SUO-MOTU PROCEEDING ON THE POLICY REVIEW IN MATTERS RELATED TO WIND POWER IN MAHARASHRTRA ( C ASE N O . 92 OF 2012 )
MSEDCL is committed to MSEDCL is committed to Promotion of Green Promotion of Green (Renewable) Power (Renewable) Power
S ALES AND R EVENUE M IX FOR FY 2012-13 3
P OWER : A VAILABLE S OURCE WISE As on 31 st March Source Unit As on 31 st Expected March in 2013-14 2011 2012 2013 MW 9665 10366 12446 18836 Thermal (State+Pvt.) (Mus) ( 54136 ) ( 61143 ) (67556) (90000) MW 3408 4198 4609 5164 Renewable (Mus) (2692) ( 3339 ) (3824) (4000) MW 3066 3066 3066 3066 Hydro (Mus) ( 6300) ( 6773 ) ( 5924 ) (6200) MW 2714 2740 2740 2740 Natural Gas (Mus) (7073 ) ( 6237) ( 5337 ) (5000) Central MW 5376 5792 6307 6627 Sector (Mus) ( 37435) ( 38489 ) ( 35978 ) (37800) Allocation MW 24229 26162 29168 36433 Total (Mus) ( 107636 ) (115981) (118619) (143000) 4
T ARIFFS OF E LECTRICITY IN 2012-13 Average Power Purchase Cost - 3.39 Rs./unit Cost of Supply - 5.56 Rs./Unit Agriculture in Gujrat. 2.52 Rs/ Unit • B.P.L. Cost – 0.76 Rs/Unit • in Maharashtra 1.01 Rs/ Unit 1-100 cost – 3.36 Rs/Unit • DETAILS OF SUBSIDIZING CONSUMERS No. of Amount Sr. Category Consumer Rs.Crs No. 2012-13 2012-13 Industrial (LT and HT) 1 347,262 6,363 2 Commercial (LT and HT) 1,265,407 1,933 3 Others * 2,567,279 1,210 Total 4 1,868,948 9,506 *Others include HT-Railway, LT Advertising, LT-Temporary and Standby charges DETAILS OF SUBSIDIZED CONSUMERS No. of Amount Sr. Category Consumer Rs.Crs No. 2012-13 2012-13 Domestic (LT) 16,474,882 1,008 1 2 Agriculture (LT and HT) 3,459,790 6,935 3 Others $ 194,983 1,563 Total 20,129,655 9,506 4 $ Others include HT-PWW, HT-Bulk Supply, LT-Street Light, LT-PWW, Mula Pravara and Bhivandi Franchisee 5
RE P OWER D ETAILS 4734 5000 4070 4500 4000 3348 3500 2838 2634 3000 2375 2500 2000 1500 1000 500 0 Upto 31.03.2009 31.03.2010 31.03.2011 31.03.2012 31.03.2013 31.03.2008 RE Installed Capacity as on(MW) Installed Capacity As on RE Source Upto 31.03.2008 31.03.2009 31.03.2010 31.03.2011 31.03.2012 31.03.2013 Wind 1754 1932 2071 2310 2717 3006 Bagasse 320 393 422 620 893 1088 Biomass 87 95 115 155 155 170 Industrial / Municipal 11 11 11 16 20 24 Solid Waste Solar 0 0 0 1 20 175 Small Hydro Project 214 214 230 247 265 271 Total 2375 2634 2838 3348 4070 4734 6
P ROMOTION OF RE G ENERATION MSEDCL is bound by the National Tariff Policy, the Act, Rules and Regulations related to Power Sector in India; GoM, MERC and MSEDCL committed to promotion of renewable power in the State The policy, rule and any regulations of MERC related to harnessing of wind power has been always supported by MSEDCL MSEDCL has pro actively participated in the development process by providing necessary infrastructure and guarantee of purchase. MSEDCL has been executing EPAs with all RE Generators (except Solar) to promote the RE Sources in the State. Need of more scientific and logical approach to establish correct wind zone; RPO to be linked with actual potential of the State and achievement thereof Tariffs to be determined based on realistic data to avoid huge profiteering to developers and benefits to consumers Unrealistic Target Potential by MEDA and High Cost affecting the ARR of Licensee Expensive Power gets passed through in ARR and ultimate sufferer is Common 7 Consumer since burden borne by Common Consumers
B ACKGROUND : A BRIEF SUMMARY Daily Order dated April 27, 2012 in the matter of Case No. 8, 18, 20 and 33 of 2012; Hon’ble Commission discussed its view on policy review in matters related to Wind Power in Maharashtra and highlighted certain illustrative issues that can be considered for Policy review: Power Purchase Agreement - provisions relating to the arrangement after the expiry of tenure of Agreement, etc ; Banking and Wheeling; Obsolescence of wind Generation technology; Objective of introducing REC mechanism , its intended beneficiaries Whether discount on Cross Subsidy Surcharge available to open access transactions from renewable energy generators is a preferential treatment Whether generators getting this discount should qualify for REC benefits also 8
I SSUES C OVERED Power Purchase Agreement Banking & Wheeling Obsolescence REC CD Reduction 15 Min accounting Cross Subsidy Surcharge Practical Issues 9
I SSUES RELATED TO E XISTING EPA S Option of renewal of Agreement ; No Regulatory obligation Life-20 to 25 Yrs EPA-13 Yrs--- At preferential tariff Complete project cost with 19 to 24 % profit paid by Cons. Of Maharashtra. After 13 yrs, project belongs to consumers of Maharashtra? Post expiry of EPA : There is should be a specific provision for Continuation of Sale to MSEDCL at discounted preferential or concessional (O&M) rate for the remaining life cycle. o Very High Profit Vs Wind Fall Profit (Burden on Consumers). 10
EPA C ONTINUATION WITH MSEDCL Regulated Environment Distribution utility mandated to purchase certain quantity This quantity mandated to be purchased at very high Feed in tariff Life of Wind generator-20 to 25 yrs EPA-13 yrs Actual project cost recovery with profit -7 to 9 yrs (Depending on wind availability) Balance 7 yrs- wind fall profit by moving to open access + REC o Competitive market: High risk high gain o Partially protected market: Medium risk medium gain o Regulated Market: Low risk low gain Present Situation : No risk & Highest gain 11
P ARALLEL E XAMPLE OF P AYBACK (G OVT . F UNDING ) Koyna Hydel Station was set up in the year 1962 MSEDCL pays only 90 paise to Koyna Hydel Power, while hydel power anywhere in the country is sold at above Rs.5/- per unit; MSEDCL pays Rs.1.65/- to 2.00/- per unit as power purchase cost primarily to recover lease rent and O&M cost as the capaital cost of the Dam and Hydel station has already been paid by the people of Maharashtra; MSPGCL has no right to sell koyna hydel power in the open market through Open Access. Conusmers in the State having paid for this investment now have exclusive right over Wind Energy Assets and its generation at reasonable O&M cost. Express ways & Roads – BOT 12
O BSOLESCENCE OF W IND G ENERATION T ECHNOLOGY Provisions about refurbishment : Absent What benefits a WEG is eligible for after refurbishment; When can a WEG go for refurbishment; No provisions for EPA after refurbishment; Present old inefficient machines may be refurbished with new efficient machines to optimize wind generation and a single wind zone tariff to be determined so as to reduce the burden on common consumers. Refurbishment of old turbines may be allowed only when the WEG agrees to enter EPA with MSEDCL for whole of plant life i.e. 20 Years; This is necessary since Tariff is determined for a life cycle of 20 / 25 Yrs; Benefits of Accelerated depreciation may have been availed in initial years. Other benefits / concessions granted by GoM viz. in the matter of sales tax, electricity duty etc. may have been availed. 13
REC M ECHANISM Objective of REC Mechanism is to promote renewable sources of energy and development of market in electricity. To encourage Renewable Energy (RE) capacity addition in the country To address the mismatch between availability of RE sources and the requirement of obligated entities to meet their RPO targets REC Mechanism to benefit both RE Generators and Obligated Entities ( OA Consumers, Discoms etc ) Verification of Eligibility for REC Mechanism RE Generators availing concessional/promotional transmission or wheeling charges, waiver of electricity duty not eligible for REC Scheme Discount on CSS for open access transactions from RE Generators should be treated as preferential treatment WEGs availing any form of concession from GoM/MERC should not be held eligible for participation in REC Scheme Misuse of REC : Group II wind generators having covered full cost of investment are now availing open access( instead of selling energy to MSEDCL at discounted price Rs. 2.52 p.u. as determined by the Hon. Commission )as well as claiming REC benefit. Auxiliary consumption should not be held eligible for REC. Legitimate Profit Vs Windfall Profit need to be considered , REC to be restricted for new generators only? 14
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