Clean Energy and Regulation in India : Role and Challenges of Civil Society Participation - PowerPoint PPT Presentation

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

• 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

• 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

• 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

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

• 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

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

• Sporadic regulatory efforts to promote EE
• Maharashtra
• CFL DSM program - over 10 MW saving
• Load Management Charge
• Time of Use tariff, Capacitor programs

• 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 MW

ASCI Estimate: 225 MW

Projects Sanctioned: 270 MW

Existing Capacity: 220 MW

R E Potential:

Biomass – Maharashtra

Estimated Potential: 781 MW

Present 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 MW

WISE 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

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 – Maharashtra

Bagasse: 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 – Orissa

Project 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.

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

• 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

• 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 intervention in RE cases

• 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

• Resources and capability of CSIs
• Analytical resources - Technical, financial, legal
• Financial resources
• Hire analytical resources
• Long drawn, sustained interventions needed for success
• Stakeholder 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

• 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

M. Thimma Reddy

Shantanu Dixit

Member, Prayas (Energy Group), India

www.prayaspune.org/peg

shantanu@prayaspune.org

Electricity Governance Initiative

www.electricitygovernance.org