Existing Wind Power Policies and Incentives

Transcription

1 Existing Wind Power Policies and Incentives Consultation on National Wind Energy Mission January 9, 2014 New Delhi

2 Wind Power Progress (in MW) Potential (at 80 m) : 1,02,000 Achievement so far : 20, th Plan Target : 9,000 Achievement during 11 th Plan : 10,260 Achievement during : 3,196 Achievement during : 1,700 Target for 12 th Plan : 15,000 Target for : 2,500 Achievement during (so far) : 1100

3 Why Incentives? Confidence in technology Low PLFs as compared to conventional sector Feed-in tariff not adequate - CERC guidelines not followed Negative NPV NPV of equity cash flow - Negative Rs Lakhs, which indicates inadequacy of tariff In-firm nature of output Grid availability and instability Project Viability

4 Central Government Policies and Incentives

5 Depreciation Accelerated Depreciation withdrawn w.e.f Ministry trying to re-instate the same in consultation with MoF At present, a total of 35% Depreciation allowed in the 1 st year of the project (15% normal + 20% additional depreciation for infrastructure project)

6 GBI Scheme GBI- Rs.0.50/kWh subject to max Rs crore/mw (increased from Rs. 62 lakh/mw) GBI over and above the FIT Duration : > 4 years, and < 10 years Total disbursement in a year not to exceed Rs. 25 lakhs per MW during first four years. GBI scheme applicable for the 12 th FYP period having a target of 15,000 MW Captive producers allowed but open access (merchant power) not allowed. Effective retrospectively w.e.f

7 Renewable Energy Certificate (REC) Launched in 2010, REC is a tradable certificate where one certificate is equal to 1MWh of wind energy generated Purchased by DISCOM, Open Access and Captive Consumer to fulfill the RPO obligation The floor and forbearance price of 1 Non-solar REC is Rs and Rs respectively Non-compliance of RPO has a direct bearing on REC mechanism 7

8 Central Fiscal Policy Direct taxes Exemption on Income Tax on earnings from the Project u/sec 80IA for 10 years. Indirect taxes Exemption of Excise Duty on WEG. Custom duty concessions for certain wind turbine components available Special bearings Gear Box Yaw components Wind turbine controllers Parts of the above components Rotor blades of wind turbines Parts and sub-parts of blades Raw materials for blades, parts and sub-parts of blades

9 Incentive in Research & Development The income tax department provides for a weighted deduction for an in house R&D activity, which entitles wind turbine manufacturers to claim 200% of the expenditure (other than expenses on land and building) incurred for in-house R&D activity

10 Foreign Direct investment 100% FDI is allowed in wind power sector Has helped greatly in bringing investment After introduction of GBI, FDI has increased in wind sector 10

11 State Government Policies and Incentives

12 Renewable Purchase Obligation 26 SERCs specified the mandatory purchase obligation under Section 86, 1(e) of the Electricity Act, 2003, for purchase of fixed percentage of energy generated from RE sources. The RPO percentage varies from 0.5% to 10.25%, depending on the local renewable resources and the electricity distributed in those states. RPO obligation can be fulfilled through direct purchase via bilateral contracts and tradable REC mechanism which can further generate revenue for RE projects.

13 Feed in Tariff State FiT (Rs./kWh) Andhra Pradesh SERCs announced feedin tariff for purchase of electricity generated from wind power projects. The present feed-in tariff varies from Rs to Rs per unit Gujarat 4.15 Karnataka 4.15 Madhya Pradesh 5.92 Maharashtra WPD w/m 2 : 5.81 WPD w/m 2 : 5.05 WPD w/m 2 : 4.31 WPD >400 w/m 2 : 3.88 Rajasthan 5.46 ( for projects in Jaisalmer, Jodhpur and Barmer districts) 5.73 (for others) Tamil Nadu 3.51

14 Wheeling, Banking & Third Party Sale Favorable provision for wheeling, banking and third party sale by wind power For wind, wheeling charge for the different states are in the range of 2% (MP and MH) to 7.5% (WB). The states of Karnataka, Tamil Nadu and Andhra Pradesh charge 5% of the total energy fed to the grid. For wind, Tamil Nadu and Karnataka allow 5% and 2% of the total renewable energy fed to the grid as bankable energy and can be availed anytime during the financial year. Rajasthan and Maharashtra provide 6 months (Apr-Sep) and 12 months of banking period respectively. The state of Andhra Pradesh doesn t permit banking.

15 Electricity duty Other Incentives Renewable energy projects are exempted from electricity duty by state government VAT Reduced or no VAT on Renewable energy components in some states Tamil Nadu has reduced VAT from 14.5% to 5% Karnataka offers 5.5% VAT for all the renewable energy components Gujarat, Tamil Nadu and Maharashtra offer 5% VAT for all renewable components

16 Other Incentives Capital Subsidy Maharashtra has the provision for capital subsidy to the extent of 11% for wind energy projects set up by the cooperative sector. Rajasthan provides soft loan equal to 1/3 of capital cost at low interest rate. Exim Policy Green technology (including wind energy) is listed as a focused group scheme. Under this scheme, export of RE product to all countries is entitled for an additional duty credit equivalent to 2% - 5% of freight on board (FOB) value of exports

17 Project Facilitation C-WET provides all technical support to developers including wind resource assessment and DPR preparations State nodal agencies (SNAs) facilitate project development right from resource assessment to the final commissioning. SNA supports the developer by facilitating development of infrastructure at identified sites and also verifies the legal statutory clearances sought by the developer from different departments. MEDA in Maharashtra has created the Green Cess (tax) fund. This is a dedicated fund in Maharashtra for the development of RE and a part of this fund is utilized to create infrastructure for grid connectivity with proposed wind farms. Similar tax (Cess) is being collected in Karnataka.

18 RAJASTHAN(1/2) Electricity Duty Banking Other Incentives Exemption for captive consumption. Six Monthly Basis i.e. Apr. to Sept. & Oct. to March. Utilization of banking energy is not permitted in Dec. to Feb. (* the Hon'ble Commission Proposed to reduce the period of banking on monthly basis in Draft Tariff Regulation, 2014) Benefit of Industry status (eligible for incentives to industrial units under the schemes administered by Industries Department)

19 RAJASTHAN(2/2) Land Transmission & Wheeling Charges Government concessional rates viz. 10% of DLC rates; with Max. allocation of 5 Hect./MW; and The conversion charges (private land to industrial use) will be 10% of charges levied for industrial purposes under the relevant rules. Transmission 50% of normal charge ; and Wheeling 50% of normal charges specified for 33 kv, in case if distribution licensee network below 132 kv level is utilized.

20 Madhya Pradesh(1/2) Electricity Duty Exemption for a period of 10 year (Captive consumption & Third party sale). Banking 100% 2% of banked energy as banking fees to the concerned State Distribution Company/State Power Trading Company. Transmission & Wheeling Charges Exemption from open access charges to captive/oa consumers in case if power procured from RE sources; and Wheeling charge grant to DISCOM - 4 % in case of third-party sale within the state

21 Madhya Pradesh(2/2) Land Government Revenue land use Rs1/-(token) premium per year (as per circular No. F VII-2A, dated and No. F VII-Nazool, dated ) Other Incentives No cess for electricity supplied by WEGs; VAT/Entry Tax exemption for Wind power plant(as per MP Govt. Notification No. 380, dated ); Benefit of Industry status (eligible for incentives under State's Industrial Promotion Policy); and Pro rata reduction in contract demand on a permanent basis(for industrial consumer buying energy from WEGs)

22 Gujarat(1/2) Electricity Duty Banking Other Incentives Except in case of TPS, the electricity generated from the WTGs is exempted from ED. For TPS: Banking not provided. For CPP (not opting REC): Banking (slotwise) allowed for 1 month, then surplus power to be purchased at 85% of P.T by the utility For CPP (opting REC): Banking not provided. WTGs for Captive use are exempted from demand cut to the extent of 30% of the installed capacity.

23 Gujarat(2/2) Land Transmission & Wheeling Charges The WTGs may be set up on private land, or revenue wasteland / GEDA land, if available For TPS: Normal OA charges/losses applicable; For Captive Use: 66 KV and above: Normal OA charges/losses applicable; <66 Kv: Normal OA charges and applicable <66 Kv (only one WTG): Normal OA charges and

24 MAHARASHTRA(1/2) Electricity Duty Banking Other Incentives For CPP and TPS, ED will not be levied for first 10 years from thecod of project. Slot wise settlement in banking allowed on yearly basis for self use or third party sale. Surplus energy up to the end of FY limited to 10% of net energy delivered to be paid at lowest slab of HT TOD tariff applicable on 31st March of the FY in which energy was generated. OA consumer sourcing power from wind has option of reduction of Contract demand. 100% refund of Octroi Tax / Entry Tax for equipments of WPP's will be made through Green Energy Fund by MEDA

25 MAHARASHTRA(2/2) Land Transmission & Wheeling Charges Developer/Investor can be allotted Govt barren land (permissible for industrial use), at declared windy sites, on lease basis with 30 yrs agreement Promotional Transmission charges for RE generators (Rs 0.29/kWh). Normal transmission loss (4.24%). Normal wheeling charges and losses applicable.

26 ANDHRA PRADESH(1/2) Electricity Duty Banking Captive generation exempted from payment of Electricity Duty, subject to the condition that the electricity generated shall be utilized fully by them. for CPP & TPS banking allowed during all 12 months. banking year is from Jan to Dec. banking charges in of energy injected. Drawal permitted only during 6 months from July to december. The banked enery remain unutilized as on 31st Dec shall be lapsed. Drawal of banked energy during peak hrs i.e. 06:00 to 09:00 & 18:00 too 21:00 not permitted.

27 ANDHRA PRADESH(2/2) Land Transmission & Wheeling Charges Each Eligible developer may be allocated available Govt. land to harness upto a maximum of 200 MW of wind power initially. After commissioning of 100 MW capacity Wind farms in 1st stage in the allocated Govt.land, the Government may allocate land for another 100 MW capacity Wind Farms. The application from the developers for Government land will be considered on a first-cum-first-served basis. Total Wheeling and Transmission Charges (Including losses) in 5% of Electricity delivered to the Grid

28 TAMIL NADU Banking Allowed for One financial year April to March. Banking charges 0.94 Rs/unit. Unutilized energy at the end of FY to be paid by of the relevant tariff (preferential tariff). WEGs availing REC will be allowed to bank power for 1 month, surplus power after a month will considered to be lapsed. Other Incentives/Subsidy Tamil Nadu Power Finance and infrastructure Dev Corporation Ltd Provides the Loan to Power Sector. Transmission & Wheeling Charges 40% of the transmission charges and 40% of the wheeling charges as applicable to the conventional power to the Wind power. Apart from these charges, the WEGs shall have to bear the actual line losses in kind as specified in the respective orders of the Commission and amended from time to time.

29 KARNATAKA Transmission & Wheeling Charges Banking 5% of injected Energy (in-kind) banked for yearly basis, carried forward month to month. banking 2% of the input energy (order dated ); difference of UI charges. CPPs availing RECs are liable to pay normal transmission wheeling charges and banking would be allowed on monthly basis, excess energy at the end of the month would be purchased by the Disbn licensee os that area at APPC determined by KERC. Proposed Banking Scenario (KERC- Draft Wheeling and Banking Agreement)

30 Issues Rajasthan The Hon ble Commission in its draft tariff Regulation, 2014 has proposed to reduce the period of banking i.e. on monthly basis which was earlier on six monthly basis ; and 14.5% which is not reasonable return to investor and also not in line with CERC RE Regulation and is defiance of National Tariff Policy Gujarat In preferential tariff calculation there is a computational error in RoE and AD which has reduced the RoE of the investors. Karnataka At present, third party sale with REC is not allowed in the state which limits the wind investment in the state Tariff determined on average basis shall not consider time value of money The banking should not be revised as per the draft wheeling and banking agreement format published recently Tamil Nadu Tariff determined on average basis shall not consider time value of money No wind power policy in the state. Conducive policy required Evacuation issue

31 THANK YOU