wind power policy framework comparison of states

By: Mohit Kathel

www.indianpowerindustry.com

Comparison of Wind Power Policy Framework Of States

Comparison of Wind Power Policy Framework of States

Mohit Kathel www.indianpowerindustry.com 1

COMPARISON OF WIND POWER POLICY FRAMEWORK OF STATES

Wind Power Policy (A brief summary) Policy parameter

Gujarat Andhra Pradesh Madhya Pradesh Rajasthan Karnataka Chhattisgarh

Nodal Agency Gujarat Energy Development Agency (GEDA)

New and Renewable Energy Development Corporation of Andhra Pradesh (NEDCAP)

Madhya Pradesh New and Renewable Energy Department (MPNRED)

Rajasthan Renewable Energy Corporation (RREC)

Karnataka Renewable Energy Development Litmited (KREDL)

Chhattisgarh Renewable Energy Development Agency (CREDA)

Effective period

31.03.2016 2013 Period of validity not mentioned.

Until superseded or modified.

2014 Not mentioned.

Eligibility

Equipment approved either by MNRE or by International Test Houses. 2nd hand WEGs not permitted.

Brand new plants in accordance with criteria mentioned by C-WET with unit rating not less than 225kW.

WTGs selected as per latest guidelines specified by MNRE.

Detailed eligibility guidelines mentioned according to purpose of sanctioning of WPPs.

Developers holding valid capacity allotment orders from Govt. for setting plants in KREDL identified sites.

Selection on the basis of open tender for eligible sites identified by CREDA.

Timeline

1-100MW – 1.5 yrs 101-200MW – 2 yrs 201-400MW – 2.5 yrs 401-600MW – 3.5 years. (time from the date of transmission capacity allotment)

Not mentioned

18 months for WPDA and other approvals 28 months for 50% capacity commissioning 36 months for complete project capacity commissioning.

1-25MW – 8 months 25-50MW – 14 months 50-75MW – 18 months 75-100MW – 22 months >100MW – 26 months.

Not mentioned Not mentioned



Sale of Power

Captive use and sale of electricity in accordance with EA 2003.

Sale to willing DISCOMS as IPP, 3rd party sale, sale of surplus energy by CGP, sale under REC mechanism. All the mode for selling the generated power are open

Direct sale to DISCOMs of state, sale to DISCOM under REC mechanism, captive use and sale to 3rd party within the state at mutually agreed rates.

Power from WPP setup developed by KREDL to be sold to geographical ESCOMS on long term agreement basis. Project on private land may adopt captive use and/or 3rd party sale.

State government or its nominated agency has 1st right to purchase energy at the rate decided by CSERC. In the case of non-purchase of the power by the State Government or its nominated agency, developer will be at liberty to sale the power to a 3rd party.

Performance guarantee

5 Lakh/MW; to be encashed by GETCO in case of delayed commissioning.

2 lakh/MW for revenue/forest areas. 1 lakh/MW in private lands.

1 Lakh/MW within 60 days of LOA issue + 0.5% of total project cost within 30 days of financial closure

Bank guarantee applicable.

Not mentioned Not mentioned.

Land

Allotment of revenue waste land/GEDA land upon approval of coordination committee.

Allotment of Govt. land at market value to private developer. Land allotment priority to captive use/3rd party sale projects.

Permission to use Govt. land given on actual use basis. Private land to be purchased by developer.

Maximum allotted land can be 5Ha/MW. Govt. land for the project at concessional rate of 10% (Agri. Land.).

10% of barren Govt. land for industrial use put aside for RE projects. Not more than 3 sites to be allotted to a developer at a time.

Govt. land given to the developer for 30 years or period of project which- ever is earlier.Private land issued as follows: Acquisition of land carried out as per the ideal rehabilitation policy under land acquisition act of the State Govt. Or developer shall pay an annual rent of Rs .5000/- per acre to the landowner. This



rent increased @ 15% every three years for 30 years.

Other features

Option to upgrade project technology of previously installed project available. 50% stamp duty exemption available on purchase of private land for the project

Performance Measures

Capacity Utilization Factor and Approved Tariff by SERC’s

For wind energy farms, a CUF of 20-35% is counted within average ranges. Greater CUF implies a more productive wind zone, which will lead to

comparatively greater energy production for the same factors elsewhere, thus feeding in more power to the grid and claiming more returns. Thus the tariff

goes down, as a regulatory measure.

Keeping all other factors constant, if the same type of wind turbine is installed in regions with 30% CUF and 20% CUF, the revenue earned on energy

generated in 30% CUF region will be more because the generation will be more. Thus, tariffs discovered in areas with higher CUF were lower as compared to

the tariffs in areas of lower CUF.

Tamil Nadu has one of the highest CUFs of the country, ranging between 30 to 32%. TNERC has considered a CUF of 27.15% (highest among the five states

considered), contributing thus to a tariff of 3.59 Rs/unit, which is lowest among the five states considered.



Similarly, the tariff within the state of Maharashtra differs zone-wise, with higher tariffs working out for zones 1 and 2, and lower tariffs working out for

higher CUF zones 3 and 4.

Tariff was highest in the state of Madhya Pradesh (5.92 Rs./unit), owing to the least productive wind zone with a CUF of 20%.

Name of the State

Date of Tariff Order

Applicable Tariff

Andhra Pradesh 15.11.2012 Rs. 4.70 per kWh Levelised Tariff For 25 Years

Gujarat 07.01.2013 Rs. 4.15 per kWh Levelised Tariff Without any Escalation For 25 Years

Karnataka 10.10.2013 Rs.4.20 per kWh fixed for 1st 10 years without any escalation from date of signing of PPA on or after 10.10.2013

Kerala 01.01.2013 Rs. 4.77 per kWh Levelised Tariff for 13 Years with effect from 01.01.2013.

Madhya Pradesh 26.03.2013 Rs. 5.92 per kWh fixed for 25 years without any escalation

Maharashtra 07.07.2014 The levelised tarrif for Financial Year 2014-15 is given below

Wind Zone Tariff if Depreciation Benefit Not availed (Rs./kWh) Tariff if Depreciation Benefit availed (Rs./kWh)

1 5.7 5.33

2 5.01 4.69

3 4.18 3.91

4 3.92 3.67

Rajasthan 16.07.2014 Tariff for the projects commissioned during financial year 2014-15 is as follows. The tariff mentioned below shall be fixed for 25 years. a) Jaisermer, Barmar & Jodhpur District : Rs. 5.64/kWh (If higher depreciation benefit is not availed) and Rs. 5.31 kWh (If higher depreciation benefit is availed) b) Other District: Rs. 5.93/kWh (If higher depreciation benefit is not availed) and Rs. 5.57/kWh (If higher depreciation benefit is availed)



Tamil Nadu 31.07.2012 Tariff Mentioned Below will be fixed for 20 years. i) Rs. 3.51/kWh for windmills commissioned after 01.08.2012 UNTIL 31.07.2014 ii) Rs.3.39/kWh for wind mill commissioned between 19.09.08 to 31.07.2012 iii) Rs.2.90/kWh for wind mill commissioned between 15.05.06 to 18.09.08 iv) Rs.2.75/kWh for wind mill commissioned prior 15.05.06

West Bengal 10.08.2010 Price cap of Rs. 4.87 per kWh fixed for 10 years.

Components to be Consider for determination of Levelised Tariff of Wind power projects Standards for Determination of Levelised Tariff of Wind Power Projects in States

Madhya Pradesh Maharashtra Rajasthan Gujarat Tamil Nadu CERC

Tariff Approved by SERC 5.92 Rs/Unit Wind Zone Without AD With AD Without AD With AD 4.23 3.59 -

1 5.6 5.25 5.93 5.57

2 4.93 4.62

3 4.11 3.85

4 3.85 3.61

Capital Cost (INR/MW) 5.96 5.75 5.65 6.06 6.04 5.97

CUF 20% Wind Zone % 20-21 % 24 27.15 20%

1 22

2 25

3 30

4 32

Depreciations 7% per annum for first 10 years and balance 20%

7% for the first 10 years and 1.33% from 11th year onwards

5.83% for the first 12 years and from 13th year onwards, the remaining depreciable value has been spread over the balance useful life

6% for the first 10 years and 2% from 11 to 25 years

3.60% per annum 5.83 % per annum for initial period of 12 years and 1.54% from 13th year onwards.

Interest on Debt 12.75% 12.78% 12.71% 13% 12.70% 13%



Interest on working capital 13.25% 13.28% 12.21% 12% 13.20% 13.20%

O&M Expenses 1 % of the capital cost of the project as O&M expenses in the first year with an escalation of 5.72% for each year thereafter.

Rs.8.58 lakhs/MW for the 1st year of operation with escalation of 5.72% p.a.

Rs.7.87 lakhs/MW for the 1st year of operation with escalation of 5.85% p.a

Rs.8.00 lakhs/MW for the 1st year of operation with escalation of 5.72% p.a.

1.1% on 85% of Capital investment and 0.22% on 15% of the Capital investment with an escalation of 5% from second year onwards in this order as adopted in the Wind Order issued in 2009

Rs.10.05 lakhs/MW (1.66% of capital cost) for the 1st year of operation with escalation of 5.72% p.a.

Return on Equity 20% Pre-Tax 19% per annum for the first 10 years and 24% per annum from 11th years onwards

16% 14% and MAT and corporate tax

20% Pre Tax 20% per annum for the first 10 years and 24% per annum from 11th years onwards

Benefits & incentives to wind energy projects in India There are various fiscal benefits & incentives which the Wind Energy Sector enjoys:

1. Direct Taxes:

Wind power projects shall have normal depreciation of 15%. In addition there is a provision of availing 20 % depreciation in the first year.

Exemption on Income Tax on earnings from the Project u/sec 80IA for 10 years.

2. Indirect Taxes:

Exemption of Excise Duty on Wind Energy Generator (WEG).



Concessional Custom Duty on specified WEG components

3. Apart from the above tax benefits the Government & Ministry of New & Renewable Energy (MNRE) has also introduced the benefits of Generation

Based Incentive (GBI). Some of the important features of the GBI Scheme are :

4. Generation Based Incentive (GBI) can be claimed irrespective of the rate of depreciation opted by the Wind Power Producers (i.e. 15% + 20%

(additional) on W.D.V. basis or 7.69% on S.L.M. basis) as provided under Income Tax Act 1961. Link

5. A GBI will be provided to wind electricity producers @ Re. 0.50 per unit of electricity fed into the grid for a period not less than 4 years and a

maximum period of 10 years with a cap of Rs. 100 Lakhs per MW.

6. The total disbursement in a year will not exceed one fourth of the maximum limit of the incentive i.e. Rs. 25.00 Lakhs per MW during first four years.

The GBI scheme will be applicable for entire 12th plan period having a target of 15,000 MW

7. GBI would be available for wind turbines commissioned on or after 01.04.2012

8. All wind power producers wishing to avail Generation Based Incentive (GBI) are required to registered with IREDA. The incentive is over and above the

tariff that may be approved by the State Electricity Regulatory Commissions (SERC’s) in various states.

9. GBI would not be available to any wind power project selling power to third party, (viz. merchant power plants)



References 1. http://urvishdave.wordpress.com/

2. http://www.windpowerindia.com/

3. Tariff orders of States

4. http://www.cercind.gov.in/

5. RE Tariff Regulations

http://urvishdave.wordpress.com/

http://www.windpowerindia.com/

http://www.cercind.gov.in/



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wind power policy framework comparison of states

Education

sale of power captive

sale of surplus energy

sale of electricity

generated power

open direct sale

land allotment priority

nominated agency

discoms of state