This document summarizes regulatory developments related to wind power projects in India. It discusses changes to transmission tariffs in Maharashtra and retail tariffs in Gujarat that impact project viability. It also outlines draft wind power tariffs in Rajasthan and issues raised in stakeholder hearings in Tamil Nadu regarding banking of electricity and tariff rates. The document provides an overview of guidelines from MNRE on installing prototype wind turbines and a new methodology from the Ministry of Power for rating distribution companies that includes RPO fulfillment as a criteria.

2. Enabling High Efficiency and Reliable Wind Power Projects
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Policy and Regulatory
WinDForce Achievements
1. MERC: Determination of Transmission Tariff for Intra-State Transmission
 Wind Resource Assessment for 3000+
System (InSTS) for FY 2012-13
MW
 Owner’s Engineer for 250+ MW
Item Description FY 2011-12 FY 2012-13
 Technical Due Diligence for 900+ MW
Transmission Tariff
(long term/ medium term)
5414 Rs/ MW/ day 7113 Rs/ MW/ day  Own Project Development for 100
MW
Transmission Tariff
(short term/collective/ renewable energy)
0.29 Rs/ kWh  Detailed Project Report for more than
300+ MW
 Total Wind Advisory 3500+ MW
From the above table, we can evaluate that the Long/ Medium term Transmission
Tariff for FY13 at 20, 00,000 kWh generation per MW comes out to be Rs 1.28 per
kWh which has increased from Rs 0.988 per kWh for FY12. However, for short term/
collective/ renewable power, it is Rs 0.29 per kWh.
In case an RE generator opts for availing REC benefit then long/ medium term tariff
shall be applicable and w/o REC benefit, Renewable Energy tariff @ Rs. 0.29/ Kwh
shall be applicable.
2. GERC: Retail Tariff for FY 2012-13
HT Tariff - Base Energy charges
Applicable for UGVCL, DGVCL, MGVCL and PGVCL
Existing Tariff New Tariff
Paise per Unit Paise per Unit
Upto 500 kVA of billing demand 390 400
For next 2000 kVA of billing demand 410 420
For billing demand in excess of 2500 kVA 420 430
As the tariff has increased by 10 paisa per unit, this has further firmed up the
viability of captive wind power projects in the state of Gujarat, as invester can
freeze the cost of power for next 20 years. With respect to the Draft GERC Policy
discussion paper dated July 2012, an RE generator shall be eligible for availing REC
benefit if it goes for captive arrangement without availing any preferential benefit.
However, it is not clear that if any captive consumer wishes to go for REC benefit
then what type (TOD etc) of banking facility shall be available to him (if any).
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3. Enabling High Efficiency and Reliable Wind Power Projects
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3. GERC: Determination of tariff for procurement of power from Wind Power
Projects in Gujarat
GERC has issued Draft discussion paper on determination of tariff for procurement
of power by distribution licensees and others from Wind Power Projects in Gujarat.
The important aspects of the same are :
Proposal for new control period starting from 11th
August 2012
Option I Option II
As per Wind Tariff Order
Parameters (Interconnection point at (Interconnection point at
dated 30 January 2010
wind farm pooling S/S) GETCO S/S)
Tariff Rs. 3.56 per kWh Rs. 3.97 per kWh Rs. 4.21 per kWh
From the two tier tariff, Investor have to invest more for project to get higher tariff
PPA as it will require to build extra electrical lines from the windfarm pooling sub-
station to the GETCO sub-station
Transmission and Wheeling Charges
 Wind power projects wheeling power for own use/ third party sale and opting
for RECs, will have to pay normal open access charges and losses.
 Wind power projects not opting for REC benefits can avail transmission and
wheeling charges/ losses as per the GERC Order dated 30 January 2010.
Cross Subsidy Surcharge
 Exempted for captive use and for third party sale of wind energy.
Energy Metering
 Wind projects shall have to provide ABT compliant meters at the interface
points and shall conform to the Central Electricity Authority (Installation and
Operation of Meters) Regulations, 2006.
 Metering shall be done at interconnection point of the generator bus-bar with
the transmission or distribution system concerned.
Banking of Surplus Wind Energy
 One month banking allowed for captive wind energy projects. They are eligible
to utilise the same during the month in proportion to the energy generated
during peak and normal hour period.
 No banking facility offered to third party sale of wind energy.
Purchase of Surplus Power from Wind Power Projects opting for Captive use and
Third Party Sale under Open Access
 For captive wind energy projects, the surplus energy after one month's banking
is considered for purchase by distribution licensee at 85% of the wind tariff.
 For third party wind energy sale, the surplus energy after 15 minutes time block
is considered for purchase by distribution licensee at the rate of 85% of the
tariff declared by the Commission.
Renewable Energy Certificates for Third party sale and Captive Use of Wind
Energy
 Third party sale and captive use of wind energy will be eligible for availing
Renewable Energy Certificates as per CERC REC Regulations.
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4. TNERC: Stakeholder’s hearing on determination of tariff and allied issues
related to power generation from NCES WinDForce Services
TANGEDCO made a plea before the TNERC for abolishing the system of 'banking' of  Wind Resource Assessment (WRA)
electricity by wind power producers.  Structuring of PPA/ Sale of power and
The 'banking' system allows wind power producers to put power into the grid and management
draw the power back for consumption within a year. This is particularly useful for  O w n e r ’s E n g i n e e r d u r i n g t h e
wind power producers who also own other industries that may need electricity to complete project implementation &
run. post commissioning
TANGEDCO's plea was that banking was hurting the organisation because wind  Detailed Project feasibility Study
power producers put electricity into the grid when there is enough power but  Detailed Project Report
exercise their option to draw power when there is a scarcity of power. As  Contract Advisory
TANGEDCO is bound to supply them the power, it has to purchase power at high  Technical Due Diligence of proposed
rates from the market for that purpose. In the bargain, TANGEDCO makes a loss. as well as existing wind farms
Furthermore, it has to supply power to the wind producers (who had 'banked' the  Technical Due Diligence of New
power) in preference to other consumers. Manufacturing Facility
Wind power producers, on the other hand, said that the facility of 'banking' was a  Environment Impact Assessment
 Development/ Co-development of
promise made by TANGEDCO on the basis of which heavy investments have been
made & withdrawing the promised facility would tantamount to breach of Wind Power Projects at Identified
agreement, wind power producers demanded higher rates in the range of Rs 5.32 a sites by WinDForce
unit to Rs 6.40 under preferential tariff, while TANGEDCO opposed for raising the
'feed-in' tariff beyond the current Rs 3.39.
5. TNERC: Extension of validity of the Commission's Tariff Order for Wind Projects
The Commission issued a comprehensive Tariff Order on wind energy in Order No 1
of 2009 on 20.03.2009. As the validity of the Order expired on 31.03.2011, the
validity was extended by the Commission upto 31.12.2011 vide Tariff Order No 1 of
2011 dated 08.04.2011.
The validity of the said Order was further extended till 30.06.2012 by Order No 4 of
2011 dated 15.12.2011.
A stakeholders hearing was held on 08.06.2012 to elicit their views on the tariff
determination. Various issues were raised in the hearing which needs to be
examined in detail before finalising the tariff order for the wind energy generators.
Therefore, the Commission has extending the validity of Order No 1 of 2009 upto
31.07.2012 or the date of issue of tariff order, whichever is earlier.
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6. RERC: Draft Tariff Order for Wind Power Plants for FY13
New Tariff (Rs/kWh)
New Tariff (Rs/kWh)
if higher
Existing Tariff FY12 if Higher
Sr. No. Particulars depreciation
(Rs/kWh) depreciation
benefit is not
benefit is availed
availed
Wind Power Plants
located in Jaisalmer,
1 4.46 5.18 4.90
Jodhpur & Barmer
districts
Wind Power Plants
located in districts other
2 4.69 5.44 5.14
than Jaisalmer, Jodhpur
& Barmer districts.
The above tariff is levelised for 25 years.
In the Order, following were introduced:
(i) As all reasonable costs and returns are being allowed to be recovered through
the tariff, therefore, any policy support by way of capital subsidy/Capital Finance
Assistance (CFA), higher depreciation benefit or Generation Based Incentive (GBI),
which becomes available to the developer/generator, needs to be passed on to the
utilities.
- This is been introduced first time and mostly not introduced by any SERC's
(only CDM benefit is being shared with state utilities)
(ii) In case, any wind power plant getting commissioned during FY 12-13 avails the
benefit of GBI/Tariff subsidy under any Government Scheme, the applicable tariff
worked out as above, would get reduced to the extent of GBI/Tariff subsidy so
availed. In case such a benefit has not been availed, an undertaking to that effect
would have to be given while signing PPA
- This means if any developer has availed GBI benefit to the tune of INR 50
paise/kWhr then the same has to be reduced from the applicable tariff
(iii) Tariff if Higher Depreciation is availed and Tariff if Higher Depreciation is not
availed
- Not clear whether Higher Depreciation is 15% + 25% or its 15% alone. Also in
the tariff calculation depreciation benefit is considered as 17.50% ((50%
(15%+20%))
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6. Enabling High Efficiency and Reliable Wind Power Projects
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(iv) Considering that considerable capacity of the wind projects already stands
commissioned in the State, the Distribution licensees, in the interest of the WinDForce Esteemed Clients
consumers, must strive to procure wind energy at a generic tariff being lower of the Hindustan Zinc Limited, NSL Renewable,
two streams namely, with or without higher depreciation benefit by giving Techno Electric, Bhilwara Energy Limited,
preference, while finalising/signing PPA, to developers/generators offering the KSK Wind, Green Infra, Avigo Capital,
lower rate among the said two tariff streams. However, if capacity in excess of RPO Olympus Capital, PTC India, Auro Mira,
is to be contracted, the licensee must obtain prior approval of the Commission MSPL, TVS Energy, Indian Energy,
based on reasons and full justification before contracting for capacity in excess of Reliance Power, CRISIL, IFCI Limited,
RPO requirement. Oswal Woolen Mills Limited, Ushdev
- This clearly means if DISCOM has fulfilled their RPO obligation by procuring Power Holdings, Bharat Light and
power under FIT mode, then it is in the hands of commission to give clearance for Power,RSPL Ltd. (Ghari Detergent),
signing of any new PPA for any excess power beyond the DISCOM's RPO. Due care Modelama Exports Ltd, Tata Power, L & T
should be taken by investors before finalization of their projects. Infra, Kiran Gems, Dharmanandan
Diamonds, Shah Promoters, Fena (P) Ltd.,
7. KERC: Second Amendment to Procurement of Energy from Renewable Sources
Bhabani Pigments, Panama Group,
Regulations, 2012
Kandla Port Trust etc.
KERC has issued second amendment to REC/ RPO Regulations for Procurement of
Energy from Renewable Sources Regulations, 2012.
Existing Regulation Amendment proposed
Captive Power Producers (CPP) based on Grid Connected Captive Power Producers (CPP)
renewable sources of energy shall be eligible to based on renewable sources of energy shall be
get accredited for obtaining RE certificates for eligible to get accredited for obtaining RE
the entire energy generated from their plants certificates for the energy generated and used
including the energy used for captive for captive consumption and for surplus energy,
consumption. if any, sold to the distribution licensee/s of the
State at the average pooled power purchase
cost notified by the Commission from time to
time
This amendment provides more clarity on Captive format.
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7. Enabling High Efficiency and Reliable Wind Power Projects
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What’s New
1. Government rating of DISCOMs to include RPO fulfilment as a criteria
Ministry of Power has developed an integrated rating methodology covering the
DISCOMs. The system is an attempt to harmonize the rating of DISCOMs by banks
and financial institutions. One of the criteria for ranking of the DISCOMs will also be
the level of their Renewable Purchase Obligation (RPO) fulfilment.
Renewable Energy Purchase Obligation shall account 25% weightage of total
rating.
A system of negative marks has also been introduced in the rating methodology.
The parameters assigned negative marks include non-auditing of accounts (upto
minus 12%), SEB unbundling (upto minus 5%), non-filing of tariff petition (upto
minus 5%), untreated revenue gap (upto minus 5%), deterioration in AT&C Loss
(upto minus 5%), increase in payables (upto minus 3%), presence of Regulatory
Asset (upto minus 3%), negative net-worth (minus 3%) and extent of cross subsidy
(upto minus 2%).
The first ranking is expected to release in March 2013.
As all the distribution companies require huge amount of funds for their planned
capital expenditure as well as working capital, all need good rating. With above
criteria, very high weightage is given to RPO compliance as well as negative ratings
for other management issues, DISCOMS are likely to follow the best practices to
maintain high ratings and this should in return should give much needed push to
offtake to RECs.
2. MNRE: Guidelines for installation of prototype wind turbine models in India
The Ministry has decided to permit the installation of a limited number of
prototype wind turbines to facilitate indigenization and encourage national
industry. The guideline document is applicable for all the wind turbine
manufacturers in India, who wish to install prototype wind turbine model(s) in the
country and synchronize with the Indian grid system. The installation of a prototype
wind turbine model will be allowed only to carry out type testing for obtaining type
certificate from Internationally Accredited Certifying Agencies.
 http://mnre.gov.in/file-manager/UserFiles/guidelines_prototype_wind_turbine.pdf
 http://mnre.gov.in/file-manager/UserFiles/land_wind.pdf
 http://www.cwet.tn.nic.in/Docu/Requirements%20for%20installation%20of%20prototype%20wind%20turbine%20model%20in%20India.pdf
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8. Enabling High Efficiency and Reliable Wind Power Projects
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Upcoming Events
 Wind Power Project Development: Planning, Contracting, EPC organized by
th
Renewable Market India to be held on 24 August 2012 at The Lalit
Intercontinental, Mumbai
 Wind Power Development Forum India, organized by Wind Energy Update to be
held on 6th - 7th September 2012 at Le Meridien, New Delhi
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9. Enabling High Efficiency and Reliable Wind Power Projects
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REC Update (till 30.06.12)
Total Accredited = 1811.31 MW – Wind Specific
Total Registered = 1426.08 MW – Wind Specific
Total Issued = 16,69,827 RECs
Total Redeemed = 14,92,437 RECs
Total Inventory = 1,77,391 RECs
REC Trading
Equilibrium Price
250000
3,000
200000
2,500
(Rs/REC)
150000
2,000
100000
2,500
50000
1,000
0
Apr’11 May’11 Jun’11 Jul’11 Aug’11 Sep’11 Oct’11 Nov’11 Dec’11 Jan’12 Feb’12 Mar’12 Apr’12 May’12 Jun’12
IEX Traded Volume (REC) 260 14,002 15,902 14,668 22,095 41,385 92,303 96,154 1,05,942 1,65,460 1,90,482 1,92,354 62,277 1,53,125 2,23,164
IEX Equilibrium Price (Rs / REC) 1,500 1,500 1,505 1,555 1,800 2,300 2,700 2,900 2,950 3,051 3,066 2,900 2,201 2,402 2,402
In June'12 trading session total around 2,50,000 RECs were traded at an average rate @
Rs 2402/ MWh. Last year in Q1 at IEX total 30,164 RECs were traded at an avg. rate of Rs
1502 per REC where as this year in Q1 at IEX total 4,38,566 RECs have been traded at an
avg. rate of Rs 2373 per REC.
This year, in Q1 it was expected that Trading Volumes will be on lower side and the
clearing price shall also be low as last year. But the market has shown some maturity
and confidence amongst the stake holders. For the continuous growth of REC Market, it
is very necessary that the entities which have not matched their RPO in FY12 must be
penalized ASAP otherwise other entities which are following the RPO shall start
deviating.
At various public forums, the investors have expressed their concern on the
bankability of REC based Wind Projects primarily because of short (5 years) control
period (currently upto 2017 only) & the enforceability of RPO. The Government
representatives have indirectly indicated that these issues are being taken care of
and soon new order to address these issues shall come.
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A WinDForce Publication
Disclaimer - This Newsletter has been compiled by WinDForce Management Services Private Limited
for circulation among the stakeholders in the energy market. Though the contents of this bulletin are
correct to the best of our knowledge, WinDForce does not vouch for their accuracy.
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