Solar Rooftops in India

Transcription

1 Solar Rooftops in India Global Summit on Smart, Secure and Sustainable Cities 18 July 2016, Royal Berkshire -UK

2 RE Development in India 2

3 RE Historic Trends and Growth Enablers Power Restructuring and National Guidelines on Tariff, Inter- Connection and Third Party Sales Electricity Act 2003 NEP, 2005 SERC to Determine Preferential Tariff Promote Private Sector Participation in RE Tariff Policy,2006 DISCOM Shall Fix RPO DISCOM to Procure RE Power Through Competitive Bidding NAPCC Guidelines CERC RE Tariff Regulation JNNSM Guidelines REC Regulation JNNSM Phase II Guidelines FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 Solar Wind Bio- Mass WtE SHP Total 3

4 Renewable Energy: Installed Capacity and Generation RE Installed Capacity (as on May 2016) Wind Solar Biomass SHP WTE RE Capacity in GWs CAGR 17.24% FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Key Statistics Key Drivers Cumulativecapacityof42,752 MWaddedasonMay2016 RE capacity comprises 14% of total generation capacity of India Wind capacity has the lion s share among RE technologies (around 65%) RE generation contributes to ~7% of total generation of the country Policy of Accelerated Depreciation, concessional import duty FIT for RE projects(for both inter and intra state projects) GBI for encouraging generation and IPPs RPO and REC Mechanism JNNSM for solar capacity addition NAPCC with national level targets for RE procurement 4

5 RE Capacity Addition Targets NAPCC RE Invest 2015 NAPCCtargetof5%forREprocurementin2010 Targettoincreaseby1%eachyeartoreach15%by2020 CEA Perspective Plan for FY 2032 CEA has projected RE capacity additions till 2032 Targets175GWby2022 Includes 60 GW from wind, 100 GW from solar and15gwfromotherre REpenetrationleveltoincreaseby8%,18%upto20%by nature 2032 COP -21, Paris 90% of the targeted RE capacity addition planned from wind and solar source which are inherently variable in 18 % 440 GW >20 % Reducing carbon emission intensity levels by 35% by 2030 compared to 2005 levels INDCs Commitment -40% of the total installed power generation capacity would be from non-fossil fuel sources by % 38 GW 175 GW Wind Solar Biomass SHP NTP Amendments 8% of electricity consumption shall be from solar energyby Mar 22 RGO (Renewable Generation Obligation): New coal based plants to establish RE capacity Promotion of micro grids and ancillary services for RE Waiver of inter-state charges for wind and solar 5

6 Policy and Regulatory Provisions for RE 6

7 The Electricity Act Mandates Regulators to Promote Renewable Energy Area of jurisdiction for RE limited to within state boundary SERCs to be responsible for all matters related to renewable energy Preferential Tariff/ FIT Determination Contractual Mechanism for Promotion of RE Technologies Role of Regulators Specifying RPO Ensuring Connectivity to Grid 7

8 Renewable Energy Policy Initiatives National Solar Mission Government specified targets for capacity addition in both grid/off-grid solar : Biggest demand pull program globally High quantum availability reduces tariff Three rounds of bidding for solar projects have happened since its inception Payment security increases investor confidence Solar Park Scheme (Draft) Government support for large scale solar parks: Offer pre-existing infrastructure facilities Competitive advantage of plugging in projects SECI is the nodal agency for central support Biomass and Cogeneration Specified targets to be achieved within a time frame: Support for fuel security Robust mechanism to define fuel prices Command area specifying a minimum radius for every power plant Industrial cogeneration has high potential and is relatively untapped on an organized scale Scaling Up Solar Energy Government to scale up solar through three key measures: Large scale deployment of rooftop projects Increased pace of grid connected projects Thrust on large scale projects (100 MW min.) Government ambitions for 100GW in six to eight years National Wind Mission and Offshore Policy (Draft) Defined targets with aggressive frameworks for on/off shore wind, small wind, hybrid and other technologies: Thrust on increased local manufacturing Resource allocation for faster deployment Repowering of old wind machines Single window clearance Sea bed lease arrangement Grid connectivity and evacuation of power Strengthening of Transmission Infrastructure Development of network specifically for wheeling of RE power: Integration of existing grid with green corridor Strengthening of infrastructure will assist developers in accurate forecasting of generation 8

9 Evolution of Solar Sector in India 9

10 Solar Growth of Installed Capacity From Total Installed Solar Generation Capacity as of March 2016 Is 6.8 GW 8,000 Installed Solar Capacity INDIA 7,000 6,763 MW 6,000 Installed capacity in 5,000 4,000 3,000 2,000 1,689 2,647 4,575 1, FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 Rapid Growth of Solar Energy in India After the Announcement of National Solar Mission in

11 Solar Scale Up Plan: 100 GW Category 1: Rooftop Projects (Target -40 GW) Category 2: Large Scale Projects (Target -60 GW) Cumulative Solar Targets (GW) by Rooftop Large Scale Solar

12 Solar Potential in India Solar Power Potential: 750 GW: (As per NISE: 3% of wasteland in the state is considered) Estimated Potential in States in GW: Rajasthan 142 J&K 110 Madhya Pradesh 60 Maharashtra 60 Gujarat 36 Others 340 India s Present Installed Capacity: 7,564 MW (~1% of the estimated potential) Solar Radiation Is High: kwh/m2 in most of the regions (>300 days of sunshine) High Radiation Areas Are Having Large Tract of Wasteland Central Govt. Has Increased Solar Target Fivefold to 100 GW by

13 Development of Rooftop Sector 13

14 Enhanced Focus on the Development of Solar Rooftop Steep reduction in the cost of solar power development has resulted in new opportunities and business models to emerge including the development of rooftop PV and small scale solar projects. By recognising significant benefits of solar power, India is now equally focusing on developing solar rooftop projects. Solar rooftop has several benefits to different stakeholders as under: For Distribution Utilities: Lowering distribution losses and improving tail-end voltage. Availability of power in day time peak. Ease in meeting RPO targets. Saving on investment in distribution infrastructure (for lower penetration). For Consumers: Opportunity for consumer participation and investment though smaller systems. Higher employment generation and entrepreneurship options. Optimal utilisation of available roof space/vacant areas. Additional benefit in terms of tax exemption (if applicable). 14

15 Recent Initiatives and Promotional Measures for the Development of SRTPV India s solar rooftop capacity is increasing rapidly with large push from central and various state governments. GOI has scaled up the approved budget from Rs. 600 Croreto Rs. 5,000 Croreto support the implementation of grid connected rooftop systems for five years up-to To accelerate the growth in the rooftop sector, capital subsidy support from MNRE has been restored to 30%, which was reduced to 15% last year. So far 26 states have already notified the regulations to provide net metering/gross metering facilities to support solar rooftop installations. As on 31 December 2015, cumulative installed capacity of solar rooftops in India is 136 MW; however, additional capacity of 836 MW is in pipeline and expected to be commissioned in The leading states in the development of solar rooftop (as on December 2015) is depicted in graph below (Figures in MW)

16 Viability for Different Consumer Segments Viable Cost of Solar Power Cost of Solar Power with AD Viable with AD Not Viable Source: Bridge to India 16

17 Different Business Models for Rooftops 17

18 Business Models and Key Parameters Key Incentives Metering Scheme Interconnection Requirements Feed-in-Tariff Generation Based Incentives REC/CDM Benefit Capital Subsidy Exemption of OA Charges/Loss Banking/Energy Credits Fiscal Benefits Tax Credits Gross Metering Net Metering Ownership Models Individual Project Capacity Cumulative Capacity at DT Connecting Voltage Levels Standards and Certification Commercial Arrangements Wheeling and Banking Open Access Cross Subsidy Charges Lease Rentals Self-Owned -Sale to Utilities Self-Owned -Captive Consumption Utility Owned Business Models Third Party Owned 18

19 Gross Metering Versus Net Metering Gross Metering Gross metering benefits the consumer by getting FIT on solar generation. It is essentially beneficial for consumers which are getting energy at subsidised rates and getting attractive FIT for solar generation. Gross metering is beneficial for utilities in terms of reducing distribution losses and cost of supply (COS). Gross metering is simpler in terms of commercial settlement of solar power. Simple uni-directional meter is used under gross metering. Net Metering Net metering benefits the consumer in terms of reduced electricity bill. It is beneficial for consumers having high retail tariff than LCOG from kw scale solar projects. Net metering is beneficial for utilities in terms of reducing the overall power purchase cost and distribution losses. Commercial settlement of solar power is little complex in net metering than gross metering i.e., monthly and annual settlement. Bi-directional net meter is used in place of consumer meter under net metering. 19

20 Key Considerations for the Development of Large City Wide Solar Rooftop Program Establishing a City Wide Program Offers a Number of Advantages: Economies of scale Participation by large RE/solar players Reduced transaction costs Design of Large City Level Programs: Third party developers install solar panels on government/residential/commercial building rooftops (on rental/lease basis) and sell power to a) local grid for feed-in-tariff or b) rooftop owners Key Design Parameters: Design of the business model and metering scheme Off-taker of the power (utility/rooftop owners) Role of rooftop owners Lease rooftop or buy power from the rooftops Targeted consumer categories Institutional/Industrial/Commercial/Residential Incentive structures Incentive structures for third party developers (GBI/Subsidy) Role of the utility Provides interconnection or participates in the business model Number of clusters One cluster or multiple ones 20

21 Solar City Program of the MNRE 1/2 Need: To reduce green house gas (GHG) emissions To address the rising energy demand due to urbanization and economic development The Solar Cities Programme: To support/encourage urban local bodies to make renewable energy cities or solar cities Aims at 10% reduction in projected demand of conventional energy at the end of five years By means of RE and energy efficiency measures A total of 60 cities/towns are proposed to be supported at least one city in each state to a maximum of five Criteria for the Selection of Cities: Population between 0.50 lakhto 50 lakh Potential and commitment for adoption of RE and energy conservation initiatives already taken by city council/administration/private developers/industry/general public Regulatory measures taken on the deployment of RE technologies and their willingness to provide resources and sustenance of activities 21

22 Solar City Program of the MNRE 2/2 Objectives Enable and empower urban local governments to address energy challenges Provide framework and support to prepare a master plan* Assistance to Urban Local Governments Preparation of a master plan for increasing RE and energy efficiency measures Setting-up institutional arrangements for the implementation of master plan Actions to Be Taken by Urban Local Governments Create Solar City Cell Constitute City Stakeholder Committee Create awareness among all sections of civil society Involve various stakeholders in the planning process Oversee the implementation of sustainable energy options through PPPs * A Master Plan Consists of: Assessment of current energy situation Future demand projections Action plans Awareness generation and capacity building activities Implementation of projects as per financial incentives under various programs of MNRE Up to Rs. 50 Lakhsper city/town is provided depending upon the population and initiatives Promote national rating system for green buildings Amend building bye-laws, provide incentives to make use of solar water heating systems Comply with MSW Rules 2000 notified by the Ministry of Environment Organize publicity, training programmes, business meets for various stakeholders Generate necessary funds from State Govt. and other funding organizations 22

23 Regulatory Challenges for Rooftops 23

24 Regulatory Challenges for kw Scale Solar Systems Framework for Interconnection: Absence of connectivity standards, interconnection procedures, roles and responsibility of utilities and consumers, interconnection agreement etc. Lack of Clarity on Business Models: Some SERCs allow third party finance under net metering whereas some are silent such as CHERC, MERC. Lack of Clarity on Open Access Charges: For transactions under third party finance, some SERCs have clearly exempted OA charges for third party finance under rooftops whereas some are silent. Recognition Under Existing Framework: Solar rooftops are fairly new in India; hence, does not have much recognition under the existing regulatory framework such as RPO/REC, OA, supply code etc. Environmental Credits: No clarity on the ownership of environmental credits for REC/CDM as in most of the net metering regulations issued by SERCs. 24

25 Regulatory Challenges for kw Scale Solar Systems Settlement of Excess Solar Power: No uniformity among SERCs on the settlement of excess solar power. Some SERC s are treating it as energy credits whereas some are providing solar FIT for excess generation like KERC, RERC. Capacity Limit of DT: In the absence of any specific study on how much available DT capacity should be allocated to solar rooftops, SERCs have followed different benchmarks for this such as DERC (20%), HERC (15%), RERC (30%) etc. Gross Metering: Most of the SERCs have issued regulations for solar rooftops based on net metering. There is hardly any regulations available for other metering mechanism such as gross metering which includes: What would be the FIT for gross metering? Eligible consumers for gross metering. Project capacity for solar systems based on gross metering. Applicability of OA and other charges. Applicability of RPO/REC on solar power. Lease rent for rooftop owner. PPA/Interconnection agreement etc. 25

26 Regulatory Challenges for kw Scale Solar Systems Connectivity Issues: Most of the SERCs have followed state distribution/supply code for connecting solar rooftops with grid, which in some cases does not allow HT/EHT consumers to connect rooftop at LT/HT level, for example, KERC. Interconnection Approval/Timelines: Implementation timeline for utilities provided under the existing net metering framework is in the range of days, which is too long. There should be a provision of fast track interconnection approval for interested consumers. Penalty for Consumers and Distribution Utilities: Mostly all SERC s under their net metering regulations have missed to panelize net metered consumers and utilities in case of not following the regulations. Exit Clause for Utilities: Most of the SERC s have allowed utilities to terminate the interconnection agreement with 30 days prior notice which is a high commercial risk for investors. 26

27 Conclusion Despite initial hiccups, solar rooftop sector is picking up pace. 40 GW rooftop target represents huge opportunity for investment (minimum $40 bn). 100% foreign direct investment in renewable energy sector is permitted. Understanding of fundamental business models, regulations, and technology is becoming critical. 27

28 Thank You Mumbai (Regd. Office): 801, Crystal Plaza, 158, CST Road, Kalina, Santacruz (E), Mumbai Tel: +(91) Delhi: , Narain Manzil, 23, Barakhamba Road, New Delhi Tel: +(91) Contact: Balawant Joshi +(91) Ajit Pandit +(91)