table at the end o this document3 Ministry o New and Renewable Energy (MNRE) annual report nancial year 2011-20124 Load Generation Balance Report 2012-13; CEA. The annual peak power decit is calculated bysubtracting the highest availability at any point in time rom the highest demand at any point in timeduring that year.
Breakup o policy targets
Category O takers Capacity
addition MW
Utility Scale High Tension (HT) consumers [through
Solar Purchase Obligation (SPO)]
5001
TANGEDCO (DISCOM) (through
competitive bidding)
1,0001
Rootop Private buildings 50
Government buildings 300
REC RPO obligated entities/third party
consumers
1,150
The policy is targeting 1,500 MW o
capacity addition through utility scaleinstallations. O this, 1,000 MW will be
allocated through competitive bid-ding or sale to Tamil Nadu Generation
and Distribution Company Limited(TANGEDCO). The remaining 500 MW
will be driven by private power pur-chase agreements (PPAs) with power
consumers who need to ulll solarpurchase obligations (SPOs). A urther
350 MW capacity addition is being tar-geted rom rootop solar installations.
O this, 300 MW is expected rom therootops o government owned build-
ings, while 50 MW is expected romprivately owned or domestic rootops.
For both, net metering is allowed. Theremaining 1,150 MW o the total target
is to be added through Renewable En-ergy Certicate (REC) projects2.
annual electrical energy decit in the
nancial year 2011-12 was 8.9m MWhwith a peak monthly decit in March.
The peak power decit during thatyear stood at 2,247 MW or 17.5%. The
Central Electricity Authority (CEA)estimates that the annual electrical
energy decit will signicantly rise to27.4m MWh (29.6%) in the nancial
year 2012-13 with an anticipated peakpower decit o 4,123 MW (30.7%)4.
Power generation in Tamil Nadu comes
mostly rom wind, coal and hydropower plants. The states main indus-
tries are textiles and automotive.
Solar power could help reduce thedecit and the use o expensive diesel
or back-up gen-sets. The generationpotential in Tamil Nadu is high. Taking
Tamil Nadu alreadyhas signifcant experi-ence with the genera-tion and transmission
o renewable energyas it has the highest
installed capacity orwind power in India.
The total annualelectrical energy
defcit in thefnancial year 2011-12was 8.9m MWh with a
peak monthly defcit inMarch.
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the average o various cities in Tamil
Nadu, based on 2011 data rom theCentral Electricity Regulatory Com-
mission (CERC)5, we arrive at the ol-lowing data points:
Average irradiation: 5.36-5.67
kWh/m2/day6
Average ambient temperature:28.8 degree celsius
Expected plant output: 1,560 MWh/year/MW
Capacity Utilization Factor (CUF)or a year: 17.81%
The Tamil Nadu distribution com-
pany (DISCOM) is a high loss makingentity that can currently hardly aord
to purchase expensive solar powerover a long period o time through, or
instance, long term Feed-in-Taris(FiT). The policy refects this concern
to some extent by shiting part o thenancial burden rom the DISCOMs to
large power consumers.
The timing o the policy is good: Therst wave o installations under the
National Solar Mission (NSM) Phase Iand the Gujarat Solar Policy has cre-ated a spurt o growth rom almost
nothing to 1,000 MW between early2011 and mid 2012 with grid-connected
power plants being built mostly inthe states o Gujarat and Rajasthan
in Indias north-west. Since then, the
market has been very slow, waiting orthe second phase o the NSM and new
state policies such as the Tamil NaduSolar Policy to be announced.
So ar, the policy has attracted greatinitial enthusiasm rom a number onew entrants: project developers rom
south India as well as large power con-sumers (obligated entities). However,
the policy is still a work-in-progressand a number o essential aspects
such as implementation o SPOs andother aspects or a payment security
theme that ensure a realization o thetargets are under discussion or need to
be tackled.
The strongest part o the policy so aris the SPO, which nudges industrial
and commercial customers that are al-ready plagued by high and rising power
costs and low supply security towardsadopting solar power quickly. The
most interesting aspect o the policy isthe net metering or 350 MW o roo-
top projects as it has the potential tostructurally change the solar marketin Tamil Nadu and India as a whole
(i implemented successully). Mostdoubts come around the proposed
targets or REC-based projects.
The Tamil Nadu SolarPolicy attempts to shit
part o the fnancialburden rom the
DISCOMs to largepower consumers.
---------------------5 Perormance o solar power plants in India; CERC6 Solar irradiance data in Tamil Nadu; TEDA
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2. UTILITYSCALE
PROJECTS
1,500 MW
HT CUSTOMERS(THROUGH SOLAR
PURCHASEOBLIGATION) -500 MW
Tamil Nadu has introduced a new
SPO mechanism. Under this, certainpower consumers have to purchase a
set quota o solar power. The SPO hasbeen xed at 3% till December 31st
2013 and 6% rom January 1st 2014 on-
wards. The obligated entities to whichthe SPO applies are dierent romthose specied by the national Renew-
able Purchase Obligation (RPO). SPOobligated entities include HT consum-
ers, who receive power rom the gridat a constantly maintained high voltage
level, o more than 11kV, transmit-ted though high tension lines. These
include special economic zones (SEZs),railway traction, registered actories7,
textile actories, tea estates, govern-
ment educational institutions, govern-ment hospitals, places o worship,consumers paying commercial elec-
tricity taris, cinemas and theaters,lit irrigation8 cooperative societies,
industries guaranteed with 24/7 powersupply, IT parks, telecom towers, all
colleges and residential schools andall buildings with a built up space o20,000 square meters or above. To
ulll their SPOs, obligated entities
can produce their own solar power,purchase power rom a solar plant,purchase RECs on any o the national
power exchanges or purchase powerrom TANGEDCO at the prevalent solar
tari.
The solar projects set up under the
SPO mechanism will not receive nan-
cial assistance rom the governmentin the orm o FiTs, Generation Based
Incentives (GBI), Viability Gap Funding(VGF), or capital subsidies. However,
there is a possibility that these proj-ects will be allowed to get RECs as
SPO requirements are supposedly notconficting with the RPO mechanism.
I allowed, this can have a signicantupside to such projects. More clarity is
needed on the subject. Also, accelerat-ed depreciation (AD) benets will apply.
The market tari or solar powerin India has already allen to ` 79(0.11)10/kWh , which is approximately
the same as the tari paid by commer-cial consumers in the state. I, as we
expect, the cost o solar power alls bya urther 40% till 201511, power could
be generated at ` 4.2 ( 0.06)/kWh.This implies that the power tari paid
in the state, which is between ` 4.5 (0.07)/kWh and ` 9.5 ( 0.15)/kWh or
the obligated entities (who comprise
o primarily commercial and industrialtari customers), will reach parity withsolar taris by 2015. Thus, Tamil Nadu
is preempting that buying solar powerinstead o conventional power will be
a viable option or HT consumers by2015 and is not making any long-term
nancial commitments, as it wouldhave done under a FiT scheme such as
that o phase one o the NSM.
The opportunity
The Tamil Nadu government has esti-
mated that through the implementa-tion o the SPO mechanism 500 MW o
solar power will be installed or directuse o or third party sale to SPO obli-
gated entities. This provides an oppor-
---------------------7 Factories registered under the Factories Act (1984)8 Lit irrigation is a method by which water or irrigation is lited with the help o pumps or other such
means which use electricity9 Conversion rate used in this document is 1 =65 `10` 7/kWh was the lowest winning tari bid or a solar project during allocations by the state oOdisha or 25 MW to Alex Green Power in February 2012. While the tari was ambitious then, webelieve that due to a recent all in polysilicon prices and the continuing oversupply in the market isits easible now. CERC estimates the current cost per kWh is at INR 7.48.11 BTI estimate based on the alling CAPEX or a solar plant
Solar projects set upunder the SPO
mechanism will notreceive fnancial
assistance rom the
government in the ormo FiT, GBI, VGF orcapital subsidies.
Tamil Nadu is preempt-ing that buying solar
power instead oconventional power
will be a viable optionor HT consumers by
2015 and is not makingany long-term fnancial
commitments.
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tunity or project developers to enter
into private PPAs or the sale o solarpower to those obligated entities that
do not regard solar power as part otheir core business or that do not have
the nancial liquidity to set up a solar
power plant to ulll their SPO. For ex-ample, many commercial consumerswill not be equipped with the inra-
structure, space or technical knowl-edge to set up large solar power plants
themselves and on site. Thereore, theywill oten choose to buy power rom
private power producers by signing aPPA with them. Industrial consumers,
while having a lower power tari, aretypically larger single o-takers and
might have space locally available tobuild solar power plants. Obligated en-
tities can either have solar plants setup on site (under a captive model) or
o site (under an open access model).Project developers could supply power
to one customer or to many.
Another actor making solar a viableoption or the obligated entities is the
requent power outages and high die-sel prices or diesel-based gen-sets inthe state. Tamil Nadu has been acing
requent bouts o load shedding whichstretch up to 10 hours in the suburbs
and over 2 hours in the cities, suchas Chennai12. Diesel is already more
expensive than solar power, with a lev-elized cost o energy (LCOE) between `
8 ( 0.12)/kWh and ` 20 ( 0.31)/kWh13while solar has an LCOE o ` 7 ( 0.11)/
kWh to ` 9 ( 0.14)/kWh14. Thus, in astate with an energy decit o 18%15 in
its monthly energy requirement, buyingsolar power already makes nancial
sense or some commercial and indus-trial consumers.
The risk
In order to ensure that the SPO tar-
get is ully realized, the enorcemento the mechanism by the state has to
be stringent. For this the state has to
levy penalties, which are higher thanthe prevalent REC prices or entities,
who deault on their SPOs. The policydocument as it stands today does not
outline a penalty structure. For plants
that are located o site and supplysolar power through the grid, there arerisks related to charges (transmission
charges, transmission losses, wheel-ing charges, wheeling losses, cross-
subsidy charges) and related to thestability o the grid as such. As o now,
the policy just species that wheelingcharges will be as normal and tax con-
cessions as per the states industrialpolicy. Further inormation will likely
be provided in the Request or Selec-tion (RS) at a later point.
Outlook
We believe that under the currentpolicy structure around hal o the 500
MW o SPO installations will be con-structed. We reach this gure ater
discounting or those obligated entities(48%)16 whose current power tari has
not yet reached parity with solar tarisand who will deault on ullling their
SPO as long as there is no crediblepenalization. The realized capacity
addition would increase signicantly,i the state imposes a strict penalty on
the deaulters.
DISCOMS (THROUGHCOMPETITIVE BID-
DING) 1,000 MWThe Tamil Nadu Electricity Develop-
ment Authority (TEDA) as the nodalagency will be directly allocating 1,000
MW by 2015. The solar power producedrom these projects will be sold to the
state DISCOM, TANGEDCO, at a preer-ential FiT.
---------------------12 Outrage in Chennai over requent outages; The Hindu13 BRIDGE TO INDIA analysis14 BRIDGE TO INDIA analysis15 NLDC monthly report September 201216 A study on power scenario in Tamil Nadu; P. Jayabalan
Many commercial
consumers willnot have the
inrastructure, spaceor technical knowledge
to set up large solarpower plants them-
selves, and will otenchoose to buy power
rom private powerproducers.
In order to ensurethe SPO target is
ully realized, theenorcement o the
mechanism by the state
has to be stringent.
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the country with a net internal loss o` 80.9 billion ( 1.25 billion) in 2011,which has gone up to ` 500 billion (
7.7 billion) by March 2012 (estimated)20.
Due to TANGEDCOs poor nancial
condition and past record or delayedpayments, the strength o its PPA isbeing questioned by investors and
banks. There is currently no provisionor a payment security scheme except
or a Letter o Credit (LoC) to cover thepayment o taris to the 1000 MW o
solar projects that is to be allocatedthrough bidding. Thus, project devel-
opers might nd it dicult to obtainnancing or their projects in the state.
In countering critical questions rom
prospective bidders at the TEDA con-sultation meeting o November 23rd
2012, Mr. K Gnanadesikan oTANGEDCO said that you can tell
your bankers that there is absolutelyno problem in getting the payment.
So ar, however, the only guarantee opayment is a standard one year, revolv-
ing letter o credit, which wind parkoperators also hold but do not redeemin order not to jeopardize their longer
term payments.
An additional risk inherent in thepolicy as it currently stands is the
bidding process. By this, all bidderswill be asked to match the lowest bid
(although irradiation varies between5.36 and 5.67 kWh/m2/day across the
states districts). This provision, andthe per-district limitations on project
sizes, will make it dicult or biddersto estimate what could be a winning
bid and how the state would handleover-subscription.
We expect that there will be signi-
cantly more discussion and detailingo the process. BRIDGE TO INDIA can
help developers to participate in the
process by providing them with key
planning related insights that will helpthem to get an allocation. Also, we can
oer our project development servicesor a proessional and timely execution
o plants.
Outlook
We estimate that under current condi-tions, only a small amount o projects
will be realized.
At the moment, TANGEDCO would re-ceive a high (solar) tari rom those
obligated SPO entities that decide toact upon their SPO but do not buy solar
power under direct PPAs with projectdevelopers, develop own solar projects
or buy RECs. In theory, this could coverthe costs o a solar FiT that TANGEDCO
pays to project developers sellingpower to it directly.
However, there is no direct connection
between the FiT and the solar taripaid by the obligated entity. The extra
solar tari income would be absorbed
by the overall nancials o TANGEDCO,where it would make little dierence.Thus, payment uncertainties remain.
Some project developers might choose
to build plants (probably initially -nanced purely on equity) under a PPA
and, in case o deault, see the RECmechanism as a allback option. They
would be betting on a strengthening oeither the TANGEDCO PPA or the REC
mechanism in the uture to allow them
to renance the project ater commis-sioning.
Any credible payment guaranteescheme or a direct link between the
solar tari paid by an obligated entityand the solar power producer would
signicantly strengthen this projectoption.
The only guarantee o
payment is a standardone year, revolvingletter o credit, which
wind park operatorsalso hold but do not
redeem in order not tojeopardize their longer
term payments.
The per-districtlimitations on project
sizes will make itdifcult or bidders to
estimate what could bea winning bid and how
the state would handleover-subscription.
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The Tamil Nadu policy is targeting acapacity addition o 300 MW rom roo-
tops o government owned buildings
and 50 MW rom rootops o privatelyowned buildings. In order to encour-age installations in the rootop space
the policy allows net metering at 240V,415V and 11KV. This is signicant, as
the state is the pioneer in allowing netmetering in India on a MW scale.
Under the mechanism, two meters are
set up along with a rootop solar sys-tem: one which calculates the units o
conventional power that is consumedby the owner o the rootop system and
another which calculates the amounto solar power the rootop solar system
eeds back into the grid. The ownero the rootop system ultimately pays
or the net dierence o the powerconsumed, as calculated by the meter.
(This mechanism is also oten calledgross metering). For net metering to
unction eciently, the local grid has tobe responsive and stable, which is not
the case everywhere in the state.
In addition to allowing net metering theprivate rootops with solar systems in-
stalled beore March 31st 2014 are alsoeligible to receive a GBI. The GBI starts
o with ` 2 ( 0.03)/kWh or the rsttwo years rom the date o installation
(independent o the year o installa-tion), ` 1 ( 0.02)/kWh or the next two
years and ` 0.50 ( 0.01)/kWh or the
last two years. However, 50 MW servesas both a targeted capacity additionrom domestic rootops and also as a
cap or the GBI or this category.
The opportunity
The highest tari o residential cus-
tomers in Tamil Nadu is currently `5.75/kWh (above 500 kWh/month). A
residential customer with around 25
m2
o rootop space could set up a 2 kW
plant. This would cost approximately` 300,000 ( 4,700), including the
solar meter. Assuming that all power
would be ed into the grid, that powertaris escalate by 5% per annum (asthey have done on average or the last
years), and assuming that such a sys-tem would be ully unded by equity, we
do not arrive at a positive return. For a100 KW system (with 70% debt nance
at 12% interest), the project IRR wouldbe at only around 5%.
Installations on government owned
buildings can also use net meter-ing but are not eligible or a GBI. This
space is ideal or project developers tobuild rootop systems by signing a PPA
with the government, as the rootopspace available in these buildings is
oten large and the policy implemen-tation will likely be stringent. There
might be a specic tender coming outor government rootops (as has been
the case in Gujarat).
The risk
This is the rst attempt at large scalenet metering in India and hence a
pioneering eort. There are alwayscertain risks associated with being
a rst mover. In specic, TANGEDCOmight nd it dicult to monitor the
erratic supply o solar power rommultiple rootops while simultaneously
maintaining the stability o the local
grid, which is already acing dicultyin handling the supply rom variouswind arms.
However, i handled well and i spreadevenly throughout the grid, this new
tail-end generation might even have a(mild) stabilizing eect on the distribu-
tion grid. See the recently publishedreport by Prayas on Solar Rootop PV
in India or more details21.
---------------------21 Ashwin Gambhir, Shantanu Dixit, Vishal Toro, Vijaypal Singh (Prayas): Solar Rootop PV in India,November 2012
3. ROOFTOPSOLAR
SYSTEMS-
350 MW
Tamil Nadu is thepioneer in allowing net
metering in India on aMW scale.
Net metering, ihandled well and
spread evenly through-out the grid, mighteven have a (mild)
stabilizing eect on thedistribution grid.
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Outlook
We believe that the 350 MW will
be constructed in Tamil Nadu. Thegovernment can directly control the
construction o 300 MW on publicbuildings. We believe that despite thecurrently low IRR, the 50 MW o private
rootops will also be built by solarenthusiasts.
The size o the batch is also good to
allow TANGEDCO to experiment andgain experience with net metering. I
net metering works, we see this as apotential game changer in the Indian
solar market and believe that thecapacity additions in Tamil Nadu can
signicantly exceed the current target.
On the market side, the main driver orthis will be the rising cost o power
both o grid power as well as back-up
(diesel) power. The central govern-ment, suering rom a signicant bud-
get decit itsel, has set aside undsto bail out DISCOMS only under the
condition that they take the politically
unpopular step o increasing powerprices. Given the size o TANGEDCOsdecit, this could lead to a signicant
rise in taris in Tamil Nadu.
In addition, given the o-take securitythat net metering provides, solar will
increasingly start to replace dieselback-up power generation (even with-
out storage). I the REC mechanismworks and i it is adapted to become
more suitable (registration costs andprocesses, sales mechanism) to small
generators, this would add a sig-nicant incentive to the installation o
these rootop systems.
Given the o-takesecurity that net
metering provides,solar will increasinglystart to replace diesel
back-up powergeneration.
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The policy aims to add 1,150 MW o
solar through REC projects. Under thisroute, the solar power plant owners
enter into a PPA with either a DIS-COM at average pooled purchase cost
(APPC) or a private consumer at amutually greed tari and additionally
generate RECs to be traded on eitherthe Indian Energy Exchange (IEX)
or the Power Exchange o India Ltd.(PXIL). Such projects could be o any
size but would typically be o 10 MW orabove, eeding power into the grid.
The opportunity
The REC mechanism allows a proj-
ect developer to have a dual incomestream: the income rom the sale o
power produced and the income romselling REC certicates (1 REC = 1
MWh). Until 2017, the project ownerwill receiving at least the foor price o` 9,300 ( 143)/REC.
The Tamil Nadu Solar Policy sets ahigh target o 1,150 MW or REC proj-
ects (by comparison: the states owntotal RPO and SPO requirements by
2015 amount to 1.304 MW, but not allRPOs will be met through the purchase
o RECs). The state does not oer anyadditional benets or REC projects in
the orm o land acquisition benets,exemption on wheeling and transmis-
sion charges or tax rebates. Thus, theopportunity in the state or REC proj-
ects is the same as the opportunitiesin the country as a whole22.
The risk
So ar, only 18 MW o REC projectshave been registered nationally with
the National Load Dispatch Center(NLDC) or the State Load Dispatch
Centers (SLDC). The low number oREC projects can be attributed to the
lack o price visibility or RECs beyond
2017. This makes it dicult or projectdevelopers to raise debt rom banks
and other nancial institutions or RECprojects.
The risks involved with the REC mech-
anism in the state are the same as therisks involved in the mechanism all
over the country. The REC mechanismhas so ar experienced only limited
success in the Indian market, primar-ily because o the diculty in obtain-
ing nancing or projects. Also, most
states do not have a penalty structurein place or non-compliance o RPO. IRPOs were to be stringently enorced,
the demand or RECs would increase,encouraging more active trading o
RECs on the exchanges and more RECprojects.
Outlook
Considering the current conditions othe REC mechanism in India, unless
there are additional benets or projectdevelopers (such as e.g. provision o
a allback revenue option), we do notexpect that the states target or REC
projects will be met. However, as peran ocial at TEDA, the REC target o
the policy is still being discussed andmight undergo a change.
I RPOs were to be enorced stringently
and the CERC were to stabilize REC
prices over a longer period o time,then REC projects would become moreattractive to pursue in the whole o
India, including in Tamil Nadu.
4. REC OFFTAKE -
1,150 MW
---------------------22 Please reer to our report BRIDGE TO INDIA; INDIA SOLAR DECISION BRIEF: The REC mechanism,Sept 2012 or more inormation
The state does not oerany additional beneftsor REC projects in the
orm o land acquisitionbenefts, exemption
on wheeling and
transmission chargesor tax rebates.
The risks involved withthe REC mechanism inthe state are the sameas the risks involved in
the mechanism all overthe country.
This policy brie has been published
on December 7th 2012, and will be
updated as regulations change.
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Period o operation 2012-2015
Target 3,000 MW
Allocation Timeline 2013 2014 2015 Total
Utility Scale (MW) 750 550 200 1,500
Rootop (MW) 100 125 125 350
Renewable EnergyCerticate (REC) (MW)
150 325 675 1,150
Total (MW) 1,000 1,000 1,000 3,000
O takers Tamil Nadu Generation and Distribution Company Limited (TANGEDCO)
Obligated entities under the Renewable Purchase obligation (RPO)
Obligated entities under the Solar Purchase obligation (SPO)
Open Access (OA) consumersObligated entity High Transmission (HT) consumers as dened by the Solar Purchase
Obligation (SPO)
3% till December 31st 2013
6% rom January 1st 2014
Financialincentives
Feed-in-tari (FiT) or projects allocated through competitive bidding
Generation Based Incentive (GBI) or rootop installations
or domestic consumers installed beore March 31st 2014
rom the date o installation
Till the 2nd year
` 2 ( 0.03)/unit
Till the 4th year
` 1 ( 0.02)/unit
Till the 6th year
` 0.50 ( 0.01)/unit
For SPO obligated entities No nancial incentives. Tax and duty rebates as per the states Industrial Policy 2007
Nodal agency TEDA
State DISCOM TANGEDCO
Links Tamil Nadu Solar Energy Policy - 2012 http://www.teda.in/pd/tamilnadu_solar_energy_policy_2012.pd
Tamil Nadu Industrial Policy 2007 http://www.tidco.com/images/industrialpolicy_e_2007.pd
TEDA http://www.teda.in/
TANGEDCO www.tangedco.gov.in
Minutes o the TEDA meeting, November 23rd 2012 http://www.teda.in/pd/pd1.pd
Evacuation capacity per district http://www.teda.in/pd/pd3.pd
Irradiation data per district http://www.teda.in/pd/pd2.pd
ContactThiru Sudeep Jain, IAS,Chairman & Managing Director,Tamil Nadu Energy Development Agency,E.V.K.Sampath Maaligai, 5th Floor, College Road, Chennai 600 006.044-28222973 | [email protected]
Single windowclearance
Tamil Nadu Energy Development Agency (TEDA)
Domestic ContentRequirement
None
PV/CSP break up None given
Exemption on wheeling/open access/transmission charges
None
Electricity duty Up to 100% exemption or 5 years
Net metering Allowed For (voltage) 240 V 415 V 11 kV
Size
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HOWBRIDGE TO INDIA
CAN SUPPORTYOU
BRIDGE TO INDIA, 2012Source: BRIDGE TO INDIA
BRIDGE TO INDIA provides servicesalong the project development
value chain. Our approach to projectdevelopment is to make projects
protable and bankable.
DEVELOPMENTCONSTRUCTION &
OPERATIONIDENTIFICATION
Site identifcation& assessment
Project registration Site supervision
Quality management
Stakeholdermanagement
Cost controllingand reporting
Management o permits andapprovals
Bid strategypreparation
Land securitization
Power PurchaseAgreement (PPA) acilitation
Renewable EnergyCertifcates (REC) consulting
Technology evaluation& selection
EPC tendering andselection
Project structuringand documentation
Techno-commercialeasibility studies
Detailed Project Report (DPR)preparation
Our unique combination o adaptingan international quality and local-
knowledge makes us the rightpartners or executing your solar
projects in Tamil Nadu.
Mr. Akhilesh Magal
Head o Project [email protected]
+91 813 033 0011
+ 91 (11) 46 08 15 79
I you would like to discuss our project development services, please contact:
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5. ANNEXUREGLOSSARY OF TERMS
APPC Average Pooled Purchase Cost
AD Accelerated Depreciation
CEA Central Electricty Authority
CERC Central Electricity Regulatory Commission
CSP Concentrated Solar Power
CUF Capacity Utilization Factor
DISCOM Distribution Company
FiT Feed In Tari
GBI Generation Based Incentive
HT High Tension
IEX Indian Energy Exchange
IWTMA Indian Wind Turbine Manuacturing Association
LCOE Levelized Cost o Energy
LoC Letter o Credit
NSM Jawaharlal Nehru National Solar Mission
NLDC National Load Dispatch Center
PPA Power Purchase Agreement
PV Photovoltaic
PXIL Power Exchange o India Ltd.
REC Renewable Energy Certicate
RS Request or Selection
RPO Renewable Purchase Obligation
OA Open Access
SEZ Special Economic Zone
SLDC State Load Dispatch Center
SPO Solar Purchase Obligation
TANGEDCO Tamil Nadu Generation and Distribution Company LimitedTEDA Tamil Nadu Energy Development Authority
VGF Viability Gap Funding
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Ms. Ratnottama SenguptaConsultant
Ratnottama analyzes the ast
developing policy and regulatoryramework or solar power in
India. She also looks at how themarket grows and expands into new
segments. She holds a mastersdegree in Economics rom Bangalore,
India where her areas o studyincluded macro and developmental
economics within the Indian economy.Her prior work experience is as a
risk and nancial analyst at GoldmanSachs Pvt. Ltd.
Dr. Tobias F. EngelmeierManaging Director
Tobias ounded BRIDGE TO INDIA in
2008. He is deeply concerned withthe energy use o Indias rapidly
growing economy and believes innding business-driven and India-
specic business models to copewith this. Over the past years, Tobias
has advised many investors andbusinesses on the Indian energy
market. Prior to setting up BRIDGETO INDIA, he has worked or ve years
in the energy sector or a leadingstrategy consultancy and written a
book on Indian political culture. HisPhD is in political science rom the
South Asia Institute in Heidelberg,
Germany.
ABOUT THEAUTHORS
Expertise: Business model
development, frst mover
strategies, long term growth,
stakeholder management
Expertise: Policies, market
regulations, market demand
projections
As part o Market Intelligence at
BRIDGE TO INDIA, we provide ourclients with the most comprehensive,
analytical and up-to-date research
and analyses on the Indian market
compiled through the joint expertise
o our team o experts. Through
our oering o various products, we
oer our clients a range o business
intelligence solutions that enable them
to take strategic decisions that directly
impact their success.
We are knowledge driven. We seek
to understand the larger dynamics o
the Indian market, especially in our
core elds: renewable energy policies,
projects, nancing and manuacturing.
Further, we are certain that a deep
understanding o the underlying social,
political and economic trends is crucial
or business success in India.
Our team combines various expertise,
experiences and skill sets rom
diverse academic backgrounds to
provide clients the best analysis in the
industry.
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18/18
BRIDGE TO INDIA is a consultingcompany with an entrepreneurialapproach based in New Delhi,Munich and Hamburg. Foundedin 2008, the company ocuses onrenewable energy technologies inthe Indian market. BRIDGE TO INDIAoers market intelligence, strategicconsulting and project developmentservices to Indian and internationalinvestors, companies and institutions.Through customized solutionsor its clients, BRIDGE TO INDIAcontributes to a sustainable world byimplementing the latest technologicaland systemic innovations where theirimpact is the highest.
Contact
www.bridgetoindia.com
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www.bridgetoindia.com/blog