India Wavers on Emissions as Power Plants Balk at Price Tag

India may ease a deadline to cut pollution from coal-fired power plants blamed for causing the world’s worst air quality amid pressure from generators who say it’s too difficult to implement the $37 billion reforms.

The deadline to meet all the new standards may be pushed back beyond the original December 2017 target, said S.D. Dubey, chairman of the Central Electricity Authority and head of the panel drafting the road map for power producers to meet the new guidelines. Prime Minister Narendra Modi’s government proposed the limits on toxic emissions in December 2015.

The delay highlights the challenge facing Modi’s administration to provide cleaner air alongside affordable and reliable power to all of the country’s 1.3 billion people. Limiting emissions would take longer than the government’s original two-year deadline and cost as much as 2.5 trillion rupees ($37.4 billion), the Association of Power Producers, a lobby group of non-state generators, said in March.

The new goals may be implemented “in a phased manner,” Dubey said in a phone interview. “Particulate matter emissions should be addressed in the first phase. The next step would be sulfur dioxide emissions and later on oxides of nitrogen. That’s the direction we are moving in.”

The office of Federal Environment Secretary A.N. Jha, whose ministry originally proposed the standards, didn’t respond to e-mails seeking comment.

India’s 187 gigawatts of coal-fired power capacity, which generate more than 75 percent of the nation’s electricity, contribute to the air pollution that makes India home to what the World Health Organization has determined are 11 of the top 20 cities on the planet with the worst air quality. The plants account for 61 percent of its generation capacity, according to the Central Electricity Authority.

India must first establish monitoring systems at all plants to establish an emissions baseline, determine what technologies will be appropriate and then install them at the plants, said Leslie Sloss, an analyst with the IEA Clean Coal Centre, a technology cooperation program of the Paris-based International Energy Agency.

“The time frame for the new norms is extremely challenging and probably not possible in practice,” Sloss said. “The new norms equate to India complying with emissions standards within a few years that Western economies have worked up to over decades. ”

Coal-fired power plants contribute to the release of about 60 percent of India’s industrial particulate matter, as much as half of the sulfur dioxide and 30 percent of oxides of nitrogen, the New Delhi-based Centre for Science and Environment said in a report in December, weeks after the new standards were announced.

“The emission norms require capital expenditure, which will lead to an increase in tariffs and burden the already weak financials of state power retailers,” said Sachin Mehta, an analyst at Mumbai-based Centrum Broking Ltd. “The plan is fraught with challenges. It is impossible to meet the current deadline.”

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http://www.bloomberg.com/news/articles/2016-11-02/india-wavers-on-emissions-goal-as-power-plants-balk-at-price-tag

Encouraging Potential for Self- consumption of Solar PV in Germany

solar

A report from the independent German think-tank Agora Energiewende(Agora) has concluded that projected increases in self-consumption through solar PV power systems in the country does not mean upsetting dynamics of the nation’s renewable energy surcharges.

The study outcomes have been welcome news to advocates for Germany’s enviable transition to clean power (referred to as ‘energiewende’). Recent figures show German solar PV capacity of over 40 GW (38.5 TWh) — providing 7.5 percent of Germany’s net electricity consumption through 2015.

There is an underlying concern addressed by the study. Matthias Deutsch, senior associate at Agora, told Renewable Energy World: “An on-going controversy in Germany surrounds the potential and consequences of self-consumption. Some people argue that large-scale up of solar PV — this rise in prosumers — means putting at risk the solidarity of the grid, because people are contributing less to the fixed costs of the system.”

A broad effect of this is thought by some to be reflected in increasing surcharges imposed by the German Renewable Energy Sources Act (EEG) on the kWh price of electricity paid by consumers and increases in grid charges, as trends for autonomy from the grid continue.

On the basis of the study’s findings, Agora observed that through 2035, albeit projecting considerable expansion, “self-consumption of solar PV will play only a secondary role in overall electricity consumption.”

The report concludes: “From today’s perspective, self-consumption poses no risk of quickly eroding the funding base of Germany’s EEG surcharge or network charges.”

Dr. Patrick Graichen, executive director of Agora Energiewende, stated: “There’s simply no reason to fear that a solar power boom will have everyone generating their own power. Even if every eligible homeowner installed a rooftop solar array overnight so they could generate their own power, the EEG-surcharge would only increase by a maximum of 0.5 cents per kWh.”

Figure 1: Development of renewable energy capacity in Germany. Credit: Agora Energiewende.

Providing further insights, Deutsch said: “The potential of self-consumption determined by the study is relatively low. Importantly, even if the price of PV energy storage systems continues to fall rapidly, growth of these systems in energy terms will remain gradual, so the impacts on EEG surcharges would not be too great.”

He added that the study is good news for the solar PV industry, and provides substance to the on-going debate about how to support and manage self-consumption in Germany.

“This is important, of course, since more and more PV storage systems for self-consumption are being offered in the market, and as we see in the report, this market is set to continue expanding,” he said.

The study considered solar PV potential over two distinct sectors: residential (single- and two-family homes) and commercial.

It found that potential residential self-consumption amounts to between 4.6-38.6 TWh per year by 2035. The upper figure was calculated with contribution of energy storage systems included; and the authors noted that there are reasonable grounds for adopting this projection.

However, since not all of this energy is conventionally supplied by the grid (notably due to solar PV powering novel heating applications) the amount of energy that self-consumption may offset in terms of grid demand is less, around 20 TWh.

In the second sector considered by the study, commerce, trade and services, the authors concluded: “We found considerable potential for self-consumption: around 3.8 TWh per year, or just under 3 percent of total electricity demand in the sector, is economically feasible.”

Altogether therefore, Deutsch said that “overall, self-consumption may lead to reduced energy use from the grid of around 24 TWh per year. This represents about 5 percent of today’s net electricity consumption.”

Correspondingly, this potential would affect Germany’s EEG surcharge only moderately: a rise of around 0.5 euro cents (US$0.55) per kWh. While EEG surcharges and other components of power prices have risen in recent years (see figure 2), Deutsch points out that the increase wouldn’t be significant.

He emphasised the hypothetical nature of this calculated increase: “This increase refers to an instant realization of the total potential for self-consumption [that] we expect to unfold only gradually in the future. At the same time, other factors will tend to reduce the EEG surcharge.”

Figure 2: A break-down of recent years’ electricity prices in Germany reveals multiple components. Credit: Agora Energiewende.

Figure 3: The future costs of supporting renewable energy in Germany (in billions) suggests that even promising development of solar PV will not overwhelm the national support system. Credit: Agora Energiewende.

Beyond assurances, the report recommends that the German government now look towards delivering a stable regulatory framework that encourages self-consumption via solar PV.

Previous regulatory amendments, comments Deutsch, have been counter-productive and sent mixed signals to the industry and prosumers.

“While the 2009 version of the EEG featured a bonus scheme for self-consumption; [in contrast] the 2014 revision introduced additional charges,” he said.

Contradictory stances have also been expressed towards the nation’s energy storage support schemes.

He concluded: “Instead of such mixed signals from policy makers, we need to develop a forward-looking system of levies and fees, which includes owners of private property and their tenants in the overall costs of the system; and which ensures that future changes in legislation do not retroactively devalue investments in on-site solar power.”

Lead image: The Solar Settlement project in Freiburg, Germany. Credit: SA 3.0

 

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http://www.renewableenergyworld.com/articles/2016/11/encouraging-potential-for-self-consumption-of-solar-pv-in-germany.html

Net-metering Is Dead — Long Live Net-metering!

Residential solar has demonstrated unprecedented growth over the past several years, driven in part by falling equipment prices, rising customer awareness, and supportive public policy. One of those key policies has been net-metering, which provides customers in more than 40 states credit for any excess solar generation not consumed at the customer’s home.

Despite years of encouraging the expansion of solar, many utilities now argue that customers with solar do not pay their fair share and create a cost shift to customers without solar. However, this argument does not address the true issue at hand, which is how does the grid need to change to address the emergence of distributed energy resource (DER) technologies, such as solar and storage?
The current utility regulatory structure was built for a one-way flow of power from large, centralized power plants to end consumers. The original net-metering policies were also established underneath this paradigm, and it is natural that compensation for exported generation will also evolve as the power industry shifts from a one-way communication platform to a two-way communication approach that delivers higher value to the grid and consumers.
As solar and DER adoption increases, compensation for generation and grid services must evolve from its early days as a simple billing mechanism for the one-way flow of power from large, centralized power plants to a more sophisticated platform connecting distributed generation and consumers to the grid.
To accomplish this goal, the grid must be modernized to allow for efficient and effective two-way communications by enabling data to be regularly provided to both utilities and customers. With this architecture in place, utilities can send clear price signals to consumers on the true cost to deliver power, and customers can make more informed decision about their choice to either generate their own power or purchase power from their utility.
One example of where this discussion is already underway is in New York, where the New York Public Service Commission is leading the Reforming the Energy Vision (REV) initiative. The REV initiative is designed to encourage clean energy innovation while improving consumer choice and affordability. To calculate the value of an energy source, New York is looking at the following features:
  • the equivalent kilowatt-hour that the local wholesale generator can earn;
  • the value of the energy power to the distribution system; and
  • the external societal value.
As the role of utilities and the grid changes to allow greater consumer choice and participation in energy markets, utilities and the grid must be enabled through policy and rate reform to integrate technology that can quantify the true value of power, regardless of source, based upon the time and location power is provided to the grid. Until that time, retail net-metering, more than any other policy, provides “rough justice” for the value of solar exported to the grid from DERs, and provides the fairest platform for consumer choice available.

Renewables could lose European power grid priority, documents reveal

Industry concern after confidential impact assessment models scenarios for paring back the ‘priority dispatch’ system for clean energy

The sun reflects off a solar collector assembly at the Andasol solar power station, southern Spain. Retroactive changes to funding rules have caused disputes and cutbacks in several countries, notably Spain.

 The sun reflects off a solar collector assembly at the Andasol solar power station, southern Spain. Retroactive changes to funding rules have caused disputes and cutbacks in several countries, notably Spain. Photograph: Marcelo Del Pozo/Reuters

Paring back the “priority dispatch” system could increase carbon emissions by up to 10%, according to a confidential EU impact assessment seen by the Guardian. But the document goes on to model four scenarios for doing just that, in a bid to make Europe’s energy generators more flexible and cost-competitive.

Some industry sources have told the Guardian they are alarmed and think it highly likely that priority dispatch for clean energy will be scrapped from the EU’s renewable energy directive, which is currently being redrafted for the post-2020 period.

Oliver Joy, a spokesman for the WindEurope trade association, said: “Removing priority dispatch for renewable energies would be detrimental to the wind sector, which would face more curtailment across the continent. It also seems to be at odds with Europe’s plans to decarbonise and increase renewables penetration over the next decade.”

“Investors took priority dispatch into account when projecting revenues in the original investment decisions, and it could have a bearing on existing projects if they are not protected from the change.”

The issue of retroactive changes to funding rules for renewables in Europe has been a cause for disputes and cutbacks in the wind and solar sectors of several countries, notably Spain.

Senior industry sources say they will push for financial compensation and access to balancing markets to help prevent a significant industry contraction, if priority dispatch is ended.

“We have had enough instability and retroactivity in Europe and going forward, the difference between existing and future assets should be well distinguished,” said one industry source.

“I would be extremely worried if they just removed priority of dispatch and did not touch other key issues around market design. It would mean that the commission was taking measures against the same renewable industries that they defend in public.”

Fossil fuel power providers argue that renewables have the lowest operating costs and so would anyway receive priority access to the grid network.

They also say that taking the clean energy sector out of priority dispatch would prevent “negative prices” – where more energy is produced than can be sold – and eliminate anti-competitive subsidies.

The EU’s assessment views the abolishing of priority dispatch as a step towards the creation of a “level playing field” for energy generators.

But without such a system, renewable sources may be the most likely to be taken offline because of the relative ease of switching off a wind turbine compared to a coal or nuclear plant.

The energy source with the lowest marginal cost – almost always renewables – is usually the first in line to be shut down by power grid operators.

As things are, a Europe-wide trend towards ending financial support has constrained the forward march of renewables on the continent, and siphoned off investment to elsewhere in the world.

“Everyone is investing in renewables outside Europe right now,” said one industry source. “If you want to bring investors back you have to send very relevant signals.”

Removing wind and solar power from priority dispatch may be intended to help reform the capacity market system, which currently pays gas generators to remain idle. Ironically though, it could lead renewable generators to demand an extension of the same mechanism to their own sector.

“If priority dispatch is removed, then renewables must be given a fall-back option of access and renumeration in the balancing markets to help stabilise the system, or clear levels of compensation in the event that curtailment is necessary,” Joy said.

Priority dispatch is supposed to be mandatory under current EU rules, although the UK, Sweden and the Netherlands are among countries that do not comply.

The study says that “the biggest impacts on generation [from ending priority dispatch] would be observed in Denmark, Great Britain and Finland, where biomass holds a large share of generation capacity”.

But this would be felt more in terms of bioenergy’s “expensive” production costs than its carbon emissions reduction potential, which is disputed inside and outside the commission.

“The removal of priority dispatch for biomass would indeed, in the first instance, imply an increase in GHG [greenhouse gas] emissions,” the paper says.

The four scenarios for scaling back priority dispatch involve an increase in CO2 emissions of 45m-60m tonnes.

 

View original post on : https://www.theguardian.com/environment/2016/nov/01/renewables-could-lose-european-power-grid-priority-documents-reveal

Surplus power: An opportunity beckons

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Representational image (Photo: Getty Images)

India is witnessing a strange paradox. Providing electricity to ensure one light and a fan to the poor is in itself a big deal, and amidst tall government claims, many villages in the country are still not electrified or despite installation of electricity poles, remain powerless. Under these circumstances, the Central Electricity Authority, under the Ministry of Power, has come out with a report, according to which there will be 1.1 per cent surplus power in 2016-17.

Surplus or deficit power is seen in terms of power supply and demand throughout the year. If demand for power is greater than its supply, it would be considered deficit of power; where supply of power is more than its demand, it would be called a power surplus situation. In fact, this is the first time that we have surplus power, according to government statistics. The situation does give satisfaction, but it poses a problem as well. Due to surplus power, power plants are under stress because of lower demand and lower prices in view of competition. The important question is whether this challenge can be converted into an opportunity.

While analysing the reasons for surplus power, experts opine that demand for power is estimated from the people connected to the grid. However, a large number of people are still not connected to the grid. If we add the prospective demand from those deprived of electricity so far, then this surplus will vanish. As per international comparisons, India’s per capita consumption of electricity is among the lowest in the world. India’s per capita electricity demand is 1070 kilowatt hours, while the global average is 3026 kilowatt hours. Among BRICS nations, India is at the bottom in terms of per capita electricity consumption. Due to lower incomes, people have lower purchasing power and therefore they consume less electricity. However, electricity demand is on the rise year after year. In 2014-15, electricity demand increased by 6.6 per cent and in 2015-16 by 4.2 per cent. The government is making efforts to increase the capacity to generate more power, to facilitate availability of power for an increasing population. By August 2016, the total capacity was 306 Giga watts. Today total production of electricity is 1108 billion units from utilities and 166 billion units from captive power plants.

It is satisfactory that we have surplus power and there are few possibilities of power cuts. However, we still have 3.2 per cent power deficit during peak hours. The current government pats itself on the back for the surplus power. However, CEA has estimated that though we have surplus power in the southern and western parts of the country, there is still power deficit in the eastern and northern parts of the country.

Power deficit was a major problem in India till some time back. However, the situation of electricity surplus is no less challenging as electricity producing units will have to sell electricity at un-remunerative prices and therefore may incur huge losses. As a result, future capacity generation may get adversely affected if electricity generation becomes a loss-making business. The last three years have seen 77636 megawatts (MW) of installed capacity in power generation.  Due to the efforts of the present government, especially the Prime Minister, significant strides have been made in solar power and there is a great future for it in the country. Therefore, it is essential that we are able to maintain a balance between demand and supply of electricity in the country.

Even when faced with power surplus, we are still using a large amount of petroleum products for transportation and cooking. A huge amount of LPG is being imported for cooking. If we are able to produce enough electricity, would it not be appropriate to promote use of electric stoves. All over the world due to environmental hazards, people are turning towards electric vehicles. While going fast on solar power generation, the Prime Minister has set a target for reducing petroleum imports by at least 10 per cent. If we are able to achieve this target, the country will be saving at least US $10 billion to 12 billion. Today, India is the fourth largest oil importing country of the world. So, a reduction in imports may also cause further reduction in the prices of petroleum products globally. We may not only be moving towards energy security, the commitments made in the Paris Deal may also be achieved faster.

Due to power surplus and fast increasing electricity generating capacity, India has also started exporting electricity, though in small quantities. We are exporting electricity to Bangladesh, Nepal and Myanmar. Electricity exports to Sri Lanka are under process by laying a cable under sea. Therefore, we can say that in times to come, India may not only be self-sufficient in electricity, it may even be exporting electricity to neighbouring countries.

Riding on electricity surplus, by increasing the use of electricity in cooking and transport, we may not only be protecting our environment, even costs may come down. On the one hand we may be able to reduce our oil import bill, and on the other, earn valuable foreign exchange. However, for converting the challenge of surplus power into an opportunity, we will have to keep a close eye on the scenario, so that the targets of electricity generation are not hit due to lower prices of electricity.

Read more at http://www.thestatesman.com/news/opinion/surplus-power-an-opportunity-beckons/173494.html#mxhR8fglvMcjXCek.99

Renewable energy firms worry about back-down by power discoms

Rising instances of discoms unplugging generating capacity from grid and delaying signing of PPAsIndia has a total wind capacity of 27.4 GW, and has set itself the target of adding 60 GW more by 2022. Photo: Bloomberg

Mumbai: Clean energy companies and their investors are worried about rising instances of state power distribution utilities (discoms) unplugging their generating capacity from the grid and delaying both payments and the signing of power purchase agreements (PPAs).

Two of India’s largest renewable energy companies, ReNew Power Ventures Pvt. Ltd and Tata Power Renewable Energy Ltd (TPREL), a subsidiary of Tata Power Co. Ltd, have been hit by such unplugging, also called back-down at their plants in multiple states, company officials said. Projects of other companies including Adani Green Energy Ltd and Hero Future Energies have also been hurt due to back-down and delays in signing PPAs, they added.

Some states resort to backing down wind and solar projects, jeopardizing investments already made in the projects, said Rahul Shah, chief executive of TPREL.

“Discoms in Maharashtra, Tamilnadu, Madhya Pradesh and Rajasthan have also been delaying payments to generators of wind and solar power by as much as 8-10 months, which puts their cash flows under tremendous pressure. These are negative signals for developers and investors who are evaluating the Indian market for investment in new renewable energy capacity,” Shah said.

According to ReNew Power’s estimates, discoms in Maharashtra, Rajasthan and Madhya Pradesh owe wind energy producers over Rs4000 crore in payments. A ReNew spokesperson said about 500 megawatt (MW) of its solar capacity and a smaller size of wind capacity is stranded in Jharkhand due to delays in signing PPAs.

A check of awarded projects shows 1200 MW of solar capacity of ReNew Power, Adani Power and ACME Solar and about 600 MW of wind capacity is stuck for the lack of PPAs in Jharkhand. Adani Power and Hero Future did not respond to emails seeking comment.

Many discoms are in poor financial shape and have started going back on their commitment to sign PPAs with solar power producers, multiple people in the renewables business said. In solar projects, which are won through reverse bidding process, a PPA is signed ahead of completion of the project, usually for a period of 25 years.

A back-down can happen due to availability of cheaper power elsewhere, lack of transmission infrastructure, absence of demand, or inability of the grid to buy power. Grids usually reserve the right to unplug power because of the variations in the amount of power generated. This practice, called power back-down, leads to losses of billions of units of green power.

Several companies have filed petitions against a state utility in Rajasthan on account of this, an official of Rajasthan Electricity Regulatory Commission said on condition of anonymity.

“Investors are losing confidence,” said Seema Changlani, director of Beont Capital, which helps Indian companies set up projects and attract new investments. “At times, the grid refuses to purchase renewable power in favour of cheaper thermal power. Investors finance projects on the basis of PPAs and absence of PPAs by discoms can hurt IRRs of these projects.”

Back-down and delay in payments have become a chronic problem, Dilip Nigam, adviser, ministry of new and renewable energy (MNRE) said on the sidelines of an event in Mumbai on Wednesday. “Discoms are backing down on renewable energy in the name of security of the grid and we have been taking up the issue separately. Renewable energy should have a ‘must-run status’.”

India has a total wind capacity of 27.4 gigawatt (GW) and solar capacity of about 9 GW. It has set itself the target of adding 100 GW of solar and 60 GW of wind capacity by 2022.

The government has set a renewable purchase obligation target for discoms, but this target is not being met. “This raises concerns over rising solar capacity and ability of the discoms to buy all of it. This (problem) is becoming bigger by the day,” Vinay Rustagi, managing director, renewable energy focused consultancy Bridge to India said.

The MNRE wrote to the Central Electricity Regulatory Commission in August highlighting the issue of back-downs. Tarun Kapoor, joint secretary, MNRE wrote in that letter that if any backing down has to be done, thermal power projects should be asked to back down so that some fuel is saved.

“This (loss of energy from backing down) can make solar power unattractive particularly when projects are being allotted through competitive bidding and tariffs have come down drastically,” he wrote. “They should be paid full tariff if they are forced to back down in rare cases.”

Solar energy tariffs have fallen from Rs15 over four years ago to below Rs5 per unit over the past 12 months, in part due to aggressive bidding in reverse auctions. Tariffs are expected to fall to Rs3.50 per unit in the next three years on account of falling cost of equipment and better technology, Mint reported on 26 July.

View original post on:  http://www.livemint.com/Industry/ASu58DZtfl5xnomADH13wL/Clean-energy-firms-worry-about-backdown-by-discoms.html

 

Strong pipeline of solar projects aided by policy support; but regulatory challenges persist: ICRA

54717171.cmsNew Delhi: The solar project pipeline in the country remains strong supported by policies but regulatory challenges persist arising out of factors such as non-enforcement of renewable purchase obligations (RPOs) and likelihood of more stringent scheduling and forecasting norms, research agency ICRA said in report.
About 6,100 Megawatt capacity of solar projects were awarded during the 8-month period of CY2016 (January – August), supported by policies at both the Central and the state level.

“About 2,520 MW capacity of solar PV projects, awarded in CY2016 so far (January till August 2016), have a tariff of less than Rs. 5/kWh, which could face challenges in achieving financial closure. Viability of such tariffs hinges on structuring of debt with longer tenures, competitive funding costs and the ability of the project developers concerned to keep the cost of modules within the budgeted levels,” said Sabyasachi Majumdar, Senior Vice President, ICRA.

Simultaneously, however, a fall in solar module prices coupled with aggressive bidding by developers leading to declining solar PV bid level has resulted in an improved tariff competitiveness of solar PV projects. This in turn remains beneficial for the state distribution utilities which are key off-takers. Weighted average competitively bid solar PV tariff has declined to Rs. 5.0/kWh for CY2016 (till August 2016) from Rs. 6.5/kWh for CY2014.

ICRA further takes note of the recently reported concerns of solar project developers on the forced back-down by the state utility in Tamil Nadu. While the solar generation project is supposed to operate on the “must run” principle basis under the grid code, any forced back down by the state, on the grounds of inadequate transmission capacity and/or grid stability, remains a concern for solar projects, in ICRA’s view, given the absence of any deemed generation clause in the tariff structure.

Notwithstanding a positive demand outlook, the solar sector continues to face several challenges like regulatory challenges arising out of inconsistency in RPO norms; and poor compliance with RPO norms by the obligated entities and weak enforcement of such norms by the State Electricity Regulatory Commissions (SERC).

“Despite the revision in solar RPO to 8% from 3% till FY2022 in the National Tariff Policy in January 2016, the SERCs in majority of the states are yet to re-align their solar RPO norms and trajectory in line with the revised target,” Majumdar said.

Further, solar PV projects remain exposed to regulatory challenges arising from requirement of scheduling and forecasting framework, which is likely to be approved by SERCs, subsequent to CERC’s framework, which has been effective since August 2015.

The Karnataka Electricity Regulatory Commission (KERC) in May 2016 had approved similar regulations and similarly, SERCs in a few other states have put in place draft regulations. For the solar projects in Karnataka, the forecasting framework would thus have a negative impact on cash flows and project IRR, particularly if the actual overall deviation (mix of over-generation and under-injection) exceeds 30% of the scheduled generation, though the extent of the impact for solar energy generation projects is likely to be relatively lower due to lesser variability in solar generation, as compared with that for wind energy projects.
View original post on : http://energy.economictimes.indiatimes.com/news/renewable/strong-pipeline-of-solar-projects-aided-by-policy-support-but-regulatory-challenges-persist-icra/54716773

 

India Already Has a Problem With Wasting Renewable Energy on the Grid

India ratified the Paris climate agreement this week, officially underscoring its commitment to reduce greenhouse gas emissions. Yet just two years after embarking on an ambitious campaign to scale up renewable energy, India is facing a curious problem: too much solar and wind power in some parts of the country.

In July, for the first time, the southern Indian state of Tamil Nadu was unable to use all the solar power it generated. Later in the month, Jayaram Jayalalitha, the chief minister of Tamil Nadu, wrote a letter to Prime Minister Narendra Modi urging him to speed up the construction of an inter-state green energy corridor that would allow renewable power to be transmitted and used in other states instead of being wasted.

And in August, Tarun Kapoor, India’s joint secretary of the Ministry of New and Renewable Energy, wrote a letter asking electricity regulators to fully utilize solar power following complaints that grid operators were letting renewable energy go to waste.

As developing countries lead the world in renewable energy investment, India’s experience highlights a larger question: Will the grid be a major roadblock for renewable energy development across the developing world?

From India to China to Chile, a significant portion of future renewable energy could go to waste without careful planning.

Solar and wind only accounted for 3.5 percent of the power generated in India in 2015. But if the government achieves its ambitious targets for renewable energy deployment, the amount of solar and wind power on the grid could quadruple by 2022. Yet there are already signs that the grid’s ability to absorb these new power sources could be a major bottleneck for renewable energy growth in India, jeopardizing the country’s energy and climate goals.

Although there is not clear national data, regulatory filings from Tamil Nadu, where the problem is thought to be the most extreme, put the curtailment rate for wind power between 33 percent and 50 percent — an astonishingly high figure.

The problem is, in part, a technical one. Solar and wind power are not as easy to control as traditional fossil fuel plants, so power grids need to become flexible enough to handle last-minute changes in power generation.

Distance is also an issue. In India, six states in the western and southern regions account for 80 percent of all of the country’s currently installed solar capacity, but only 38 percent of power demand. For grid operators used to being able to turn fossil fuel plants on and off at will, these changes can take some getting used to. If new measures are not put into place to accommodate variable renewable energy sources, a situation can arise where the physical grid — or the grid operator — is unable to use solar and wind power when it becomes available.

Other countries have already dealt with this problem with varying degrees of success. Germany and the U.S. have relatively high levels of solar and wind penetration and low curtailment rates, while China has had major issues with curtailment as the share of wind and solar in the energy mix increases.

Indeed, China currently has more wind and solar power capacity than any other country in the world after scaling up very quickly. In the five years between 2010 and 2015, the share of solar and wind power generated in China quadrupled. Yet in 2015, the U.S. still produced more electricity from wind than China, despite having only 58 percent of China’s installed wind capacity. A large reason for this discrepancy is that much of China’s solar and wind power is wasted: 21 percent of wind power was curtailed in the first half of 2016 (with Gansu province reaching a 47 percent curtailment rate), and solar curtailment reached 11 percent in the first three quarters of 2015.

Although China has been able to build out renewable energy capacity quickly over the past decade, it has taken much longer to develop the transmission infrastructure and make the institutional changes required to utilize all of this new power.

How can India learn from China’s mistakes and rapidly scale up renewables without waste?

Luckily, the challenge has not caught Indian policymakers by surprise. There are already a number of initiatives underway to help integrate renewables into the grid. Perhaps most important is that, unlike China, India already has a wholesale power market, which can provide much-needed flexibility for utilities to buy and sell power at short notice.

There is also the aforementioned green energy corridor, a series of transmission lines that will connect states with excess renewable energy to areas where there is demand. And similar to China, solar and wind already have “must run” status, meaning that any power they generate should always be accepted by the grid.

Yet even these steps may not be enough. A recent survey found that 31 percent of senior corporate leaders in Indian solar companies think that grid integration will be the biggest challenge for expanding solar in India going forward.

The first priority for India when addressing this issue is to finish the green energy corridor and other new transmission lines so that renewable power can be transmitted where it is needed. There are significant power surpluses in some states and power deficits in others.

For instance, Uttar Pradesh has a peak power deficit of 9.7 percent (meaning 9.7 percent of demand at peak times cannot be met with the power available in the state), whereas the bordering state of Madhya Pradesh has a peak power surplus of 8.3 percent. Yet the power connection between the two states was at full capacity 73 percent of the time in May 2016, meaning some surplus power in Madhya Pradesh may not have made it to Uttar Pradesh. Nationally, 10 percent of the power supply available on the short-term markets last year could not be used because of transmission constraints.

New investment in inter-state power lines will help balance out such disparities. It is particularly important for India to attract private investment in these projects. The green energy corridor will cost an astounding USD $3.4 billion, and is funded in part by government funds and partially by a $1 billion loan from the Asian Development Bank and 1 billion loan from GiZ. But the public sector can only fund so many multibillion-dollar projects, and many state utilities are already in poor financial conditions.

Private capital is projected to be required for 47 percent of infrastructure investment in India between 2012 and 2017. India’s planning commission has created a framework for public-private partnerships for transmission investment, but land acquisition and permitting are still major roadblocks for private developers hoping to complete a project on schedule. Reducing the time and cost of land acquisition will be essential to making infrastructure projects attractive to developers and unlocking the private capital needed to finance transmission lines.

Second, focusing on deploying distributed energy technologies like rooftop solar can help increase the amount of renewable energy in use where new transmission lines are infeasible or too expensive.

India hopes to get 40 percent of its solar capacity from rooftop solar by 2022, but the market has been slow to take off despite a 30 percent capital subsidy from the government. The barriers to rooftop solar deployment are often more institutional than technical. In China, slow subsidy disbursement and a lack of financing have caused rooftop solar deployment to fall short of government targets. In India, a recent survey found that 93 percent of senior corporate leaders in the Indian solar sector did not think the country would even reach half of its rooftop solar target by 2022, citing ineffective net metering policy, unavailable and expensive financing, and consumer awareness as top issues.

There are a number of potential solutions: Training for distribution utilities unaccustomed to having customers generate their own electricity; streamlining the application and approval process; creating certifications to ensure installer quality; and even allowing rooftop solar systems to serve as backup power when the grid goes down. Quickly implementing such solutions can allow renewables to grow without worsening curtailment.

Energy storage can also play an important role in reducing curtailment. The cost of storage is still a major barrier to mass adoption, but prices are dropping quickly.

Moreover, Germany and Texas have achieved low curtailment rates with minimal energy storage and high renewable energy penetrations through improved grid planning and changes to the power market structure. Still, India is planning on installing 10 gigawatts of pumped hydro energy storage across the country to accommodate increased renewable energy penetration (China is taking similar measures to reduce curtailment). As the price of energy storage drops, it will become an increasingly compelling complement to variable renewable energy.

Finally, India can look to other countries to find grid planning and operational solutions to help manage curtailment as renewable power scales up. One such change, highlighted in a recent Paulson Institute report on curtailment, is to create financial incentives against curtailing renewables.

Currently, Indian solar and wind generators are not compensated for curtailment, and compensation should not be necessary because renewables have “must run” status. However, financial incentives can help reinforce such regulations when mandates alone are insufficient. China has had a similar experience with “must run” mandates: multiple policies have stated that solar and wind should always receive priority on the grid, but curtailment continues to be an issue because there are few penalties for ignoring this regulation.

recent regulation released by China’s National Development and Reform Commission requires that coal plant owners pay wind or solar plant owners whose energy is curtailed, creating a stronger incentive for grid operators to fully utilize renewables. An even simpler solution would be to compensate solar and wind projects for any curtailed energy at a fixed rate. This not only penalizes grid operators that choose to curtail renewables, but also provides more certainty for power producers when trying to forecast revenue.

Even smaller changes to how the grid is operated can make a difference. In Texas, grid operator ERCOT shifted from 15-minute dispatch intervals on the intra-day market to 5-minute intervals, allowing for more granular planning around variable wind and solar power plants. (India currently uses 15-minute dispatch intervals.) ERCOT also shifted from targeting 0 percent curtailment to a maximum acceptable curtailment rate of 3 percent of annual renewable energy production — a more cost-effective solution than trying to utilize every unit of electricity generated at peak times.

Such institutional changes can provide flexibility to the grid without the high risk and cost of major new transmission and storage projects.

India has already set a moonshot goal for renewable energy deployment that would have been unthinkable just a few years ago. Indeed, in the five years between Copenhagen and Paris, India went from being a hindrance to an enthusiastic participant to in the United Nation’s global climate negotiations.

Yet a successful energy transition will require a broader change in the infrastructure and institutions that support renewables — not just targets themselves.

View original post: http://www.greentechmedia.com/articles/read/how-can-india-avoid-wasting-renewable-energy

Renewable energy project returns face counter party risks

The weak financial health of discoms is constraining the credit profile of renewable energy developers, says India Ratings and Research

Falling component prices and project costs may have vindicated renewable energy developers’ bets on low tariffs. But their returns are seeing risk from an unexpected quarter—power distribution companies or discoms, the buyers of renewable energy.

The weak financial health of discoms is constraining the credit profile of renewable energy developers, raising debt costs and crimping potential returns for project developers, ratings agency India Ratings and Research said in a note.

According to India Ratings, discoms in Madhya Pradesh, Rajasthan, Maharashtra and Tamil Nadu, which have large installed renewable energy capacities and more in the pipeline, are taking more than four to eight months to release payments. Maharashtra State Electricity Distribution Co. Ltd is said to have delayed payments to wind projects by about a year. The payment delays and uncertainties are raising the credit risk profile of the developers, driving up the finance costs. “This uncertainty is factored into the pricing of infra bonds, causing a burden on the projects’ cash flows,” India Ratings adds.

Renewable energy projects in general are built on an 80:20 debt-equity ratio. So higher finance costs can crimp cash flows and weigh on project returns. The ratings agency says the project developers may not have fully considered the counter-party risks and their impact on finance costs while making aggressive tariff bids.

Vikram Kailas, vice chairman and managing director of Mytrah Energy Ltd, a renewable energy company, says the aggressive bids (at tariffs of Rs 4 per unit) had “very low” margin of error. Those bids do not fully cover risks like project quality, execution and payment delays, which matter to lenders, Kailas said.

Raj Prabhu, chief executive of Mercom Capital Group, echoes these views. Competition has squeezed margins and lenders are wary of financing such projects. “Due to recent fall in Chinese module prices, some of these low bids that were looking unrealistic may become viable, but banks need to (be) convinced to lend to these projects,” Prabhu adds.

According to Mercom, developers are “waking up” to the reality and the scenario may improve. But that will only solve part of the problem. For the situation to improve, power distribution companies should get their finances in order. That will reduce counter-party risks and ensure competitive power tariffs for consumers.

View original post on: http://www.livemint.com/Money/dG2MgzYQpkBVViYz0pOnJP/Renewable-energy-project-returns-face-counter-party-risks.html

India Already Has a Problem With Wasting Renewable Energy on the Grid

The country can learn from China, Germany and Texas on how to mitigate the problem.

India ratified the Paris climate agreement this week, officially underscoring its commitment to reduce greenhouse gas emissions. Yet just two years after embarking on an ambitious campaign to scale up renewable energy, India is facing a curious problem: too much solar and wind power in some parts of the country.

In July, for the first time, the southern Indian state of Tamil Nadu was unable to use all the solar power it generated. Later in the month, Jayaram Jayalalitha, the chief minister of Tamil Nadu, wrote a letter to Prime Minister Narendra Modi urging him to speed up the construction of an inter-state green energy corridor that would allow renewable power to be transmitted and used in other states instead of being wasted.

And in August, Tarun Kapoor, India’s joint secretary of the Ministry of New and Renewable Energy, wrote a letter asking electricity regulators to fully utilize solar power following complaints that grid operators were letting renewable energy go to waste.

As developing countries lead the world in renewable energy investment, India’s experience highlights a larger question: Will the grid be a major roadblock for renewable energy development across the developing world?

From India to China to Chile, a significant portion of future renewable energy could go to waste without careful planning.

Solar and wind only accounted for 3.5 percent of the power generated in India in 2015. But if the government achieves its ambitious targets for renewable energy deployment, the amount of solar and wind power on the grid could quadruple by 2022. Yet there are already signs that the grid’s ability to absorb these new power sources could be a major bottleneck for renewable energy growth in India, jeopardizing the country’s energy and climate goals.

Although there is not clear national data, regulatory filings from Tamil Nadu, where the problem is thought to be the most extreme, put the curtailment rate for wind power between 33 percent and 50 percent — an astonishingly high figure.

The problem is, in part, a technical one. Solar and wind power are not as easy to control as traditional fossil fuel plants, so power grids need to become flexible enough to handle last-minute changes in power generation.

Distance is also an issue. In India, six states in the western and southern regions account for 80 percent of all of the country’s currently installed solar capacity, but only 38 percent of power demand. For grid operators used to being able to turn fossil fuel plants on and off at will, these changes can take some getting used to. If new measures are not put into place to accommodate variable renewable energy sources, a situation can arise where the physical grid — or the grid operator — is unable to use solar and wind power when it becomes available.

Other countries have already dealt with this problem with varying degrees of success. Germany and the U.S. have relatively high levels of solar and wind penetration and low curtailment rates, while China has had major issues with curtailment as the share of wind and solar in the energy mix increases.

Indeed, China currently has more wind and solar power capacity than any other country in the world after scaling up very quickly. In the five years between 2010 and 2015, the share of solar and wind power generated in China quadrupled. Yet in 2015, the U.S. still produced more electricity from wind than China, despite having only 58 percent of China’s installed wind capacity. A large reason for this discrepancy is that much of China’s solar and wind power is wasted: 21 percent of wind power was curtailed in the first half of 2016 (with Gansu province reaching a 47 percent curtailment rate), and solar curtailment reached 11 percent in the first three quarters of 2015.

Although China has been able to build out renewable energy capacity quickly over the past decade, it has taken much longer to develop the transmission infrastructure and make the institutional changes required to utilize all of this new power.

How can India learn from China’s mistakes and rapidly scale up renewables without waste?

Luckily, the challenge has not caught Indian policymakers by surprise. There are already a number of initiatives underway to help integrate renewables into the grid. Perhaps most important is that, unlike China, India already has a wholesale power market, which can provide much-needed flexibility for utilities to buy and sell power at short notice.

There is also the aforementioned green energy corridor, a series of transmission lines that will connect states with excess renewable energy to areas where there is demand. And similar to China, solar and wind already have “must run” status, meaning that any power they generate should always be accepted by the grid.

Yet even these steps may not be enough. A recent survey found that 31 percent of senior corporate leaders in Indian solar companies think that grid integration will be the biggest challenge for expanding solar in India going forward.

The first priority for India when addressing this issue is to finish the green energy corridor and other new transmission lines so that renewable power can be transmitted where it is needed. There are significant power surpluses in some states and power deficits in others.

For instance, Uttar Pradesh has a peak power deficit of 9.7 percent (meaning 9.7 percent of demand at peak times cannot be met with the power available in the state), whereas the bordering state of Madhya Pradesh has a peak power surplus of 8.3 percent. Yet the power connection between the two states was at full capacity 73 percent of the time in May 2016, meaning some surplus power in Madhya Pradesh may not have made it to Uttar Pradesh. Nationally, 10 percent of the power supply available on the short-term markets last year could not be used because of transmission constraints.

New investment in inter-state power lines will help balance out such disparities. It is particularly important for India to attract private investment in these projects. The green energy corridor will cost an astounding USD $3.4 billion, and is funded in part by government funds and partially by a $1 billion loan from the Asian Development Bank and 1 billion loan from GiZ. But the public sector can only fund so many multibillion-dollar projects, and many state utilities are already in poor financial conditions.

Private capital is projected to be required for 47 percent of infrastructure investment in India between 2012 and 2017. India’s planning commission has created a framework for public-private partnerships for transmission investment, but land acquisition and permitting are still major roadblocks for private developers hoping to complete a project on schedule. Reducing the time and cost of land acquisition will be essential to making infrastructure projects attractive to developers and unlocking the private capital needed to finance transmission lines.

Second, focusing on deploying distributed energy technologies like rooftop solar can help increase the amount of renewable energy in use where new transmission lines are infeasible or too expensive.

India hopes to get 40 percent of its solar capacity from rooftop solar by 2022, but the market has been slow to take off despite a 30 percent capital subsidy from the government. The barriers to rooftop solar deployment are often more institutional than technical. In China, slow subsidy disbursement and a lack of financing have caused rooftop solar deployment to fall short of government targets. In India, a recent survey found that 93 percent of senior corporate leaders in the Indian solar sector did not think the country would even reach half of its rooftop solar target by 2022, citing ineffective net metering policy, unavailable and expensive financing, and consumer awareness as top issues.

There are a number of potential solutions: Training for distribution utilities unaccustomed to having customers generate their own electricity; streamlining the application and approval process; creating certifications to ensure installer quality; and even allowing rooftop solar systems to serve as backup power when the grid goes down. Quickly implementing such solutions can allow renewables to grow without worsening curtailment.

Energy storage can also play an important role in reducing curtailment. The cost of storage is still a major barrier to mass adoption, but prices are dropping quickly.

Moreover, Germany and Texas have achieved low curtailment rates with minimal energy storage and high renewable energy penetrations through improved grid planning and changes to the power market structure. Still, India is planning on installing 10 gigawatts of pumped hydro energy storage across the country to accommodate increased renewable energy penetration (China is taking similar measures to reduce curtailment). As the price of energy storage drops, it will become an increasingly compelling complement to variable renewable energy.

Finally, India can look to other countries to find grid planning and operational solutions to help manage curtailment as renewable power scales up. One such change, highlighted in a recent Paulson Institute report on curtailment, is to create financial incentives against curtailing renewables.

Currently, Indian solar and wind generators are not compensated for curtailment, and compensation should not be necessary because renewables have “must run” status. However, financial incentives can help reinforce such regulations when mandates alone are insufficient. China has had a similar experience with “must run” mandates: multiple policies have stated that solar and wind should always receive priority on the grid, but curtailment continues to be an issue because there are few penalties for ignoring this regulation.

recent regulation released by China’s National Development and Reform Commission requires that coal plant owners pay wind or solar plant owners whose energy is curtailed, creating a stronger incentive for grid operators to fully utilize renewables. An even simpler solution would be to compensate solar and wind projects for any curtailed energy at a fixed rate. This not only penalizes grid operators that choose to curtail renewables, but also provides more certainty for power producers when trying to forecast revenue.

Even smaller changes to how the grid is operated can make a difference. In Texas, grid operator ERCOT shifted from 15-minute dispatch intervals on the intra-day market to 5-minute intervals, allowing for more granular planning around variable wind and solar power plants. (India currently uses 15-minute dispatch intervals.) ERCOT also shifted from targeting 0 percent curtailment to a maximum acceptable curtailment rate of 3 percent of annual renewable energy production — a more cost-effective solution than trying to utilize every unit of electricity generated at peak times.

Such institutional changes can provide flexibility to the grid without the high risk and cost of major new transmission and storage projects.

India has already set a moonshot goal for renewable energy deployment that would have been unthinkable just a few years ago. Indeed, in the five years between Copenhagen and Paris, India went from being a hindrance to an enthusiastic participant to in the United Nation’s global climate negotiations.

Yet a successful energy transition will require a broader change in the infrastructure and institutions that support renewables — not just targets themselves.

View original post:  http://www.greentechmedia.com/articles/read/how-can-india-avoid-wasting-renewable-energy