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Current Trends/Status in Solar Power Market

Workshop on Challenges and Issues in Solar RPO


Compliance/RECs

Hyderabad
May 23, 2013
Anish De
F-Mercados EMI

AF-Mercados EMI

Current Installed Capacity and Power Supply Position:


Persistent Deficits In A Changing Supply Mix

Installed Capacity (MW)

(Deficit %)

All India Installed Capacity (as of 31st March


2013): Technology Break Up

Hydro

Renewable

Nuclear

The current capacity stands at around 223 GW

Generation mix continues to be following a flat


trend for the past four years with coal being the
dominant source

Coal accounts for about 56%,Hydro around 18%,


and Gas around 9% of the total installed capacity

Share of renewables have increased over the past,


from 2% in 2003-04 to 6% in 2006-07 and now to
12% in 2012-13

AF-Mercados EMI

(Deficit %)

Thermal

The country is in an overall deficit.

North Eastern, Western, and Southern region


experience larger regional imbalances.

Solar Resource in India


Among the various renewable energy
resources, solar energy potential is
the highest in the country.

The equivalent energy potential is


about 6,000 million GWh of energy
per year. As compared to this, the
present level of generation of electricity
in 2008-09 from all resources was 0.7
million GWh.
The states that have the maximum
insolation are Rajasthan and Gujarat.
In addition, the states of Tamil Nadu,
Andhra Pradesh, Madhya Pradesh,
Maharashtra and Chhattisgarh also
enjoy good insolation levels.
Most of these states are in regions
where the unmet electricity demand
as well as the growth in demand for
electricity is high

AF-Mercados EMI

Cumulative Capacity Addition of Solar Power

Sr. No.
1
2
3
4
5

States
Andhra Pradesh
Arunachal Pradesh
Chhattisgarh
Delhi
Goa & UT

Installed
Capacity * (MW)
23.15
0.025
4
2.525
1.685

Gujarat

824.09

7
8
9
10
11
12
13
14

Haryana
Jharkhand
Karnataka
Kerala
Madhya Pradesh
Maharashtra
Odisha
Punjab

7.8
16
14
0.025
11.75
164.5
13
9.325

15

Rajasthan

517.25

16
17
18
19

Tamil Nadu
Uttarakhand
Uttar Pradesh
West Bengal

17.055
5.05
12.375
2

EA 2003 : NEP (2005) and NTP (2006)

NAPCC:15% RPO by 2022

Provision for SPO in NTP(3% solar)

NSM Phase 1, Batch 1, Projects under Gujarat Solar Policy

NSM Phase -I, Batch 2, Solar REC based projects

1800

1645.61

1600
1400

MW

1200

941.24

1000
800
600
400
200
2.11

2.12

2.12

2006-07

2007-08

2008-09

10.28

35.15

0
2009-10 2010-11
Year
Solar Installed capacity (MW)

2011-12

2012-13

Total
1645.605
Note : The data is compiled on the basis of
information obtained from IREDA, NVVN, State
Agencies and Project Developers
* As on 30th April 2013

Several states such as Gujarat, Rajasthan, Tamil Nadu, Chhattisgarh, Andhra Pradesh, Orissa, Uttar
Pradesh, Madhya Pradesh, Kerala have come up with solar Policies to promote solar power in
respective
states
AF-Mercados
EMI
4

Current solar power business models


Bundled

NVVN
NVVN

Sale to Utility

Power

Sale through state policy or REC route

Solar
Power
Plant

Utility/
Consumer

(i) FiT + GBI (PPA) (ii) APPC+ REC (iii) Bid (iv) Captive
Merchant Sale

Px /
Traders

Solar
Radiation

Electricity
Generation

Market Price + REC

Surplus power sale to utility + REC (if grid connected)


Net metering

Solar
RoofTop
Surplus power post self
consumption can be injected into
the grid

Utility

Power from utility


Surplus power sale to Third party+ REC (if grid
connected)
PPA Price

Consumer
/ Third
Party Sale

During Phase II of NSM, Viability Gap Funding for solar power is being introduced. SECI will
invite Expression of Interest from DISCOMs and will procure power from sellers and sell to
5
DISCOMS with a trading margin.

AF-Mercados EMI

Initiatives for Solar capacity addition

Capacity
Addition
National Solar Mission*
NVVN
Bidding

Migration
Scheme

RSSPV
(GBI
Scheme)

State
Policies

Other
schemes

REC
Scheme

~ 446 MW

~ 53 MW

~ 91.8 MW

~ 829 MW

~108 MW

~118 MW

Total
~1645 MW
(as on 30th April 2013)

AF-Mercados EMI

* Refer to
Annexure I

National level Solar RPO Target


Tariff Policy stipulates SPO target of 0.25 % by 2013, which will increase to
3% by 2022.
Year

Solar RPO (%)

Solar Capacity Requirement for RPO compliance


(MW)

2013-14

0.50%

3,197

2014-15

0.75%

5,165

2015-16

1.00%

7,420

2016-17

1.25%

9,994*

2017-18

1.75%

15,080

2018-19

2.25%

20,901

2019-20

2.50%

25,041

2020-21

2.75%

29,708

2021-22

3.00%

34,961

Source: Demand as per CEA Power Supply Position 2012-13, Growth rate as per 18th EPS

CUF based on CERC norms are used to arrive at MW capacity

To achieve 3% RPO compliance by 2022, the country would need ~35,000MW of


solar capacity
* Refer to Annexure
II for State wise
break-up

AF-Mercados EMI

Case Study Comparative Analysis for UP & AP


Parameters
Energy Requirement by 2017
(MU)
Energy Availability by 2017
(MU)

Uttar Pradesh

Gap (MU)
Gap(%)

Andhra
Pradesh

106,134

129,821

81,705

112,274

(24429.25)

(17547.11)

-23%

-14%

Source: AF-Mercados EMI database

Exceeding Solar Purchase Obligation (SPO) will


only help in bridging the demand supply gap.

AF-Mercados EMI

Case Study Comparative Analysis for UP & AP


Parameters
SPO target by 2017 (%)
SPO (MU)
SPO Requirement (MW)
Tie-up capacity achieved till date (MW)
Capacity in Pipeline under state policy** (MW)
Potential Allocation from Phase 2 (MW)
Balance to be met (MW)

Uttar Pradesh Andhra Pradesh


1.25%
1.25%
1,326.67
1,622.76
797.09
974.98
93.38
77.7
285
314

418.93

582.89

Inviting of bids by State Distribution Licensees as per the


State Policy
Procurement of Renewable Energy Certificates (RECs)
Direct compliance of RPO by Large Consumers (OA/Captive
users, HT Consumers)

Means to bridge the


above gap

Separate provisions for Green Tariff in state tariff orders


Solar Rooftop (subject to resolution of regulatory issues)
** Tendered capacities in UP 200 MW and AP 1000 MW; capacities not yet allocated in both states, hence not considered.

AF-Mercados EMI

Current state-wise SPO targets


States
Andhra Pradesh
Arunachal
Assam
Bihar
Chhattisgarh
Delhi
Gujarat*
Haryana
Himachal Pradesh
Jammu Kashmir
Goa & UT
Jharkhand
Karnataka*
Kerala
Madhya Pradesh
Maharashtra
Manipur
Mizoram
Meghalaya
Nagaland
Orissa
Punjab
Rajasthan

2012-13
0.25%
0.10%
0.15%
0.25%
0.50%
0.15%
1.00%
0.05%
0.25%
0.25%
0.40%
1.00%
0.25%
0.25%
0.60%
0.25%
0.25%
0.25%
0.40%
0.25%
0.15%
0.07%
0.75%

2013-14
0.25%
0.15%
0.20%
0.50%

2014-15
0.25%
0.20%
0.25%
0.75%

2015-16
0.25%

2016-17
0.25%

2017-18

2018-19

2019-20

2020-21

2021-22

1.00%

1.25%

1.50%

1.75%

2.00%

2.50%

3.00%

0.20%

0.25%

0.30%

0.35%

0.10%
0.25%

0.25%

0.25%

0.25%

0.50%

0.75%

1.00%

2.00%

3.00%

0.25%
0.25%
0.80%
0.50%

0.25%
0.25%
1.00%
0.50%

0.25%

0.25%

0.25%

0.25%

0.25%

0.25%

0.25%

0.20%
0.13%
1.00%

0.25%
0.19%

Sikkim

0.50%

0.30%

Not regulation issued for RPO by the Power Department

Tripura
Tamil Nadu*
Uttarakhand
Uttar Pradesh*
West Bengal

0.10%
0.05%
0.05%
1.00%
0.10%

> Tariff policy Target by 2013

0.15%

0.20%

0.25%

0.30%

< Tariff policy Target by 2013

= As per Tariff policy Target by 2013

There should be uniformity in RPO trajectory specified by different states.

Also, states need to set RPO targets as per tariff policy guidelines

AF-Mercados EMI
* Same SPO level holds good unless notified

10

SPO Compliance Status (2012-13) Root of concern.


Gujarat

Punjab
Karnataka

Rajasthan

Uttarakhand
High
Compliance

Orissa

100%
Compliance
Jharkhand

West Bengal

Assam
Low
Compliance

Tamil Nadu

Chhattisgarh
Andhra Pradesh
Maharashtra

Haryana
Uttar Pradesh

Delhi

0.25%
(As per Tariff policy)

Low RPO Levels

AF-Mercados EMI
Based on the tied up capacities by each state till

Kerala
HP J & K

11

31 st

March 2013

MP
Goa & UT

Bihar

High RPO Levels

Majority of
states
under low
compliance

State RPO regulations Few select states


State

Regulations

Bihar

If solar certificates are not available in a particular year, then in such cases,
additional non-solar certificate shall be purchased for fulfillment of the Renewable
Purchase Obligation (RPO).

Gujarat

The RPO regulations are not applicable on captive as well as open access
consumers as their applicability is yet to be notified.

Karnataka

A Generating Company opting for REC Scheme shall sell the electricity generated
by it to ESCOMs of the State at the pooled cost of power purchase

Punjab,
Maharashtra
,Jharkhand

They have allowed carry forward of RPO to subsequent years

State should provide for adequate provisions for solar purchase in their
Annexure IV
ARRs
The RPO regulations need to be harmonized as far as possible between
states to send out consistent messages and improve investment climate
AF-Mercados EMI

12

Solar PV & Solar Thermal Cost & Tariff - Benchmark


Cost of Solar PV & Solar
Thermal
Benchmark Cost & Tariffs

Rs Cr/MW

20.00
15.00
10.00
5.00

0.00
2010-11

2011-12

2012-13

2013-14

Rs Cr/MW 2010-11
Solar PV
15.2
Solar
Thermal
14.2

2011-12
14.42
15

2012-13
10
13

2013-14
8
12

FY
Solar PV

Solar Thermal

This has resulted in reduction in benchmark tariffs as shown below:

Solar Tariff
Rs./KWh

20.00

Rs/Kwh 2010-11
Solar PV
17.91
Solar
Thermal
15.31

15.00
10.00
5.00
0.00
2010-11

2011-12

2012-13

2013-14

FY
Solar PV

AF-Mercados EMI

Solar Thermal
13

2011-12
15.34

2012-13
10.39

2013-14
8.75

15.04

12.46

11.9

Solar PV & Solar Thermal Tariff - Bidding


9.5

Introduction of
competitive bidding
has brought down
tariffs significantly, to
below the Solar REC
Floor price

Rs./Kwh

8.5

8
7.5
7
6.5
6
Karnataka

Madhya
Pradesh

Solar PV (INR/kWh)

Orissa

Gujarat

Tamil Nadu

CERC Tariff (INR/kWh)

Andhra
Pradesh

Rajasthan

REC Floor Price (INR/kWh)

State FiT

Solar Thermal
(INR/kWh)
Solar PV
(INR/kWh)
CERC Tariff
(INR/kWh)
REC Floor Price
(INR/kWh)

Karnataka

Madhya
Pradesh

Orissa

Gujarat

Tamil Nadu

Andhra
Pradesh

Rajasthan

11.13

11.55

8.34

8.05

8.63

8.28*

6.49

6.45

8.75

8.75

8.75

8.75

8.75

8.75

8.75

9.3

9.3

9.3

9.3

9.3

9.3

9.3

*TANGEDCO has revised the tariff to 6.48/Kwh for first year which on Levelised basis works out to
be Rs 8.28 /Kwh (arrived at by considering current CERC discount rate of 13.10%)

AF-Mercados EMI
* This is the first year tariff; INR 8.28 is the levelized tariff - TANGEDCO 14

Comparison of Solar Tariffs with Case-1 bids for Thermal


Power
TN case 1 bid*

UP Case 1 bid*

Min Tariff

4.84

4.48

Max Tariff

9.85

7.1

Wt average
Tariff

5.57

5.53

VGF proposes to bring it down to


level with conventional power

NSM-I
(Feb
2010)

NSM-II
(Feb
2011)

Karnataka
(Aug-11)

Rajasthan
(Nov-12)

TN (First year
Tariff);Dec-12

Andhra
Pradesh
(Dec-12)

Min Tariff

10.95

7.49

7.94

6.45

5.97

6.49

Max Tariff

12.76

9.44

8.5

8.45

17.95

10.98

Wt Av
Tariff

12.12

8.77

8.34

7.59

8.28*

6.49**

VGF

5.45

Tariff for solar projects have reduced significantly over last 2 years
This should facilitate SPO compliance through purchase of power
*TANGEDCO has revised the tariff to 6.48/Kwh for first year which on Levelised basis works out to
be Rs 8.28 /Kwh (arrived at by considering current CERC discount rate of 13.10%)
** AP has revised the tariff to Rs 6.49/Kwh on Levelised basis as asked the bidders to match it

AF-Mercados EMI

15

*Refer
Annexure III

REC framework has the ability to facilitate compliance by


resource deficit states but faces implementation
challenges
Past Trend of the REC Market at IEX (Solar)
50000
No. of RECs

40000

30000

13500

13400
12750

13000

12680

12850

13000

12720

12800
12500

12620

12500

12500

12500

20000

12206

12000

10000
0

11500
May-12 Jun-12

Jul-12

Buy Bid (REC)

Aug-12

Sep-12

Oct-12

Nov-12

Sell Bid (REC)

Dec-12

Jan-13

Feb-13

Mar-13

Total Volume Traded (REC)

Prices have come down - possible reasons :


Non-compliance of RPO/Lack of interest in REC
Further, unsold REC stocks have brought prices under pressure

AF-Mercados EMI

16

Apr-13

Clearing Price (Rs./REC)

Solar REC Projects- Status and Challenges


States
Andhra
Pradesh
Chhattisgarh
Madhya
Pradesh
Maharashtra
Odisha
Rajasthan
Tamil Nadu
Grand Total

Capacity
Accredited(MW)

No. of projects
accredited

Capacity Registered
(MW)**

No. of projects
registered

5.75
2

1
1

5.75
2

36.225
30.15
3.5
75.75
1.055
157.43

40
17
2
27
1
90

24.33
17.15
67.75
1.055
118.035

23
4
16
1
45

**All projects registered are commissioned.

Lack of clarity on solar REC price post 2017


Challenges
faced by REC
based projects

Solar REC Price higher than solar Feed-in-Tariff


Reducing trading volumes due to lack of compliance
Lack of clarity regarding applicability of REC mechanism for solar
rooftop installations

AF-Mercados EMI

17

Current Status of REC Market (Solar & Non-solar)


Participation Trend
100.0%
90.0%
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%

Voluntary

CPP

Open Access

Discom

Buyers : Largely distribution companies in terms of volume, however few


captive consumers are also participating.
Very few Discoms participating (Torrent, Tata Power, REL, Chandigarh, DDN,
JUSCO)
Government Discoms are still absent in the market

AF-Mercados EMI

18

Conclusions
Solar power can significantly address power shortage issues
Power procurement through competitive bidding will help states to fulfill their
solar RPO targets at reasonable costs, and complement initiatives like JNNSM
Phase II
Variety of compliance options (Solar power procurement/REC
procurement/Direct compliance by large consumers) can make compliance
practicable
Active policy and regulatory interventions are required for ensuring market
development, implementation of financeable business models, compliance.

Consistency in regulations of states on RPO, REC, Net meeting for rooftop, and
other related aspects would be highly desirable

AF-Mercados EMI

19

Thank You

AF-Mercados EMI

21

Annexure I: Summary status of projects under National Solar


Mission till 2012-13
Back
Projects

Project
Allotted

Project
Commissioned***

Wt Av
Tariff(Rs/Kwh)

CERC Tariff
(Rs/Kwh)

MW
Solar PV projects through
NVVN (Batch I)

Solar Thermal Projects


Through NVVN
Solar PV
Solar
Thermal
RPSSGP Scheme (PV)
PV
projects
through
NVVN (Batch II)
Migration
Scheme

MW

150

136.4*

12.16 (32%
reduction)

470

11.48

54

50.5

30*

2.5

98.5

91.80

350

Other schemes**
TOTAL

290

8.77 (43%
reduction)

17.91

15.34

19.6
591 MW

* Two projects were cancelled


**Includes demonstration projects, pilot projects, tail end projects
*** as on 30th April 2013

*The solar thermal projects are scheduled to be commissioned by later half of 2013.

AF-Mercados EMI

Annexure II: Solar Power Capacity Requirement by States by 2017

Back

Capacity
Capacity tied likely to be
- JNNSM
allocated
Phase -1
under Phase(MW)
2 of
JNNSM(MW)*

Gap to be
fulfilled by
States(MW)

Sr.
States
No.

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29

Andhra Pradesh
Arunachal Pradesh
Assam
Bihar
Chhattisgarh
Delhi
JERC (Goa & UT)
Gujarat
Haryana
Himachal Pradesh
Jammu and Kashmir
Jharkhand
Karnataka
Kerala
Madhya Pradesh
Maharashtra
Manipur
Mizoram
Meghalaya
Nagaland
Orissa
Punjab
Rajasthan
Sikkim
Tamil Nadu
Tripura
Uttarakhand
Uttar Pradesh
West Bengal

Demand
(2016-17)
(MU)

RPO Target
(2016-17)

139457
1.25%
823
1.25%
9556
1.25%
25602
1.25%
26497
1.25%
37122
1.25%
17002
1.25%
104102
1.25%
55918
1.25%
10989
1.25%
16492
1.25%
8712
1.25%
85455
1.25%
26598
1.25%
77377
1.25%
197671
1.25%
959
1.25%
677
1.25%
2801
1.25%
764
1.25%
31372
1.25%
63171
1.25%
72393
1.25%
537
1.25%
118724
1.25%
1324
1.25%
14559
1.25%
126323
1.25%
57735
1.25%
Total Solar Power
Requirement (2016-17)
(MW)

Solar Power
Capacity
Required (MW)

State
initiatives
(MW)

1047.35
6.18
71.77
192.28
199.00
278.79
127.69
781.83
419.96
82.53
123.86
65.43
641.79
199.76
581.12
1484.55
7.20
5.09
21.03
5.73
235.61
474.43
543.68
4.03
891.64
9.94
109.34
948.71
433.61

2.20
0.03
0.00
38.00
0.00
2.53
1.69
968.50
0.00
0.00
0.00
0.00
89.00
0.03
206.50
163.50
0.00
0.00
0.00
0.00
50.00
-0.67
65.65
0.00
274.11
0.00
0.05
0.38
2.05

75.50
0.00
5.00
0.00
29.00
0.00
0.00
0.00
8.80
0.00
0.00
36.00
70.00
0.00
5.25
37.00
0.00
0.00
0.00
0.00
28.00
52.50
340.50
0.00
12.00
0.00
5.00
93.00
50.00

314
2
22
58
60
84
38
235
126
25
37
20
193
60
174
446
2
2
6
2
71
142
163
1
268
3
33
285
130

9,994

1,864

848

3,000

AF-Mercados EMI
* State wise allocation of capacity under Phase II done in proportion to the states energy demand

655
4
45
97
110
193
88
285
58
87
10
290
140
195
838
5
4
15
4
87
280
3
338
7
71
571
251
4730

Back

Annexure III: Case 1 bid results


Tamil Nadu Bid
DB Power
Ind Bharat
Jindal Power Ltd
Dhariwal Infra Ltd
Balco
PTC Meenakshi
(Adhunik Power)
KSK Mahanadi
IL&FS Tamilnadu
GMR
Coastal Energen
OPG
Simhapuri Energy Ltd
(Madhucon)

Capacity
208
500
400
100
200

UP Bid

100

5.45

500
540
150
600
74

5.49
5.61
5.69
6.11
7.50

100

9.85

AF-Mercados EMI

Capacity
Tariff
NSL
300
4.48
RKM Powergen
350
4.886
PTC - TRN ACB
390
4.886
Lanco - Babandh
424
5.074
Jindal
300
5.419
KSK Mahanadi
1000
5.443
PTC - Moser Baer
360
5.73
Navyuga (Krishnapattnam Power
800
5.843
Company limited)
PTC - DB Power
203
5.97
Indiabulls Maharashtra (Nasik)
1200
5.97
Indiabulls Maharashtra (Amravati)
800
6.3
Lanco - Amarkantak
1073
6.303
NCC
200
6.425
Lanco - Vidharba
474
6.643
PTC - East Coast
300
6.819
PTC - DB Power Vindyachal
302
7.1
RPG Dhariwal
245
Disqualified
Reliance (Butibori) Maharashtra
270
Disqualified

Tariff
4.84
4.91
4.96
4.97
5.05

24

Annexure IV: State Initiatives for Solar Projects (1/3)


State

Announced
(MW)

Tendered
(MW)

Awarded
(MW)

Under
Commissione
Installation
d (MW)
(MW)

Gujarat

968.5

968.5

824.09

Maharashtra

150

125

80

80

130

Yet to awarded

Karnataka

Back

Additional Notes
No bidding carried out
during FY 13
State has come up with
roof-top policy for grid
connected systems
40 MW commissioned
in Rajasthan (RPO)
under open access
Under
the
REC
mechanism the project
developers can sell
their power at APPC
only to the ESCOMS.

200

Rajasthan

600 (by 2017)

100

75

Odisha

75

25
25
25

25
25
-

A Maximum capacity
of 100 MW can be
installed under this
scheme.
RRECL (off-taker) will
in turn sell power to
state DISCOMs

Several states have invited bids to fulfill their SPO targets


AF-Mercados EMI

25

Back

State Initiatives for Solar Projects (2/3)


Announced
(MW)

State

Tendered
(MW)

Awarded
(MW)

Under
Commissione
Installation
d (MW)
(MW)

Tamil Nadu

3000

1000

266

Andhra Pradesh

1000

1000

Yet to be
awarded

Additional Notes
Tender for 1000 MW;
bids received for 499
MW; finally only 266
MW of solar power
projects allocated
State has included
net
metering
provision in state
solar policy
Bidders are required to
match the L1 tariff of
INR 6.49/kWh
State has also come
up with Net metering
policy to promote
solar
A separate category
for green power tariff
has been created in
retail supply tariff
order in FY 14 with a
tariff
of
INR
10.78/kVAh

Several states have invited bids to fulfill their SPO targets


AF-Mercados EMI

26

Back

State Initiatives for Solar Projects (2/3)


State

Punjab

Announced
(MW)
300

Tendered
(MW)

Awarded
(MW)

300

Yet to be
awarded

Under
Commissione
Installation
d (MW)
(MW)
-

Kerela

Madhya Pradesh

200

200

200

Bihar

150

150

Yet to be
awarded

38

Additional Notes
PEDA has released
RFP for 300 MW in
March 2013
State has initiated a
solar roof-top scheme
for 10,000 households
in the state
State has introduced
roof-top policy for offgrid systems
Bidding categories:
I: Competitive bidding
II: Captive/3rd part
sale within or outside
the state
III: REC
IV: Projects under
JNNSM
38 MW have been
awarded at the feed
in-tariff:
The 150 MW RfP to be
allocated
through
competitive
bidding
also promotes Pisciculture

Several
bids to fulfill their SPO targets
27
AF-Mercados
EMI states have invited