This presentation will take you through the challenges and opportunities available for developing Wind Energy in India. The presentation has also covered various incentives and guidelines for availing same, tariff structure of various states. Various development models and financial models has also been covered. Finally way forward for any developer has also been touched upon.
Opportunities & Challenges in Developing Wind Energy in India
1. Opportunities & Challenges in Developing Wind Energy in India
By:-DeveshGautam
B.Tech(Electrical Power), IIT Delhi
Sep’2014
2. Key Factors Driving Wind Energy in India
•Over 21 GW installed –world’s 5thlargest
•Dedicated ministry and established regulatory framework
•Strong policy support with multiple revenue options and incentives
•Established long term preferential tariff mechanism
•Aggressive targets & commitment under govt.’s national action plan (NAPCC)
•The harnessablewind power potential in India is over 102 GW, out of which almost 81% is still untapped
•Access to latest technology, supply chain and expertise
•By 2020 India could have 65 GW of wind power in operation
3. Wind Power Potential of India
•Nodal development agency, CWET has recently reassessed the estimates of total wind energy potential in the country from earlier 48 GW to over 102 GW
•Wind potential is concentrated in southern, western and north-western regions
•Grid connected projects operational in 8 states
•MNRE in its “Strategic Plan for the New & Renewable Energy Sector for the period 2011-2017” has targeted a growth in capacity addition of 27,300 MW by wind alone out of total Grid Interactive RE
6. Generation Based Incentive (GBI) by Central Govt.
•No minimum capacity is fixed under this scheme, unlike Solar where only projects in the capacity range of 100 KW to 2 MW is considered
•Scheme is applicable for the projects commissioned on/after 01/04/2012.
•Following are the eligibility criteria for availing this scheme;
•Projects should sell the electricity to grid at tariff fixed by SERC or State Govt.
•Project should not avail accelerated depreciation.
•The scheme is also available for Captive Wind Power Projects including Group Captive to the extent of sale of electricity to the grid only.
•Scheme is not available to any wind power project selling power to third party, viz. merchant power plants.
•The projects have to register on-line with Indian Renewable Energy Development Agency (IREDA)
7. Main Features of GBI Scheme
•GBI will be provided @ Rs0.5 per unit of electricity fed into the grid.
•The incentive is over and above the tariff that has been fixed by SERC/State Govt.
•GBI is available for a period not less than 4 years and a maximum period of 10 years.
•Maximum cap is Rs100 Lakhs per MW.
•Total disbursement in a year will not exceed one fourth of the maximum limit of the incentive i.e. Rs25 Lakhs per MW during first four years.
•Scheme is applicable for entire 12thPlan period i.e. 2012-2017 having a target of 15,000 MW
•No clarification issued as of now by MNRE in case target quota is fulfilled before 2017 i.e. projects coming up after quota of 15000 MW and before Apr’2017, may or may not get GBI scheme from GOI.
8. Central Incentives for Wind Power Plants
•Indirect Taxes
•Rebates offered on various equipment’s.
•5% for special bearing, gear box, yaw components, wind turbine collectors, raw material for manufacture of blades of rotor.
•25% for sensor, brake hydraulics, flexible coupling, brake calipers
•Wind operated electricity generator, its components and parts thereof are exempted from Excise Duty
•Exemption/Reduction in Central Sales Tax & General Sales Tax are available on sale of renewable energy equipment’s in various states.
•Direct Taxes
•80% Accelerated Depreciation in the first year of installation of the projects.
•Tax Holiday for a period of 10 years out of the total 15 years period.
9. Clarification Announced by MNRE for Wind GBI
•It was clarified that GBI can be claimed irrespective of the rate of depreciation opted by Wind Power Producers.
•15% + 20% (additional) on W.D.V basis or,
•7.69 % on S.L.M basis
•It is applicable only for the projects commissioned on or after 1stApril 2012
11. Tariff Regulation of Various States for Wind Power
State
Distrcits
Capacity Utilization Factor (CUF) (W/m2)
GBI
ROE/Annum
Useful Life (Years)
RPO Obligation for Wind
CDM Benefits
200-250
250-300
300-400
>400
CERC
20%
23%
27%
30%
19% for 1st 10 Years 24 % from 11th Year Pre Tax
1st Year -100% to Developer 2nd Year Onwards 10 % increase every year till 50 % for both
Rajasthan
Jaisalmer,Jodhpur, Barmer
21%
No
16 % Pre Tax
25
10%
75 % -Developer 25 % -Discom
Other Districts
20%
Andhra Pradesh
24.50%
No
15.5 % Pre Tax
20
90 % -Developer 10 % -Discom
Maharashtra
20%
23%
27%
30%
No
Pre Tax -19% for first 10 yrs Pre tax -24% for 11th Year onwards
20
8.50%
100 % with Generating Company
Gujarat
24%
No
14%
20
7.75%
1st Year -100% to Developer 2nd Year Onwards 10 % increase every year till 50 % for both
Tamil Nadu
27.50%
No
17.63 % Pre Tax
20
14%
1st Year -100% to Developer 2nd Year Onwards 10 % increase every year till 50 % for both
12. State Wise Comparison of Tariff for Wind Power
State
Wind Tariff
Industrial Tariff
Details of Available Tariff Rate (2012-13 Regulations)
Rajasthan
5.48
5.5
No escalation over project life of 25 years
Andhra Pradesh
4.7
5.73
Constant for 25 years for the PPAs to be signed by 31-03-2015
Maharashtra
5.67
7.1
No escalation for 13 years
Gujarat
4.15
5.8
No escalation for 25 years of project life
Tamil Nadu
3.51
5.5
No escalation for 20 years of project life
16. Strengths
•Continuing demand-supply gap
•High preferential tariff offered by some states govtslike Maharashtra, Rajasthan etc.
•Escalation in the cost of fossil fuel-based power generation
•Availability of soft loans and government incentives
•Project gestation period is significantly shorter than conventional sources
•95-96% Plant Availability Factor
•O&M cost is very low, approx. Rs0.5/kWh
•Capacity addition can be in modular form.
17. Weakness
•Low capacity utilization of the wind generation plants ( PLF: 18-23 %)
•Rising land costs and developmental issues
•Forced outages due to technical factors such as weak grid integration, mechanical problems etc.
18. Threats
•Risk of obsolescence in case of technological innovations in other forms of energy
•Wind power subsidies may be rationalize or pegged down
•Legal issues related to land, government laws and liability concern
•Project life is only 25 Years.
19. Opportunities
•Substantial untapped market (current utilization :24%)
•As per CWET, India has an estimated potential of around 102,778 MW at 80 meters height at 2% land availability.
•CDM credits for clean technologies
•Concept to Commission model offered by few manufactures under which everything from land acquisition, implementation & O&M is carried out by them.
•Due to above factor prior experience not required by the project owners
•Depleting fossil fuels reserves, climate change and ensuring energy security provides an idea opportunity for developing wind energy
21. Major Issues Affecting The Wind Energy Sector in India
•Technological
•Lack of Transmission Infrastructure
•Estimation of effective turbine capacity not deterministic
•Noise made by rotating wind machine blades can be annoying to nearby neighbors and thus their resistance.
•Electricity produced by wind power sometimes fluctuates in voltage and power factor, which can cause difficulties in linking with CTU.
•Dearth of good wind sites:-Most of the good sites having PLF in the range of 28% have already been developed or grabbed, no option but to develop low PLF sites
•Wind assessment studies to be vetted:-Wind assessment studies to be vetted by an independent consultant to ascertain whether the micro settings are optimized for installed capacity or for energy generation.
22. Major Issues Affecting The Wind Energy Sector in India
•Regulatory
•Complexity of subsidy structure and involvement of too many agencies such as MNRE,IREDA,SERCs etc.
•Land acquisition problems for exclusive installation and securing ‘Right of Way’ for taking turbines, blades and towers
•As per Wind Powers Association, 470 MW wind power worth of commission is ready and idle due to delay in signing of PPA’s
•In Aug 2013, CERC released an order mandating wind power producers to provide a forecast of their generation the following day on a quarter-hourly basis or face penalties. (Order is being challenged in CERC)
•Delays in acquiring land and obtaining statutory clearances
•Lack of an appropriate regulatory framework to facilitate purchase of renewable energy from outside the host state
23. Major Issues Affecting The Wind Energy Sector in India
•Investment related
•Capital expenditure much more as compared to conventional sources
•Moratorium of 12 months :-The cash flows from wind farms are generated only during the high wind season, typically lasting 4-6 months. Moratorium of 12 months from COD for repayment of principal to be stipulated in order not to land the project in trouble in case it gets commissioned during non wind season.
•Loans of Longer Tenure:-Due to low PLF wind farms require longer tenure loan of say 12-13 years to have a descent DSCR. May also require structured installments.
25. Foreign Investment Policy in Renewable Sector
•Foreign investors can enter into a joint venture with an Indian partner for financial and/or technical collaboration and for setting up of RE-based power generation projects.
•100% foreign investment as equity is permissible with the approval of the Foreign investment Promotion Board (FIPB)
•The Government of India encourages foreign investors to set up power projects on BOO basis. Investors are require to enter into a power purchase agreement with concerned states.
•No prior approval of the government is required to set up an industrial undertaking with Foreign Direct Investment (FDI) by NRIs or Overseas Corporate Bodies (OCBs)
•The RBI has permitted Indian companies to accept investment without obtaining prior approval from RBI, though investors are required to notify the regional office of RBI, of receipt of inward remittances within 30 days of such receipt.
26. Information Required for Getting a Project Financed
•A comprehensive wind monitoring study (minimum 1 year data) conducted at the site
•A project feasibility study by a credible consultant
•Proven expertise in managing a wind project or an agreement with a qualified 3rdparty project manager
•Zoning & site permitting approval
•Turbine performance data
•A complete interconnection details with grid
•A long term power purchase agreement (at least 10 years)
•A business, financial and risk management plan for the project including complete profroma
27. Risk & Mitigation
Risk
Mitigation
Wind Availability
Minimum 1-2 Year site specific data
Equipment's
Performance data, warranties
Operations & Maintenance
Experienced Managers, maintenance contracts
Revenue
Power purchase agreements
Construction
Fixed completion dates & penalties, performance bond
Force Majeure
Insurance
Transmission
Interconnection agreements
Tax Benefit Utilizations
28. Break-Up of Per MW Cost
S.No
Component
Amount
% of Total
1
Turbine & Accessories
3.68
63.1%
2
Civil Work
0.58
9.9%
3
Electrical Work
0.47
8.1%
4
Grid Integration
0.37
6.3%
5
Installation
0.11
1.9%
6
Others *
0.62
10.6%
Total
5.83
Note:-
•*Taxes, Road Work, Consultant fees etc.
•Operation & Maintenance cost–Rs0.5/kWh for first 5 years
Increase of 5% after that
30. Business Model Options
•Self Development
•Managing all resources over project life cycle
•Not recommended for first time developers
•Limited turn-key contract
•It involves self management of only the key resources (Land, Regulatory clearances etc.)
•End to End Solution
•Complete turn-key outsourcing over entire project life cycle
31. Revenue Model Options
•Sale of power to local utility under long term PPA at fixed preferential tariff
•Sale of power to local utility under long term PPA at dynamic APPC tariff + RE Certificate
•Set-off generated wind power against self consumption (captive) + RE Certificate
•Sale of power in market under open access + RE Certificate
32. Key Policy Benefits
•Preferential Feed-in-tariff under long term PPA
•Generation Based Incentive of INR 0.5 per unit of power in addition to preferential feed-in tariff
•Revenue from trading of carbon credits through CDM route
33. Way Forward For A Developer
•Identification of land/location based on the data of Centre for Wind Energy Technology (CWET).
•Wind monitoring station (WMS) can be setup under National Clean Energy Fund (NCEF) for collecting data and developing wind farm. (Notification issued on 11.07.2014)
•Existing location where data is measure for 20/25/30 m height may be considered for wind resource assessment at higher hub height of 100 m.
•50% fund to be provided by ministry and balance 50% by CWET depending on the usage by IPP
•Acquiring/collecting wind data of the location for power potential studies.
•790 wind monitoring station data available with CWET.
•Micro Siting –Conducting micro survey around the station and further micrositingconsidering the topography, contour, roughness etc.
•As of now 97 stations micro survey report available with CWET.
•Techno-Commercial feasibility studies of the identified locations.
•Preparation of detailed project report.
•Approval of DPR by respective State Govt.
•Construction Begins;
•Acquiring Land
•Placement of order to Equipment Supplier
•Erection
•Commissioning