clean energy and regulation in india: role and challenges of civil society participation m. thimma...

Clean Energy and Regulation in India: Role and Challenges of Civil Society

Participation

M. Thimma Reddy

Shantanu Dixit

Prayas (Energy Group) India

Electricity Governance Initiative

Agenda

Overview Legal, Policy framework, Regulatory initiatives

Current Status of Clean Energy in five Indian states Challenges to maintaining CE momentum Role and importance of civil society participation Barriers to enhanced CSI Participation : Lessons

from five Indian states Concluding comments

Electricity Act 2003 : Promising Provisions for Clean Energy

Preamble : Promotion of efficient and environmentally benign policies

S. 61, S. 86 : Promotion of co-generation and renewable energy sources (RE)

- Tariff, Grid Connectivity, Sale to any person, Specify % of RE use

S. 61 : Tariff to encourage efficiency, economical use of resources, optimum investments

National Policies: (EP 05, TP 06, NAPCC 08)

Strengthened mandate for clean energy

Full exploitation of feasible RE potential Preferential feed-in tariff High priority to Demand Side Management

(DSM) Adoption of load management techniques,

Time of Use tariff RE contribution target of 15% by 2020

Regulatory Initiatives:Accelerating Deployment of Clean Energy ..1

Central Regulatory Commission Initiatives Terms and conditions for RE tariff determination Renewable Energy Certificates Multi-state program for accelerated deployment

of efficient appliances

Regulatory Initiatives:Accelerating Deployment of Clean Energy ..2

Technology specific feed in tariffs (yr 2002 to 2006) Typical tariff preferential of about Rs. 0.80 – 1.20 / kWh Higher rate of return

Long term power purchase agreements (13 to 20 years) Connectivity Payment security

Regulatory Initiatives: Accelerating Deployment of Clean Energy ..3

Renewable portfolio standards / Renewable Purchase Obligations (2006 –2010)

State RE Contribution Target (% MU) FY 2010-11

Maharashtra 6%

Andhra Pradesh 5%

Tamil Nadu 14%

Gujarat 5%

Orissa 4.5%

Clean Energy Deployment: Current status of renewables

State RE Capacity (MW) 2009

RE Contribution (%)

Maharashtra 2370 3757 MU / 3.95% (2009)

Andhra Pradesh 644 1163 MU/ 1.75% (2009)

Tamil Nadu 4703 7615 MU / 11.96% (2008)

Gujarat 1574 ~1,100 MU / 2.23 % (2009)

Orissa -- 375 MU/ 3.2% (2009)

Clean Energy Deployment: Current status of energy efficiency

Sporadic regulatory efforts to promote EE Maharashtra

CFL DSM program - over 10 MW savingLoad Management Charge

Time of Use tariff, Capacitor programs

Clean Energy Deployment: Challenges to maintain momentum

Un-even development across states Emphasis on high positive cost RE options, while

low / -ve cost EE getting less attention Increasing tariff impact (MH ~ Rs. 900 Crore/Yr.) Lukewarm, at times, negative response by some

utilities and large consumers (Spenser's case)


R E Potential:Biomass – Andhra Pradesh

NEDCAP Estimate: 627 MWASCI Estimate: 225 MWProjects Sanctioned: 270 MWExisting Capacity: 220 MW


R E Potential:Biomass – Maharashtra Estimated Potential: 781 MWPresent installed capacity is only 12% of the estimated

potential. Already availability of biomass fuel has become a problem

“…the price of the biomass is also increasing because of the unavailability of biomass fuels” (para 22, Order Dt. 14-12-2009)


R E Potential:

Biomass – Tamil Nadu

2006 Estimate: 500 MW

2009 Estimate: 868 MW

MNRE Estimate: 967 MW

Exiting Capacity: 272 MW


R E Potential:Wind – A.P. NEDCAP Estimate: 2110 MW InWEA Estimate: 8675 MW

Maharashtra: MEDA Estimate: 6500 MW ABPS Estimate: 4584 MW

Orissa: OREDA Estimate: 1700 MW WISE Estimate: 2430 MW


R E Potential:

Solar – Orissa

OREDA Estimate: 14,000 MWWISE Estimate: 5,000 MW


Past Policies: Capital subsidies – Accelerated depreciation The Scheme was misused Generation Based Incentive Who will finance RE intervention? Present attention is to add massive conventional

capacities RE is not being looked at as an alternative


Government Intervention:A.P. Wind Tariff:GoAP Order Dt. 11-04-2008 = Rs.3.10/U

GoAP Order Dt. 09-09-2008 = Rs.3.50/U

APERC Order Dt. 01-05-2009: adopted corresponding tariff

A.P. Biomass:GoAP Order Dt. 12-11-2008 = Rs.3.79/U

APERC Order Dt. 31-03-2009 = Rs.3.95/U

These Orders were given under S.108 of E. Act 2003


Lack of Coordination: Multiple departments are involved Lack of coordination among these departments Orissa: OREDA, Dept. of Science and Technology,

Irrigation Dept., State Technical Committee, GRIDCO

Tamil Nadu: TEDA, TNEB, Irrigation Department


Lack of capacity of EDAs: Do not have adequate manpower The existing staff does not have capacity Some times/places All India Service

personnel head them, and they consider it as a punishment posting

Political interference


Lack of Transparency: Capital Cost: A.P. – Wind Energy

APERC approved capital cost: Rs. 4.70 Crore/MW

Client Submission Date

Cost (Rs. Cr/MW)

Gujarat Alkalies 17-03-2007 5.14

Chennai Port Trust 04-04-2007 5.36

Rajasthan Mines&Minerals 23-04-2007 5.16

ONGC - Gujarat 15-06-2007 6.08

BEL - Karnataka 16-06-2007 7.45


Lack of Transparency:Fuel Price – Maharashtra Biomass: MERC Order Dt. 14-12-2009: Biomass

variable cost increased from Rs. 1.34 per unit to Rs. 3.28. Total cost increased to Rs. 4.98 per unit

“discrepancies and reliability of data was a major issue in arriving at necessary conclusion”. (Para 54)

Same biomass price continued in RE Tariff Regulation 2010 (Para 46.1)


Lack of Transparency:Fuel Price – MaharashtraBagasse: MERC Order Dt. 11-01-2010: Cogen power

tariff increased from Rs. 3.50 per unit to Rs. 4.79 due to hike in bagasse price

“The Petitioner has neither provided any statistics, computations of cost of generation nor any supporting documents for the operational cogeneration projects” (Para 49)

Same bagasse price continued in RE Tariff Regulation 2010 (Para 55.1)


Lack of Transparency:

Project Cost – OrissaProject cost decided by State Technical Committee Incase of dispute OERC advises the parties to settle

it through discussions Then OERC approve the outcome of the

discussions


Lack of Transparency: Solar tariff

What is appropriate tariff for Solar power?Whether competitive bidding provides solution.

Solar PV Rs/U

Solar Thermal Rs/U

MNRE 2007 15.0 13.0

Gujarat Policy 09 12.0 09.0

RERC 2009 15.2 13.2

CERC 209 17.9 15.3


Absence of Performance Monitoring:

EDAs Pollution Control Boards ERCs


Environmental and Social Impacts:

Biomass Power Plants: A.P.

Municipal Solid Waste based Plants

Wind Energy Plants

Civil Society Participation: Critical for addressing emerging challenges

Support for innovative solutions and managing trade-offs

Push for balanced, rational but ambitious deployment of clean energy

Make regulators, utilities, project developers and large consumers accountable

Civil Society Participation: Huge opportunity

Many spaces for CSI intervention Regulatory commissions required to function in

a transparent manner (public notice etc.) CSIs can file petitions Participate in public hearings Large no. of ‘green’ CSIs

Create ‘demand pull’

Civil Society Participation: ….. but limited use

Civil society intervention in RE casesEvent A.P. Gujarat MH Orissa T.N.

1st

RPPO 9 0 1 1 2

2nd

RPPO 6 NA NA NA 6

Wind – 6Biomass – 1Bagasse – 4

Small Hydro – 0MSW – 1Solar – 0

Wind – 1Solar – 0

0 2

Bagasse - 3

2nd

Tariff Order

6 6

1st

Tariff Order

9 Wind – 1

Barriers to enhanced CSI ParticipationLessons from five Indian states

Awareness amongst CSIs Role and process of regulatory decision making Opportunities / Spaces for CSI intervention Potential and feasibility of CE options Importance of appropriate RC and utility actions

Barriers to enhanced CSI ParticipationLessons from five Indian states ..2

Resources and capability of CSIs Analytical resources - Technical, financial, legal Financial resources

Hire analytical resourcesLong drawn, sustained interventions needed for

successStakeholder engagement and interactions


Transparency about RE generation costs In-adequate information about costs and performance

norms Significant upward changes in fuel / capital costs Lack of transparency about nature and scale of subsidies,

concessions Concerns about excessive tariff and profiteering by

developers Consumers’ inputs not taken into account: e.x. AP

Concerns about ‘Is the premium reasonable ?’


Effective performance monitoring systems Little monitoring of project performance after

clearances and power purchase agreements by authorities

Concerns about ‘is the premium justified?’


Consideration of social and environmental impacts of RE generation Biomass projects – De-forestation, un-availability of

cooking fuel Wind – Compensation for land, impact on common

property rights

Recognition of CSIs role ERCs, Utilities, Developers should appreciate and

encourage role of CSIs

Concluding comments

Enhanced CSI participation in RC is crucial for sustained and ambitious CE program

RCs and funding agencies can play a significant role in enhancing CSI role RCs – Ensure better transparency (costs, potential ) and

performance monitoring Development organizations and funding agencies – Support

Awareness and capacity building of CSIs Government and Project Developers – Transparency about

costs and performance, mechanisms to address local social and environmental concerns

Thank you.

M. Thimma ReddyShantanu Dixit

Member, Prayas (Energy Group), Indiawww.prayaspune.org/[email protected]

Electricity Governance Initiativewww.electricitygovernance.org

clean energy and regulation in india: role and challenges of civil society participation m. thimma...

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