AF-Mercados EMI

Current Trends/Status in Solar Power Market

Workshop on “Challenges and Issues in Solar RPO

Compliance/RECs”

Hyderabad

May 23, 2013

Anish De

ÅF-Mercados EMI

AF-Mercados EMI

Current Installed Capacity and Power Supply Position: Persistent Deficits In A Changing Supply Mix

In

sta

lled

C

ap

acity (M

W)

Thermal Renewable Hydro 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

(De

ficit %

) (D

efic

it %)

The country is in an overall deficit.

North Eastern, Western, and Southern region

experience larger regional imbalances.

2

All India Installed Capacity (as of 31st March

2013): Technology Break Up

AF-Mercados EMI

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

3

AF-Mercados EMI

2.11 2.12 2.12 10.28 35.15

941.24

1645.61

0

200

400

600

800

1000

1200

1400

1600

1800

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

MW

Year Solar Installed capacity (MW)

Cumulative Capacity Addition of Solar Power

Sr. No. States

Installed

Capacity * (MW)

1 Andhra Pradesh 23.15

2 Arunachal Pradesh 0.025

3 Chhattisgarh 4

4 Delhi 2.525

5 Goa & UT 1.685

6 Gujarat 824.09 7 Haryana 7.8

8 Jharkhand 16

9 Karnataka 14

10 Kerala 0.025

11 Madhya Pradesh 11.75

12 Maharashtra 164.5

13 Odisha 13

14 Punjab 9.325

15 Rajasthan 517.25 16 Tamil Nadu 17.055

17 Uttarakhand 5.05

18 Uttar Pradesh 12.375

19 West Bengal 2

Total 1645.605

Note : The data is compiled on the basis of

information obtained from IREDA, NVVN, State

Agencies and Project Developers

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

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

NAPCC:15% RPO by 2022

Provision for SPO in NTP(3% solar)

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

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

* As on 30th April 2013

4

AF-Mercados EMI

Current solar power business models

5

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

DISCOMS with a trading margin.

Solar

Power

Plant

Solar

Roof-

Top

Solar

Radiation Electricity

Generation

NVVN

Utility/

Consumer

Px /

Traders

Merchant Sale

Market Price + REC

Sale to Utility Bundled

Power

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

Sale through state policy or REC route

Utility

Consumer

/ Third

Party Sale

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

Power from utility

Net metering

Surplus power sale to Third party+ REC (if grid

connected)

PPA Price Surplus power post self

consumption can be injected into

the grid

NVVN

AF-Mercados EMI

Initiatives for Solar capacity addition

6

Capacity Addition

NVVN Bidding

~ 446 MW

Migration Scheme

~ 53 MW

RSSPV (GBI

Scheme)

~ 91.8 MW

State Policies

~ 829 MW

Other schemes

~108 MW

REC Scheme

~118 MW

Total

~1645 MW (as on 30th April 2013)

National Solar Mission*

* Refer to

Annexure I

AF-Mercados EMI

National level Solar RPO Target

7

Tariff Policy stipulates SPO target of 0.25 % by 2013, which will increase to

3% by 2022.

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

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

* Refer to Annexure

II for State wise

break-up

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

solar capacity

AF-Mercados EMI

Case Study – Comparative Analysis for UP & AP

Parameters Uttar Pradesh

Andhra

Pradesh

Energy Requirement by 2017

(MU)

106,134

129,821

Energy Availability by 2017

(MU)

81,705

112,274

Gap (MU) (24429.25) (17547.11)

Gap(%) -23% -14%

Exceeding Solar Purchase Obligation (SPO) will

only help in bridging the demand supply gap.

Source: AF-Mercados EMI database

8

AF-Mercados EMI

Case Study – Comparative Analysis for UP & AP

Parameters Uttar Pradesh Andhra Pradesh

SPO target by 2017 (%) 1.25% 1.25%

SPO (MU) 1,326.67 1,622.76

SPO Requirement (MW) 797.09 974.98

Tie-up capacity achieved till date (MW) 93.38 77.7

Capacity in Pipeline under state policy** (MW) - -

Potential Allocation from Phase – 2 (MW) 285 314

Balance to be met (MW) 418.93 582.89

** Tendered capacities in UP 200 MW and AP 1000 MW; capacities not yet allocated in both states, hence not considered.

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)

Separate provisions for Green Tariff in state tariff orders

Solar Rooftop (subject to resolution of regulatory issues)

Means to bridge the

above gap

9

AF-Mercados EMI

Current state-wise SPO targets

10

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

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

States 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22

Andhra Pradesh 0.25% 0.25% 0.25% 0.25% 0.25%

Arunachal 0.10% 0.15% 0.20%

Assam 0.15% 0.20% 0.25%

Bihar 0.25% 0.50% 0.75% 1.00% 1.25% 1.50% 1.75% 2.00% 2.50% 3.00%

Chhattisgarh 0.50%

Delhi 0.15% 0.20% 0.25% 0.30% 0.35%

Gujarat* 1.00%

Haryana 0.05% 0.10%

Himachal Pradesh 0.25% 0.25% 0.25% 0.25% 0.25% 0.50% 0.75% 1.00% 2.00% 3.00%

Jammu Kashmir 0.25%

Goa & UT 0.40%

Jharkhand 1.00%

Karnataka* 0.25% 0.25% 0.25%

Kerala 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%

Madhya Pradesh 0.60% 0.80% 1.00%

Maharashtra 0.25% 0.50% 0.50% 0.50%

Manipur 0.25%

Mizoram 0.25%

Meghalaya 0.40%

Nagaland 0.25%

Orissa 0.15% 0.20% 0.25% 0.30%

Punjab 0.07% 0.13% 0.19%

Rajasthan 0.75% 1.00%

Sikkim Not regulation issued for RPO by the Power Department

Tripura 0.10%

Tamil Nadu* 0.05%

Uttarakhand 0.05%

Uttar Pradesh* 1.00%

West Bengal 0.10% 0.15% 0.20% 0.25% 0.30%

> Tariff policy Target by 2013 < Tariff policy Target by 2013 = As per Tariff policy Target by 2013

* Same SPO level holds good unless notified

AF-Mercados EMI

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

11

High

Compliance

Low

Compliance

0.25%

(As per Tariff policy)

Andhra Pradesh

Assam

Bihar

High RPO Levels Low RPO Levels

Chhattisgarh

Delhi

Gujarat

Goa & UT

Haryana

HP J & K

Jharkhand

Karnataka

Kerala MP

Maharashtra

Orissa

Punjab

Rajasthan Uttarakhand

Tamil Nadu

Uttar Pradesh

West Bengal

100%

Compliance

Majority of

states

under low

compliance

Based on the tied up capacities by each state till 31st March 2013

AF-Mercados EMI

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

12

The RPO regulations need to be harmonized as far as possible between

states to send out consistent messages and improve investment climate

State should provide for adequate provisions for solar purchase in their

ARRs Annexure IV

AF-Mercados EMI 13

Solar PV & Solar Thermal Cost & Tariff - Benchmark

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

Ben

ch

mark

Co

st

& T

ari

ffs

0.00

5.00

10.00

15.00

20.00

2010-11 2011-12 2012-13 2013-14

Rs C

r/M

W

FY

Cost of Solar PV & Solar Thermal

Solar PV Solar Thermal

Rs Cr/MW 2010-11 2011-12 2012-13 2013-14 Solar PV 15.2 14.42 10 8 Solar Thermal 14.2 15 13 12

Rs/Kwh 2010-11 2011-12 2012-13 2013-14

Solar PV 17.91 15.34 10.39 8.75

Solar Thermal 15.31 15.04 12.46 11.9

0.00

5.00

10.00

15.00

20.00

2010-11 2011-12 2012-13 2013-14

Rs./K

Wh

FY

Solar Tariff

Solar PV Solar Thermal

AF-Mercados EMI 14

Solar PV & Solar Thermal Tariff - Bidding

Introduction of

competitive bidding

has brought down

tariffs significantly, to

below the Solar REC

Floor price

State FiT

Karnataka

Madhya

Pradesh Orissa Gujarat Tamil Nadu

Andhra

Pradesh Rajasthan

Solar Thermal

(INR/kWh) 11.13 - - 11.55

Solar PV

(INR/kWh) 8.34 8.05 7 8.63 8.28* 6.49 6.45

CERC Tariff

(INR/kWh) 8.75 8.75 8.75 8.75 8.75 8.75 8.75

REC Floor Price

(INR/kWh) 9.3 9.3 9.3 9.3 9.3 9.3 9.3

* This is the first year tariff; INR 8.28 is the levelized tariff - TANGEDCO

*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%)

6

6.5

7

7.5

8

8.5

9

9.5

Karnataka Madhya Pradesh

Orissa Gujarat Tamil Nadu Andhra Pradesh

Rajasthan

Rs./

Kwh

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

AF-Mercados EMI

Comparison of Solar Tariffs with Case-1 bids for Thermal Power

15

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

NSM-I

(Feb

2010)

NSM-II

(Feb

2011)

Karnataka

(Aug-11)

Rajasthan

(Nov-12)

TN (First year

Tariff);Dec-12

Andhra

Pradesh

(Dec-12)

VGF

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** 5.45

*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%)

VGF proposes to bring it down to

level with conventional power

** AP has revised the tariff to Rs 6.49/Kwh on Levelised basis as asked the bidders to match it

Tariff for solar projects have reduced significantly over last 2 years

This should facilitate SPO compliance through purchase of power

*Refer

Annexure III

AF-Mercados EMI

REC framework has the ability to facilitate compliance by resource deficit states but faces implementation challenges………

16

Prices have come down - possible reasons :

Non-compliance of RPO/Lack of interest in REC

Further, unsold REC stocks have brought prices under pressure

1300012750

1280012850

12500

1268012720

1262012500 12500

13400

12206

11500

12000

12500

13000

13500

0

10000

20000

30000

40000

50000

May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13

No

. of

REC

s

Past Trend of the REC Market at IEX (Solar)

Buy Bid (REC) Sell Bid (REC) Total Volume Traded (REC) Clearing Price (Rs./REC)

AF-Mercados EMI

Solar REC Projects- Status and Challenges

States Capacity Accredited(MW)

No. of projects accredited

Capacity Registered (MW)**

No. of projects registered

Andhra Pradesh 5.75 1 5.75 - Chhattisgarh 2 1 2 1 Madhya Pradesh 36.225 40 24.33 23 Maharashtra 30.15 17 17.15 4 Odisha 3.5 2 - - Rajasthan 75.75 27 67.75 16 Tamil Nadu 1.055 1 1.055 1 Grand Total 157.43 90 118.035 45

Challenges

faced by REC

based projects

Lack of clarity on solar REC price post 2017

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

**All projects registered are commissioned.

17

AF-Mercados EMI

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

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Participation Trend

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

18

AF-Mercados EMI

Conclusions

19

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

Thank You

21

AF-Mercados EMI

Annexure I: Summary status of projects under National Solar Mission till 2012-13

Projects Project

Allotted

Project

Commissioned***

Wt Av

Tariff(Rs/Kwh)

CERC Tariff

(Rs/Kwh)

MW MW

Solar PV projects through

NVVN (Batch I) 150 136.4*

12.16 (32%

reduction)

17.91

Solar Thermal Projects

Through NVVN 470 - 11.48

Migration

Scheme

Solar PV 54 50.5

Solar

Thermal 30* 2.5

RPSSGP Scheme (PV) 98.5 91.80

PV projects through

NVVN (Batch II) 350 290

8.77 (43%

reduction)

15.34

Other schemes** 19.6

TOTAL 591 MW

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

* Two projects were cancelled

**Includes demonstration projects, pilot projects, tail end projects

*** as on 30th April 2013

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AF-Mercados EMI

Annexure II: Solar Power Capacity Requirement by States by 2017

Sr. No.

States Demand

(2016-17) (MU)

RPO Target (2016-17)

Solar Power Capacity

Required (MW)

State initiatives

(MW)

Capacity tied - JNNSM Phase -1

(MW)

Capacity likely to be allocated

under Phase-2 of

JNNSM(MW)*

Gap to be fulfilled by

States(MW)

1 Andhra Pradesh 139457 1.25% 1047.35 2.20 75.50 314 655

2 Arunachal Pradesh 823 1.25% 6.18 0.03 0.00 2 4

3 Assam 9556 1.25% 71.77 0.00 5.00 22 45

4 Bihar 25602 1.25% 192.28 38.00 0.00 58 97

5 Chhattisgarh 26497 1.25% 199.00 0.00 29.00 60 110

6 Delhi 37122 1.25% 278.79 2.53 0.00 84 193

7 JERC (Goa & UT) 17002 1.25% 127.69 1.69 0.00 38 88

8 Gujarat 104102 1.25% 781.83 968.50 0.00 235 -

9 Haryana 55918 1.25% 419.96 0.00 8.80 126 285

10 Himachal Pradesh 10989 1.25% 82.53 0.00 0.00 25 58

11 Jammu and Kashmir 16492 1.25% 123.86 0.00 0.00 37 87

12 Jharkhand 8712 1.25% 65.43 0.00 36.00 20 10

13 Karnataka 85455 1.25% 641.79 89.00 70.00 193 290

14 Kerala 26598 1.25% 199.76 0.03 0.00 60 140

15 Madhya Pradesh 77377 1.25% 581.12 206.50 5.25 174 195

16 Maharashtra 197671 1.25% 1484.55 163.50 37.00 446 838

17 Manipur 959 1.25% 7.20 0.00 0.00 2 5

18 Mizoram 677 1.25% 5.09 0.00 0.00 2 4

19 Meghalaya 2801 1.25% 21.03 0.00 0.00 6 15

20 Nagaland 764 1.25% 5.73 0.00 0.00 2 4

21 Orissa 31372 1.25% 235.61 50.00 28.00 71 87

22 Punjab 63171 1.25% 474.43 -0.67 52.50 142 280

23 Rajasthan 72393 1.25% 543.68 65.65 340.50 163 -

24 Sikkim 537 1.25% 4.03 0.00 0.00 1 3

25 Tamil Nadu 118724 1.25% 891.64 274.11 12.00 268 338

26 Tripura 1324 1.25% 9.94 0.00 0.00 3 7

27 Uttarakhand 14559 1.25% 109.34 0.05 5.00 33 71

28 Uttar Pradesh 126323 1.25% 948.71 0.38 93.00 285 571

29 West Bengal 57735 1.25% 433.61 2.05 50.00 130 251

Total Solar Power

Requirement (2016-17) (MW)

9,994

1,864

848

3,000

4730

* State wise allocation of capacity under Phase II done in proportion to the state’s energy demand

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AF-Mercados EMI 24

Annexure III: Case 1 bid results

Capacity Tariff

DB Power 208 4.84

Ind Bharat 500 4.91

Jindal Power Ltd 400 4.96

Dhariwal Infra Ltd 100 4.97

Balco 200 5.05

PTC Meenakshi

(Adhunik Power) 100 5.45

KSK Mahanadi 500 5.49

IL&FS Tamilnadu 540 5.61

GMR 150 5.69

Coastal Energen 600 6.11

OPG 74 7.50

Simhapuri Energy Ltd

(Madhucon) 100 9.85

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

Company limited)

800 5.843

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

Tamil Nadu Bid UP Bid

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AF-Mercados EMI

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

State Announced

(MW)

Tendered

(MW)

Awarded

(MW)

Under

Installation

(MW)

Commissione

d (MW) Additional Notes

Gujarat 968.5 - 968.5 - 824.09

No bidding carried out

during FY 13

State has come up with

roof-top policy for grid

connected systems

Maharashtra - - - 150 125

40 MW commissioned

in Rajasthan (RPO)

under open access

Karnataka 200

80 80 - 9 Under the REC

mechanism the project

developers can sell

their power at APPC

only to the ESCOMS.

A Maximum capacity

of 100 MW can be

installed under this

scheme.

130 Yet to awarded - -

Rajasthan 600 (by 2017) 100 75 - -

RRECL (off-taker) will

in turn sell power to

state DISCOMs

Odisha 75

25 25 - -

25 25 - -

25 - - -

25

Several states have invited bids to fulfill their SPO targets

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AF-Mercados EMI

State Initiatives for Solar Projects (2/3)

State Announced

(MW)

Tendered

(MW)

Awarded

(MW)

Under

Installation

(MW)

Commissione

d (MW) Additional Notes

Tamil Nadu 3000 1000 266 - -

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

Andhra Pradesh 1000 1000 Yet to be

awarded - -

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

26

Several states have invited bids to fulfill their SPO targets

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AF-Mercados EMI

State Initiatives for Solar Projects (2/3)

State Announced

(MW)

Tendered

(MW)

Awarded

(MW)

Under

Installation

(MW)

Commissione

d (MW) Additional Notes

Punjab 300 300 Yet to be

awarded - -

PEDA has released

RFP for 300 MW in

March 2013

Kerela

State has initiated a

solar roof-top scheme

for 10,000 households

in the state

State has introduced

roof-top policy for off-

grid systems

Madhya Pradesh 200 200 200 - -

Bidding categories:

I: Competitive bidding

II: Captive/3rd part

sale within or outside

the state

III: REC

IV: Projects under

JNNSM

Bihar 150 150 Yet to be

awarded 38 -

38 MW have been

awarded at the feed –

in-tariff:

The 150 MW RfP to be

allocated through

competitive bidding

also promotes Pisci-

culture

27 Several states have invited bids to fulfill their SPO targets

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