Deep Insights on Tamil Nadu SPO

   The Tamil Nadu Solar Energy Policy 2012 was announced in October 2012.from day one it is popular by one of the most ambitious state solar policy in India. With The operative period of the policy is from 2012 to 2015, during which it targets to add 3 GW of solar power. State which is known by its high installed capacity of wind energy is also on the voyage to be a solar state.

        Under the “Tamil Nadu solar energy policy 2012” 1500MW will be added through utility scale purpose from which 1000MW will be saleable to the TANGEDCO and remaining 500 will be driven by private power purchase agreements.

                                            

	Utility scale (MW) (A)	Solar Roof Top (MW) (B)	REC (MW) (C)	Total (MW) (A)+(B)+(C)
2013	750	100	150	1000
2014	550	125	325	1000
2015	200	125	675	1000
Total	1500	350	1150	3000

Solar Purchase Obligations

       This policy came up with revised term SPO in which H.T consumers and L.T commercial will be off taker for the solar energy. most interesting fact in this policy is that, Instead of implying RPO on DISCOMS it is directly imposed on end users (HT Consumers (HT Tariff I to V) & LT Commercial (LT Tariff V)), this arrangement may relief State DISCOM From additional tariff burden.

 “Obligated entities” for SPO under this policy

·         HT Consumers (HT Tariff I to V)

        This category will cover all HT consumers including:

       1. Special Economic Zones (SEZs)

       2. Industries guaranteed with 24/7 power supply

       3. IT Parks, Telecom Towers

       4. All Colleges & Residential Schools

       5. Buildings with a built up area of 20,000 sq.m. Or more

·         LT Commercial (LT Tariff V)

	Up to  DEC 2013	From   JAN 2014
SPO Percentages	3%	6%

The SPO will be administered by TANGEDCO. Whereas Tamil Nadu Electricity Development Authority (TEDA) will be stated as a nodal agency

The above obligated consumers may fulfill their SPO by:

·         Generating captive Solar Power in Tamil Nadu equivalent to or more than their SPO (due to this big industries will have to invest in solar power by establishing captive power plant)

·         Buying equivalent to or more than their SPO from other third party developers of Solar Power projects in Tamil Nadu (this will promote IPPA with third party power producer)

·         Buying RECs generated by Solar Power projects in Tamil Nadu equivalent to or more than their SPO. (This will nurture REC projects within Tamil Nadu)

·         Purchasing power from TANGEDCO at Solar Tariff (Additional income from this tariff price can be utilized to invest in another solar policy)

   Consumers desirous of availing SPO exemption by captive solar generation shall necessarily install separate meters to measure captive generation.

     Enforcement strategy

·         If any of the obligated consumers has not complied  with the SPO they should pay an amount equivalent to the “Forbearance Price “of the Solar REC to the administrator and in turn the administrator shall purchase REC for the amount collected from the obligated consumers.

·         For the purchases made by the obligated consumers from the TANGEDCO in order to meet their Solar Purchase Obligation, the TANGEDCO shall make equivalent purchases of solar power as prescribed in the Tamil Nadu Solar Energy Policy 2012.

·         In case an obligated consumer has multiple service connections, the SPO can be met in total for his/her electricity consumption in the area of the distribution licensee.

·         The SPO will be fixed on the total consumption of non-solar power of the consumer irrespective of the sources.

·         For those consumers who are purchasing solar power only from the distribution licensee for the fulfillment of their SPO the compliance period may be specified as that of the billing cycle. For others who are purchasing from other solar generators or consuming from their own solar generators the period may be fixed for the Calendar year as prescribed in the Policy.

     Unsolved issues

·         NAPCC had set the target of 5% renewable energy purchase for FY 2009-10, and also envisaged that such target will increase by 1% for next 10 years. It targets a minimum of 5% RE in the supply mix of the entire country by 2010, 15% by 2015 and 20% by 2020. On this guideline CERC had set RPO structure for each state which could make its target reachable within permitted timing. But now it seems that states are ignoring national regulations.

·          “Obligated entity” is defined differently in the Solar Policy 2012 and in Clause 2 (g) of the TNERC Renewable Energy Purchase Obligation Regulations 2010.

·         Connected load by the obligated entities*(as per TNSEP 2012) is approximately 6000MW. It means to fulfill 3% SPO before December 2013 would require 180MW of solar power from around installed capacity of 900MW (by considering 20% capacity factor) which is practically impossible. Also that amount of REC.

·         There is already an obligation to a level of 8.95% from non solar sources with an additional 0.05% from solar sources as RPO as per the TNERC RPO Regulations 2010. Hence the total obligation under RPO is 9% only. However, when the SPO is specified separately, the impact of the present RPO fixed at 9% in total should also be considered for modification. Accordingly, it should specifically exempt to that extent the RPO in suitable manner.

·         SPO are implemented on end users instead of DISCOMS which is contradictory with the policies of other states. Tough it will relief the tariff burden of DISCOMS it will badly affect on industrial consumers who are already purchasing wind energy at higher tariff.

 

·         National solar mission policy already concludes SPO in its Renewable purchase obligation which is also approved by TNERC. Then there is no need to such kind of SPO which is only doubling the obligations.

·         Under the option for fulfillment of SPO, (c) policy stated that obligated entities are mandatory to buy REC those are generated only in the state of Tamil Nadu. Whereas REC market is a national market and not restricted to the certain states. To do so TNERC has to establish their own REC market, as there is no any such kind of identification available on the certificate to recognize from which state it is generated.

    Conclusion

TNERC has to come up with comprehensive outlook on its SPO structure. Also it needs to communicate with industrial consumers on enforcement procedure and percentage proportions after all they are contributing roughly 46% electricity demand. 

Anti dumping duty _ next burning issue in indian solar industry_ part 2

Anti dumping duty

    Definition- “Dumping is supposed to occur when the ‘export price’ of the goods is less than the ‘normal value’ of the articles sold in the domestic market of the exporter”

Indian solar (PV) manufacturer perspective

·         Indian solar PV manufacturers industry is largely smashed by cheap, large scale imported PV modules and cells from the countries like china, U.S, Malaysia and Taiwan. In phase 1 Domestic Content Ratio DCR was mandatory only on crystalline technology, so that project developers were choose thin film technology which was mostly imported from U.S at low cost with the support of us EXIM bank. though Under the draft policy for phase 2 MNRE has considering several options to implement DCR it is hard to predict what kind of decision MNRE will take (by considering project developers perspective).

·         In countries like U.S, china governments are providing lands at low cost, loan at 1-2% interest rates and subsidies financing model to the manufacturing companies due to all this they are capable to spend hefty amount on R&D and vertical integration which is reducing the cost of product. This is unfair for domestic players as they charged by 13% interest rates, low class technology, restricted capacity scaling. Many experts agree with the fact that thin film technology is not suitable for Indian environment but due to the low cost and attractive interest rates many developers were choose it.

·         From ISMA point of view anti dumping should be in charge along with strict instruction on DCR.

Project developer’s perspective

·          Solar Independent Power Producer Association (SIPPA) has come up to oppose anti dumping duty. Accordingly to them instead of applying anti dumping duty government should have to take some long term measures to protect domestic solar industry.

·         A recent research report by the Center for Energy Environment and Water (CEEW) has pointed out that very few Indian developers have adopted Crystalline Technology due to the import restrictions under the Solar Mission 2020 initiative. “Though there is numerous advanced Crystalline Silicon Technologies available the world over, the developers’ choice is restricted to domestically manufacture solar PV panels in this category.

·         Indian manufactures of crystalline silicon based modules import all major raw materials like poly silicon waters and cells and the prices of such raw materials have also crashed due to the heightened demand-supply gap. “In such a situation imposition of anti-dumping duty on solar photovoltaic modules would be counterproductive to the country’s solar aspirations.

·         Also If anti-dumping is imposed on solar imports, cost of solar power in India is bound to go up which will be borne by distribution companies and commercial consumers (as most of the DISCOMS are already poor in state).

   After assessing both the perspectives MNRE should have to take unbiased decision to protect Indian solar industry. Only imposing anti-dumping duties might work for the short-term, but it might de-incentivize innovation and investment in R&D. If India wants to improve its manufacturing, then it is imperative that a competitive advantage is maintained through investment is R&D and efficiency improvements.

    Whether to impose duty or not is not the big question, as industry is going to face little bit hard situation by either decision, the question is what measures MNRE will take to sustain domestic industry in long term basis.

Anti dumping duty _ next burning issue in indian solar industry

   “We will pool our scientific, technical and managerial talents, with sufficient financial resources, to develop solar energy as a source of abundant energy to power our economy and to transform the lives of our people. Our Success in this endeavor will change the face of India. It would also enable India to help change the destinies of people around the world.”

          Those are the words of Hon. Prime minister of India Dr. Manmohan Singh at the time of addressing National Action Plan on Climate Change (NAPCC). Clear, determinant and encouraging speech by prime minister turns into the action by announcing Jawaharlal Nehru National Solar Mission (JNNSM). A mission to transform energy dependency on fossil fuel to the renewable source of power mainly solar energy by creating the policy conditions for its diffusion across the country as quickly as possible. Ministry of New and Renewable Energy (MNRE) started planning to establish strong policy framework for this mission. Before announcement of this mission India had installed capacity of mealy 17.8 mw. It means MNRE has to establish entirely new industry. Even though it was a hard task to develop optional power source which is relatively costlier than conventional sources under the variating global economic conditions. MNRE successfully manage it by implicating various plans. And at the end of October 2012 mission crossed milestone of installed capacity of 1000mw. Since announcement of the JNNSM, Indian solar industry has been facing many hurdles related to the global over capacity, financial backups, loose RPO enforcement conditions and recently born TRADE war.

    The Indian Solar (PV) Manufacturers’ Association on behalf of three Indian cell manufacturers, namely, Indosolar, Websol Energy Systems and Jupiter Solar has filed a dumping complaint against cell and module imports from China, the US, Malaysia and Taiwan. This complaint was first reported on January 2012 to the Directorate General of Anti-Dumping and Allied Duties (DGAD) at the Ministry of Commerce. On November 23rd 2012, DGAD announced that it had found sufficient preliminary evidence of dumping in India. And investigation has started from that day. The ‘period of investigation’ has been determined as between January 1st2011 to June 30th2012 (18 months) as part of the investigation, any entity that is directly impacted in any manner by the duties is referred to as an ‘interested party’. Ac-accordingly, an ‘interested party’ can be any of the following: domestic industry on whose complaint the proceedings are initiated, exporters or the foreign producers of the like articles subject to investigation, importers of the same article allegedly dumped into India, government of the exporting countries, trade or business associations of the domestic producers or importers of the dumped product.

Factors, which are reducing the cost of Chinese product

·         Strong governmental support

At the beginning of 2008 Chinese government sense the future aspects of the solar PV industry worldwide, which was the triggering point for them and accordingly they began their massive capacity formula. Govt had given free land to the pv manufacturers, quick clearance for the projects, large benefits in terms of 1% -2% interest rates on loan, tax benefits on large exports, etc. due to all these reasons Chinese companies were thrive to expand their scale and vertical integration model.

·         Scale and vertical integration

China has some of words largest PV manufacturing companies which cover almost half production market worldwide. Suntech has annual production capacity of 2000 MW, while as the total module production capacity in India is about 1.5 GW and cell capacity is about 500 MW. Chinese manufacturer are surviving in this surplus supply circumstance, is because of their vertical integrating chain of supply, so as per market condition they have a scope to shift their margin along the chain. It is maintaining their flexibility in this harsh condition.

·         excessive export volume

Some experts doubting about their export volume. According to them, Chinese firms are selling PV modules below even the cash cost of production. Chinese manufacturers want to show high export numbers so that state-owned banks do not call in their loans and in the hope that they will eventually be given a debt waiver.

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bosch solar entering in maharashtra & tamil nadu

 

Bosch Solar, a unit of German company Bosch, will soon electrify villages in India. The €788-million solar division of Bosch has implemented a micro-grid based solar power project of 5 kW at a village in Bihar, jointly with NGOs, and is working on more such rural electrification projects in Maharashtra and Tamil Nadu, said Mr C. M. Venugopalan, Sales Director, Solar Energy Division at Bosch Ltd.

The pilot project (funded by Bosch’s solar division) in a local market in Bihar’s Tamkuha village supplies about 15 units of electricity everyday, powering over 50 shops, the company said. Bosch entered the solar energy segment in India in June last year. It is present across the value chain and manufactures silicon, ingots, solar cells, and modules, besides executing power projects.

Rural electrification apart, Bosch will focus on executing commercial and industrial rooftop solar solutions in India.A certified partner of the Ministry of New and Renewable Energy, the company can get the Ministry’s 30 per cent subsidy for rooftop projects, Mr Venugopalan said.

“The company is in the final stage of executing a few such projects in Gujarat of about 100 kW capacity,” he said. The company also provides EPC (engineering, procurement and construction) services where it designs, procures equipment and sets up plants for power project developers. Bosch Solar has executed a one-MW grid-connected solar power project in Gujarat, and also expects to “set up a couple of more 1 MW-scale projects in Gujarat, Maharashtra and Rajasthan by the end of this year,” Mr Venugopalan said.

For the grid-connected power projects, the company would have some projects under the Renewable Energy Certificates scheme, Mr Venugopalan said. REC scheme is one where producers of renewable energy that opt out of the preferential feed-in tariff get tradable certificates.