solar rooftops in india - idam infrastructure …...• cerc re tariff regulation • jnnsm...

Solar Rooftops in India

Global Summit on Smart, Secure and Sustainable Cities

18 July 2016, Royal Berkshire - UK

RE Development in India

18 July 2016Idam Infrastructure Advisory Pvt. Ltd. 2

RE Historic Trends and Growth Enablers

24088

37356

25000

30000

35000

40000

Electricity Act 2003

NEP, 2005SERC to

Tariff Policy,2006•DISCOM Shall Fix RPO

•DISCOM to Procure RE Power Through Competitive Bidding

• CERC RE Tariff Regulation

• JNNSM Guidelines

REC Regulation

JNNSM Phase II Guidelines

NAPCC Guidelines

Idam Infrastructure Advisory Pvt. Ltd. 3

2 10 37 4811689

2647

4575

24088

0

5000

10000

15000

20000

FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15

Solar Wind Bio- Mass WtE SHP Total

Power Restructuring and National Guidelines on Tariff, Inter-Connection and Third Party Sales

• SERC to Determine Preferential Tariff

• Promote Private Sector Participation in RE

18 July 2016

Renewable Energy: Installed Capacity and Generation

26.76.7

4.8

4.2

0.15

RE Installed Capacity

(as on May 2016)

Wind

Solar

Biomass

SHP5

10

15

20

25

30

35

40

45

RE Capacity in GWs

CAGR 17.24%

WTE0

5

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16

• Cumulative capacity of 42, 752 MW added as on May 2016

• RE capacity comprises 14% of total generation capacity of India

• Wind capacity has the lion’s share among RE technologies

(around 65%)

• RE generation contributes to ~7% of total generation of the

country

• Policy of Accelerated Depreciation, concessional import duty

• FIT for RE projects (for both inter and intra state projects)

• GBI for encouraging generation and IPPs

• RPO and REC Mechanism

• JNNSM for solar capacity addition

• NAPCC with national level targets for RE procurement

Key StatisticsKey Drivers

4Idam Infrastructure Advisory Pvt. Ltd. 18 July 2016

RE Capacity Addition Targets

NAPCC RE Invest 2015

• NAPCC target of 5% for RE procurement in 2010

• Target to increase by 1% each year to reach 15% by 2020

• Targets 175 GW by 2022

• Includes 60 GW from wind, 100 GW from solar

and 15 GW from other RE

• 90% of the targeted RE capacity addition planned from

wind and solar source which are inherently variable in

nature

CEA Perspective Plan for FY 2032

• CEA has projected RE capacity additions till 2032

• RE penetration level to increase by 8%, 18% up to 20% by

2032 COP -21, Paris

• Reducing carbon emission intensity levels by 35% by>20%

5

2015 2022 2032

Wind Solar Biomass SHP

38

GW

175

GW

440

GW

8%

18%

• Reducing carbon emission intensity levels by 35% by

2030 compared to 2005 levels

• INDCs Commitment - 40% of the total installed power

generation capacity would be from non-fossil fuel

sources by 2030

NTP Amendments

• 8% of electricity consumption shall be from solar

energy by Mar’22

• RGO (Renewable Generation Obligation): New coal

based plants to establish RE capacity

• Promotion of micro grids and ancillary services for RE

• Waiver of inter-state charges for wind and solar

Idam Infrastructure Advisory Pvt. Ltd. 18 July 2016

Policy and Regulatory Provisions for RE


The Electricity Act Mandates Regulators to Promote Renewable Energy

� Area of jurisdiction for RE limited to within state boundary

� SERCs to be responsible for all matters related to renewable energy

Preferential Tariff/FIT Determination


Role of Regulators

Contractual Mechanism for Promotion of RE Technologies

Specifying RPO

Ensuring Connectivity to Grid

18 July 2016

Renewable Energy Policy Initiatives

National Solar Mission

Government specified targets for capacity addition in both grid/off-grid solar :• Biggest demand pull program globally• High quantum availability reduces tariff• Three rounds of bidding for solar projects have

happened since its inception• Payment security increases investor confidence

Scaling Up Solar Energy

Government to scale up solar through three key measures:• Large scale deployment of rooftop projects• Increased pace of grid connected projects• Thrust on large scale projects (100 MW min.)• Government ambitions for 100 GW in six to eight years

Solar Park Scheme (Draft)

National Wind Mission and Offshore Policy (Draft)

Defined targets with aggressive frameworks for on/off shore wind, small wind, hybrid and other technologies:


Government support for large scale solar parks:• Offer pre-existing infrastructure facilities• Competitive advantage of plugging in projects• SECI is the nodal agency for central support

shore wind, small wind, hybrid and other technologies:• Thrust on increased local manufacturing• Resource allocation for faster deployment• Repowering of old wind machines• Single window clearance• Sea bed lease arrangement• Grid connectivity and evacuation of powerBiomass and Cogeneration

Specified targets to be achieved within a time frame:• Support for fuel security• Robust mechanism to define fuel prices• Command area specifying a minimum radius for

every power plant• Industrial cogeneration has high potential and is

relatively untapped on an organized scale

Strengthening of Transmission Infrastructure

Development of network specifically for wheeling of RE power:• Integration of existing grid with green corridor• Strengthening of infrastructure will assist developers

in accurate forecasting of generation

18 July 2016

Evolution of Solar Sector in India


Solar Growth of Installed Capacity From 2010-2016

Total Installed Solar Generation Capacity as of March 2016 Is 6.8 GW

6,763

6,000

7,000

8,000

Inst

alle

d c

apac

ity

in

MW

Installed Solar Capacity – INDIA

� Rapid Growth of Solar Energy in India After the Announcement of National Solar Mission in 2010

10 37 481

1,689

2,647

4,575

-

1,000

2,000

3,000

4,000

5,000

FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16

Inst

alle

d c

apac

ity

in

MW

10Idam Infrastructure Advisory Pvt. Ltd. 18 July 2016

Solar Scale Up Plan: 100 GW

Category 1: Rooftop Projects(Target - 40 GW)

Category 2: Large Scale Projects(Target - 60 GW)

6 1222

3242 51.5 60

1 5

10

16

23

31

40

0

20

40

60

80

100

120

2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22

Cumulative Solar Targets (GW) by 2022

Rooftop Large Scale Solar


Solar Potential in India

� Solar Power Potential: 750 GW:

□ (As per NISE: 3% of wasteland in the state is considered)

� Estimated Potential in States in GW:

□ Rajasthan – 142

□ J&K – 110

□ Madhya Pradesh – 60

□ Maharashtra – 60

□ Gujarat – 36

□ Others – 340

� India’s Present Installed Capacity:

□ 7,564 MW (~1% of the estimated potential)

� Solar Radiation Is High:

□ 4.5-5.5 kWh/m2 in most of the regions (>300 days of sunshine)

� High Radiation Areas Are Having Large Tract of

Wasteland

� Central Govt. Has Increased Solar Target Fivefold to 100

GW by 2022


Development of Rooftop Sector


Enhanced Focus on the Development of Solar Rooftop

� Steep reduction in the cost of solar power development has resulted in new opportunities and business models to emerge including the development of rooftop PV and small scale solar projects.

� By recognising significant benefits of solar power, India is now equally focusing on developing solar rooftop projects.

� Solar rooftop has several benefits to different stakeholders as under:

□ For Distribution Utilities:□ For Distribution Utilities:� Lowering distribution losses and improving tail-end voltage.� Availability of power in day time peak.� Ease in meeting RPO targets.� Saving on investment in distribution infrastructure (for lower penetration).

□ For Consumers: � Opportunity for consumer participation and investment though smaller systems.� Higher employment generation and entrepreneurship options.� Optimal utilisation of available roof space/vacant areas.� Additional benefit in terms of tax exemption (if applicable).


Recent Initiatives and Promotional Measures for the Development of SRTPV

□ India’s solar rooftop capacity is increasing rapidly with large push from central and various state governments.

□ GOI has scaled up the approved budget from Rs. 600 Crore to Rs. 5,000 Crore to support the implementation of grid connected rooftop systems for five years up-to 2019-20.

□ To accelerate the growth in the rooftop sector, capital subsidy support from MNRE has been restored to 30%, which was reduced to 15% last year.

□ So far 26 states have already notified the regulations to provide net metering/gross metering facilities to support solar rooftop installations.

□ As on 31 December 2015, cumulative installed capacity of solar rooftops in India is 136 MW; however,additional capacity of 836 MW is in pipeline and expected to be commissioned in 2016.

□ The leading states in the development of solar rooftop (as on December 2015) is depicted in graph below.

0.0

5.0

10.0

15.0

20.0

25.0 21.216.3 16.0

8.0 5.9 5.8 5.3 4.5 3.56.7

(Figures in MW)


Viability for Different Consumer Segments

Source: Bridge to India

• Cost of Solar Power• Cost of Solar Power with AD

• Viable

• Viable with AD

• Not Viable


Different Business Models for Rooftops


Business Models and Key Parameters

Key Incentives

Generation Based Incentives

Feed-in-Tariff

Capital Subsidy

REC/CDM Benefit

Metering Scheme

Gross Metering

Interconnection Requirements

Cumulative Capacity at DT

Connecting Voltage Levels

Individual Project Capacity

Standards and CertificationNet Metering

Exemption of OA Charges/Loss

Capital Subsidy

Banking/Energy Credits

Self-Owned - Sale to Utilities

Third Party OwnedSelf-Owned - Captive

ConsumptionSelf-Owned - Captive

Consumption

Ownership Models

Commercial Arrangements

Wheeling and Banking

Open Access

Cross Subsidy Charges

Lease Rentals

Net Metering

Tax Credits

Fiscal Benefits

Utility Owned Business Models

Utility Owned Business Models


Gross Metering Versus Net Metering

� Gross metering benefits the consumer by getting FIT on solar generation.

� It is essentially beneficial for consumers which are getting energy at subsidised rates and getting attractive FIT for solar generation.

� Gross metering is beneficial for utilities in

� Net metering benefits the consumer in terms of reduced electricity bill.

� It is beneficial for consumers having high retail tariff than LCOG from kW scale solar projects.

� Net metering is beneficial for utilities in terms of reducing the overall power purchase cost

Gross Metering Net Metering

� Gross metering is beneficial for utilities in terms of reducing distribution losses and cost of supply (COS).

� Gross metering is simpler in terms of commercial settlement of solar power.

� Simple uni-directional meter is used under gross metering.

of reducing the overall power purchase cost and distribution losses.

� Commercial settlement of solar power is little complex in net metering than gross metering i.e., monthly and annual settlement.

� Bi-directional net meter is used in place of consumer meter under net metering.


Key Considerations for the Development of Large City Wide Solar Rooftop Program

� Establishing a City Wide Program Offers a Number of Advantages:□ Economies of scale□ Participation by large RE/solar players□ Reduced transaction costs

� Design of Large City Level Programs:□ Third party developers install solar panels on government/residential/commercial building

rooftops (on rental/lease basis) and sell power to a) local grid for feed-in-tariff or b) rooftop owners

� Key Design Parameters:□ Design of the business model and metering scheme – Off-taker of the power (utility/rooftop

owners)□ Role of rooftop owners – Lease rooftop or buy power from the rooftops□ Targeted consumer categories – Institutional/Industrial/Commercial/Residential□ Incentive structures – Incentive structures for third party developers (GBI/Subsidy)□ Role of the utility – Provides interconnection or participates in the business model□ Number of clusters – One cluster or multiple ones


Solar City Program of the MNRE 1/2

� Need:□ To reduce green house gas (GHG) emissions□ To address the rising energy demand due to urbanization and economic development

� The Solar Cities Programme:□ To support/encourage urban local bodies to make ‘renewable energy cities’ or ‘solar cities’□ Aims at 10% reduction in projected demand of conventional energy at the end of five years□ By means of RE and energy efficiency measures□ A total of 60 cities/towns are proposed to be supported – at least one city in each state to a

maximum of five


maximum of five

� Criteria for the Selection of Cities:□ Population between 0.50 lakh to 50 lakh□ Potential and commitment for adoption of RE and energy conservation initiatives already taken by

city council/administration/private developers/industry/general public□ Regulatory measures taken on the deployment of RE technologies and their willingness to provide

resources and sustenance of activities

18 July 2016

Solar City Program of the MNRE 2/2

Create “Solar City Cell”

Constitute “City Stakeholder Committee”

Promote national rating system for green

Actions to Be Taken by Urban Local Governments

Preparation of a master plan for increasing RE and energy efficiency measures

Setting-up institutional arrangements for the implementation of master plan

Awareness generation and capacity

Assistance to Urban Local Governments

Enable and empower urban local governments to address energy challenges

Provide framework and support to prepare a master plan*

Create awareness among all sections of

Objectives


Promote national rating system for green buildings

Amend building bye-laws, provide incentives to make use of solar water heating systems

Comply with MSW Rules 2000 notified by the Ministry of Environment

Organize publicity, training programmes, business meets for various stakeholders

Generate necessary funds from State Govt. and other funding organizations

Awareness generation and capacity building activities

Implementation of projects as per financial incentives under various programs of MNRE

Up to Rs. 50 Lakhs per city/town is provided depending upon the population and initiatives

Create awareness among all sections of civil society

Involve various stakeholders in the planning process

Oversee the implementation of sustainable energy options through PPPs

* A Master Plan Consists of:• Assessment of current energy situation • Future demand projections• Action plans

18 July 2016

Regulatory Challenges for Rooftops


Regulatory Challenges for kW Scale Solar Systems

� Framework for Interconnection:□ Absence of connectivity standards, interconnection procedures, roles and responsibility of utilities

and consumers, interconnection agreement etc.

� Lack of Clarity on Business Models:□ Some SERCs allow third party finance under net metering whereas some are silent such as

CHERC, MERC.

� Lack of Clarity on Open Access Charges:□ For transactions under third party finance, some SERCs have clearly exempted OA charges for third □ For transactions under third party finance, some SERCs have clearly exempted OA charges for third

party finance under rooftops whereas some are silent .

� Recognition Under Existing Framework:□ Solar rooftops are fairly new in India; hence, does not have much recognition under the existing

regulatory framework such as RPO/REC, OA, supply code etc.

� Environmental Credits:□ No clarity on the ownership of environmental credits for REC/CDM as in most of the net metering

regulations issued by SERCs.



� Settlement of Excess Solar Power:□ No uniformity among SERCs on the settlement of excess solar power. Some SERC’s are treating it as

energy credits whereas some are providing solar FIT for excess generation like KERC, RERC.

� Capacity Limit of DT:□ In the absence of any specific study on how much available DT capacity should be allocated to solar

rooftops, SERCs have followed different benchmarks for this such as DERC (20%), HERC (15%), RERC (30%) etc.

� Gross Metering:� Gross Metering:□ Most of the SERCs have issued regulations for solar rooftops based on net metering. There is hardly

any regulations available for other metering mechanism such as gross metering which includes:� What would be the FIT for gross metering?� Eligible consumers for gross metering.� Project capacity for solar systems based on gross metering.� Applicability of OA and other charges.� Applicability of RPO/REC on solar power.� Lease rent for rooftop owner.� PPA/Interconnection agreement etc.



� Connectivity Issues:□ Most of the SERCs have followed state distribution/supply code for connecting solar rooftops with

grid, which in some cases does not allow HT/EHT consumers to connect rooftop at LT/HT level, for example, KERC.

� Interconnection Approval/Timelines:□ Implementation timeline for utilities provided under the existing net metering framework is in the

range of 120-180 days, which is too long. There should be a provision of fast track interconnection approval for interested consumers.

� Penalty for Consumers and Distribution Utilities:□ Mostly all SERC’s under their net metering regulations have missed to panelize net metered

consumers and utilities in case of not following the regulations.

� Exit Clause for Utilities:□ Most of the SERC’s have allowed utilities to terminate the interconnection agreement with 30 days

prior notice which is a high commercial risk for investors.


Conclusion

� Despite initial hiccups, solar rooftop sector is picking up pace.

� 40 GW rooftop target represents huge opportunity for investment (minimum $40 bn).

� 100% foreign direct investment in renewable energy sector is permitted.

� Understanding of fundamental business models, regulations, and technology is becoming critical.


Thank You

Mumbai (Regd. Office):

801, Crystal Plaza,158, CST Road,Kalina, Santacruz (E),Mumbai – 400 098Tel: +(91) 22 4057 0200

Delhi:

513-516, Narain Manzil,

23, Barakhamba Road,New Delhi - 110001Tel: +(91) 11 2616 5220

Contact:

Balawant Joshi +(91) 98214 21630Ajit Pandit +(91) 98211 08222

Email: [email protected]

solar rooftops in india - idam infrastructure …...• cerc re tariff regulation • jnnsm...

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