Published on October 26, 2016
1. TAMIL NADU SOLAR ENERGY POLICY WORKSHOP June 21, 2016
2. Page 3 / 26 TAMIL NADU SOLAR ENERGY POLICY WORKSHOP - June 21, 2016 Chapters Pages TAMIL NADU SOLAR ENERGY POLICY WORKSHOP OBJECTIVES FINDINGS AND RECOMMENDATIONS FROM WORKSHOP PARTICIPANTS TESTIMONIALS ANNEX - LIST OF PARTICIPANTS ANNEX - PROGRAM SCHEDULE CONTENTS 4 5 5 22 24 25
3. Page 4 / 26 TAMIL NADU SOLAR ENERGY POLICY WORKSHOP - June 21, 2016 TAMIL NADU SOLAR ENERGY POLICY WORKSHOP
4. Page 5 / 26 TAMIL NADU SOLAR ENERGY POLICY WORKSHOP - June 21, 2016 OBJECTIVES The objective of the project is to help the State of Tamil Nadu surpass the solar energy generation targets by • Improving key aspects of the Tamil Nadu Solar Energy Policy, 2012 • Improving implementation aspects of the Policy WORKSHOP DOCUMENTATION A one-day workshop was organised by Auroville Consulting, unit of the Auroville Foundation in affiliation with the World Resources Institute, India to discuss issues pertaining to the scaling up of solar energy, and use the recommendations to propose a 2016 Action Plan for Tamil Nadu Solar Energy Policy 2012. The workshop provided a platform for key stakeholders to interact with each other and deliberate on the present policy, discuss ground realities, recognize barriers in planning and execution and suggest workable strategies to reconnect with the State vision. Participants included installers, consumers, academics, and civil society organizations along with senior representatives from the World Bank, Tamil Nadu Energy Development Agency (TEDA), Tamil Nadu Energy Regulatory Commission (TNERC), Tamil Nadu Transmission Corporation (TANTRANSCO), the Central Electricity Regulatory Commission (CERC) and the Tamil Nadu Energy Generation and Distribution Corporation (TANGEDCO). Participants deliberated on four aspects of the Solar Energy Policy, viz. Rooftop Solar, Utility Scale Projects, Open Access and Transmission Infrastructure. Recommendations from each table discussion are given below. These will be enumerated as the 2016 Action Plan and submitted to the relevant authorities for their consideration.
5. Page 6 / 26 TAMIL NADU SOLAR ENERGY POLICY WORKSHOP - June 21, 2016 ROOFTOP SOLAR / CONSUMER SCALE ROOF A. Definition Of ‘Rooftop Solar” Issue: It was felt by some participants that the term “rooftop solar” does not adequately describe the solar system types that are supposed to be covered by this term. Recommendation from workshop: It was suggested that instead of using the expression “rooftop solar”, the definition should be something like ‘Any solar system installed within the premises of an electricity consumer, primarily for self-consumption of energy, with or without energy export to the grid’.
6. Page 7 / 26 TAMIL NADU SOLAR ENERGY POLICY WORKSHOP - June 21, 2016 B. Net Metering – Export Energy Credit Cap Issue: Presently, electricity generated from a solar rooftop/solar system and exported to the licensee’s grid is capped at 90% of the imported energy. Energy export in excess of this limit is treated as lapsed, i.e. there is no compensation in the form of energy credits or payments. Recommendation from workshop: Energy exported to the grid to be capped at 100% of imported energy for the purpose of net-metering during the 12 months settlement period. Energy export in excess of 100% of imported energy at the end of the 12 months settlement period to be paid for at the Average Pooled Power Purchase Cost (APPC) or the consumption tariff, whichever is lower.
7. Page 8 / 26 TAMIL NADU SOLAR ENERGY POLICY WORKSHOP - June 21, 2016 C. Solar Energy Grid Penetration At Distribution Transformer Level Issue: Currently the cumulative solar energy capacity at distribution transformer level has been capped at 30% of the distribution transformer capacity (example: a maximum of 30 kW of total solar PV capacity can be connected to a 100 KVA distribution transformer). There are views that this cap can be raised to a higher percentage. Some states in India have done so (e.g. 50%, 80%) and in some countries there is no prescribed cap at distribution transformer level at all. Recommendation from workshop: A field study is being conducted on distribution transformers where the 30% solar energy capacity penetration cap has been reached or is about to be reached. TANGEDCO to be requested to allow solar energy capacity penetration of up to 50% in some transformers to facilitate the proposed field study. During the proposed field study, LT voltages at various points in the distribution network and bidirectional active, apparent and reactive energy flow to be measured at the distribution transformer LT terminals. Renewable energy caps may be maintained however at overall grid level and these caps may be gradually increased as and when energy storage capacity is enhanced and inter-state / inter-region energy flow capacity enhances at transmission network level.
8. Page 9 / 26 TAMIL NADU SOLAR ENERGY POLICY WORKSHOP - June 21, 2016 D. Eligible Consumers Issue: Electricity consumers under 13 consumer tariffs have been excluded from the Tamil Nadu’s Net Metering Policy. Private educational institutions, places of worship, industries and power looms are amongst the excluded consumer categories. This deprives many consumer categories from access to the net-metering mechanism. Recommendation from workshop: Presently some of the highest tariff consumers (e.g. LT tariff V) are included in net-metering and numerous low LT and HT tariff consumers are excluded. Include all metered tariff consumers in the Tamil Nadu Net Metering Policy. This will be good for all stake holders including TANGEDCO since with the inclusion of all consumer tariffs the probability of the net-metering mechanism resulting in a financial gain or a financially neutral proposition for TANGEDCO increases.
9. Page 10 / 26 TAMIL NADU SOLAR ENERGY POLICY WORKSHOP - June 21, 2016 E. Availability Of Bidirectional Energy Meters For Net-Metering Issue: For solar net metering the existing TANGEDCO service connection meter needs to be replaced with a bidirectional energy meter. In these meters imported and exported energy are recorded and displayed in separate meter registers. There have been cases where consumer had to wait a long time for this meter replacement. Recommendation from workshop: Almost all digital electronic energy meters are four-quadrant bidirectional energy meters as also confirmed by the meter manufacturers in their product literature. The difference between a “unidirectional” and a “bidirectional” meter is therefore only in the parameterisation settings, which can be changed with meter configuration software. It is recommended that all new service connection meters in Tamil Nadu (and the country as a whole) are configured for bidirectional energy recording and display so that the electricity service connections equipped with these bidirectional meters are “solar net-metering ready”. This will also reduce inventory costs for TANGEDCO and the waiting for a “bidirectional meter” will be a thing of the past.
10. Page 11 / 26 TAMIL NADU SOLAR ENERGY POLICY WORKSHOP - June 21, 2016 F. New Solar Energy Policy Components For Inclusion In The Tamil Nadu Solar Energy Policy Issue: There are flat owners, office building operators and others who want to participate in the solar energy mission but do not have a (suitable) roof or other space where they can install solar panels. Recommendation from workshop: Include the “Virtual Net Metering” mechanism in the solar energy policy whereby consumers can be beneficial owners of a part of a collectively owned solar system. All energy produced by a collectively owned solar system will be fed into the grid through an energy meter and the energy feed-in as recorded by that meter will be credited, in kilowatt-hours, in the electricity bill of each participating consumer pro-rata their beneficial ownership of the solar system. Issue: There are electricity consumers with multiple service connections in their name spread out over a town or in the state. Examples include government departments, educational institutions, companies and spiritual organisations. Some of the buildings they own or use have excellent roofs for solar energy but with low energy consumption and vice versa. How can we ensure that the good solar roofs of these consumers are used to their full potential? Recommendation from workshop: Include the “Group Net Metering” facility in the solar energy policy whereby the surplus energy exported through an electrical service connection of a consumer can be credited, in kilowatt- hours, in one or more other service connections of that consumer.
11. Page 12 / 26 TAMIL NADU SOLAR ENERGY POLICY WORKSHOP - June 21, 2016 UTILITY SCALE A. Technology Outlook Issue: It was felt that the solar policy focuses a lot on solar PV. Though large scale solar thermal plants are expensive, in the Indian ecosystem they can offer grid management capabilities which need to be factored in its evaluation. Also battery technology would evolve to a stage where solar coupled with storage could be competitive in the next five years. This could be a game changer that TN should encourage. Recommendation from workshop: It was agreed that each technology has its merits and demerits. However, the primary requirement for the state is to be agnostic as far as technology is concerned. Whichever technology can help tap the potential at an affordable cost must be encouraged.
12. Page 13 / 26 TAMIL NADU SOLAR ENERGY POLICY WORKSHOP - June 21, 2016 B. Planning For Capacity Addition Issue: Presently, a database of land owners is not available which hampers realistic planning by TANGEDCO. In addition, water availability is not considered in advance while adding capacity. Recommendation from workshop: It is recommended that a geo-spatial analysis that maps land suitable for solar projects is undertaken. This should be a coordinated effort with the revenue department. TANGEDCO’s plan- ning should consider land availability. Rain water harvesting and waste water management should be essential components of solar projects. It is also recom- mended that the Policy includes a time bound development target for projects to prevent hoarding of land.
13. Page 14 / 26 TAMIL NADU SOLAR ENERGY POLICY WORKSHOP - June 21, 2016 C. Procurement Process Issue: The three-way procurement processes of Feed-in Tariffs (FIT), Average Pooled Purchase Cost (APPC) and competitive bidding have their inherent weaknesses in their current form. Though FITs provide long term visibility, they create stress upon Utilities when the prices of modules fall and the FIT levels do not reflect that. Competitive bidding if not handled properly can throw up unrealistic tariffs which then have a cascading effect on project implementation. Sale to the utility based on the Average Pooled Purchase Cost + Renewable Energy Certificate (REC) model needs the REC market to be fixed – else developers wouldn’t be interested to participate. Recommendation from workshop: For competitive bidding, a possible solution could be to get the regulator involved in overseeing the process to ensure that all risks are factored. There must be new norms for selection of bidders using bidder history while at the same time there must be a mechanism to support new installers. One possible solution is a slab system where new bidders compete for smaller projects and then bigger projects as they build up an experience history. There could be a mechanism where TANGEDCO takes care of land and evacuation thereby reducing the risk on the developer. For FITs, Regulators could possibly look at a tariff index linked to expected cost declines for a longer duration. Also could there be a quarterly review for FITs like that for Fuel and Purchased Power Cost Adjustment (FPPCA).
14. Page 15 / 26 TAMIL NADU SOLAR ENERGY POLICY WORKSHOP - June 21, 2016 OPEN ACCESS A. Enforcement Of Renewable Purchase Obligation (RPO) Non-Compliance Penalties Issue: Currently, penalties for non-compliance with RPO are prescribed, but are not implemented. In addition, following the striking down of TNERC’s proposed amendments to the state’s Renewable Purchase Obligations (RPO) by the Appellate Tribunal for Electricity (APTEL), there is confusion around the applicability of Solar Purchase Obligations (SPO) issue in Tamil Nadu. This has led to two issues: 1) non-implementation of RPO non-compliance penalties and 2) absence of clarity of regulation, and hence obligated entities are not buying solar power to their full RPO/SPO limits yet. Recommendation from workshop: The confusion around the current SPO / RPO issue is only with respect to the quantum and the consumers affected by it. The concepts of RPO / SPO will themselves not be abolished. When they get enforced, they could become retroactively applicable on all the obligated entities. Supreme Court has ruled in favour of implementing RPO non- compliance penalties in Rajasthan. Other states, including Tamil Nadu, should follow suit after this legal precedent.
15. Page 16 / 26 TAMIL NADU SOLAR ENERGY POLICY WORKSHOP - June 21, 2016 B. Clarity On RPO/ REC Compliance For Captive Solar Projects Issue: Currently TNERC has prescribed promotional (30% of the normal) transmission, wheeling, scheduling and system operation charges for solar projects. It is not clear if captive consumers who avail of these promotional measure can count such solar projects towards RPO compliance. TNERC Solar tariff order separately mentions that projects that want to avail of RECs need to pay 100% of these charges. Even though RECs are directly related to RPO compliance, there is no explicit clarity given, if a captive project needs to pay 100% of the charges to be counted towards SPO compliance (by generating RECs). Recommendation from workshop: Buyers will not invest in solar proj- ects if they cannot use them towards SPO compliance, even if it means paying lesser grid usage charges. Hence TNERC needs to provide explicit clarity on the above issue. C. Solar as Agricultural Demand-side Management strategy to tackle Cross Subsidy Surcharge (CSS).
16. Page 17 / 26 TAMIL NADU SOLAR ENERGY POLICY WORKSHOP - June 21, 2016 C. Solar as Agricultural Demand-side Management strategy to tackle Cross Subsidy Surcharge (CSS) Issue: CSS was originally meant to be phased out. And as per the revised tariff policy it cannot exceed 20% of the tariff of the relevant open access consumer. But the electricity subsidies (for farmers, under-privileged and the residen- tial consumers) in India mean that CSS is still continued by the regulators to maintain the stability of the utilities. CSS makes the landed cost of open access power (third party) expensive. Hence TNERC needs to optimize it in such a way that it doesn’t hinder investments in solar projects. Recommendation from workshop: Subsidies to the farmers can be targeted through solar powered water pumps. These produce power at the source of de- mand, reduce Transmission and Distribution (T&D) losses and also enable feed- er level separation of the distribution network to improve efficiencies. Upfront disbursement of subsidy to such installations can do away with the need for subsidies in the medium to long term. TNERC needs to devise suitable schemes to scale up such projects. TNERC can also explore if it can facilitate the use of Corporate Social Responsibility (CSR) funds to augment CSS for solar power projects of corporates.
17. Page 18 / 26 TAMIL NADU SOLAR ENERGY POLICY WORKSHOP - June 21, 2016 TRANSMISSION INFRASRTUCTURE The following recommendations are applicable for the solar generation installed capacity of 10 MW and above. The policy guidelines may follow/amend as per the CERC regulations on renewable in future time. A. Scheduling And Forecasting Issue: Integration of Variable Generation (VG) poses disruptive challenges to the Electricity Grid. Currently Tamil Nadu Solar Energy Policy does not address scheduling & forecasting and Transmission infrastructure. Recommendation from workshop: i. Solar energy generation having the installed capacity of 10 MW and above needs to provide the scheduling of solar generation on 15-minute interval for day ahead scheduling. ii. The solar generation can obtain the forecasting and/or scheduling services by themselves or request SLDC for the same on cost basis as specified in CERC regulations on Scheduling & Forecasting for RE generation.
18. Page 19 / 26 TAMIL NADU SOLAR ENERGY POLICY WORKSHOP - June 21, 2016 Explanatory Statements: i. It is advisable to SLDC/solar developers to formulate the coordination agencies. The aim should be to encourage at least 3 to 5 agencies who can look into scheduling and forecasting activities on behalf of solar developers on an annual cost basis. ii. It is also advisable to provide the solar generation schedules on cluster level, of say, 5 or 10 clusters in Tamil Nadu. This will help SLDC to plan the conventional generation for RE variations instead of hundreds of schedules submitted by individual RE developers. Also this will save cost for individual RE generation plants as cost is socialised. iii. However, to fulfill the above cluster procedure, the transmission planning department shall ensure no transmission constraints within the cluster. Hence it is advisable to perform the transmission network planning for Tamil Nadu State and to plan for contingency free network plan. This will enable to identify the clusters in the state.
19. Page 20 / 26 TAMIL NADU SOLAR ENERGY POLICY WORKSHOP - June 21, 2016 B. Grid Connectivity And Evacuation Facility Recommendation from workshop: Tamil Nadu policy can adopt any one of the following options under grid connectivity. The evacuation facility from the solar substation/switch yard to the TNEB substation at voltage level 66 kV and above shall be laid by TNEB. They should be integrated by installing RTUs by solar project developer so that the penetration can be monitored at the connectivity substation by the SLDC on real time basis. or The power generated from a solar power project shall be injected at an appropriate voltage to the nearest substation of TNEB. The evacuation line from interconnection point to grid substation shall be laid by the TNEB at the cost of the project developer. However, if the project developer wishes to lay evacuation line by themselves, they can do so by paying the supervision charges to TNEB.
20. Page 21 / 26 TAMIL NADU SOLAR ENERGY POLICY WORKSHOP - June 21, 2016 Explanatory Statements: i. As Tamil Nadu state has high levels of wind and solar potential, it is advisable to perform the evacuation studies considering the hybrid (wind and solar) generation. This will optimize the transmission infrastructure cost. i. It is also advisable to load the transmission network up to line thermal loading limits in high RE penetration region instead of surge impedance loading levels. This will minimize the transmission infrastructure cost and minimizes the backing down of RE generation. iii. It is also advised to consider the RE as must run units and hydro as high cost peaking power source instead of low cost base load generation, as it is currently treated now. This will help to evacuate the more RE in Tamil Nadu state as hydro will help to compensate the Hybrid power variations. iv. It is advisable to perform the state level transmission planning considering the advantages of hybrid generation in the state and plan for network plan to minimize or eliminate the congestion in state transmission network. This will indirectly help to divide the state in clusters or areas where no congestion exists within cluster or area.
21. Page 22 / 26 TAMIL NADU SOLAR ENERGY POLICY WORKSHOP - June 21, 2016 PARTICIPANTS TESTIMONIALS Some testimonials received from the participants are given below: “The room was full of energy, engagement, commitment, concentration and passion. The workshop was about substance and there are concrete outcomes. The workshop format was excellent and everything went beyond expectations.” “It was indeed an enriching workshop. Well-planned and organized. Looking forward to more of such interactions.” “It was a good discussion and quite a few take-aways. It is also good to see Auroville Consulting’s engagement with the State Government of Tamil Nadu.” “Very well organised workshop. It was a wonderful experience and useful for me.” “Great to see this excellent organization and follow up by you and your team. Congrats for that!” "Thank you for the wonderfully crafted document which will be a path breaker for the growth of solar sector."
22. Page 23 / 26 TAMIL NADU SOLAR ENERGY POLICY WORKSHOP - June 21, 2016 ANNEXES
23. Page 24 / 26 TAMIL NADU SOLAR ENERGY POLICY WORKSHOP - June 21, 2016 Speakers Name Organisation Mr. Jag Mohan Singh Raju Tamil Nadu Energy Development Agency Mr. Gireesh Pradhan CERC Ms. Mohua Mukherjee World Bank Facilitators Name Organisation Mr. Ashok Thanikonda World Resources Institute Mr. Chandra Shekhar Reddy Power Research and Development Consultants Mr. Deepak Krisnan World Resources Institute Mr. Toine van Megen Auroville Consulting Organising Team Name Organisation Ms. Amala Devi World Resources Institute Ms. Anjana Agarwal World Resources Institute Mr. Jaswanth Auroville Consulting Ms. Nandini Agarwal Auroville Consulting Mr. Satish Ravishankar Auroville Consulting Mr. Tushar Patel Auroville Consulting Mr. Vikram Devatha Auroville Consulting Mr. Vimal Bhojraj Auroville Consulting Participants Name Organisation Mr. Aditya Ramji CEEW Mr. Andrew Hines CleanMax Solar Mr. Ayush Khanna TIDE Mr. Bala Baskar N Auroville Consulting Mr. Bharath Jairaj World Resources Institute Mr. Dhilip Consumer Action Group Mr. E. Jayaraman TNIFMC Ms. Er. J. Rexline Teresse TANTRANSCO Mr. G.Sivakumaran Hindel Power Technologies Pvt Ltd Ms. Jayanthi V. TANGEDCO Mr. K C Sundaram Indian Institute of Public Policy Mr. K.E Raghunathan Solkar Dr. Muraleedharan V R IIT Madras Mr. Narasimhan Santhanam Solar Mango Mr. Nikhil Vinay Solar Mango Mr. Pranjal Dhariwal Solar Quest Mr. Rahul Bhardwaj L&T Mr. Raja Singarayar R CleanMax Solar Ms. Ramya Gopinath Solar Mango Mr. S Ashwin Ram Madras School of Economics Mr. Sathyamurthy V TANGEDCO Mr. Shirish Garud TERI Mr. Subramaniam Omega School Ms. Sugandhi R M TNERC Mr. Surya Prakash World Resources Institute Mr. Vineeth Vijayaraghavan Panchabuta Mr. Vishnu Rao Consumer Action Group
24. Page 25 / 26 TAMIL NADU SOLAR ENERGY POLICY WORKSHOP - June 21, 2016 Program Schedule 09:00 - 09:30: Arrival and Registration 09:30 - 10:00: Plenary session Overview of TN Solar Policy by Anjana Agarwal, WRI India 10:00 - 12:15: Break-Out Session – In-epth discussion on key aspects of TN Solar Policy. Group discussions on Rooftop Solar (led by Toine van Megan, Auroville Consulting), Utility-Scale Solar Power Plants (led by Deepak Krishnan, WRI India), Open Access (led by Ashok Thanikonda, WRI India) and Transmission Infrastructure required to meet Solar Targets (led by Chandrasekhar Reddy Atla, PRDC) 12:15 -12:45: Presentation by Ms. Mohua Mukherjee, Senior Energy Specialist, World Bank. Overview of international funds for Solar projects in India 12:45 - 13:30: Lunch 13:30 - 15:00: Interactive session Role play based on key contentious issues that emerge in the break-out session 15:00 - 16:00: Presentation of findings and recommendations Led by break-out group facilitators 16:00 - 16:30: Valedictory address Mr. Gireesh Pradhan, Chairperson, CERC Mr. Jag Mohan Singh Raju, Chairperson, TEDA 16:30 - 17:00: Consolidation and Next Steps