At the request of my daughter, who is an international scholar on renewable energy and trying to increase zero-emission of CO 2 by establishing new products in the market on the behalf of her company, the following article is being written on renewable energy journey made by India and its ambitious targets to be achieved in near future to serve the mother earth.

At the invitation of NITI Aayog, in 2019, International Energy Agency, popularly known as IEA, visited India and prepared its “Energy Insights on India”, 284 pages report lauding the giant strides made under energy with special reference to ‘Renewable energy, under chapter” 5”.

Web site containing the IEA report is as under:

https://webstore.iea.org/download/direct/2933?fileName=India_2020-Policy_Energy_Review.pdf

Other Government of India web site dealing with petroleum is also given below.

http://petroleum.nic.in/sites/default/files/ipngstat_0.pdf

Our whole discussion is based on giant strides made by India in respect of renewable energy since the whole economy of India, currently based on imported oil badly needs its replacement to survive in the future. However, it is appropriate to start the discussion with the preamble from the IEA executive summary:

“With a population of 1.4 billion and one of the world’s fastest-growing major economies, India will be vital for the future of the global energy markets. The Government of India has made impressive progress in recent years in increasing citizens’ access to electricity and clean cooking. It has also successfully implemented a range of energy market reforms and carried out a huge amount of renewable electricity deployment, notably in solar energy.”

India is the world’s third-largest consumer of oil, the fourth-largest oil refiner, and a net exporter of refined products. The rate of growth of India’s oil consumption is expected to surpass that of the People’s Republic of China in the mid-2020s, making India a very attractive market for refinery investment. India imported oil worth the US $ 102.3 Billion in 2019.

Renewable energy

The Government of India (GoI) has set ambitious renewable electricity targets for the short to medium term.

By 2022 the country aims to have 175 GW of installed renewable electricity capacity. In 2018 the GoI announced an increased ambition of 227 GW renewable capacity by 2022 and 275 GW by 2027.

At the United Nations’ Climate Summit in New York on 23 September 2019, the Prime Minister of India announced a new target of 450 GW of renewable electricity capacity, without specifying a date.

 At the end of November 2019, grid-connected renewable electricity capacity reached 84 GW, with 32 GW coming from solar photovoltaic (PV), around 37 GW from onshore wind, and the remainder from small hydro.

 Solar PV has been on a rapid rise in recent years

Some of the statistical facts reveal the present position vis a vis IEA indication for the world. (As on 2017 IEA statistics)

Some explanation of the words used is needed to understand the data.

What is TPES?

Total primary energy supply (TPES) is the total amount of primary energy that a country has at its disposal. This includes imported energy, exported energy (subtracted off) and energy extracted from natural resources (energy production)

What is Mtoe? Mtoe is an acronym that may refer to Million Tons of Oil Equivalent.

 What is TWh? Terawatt-hour (TWh), a measure of electrical energy, 1012 watt-hours.

Now let us understand the present position of Indian renewal energy for starting out the discussion.

  • Renewable energy in TPES: 206.5 Mtoe, 23.4% of TPES (IEA total: 9.9%)
  • Renewable electricity: 263.5 TWh, 17.2% of electricity generation (IEA total: 24.6%)
  • Bioenergy and renewable waste**: 186.8 Mtoe (21.2% of TPES) and 44.6 TWh (2.9% of electricity generation)
  • Hydro: 12.2 Mtoe (1.4% of TPES) and 141.8 TWh (9.3% of electricity generation)
  • Wind: 4.4 Mtoe (0.5% of TPES) and 51.1 TWh (3.3% of electricity generation)
  • Solar: 3.1 Mtoe (0.4% of TPES) and 26.0 TWh (1.7% of electricity generation)

Instead of immersing with the deluge of statistical information, the purpose of this article is to really show the tender quoted by the Government of India on July 20, 2020, on renewable energy, positioned as a unique one and the first one to appear among all nations. I am proud to deal with this matter on renewable energy. Yes, the proof of the pudding is in the eating.

file:///C:/Users/subramanian/Downloads/file-Tue%20Jul%2028%202020%2019_39_37%20GMT+0530%20(India%20Standard%20Time).pdf

“MINISTRY OF POWER

 RESOLUTION

New Delhi, the 22nd July 2020

Guidelines for Tariff Based Competitive Bidding Process for Procurement of Round-The Clock Power from Grid Connected Renewable Energy Power Projects, complemented with Power from Coal Based Thermal Power Projects. No. 23/05/2020-R&R.—1.

PREAMBLE 1.1 Background

1.1.1 In order to facilitate grid-connected solar power, the first phase of National Solar Mission provided for a scheme of “bundling” wherein, the then relatively expensive solar power was to be bundled with cheaper thermal power from the unallocated quota of the Government of India (Ministry of Power), generated at NTPC coal-based stations.

1.1.2 With the intervention of Government of India, the risks associated with solar and wind power sector have been brought down by way of advance arrangement of land and evacuation through solar parks, green energy corridors, a secure and standardized Power Purchase Agreement (PPA) for 25 years with an elaborate mechanism for risk apportionment and compensations, payment security, etc.”

Please bear with me if I quote from the notification to really understand the objective, process, nature of bidding and see the gains to be obtained by a resident of India with an enormous growth in renewable energy which has been one of the topmost questions in civil service examinations only so far.

What is the core objective?

Let us look at the wording and later explain it.

“Objectives

1.2.1 The specific objectives of these Guidelines are as follows:

(a). To provide Round-The-Clock (RTC) power to the DISCOMs from renewable energy sources complemented/ balanced with coal-based thermal power;

(b). To facilitate renewable capacity addition and fulfillment of Renewable Purchase Obligation (RPO) requirement of DISCOMs;

(c). To provide a transparent, fair, standardized procurement framework based on open competitive bidding with appropriate risk-sharing between various stakeholders to enable procurement of power at competitive prices in consumer interest, improve the bankability of projects and ensure reasonable returns to the investors; and

(d). to provide for a framework for an Intermediary Procurer as an Aggregator/Trader for the inter-state/ intra-state, long-term, sale-purchase of power.”

What do I understand from above?

To help a coal-based thermal power which produces electricity on around the clock basis, to DISCOMs from renewable energy.

The cost of power based on the most competitive basis to facilitate the ordinary customer who uses the electricity.

Also, the procurer to use it in an inter-state, intra-state, and long-term basis.

What do you understand from the terms “solar” and “renewable energy”?

2.2 Explanations:

(a). ‘Solar’: The term ‘Solar’, wherever used in these Guidelines, shall refer to Solar Photovoltaic (PV) technology or the power plant based on such technology.

(b). ‘Renewable (RE) Power’: The term Power’, or ‘Renewable Power’, or ‘Renewable Energy Power’, wherever used in these Guidelines, shall refer to power from Solar Power Generating Systems, Wind Power Generating Systems, or a combination thereof, with or without Energy Storage System (ESS), commissioned in pursuance of bidding process under these Guidelines. It is clarified that ESS charged using a source other than REpower would not qualify as REpower.”

Solar power generating systems and wind power generating systems alone qualify for consideration under this quotation.

The following para on thermal power is very important to be understood since renewal power is to enhance thermal power capacity only.

“The term ‘Thermal Power’, wherever used in these Guidelines, shall refer to power from coal-based Thermal Power Generating Systems. Such generating systems shall include thermal power plants which are already, partly or fully, commissioned before the issuance of bids or are under construction at the time of issuance of bids, but have spare generation capacity that can be made available for long-term supply of RTC Power under these Guidelines.”

Let us understand how the tender system works to augment the availability of renewable energy for the thermal power plant which would use it profitably.

The generator of power will combine renewable power with thermal power compulsorily at 85% availability annually and also at least 85% availability during the peak requirement of four hours every day to be specifically mentioned by the procurer in advance.

Interestingly, the power composition constitutes of REpower for 51% or requirements and the rest from thermal power sources. A composite single tariff will be quoted at the beginning itself.

We are aware of the complexities of a thermal power plant that extensively uses coal which can be obtained both internally and from abroad sources. Then what would happen to its price from time to time?

  The cost of thermal power varies with the price of coal, operation and maintenance cost, etc.

 Thus, to accommodate such variations in cost in the entire energy mix, 25% of the Composite Tariff shall be indexed and adjusted, with the index of domestic coal or the imported coal, as the case may be, as notified by Central Electricity Regulatory Commission (CERC) from time to time.

 This shall be clearly mentioned in RfS document by the Procurer. This clearly explains our queries.

Does it mean variable thermal power tariff and fixed thermal power tariff?

Yes, the government guidelines clearly explain the tariff in unambiguous language as under:

“For Thermal component of power, 50% of the indexed Composite Tariff shall be deemed to be the Thermal Fixed Charge Tariff and 50% of the indexed Composite Tariff shall deemed to be the Thermal Variable Charge Tariff.

The Fixed Charge shall be paid based on the offered thermal capacity at Thermal Fixed Charge Tariff, (50% of indexed Composite tariff), whereas the Variable Charge shall be paid to the extent of thermal energy dispatched, at Thermal Variable Charge Tariff (50% of indexed Composite tariff).”

What will be the bid structure to obtain the energy?

 BID STRUCTURE (For obvious reasons, I have actually quoted the terms which clearly amplify the clear and open structure of the bidding process which totally works on merit)

 Bids in Power Terms: The Procurer shall invite the bids in Power Capacity (MW) terms, specifying the total quantum to be contracted by the procurer.

 A bidder can quote for a part of the total quantum to be procured by the procurer. The minimum quantum of power that can be offered by the bidder should be 250 MW in order to have economies of scale and considering the suitability of coupling with ISTS.

 Since a bidder can tie-up with more than one thermal plant for his RE Project, thermal capacities even much smaller than 250 MW can be utilized. Notwithstanding this, on due consideration of the availability of land and transmission facility, the smaller minimum quantum of power that can be offered by a bidder can be kept in case of North-Eastern States, Special Category States and Projects outside RE Parks but this should be clearly provided for beforehand in the Bidding documents

In order to have advantages of economies of scale and optimum utilization of resources, there may not be any maximum limit on the quantum of power that can be allocated to a single bidder in a tender.

Tariff as the Bidding Parameter: The bidding parameter shall be the Composite Tariff for per unit supply of RTC power quoted by the bidder.

Let us also look at the following processes from the government communication.

  • 5 Bid submission and evaluation
  • POWER PURCHASE AGREEMENT
  • Bidding process
    • Request for selection document
    • Indicative time table for a bid process
    • Contract award and conclusion
    • Guarantee details
    • Financial closure
    • The minimum capital to be held by the promoter
    • Commissioning

You can refer the original communication for detailed study. The purpose is to instill the confidence that the central government is very serious about its conversion of conventional energy to renewable energy and that too for a long time.

Conclusion

It was intended to showcase the extraordinary growth made by the renewable energy sector by the new entrepreneurs who have taken the high-tech energy methods to India in solar/wind energy sectors and that too in a competitive manner making even the state governments confused by the falling rates of RE energy supplies.

“What about carbon emission?” is the next relevant question.

Following paras from page 93 of the main document from IEA clearly concludes our discussion.

“The government is focusing on decarbonizing the transport sector through increased efficiency, cleaner fuels, electric mobility, and modal shift. In January 2014 the government set CO2 emission targets for LDVs at the equivalent of 130 grams of CO2 per kilometer (gCO2/km) in 2017 and 113 gCO2/km in 2022.

In 2016 it then published Bharat Stage (BS) VI emission standards for motor vehicles, effective April 2020, on a par with EURO VI standards. They address all major vehicle types and include provisions that will ensure clean fuels are available alongside the introduction of new low-emitting vehicles.

 ln August 2017, as one of the first countries in the world, India published fuel efficiency standards for commercial heavy-duty vehicles. Phase 1 came in effect in April 2018, while Phase 2 will become effective in April 2021.

 India is actively promoting the uptake of electric and hybrid vehicles. The efficiency of an electric vehicle (EV) is typically around 60% (increasing up to about 77% if regenerative braking is included), compared to around 20% efficiency for combustion engines.”

I conclude with my optimism that for the welfare of the earth itself, Indian achievements in the reduction of carbon emission vehicles, replacement of conventional energy with renewable energy, or any attempts to reduce the cost of production of energy would be watched by everyone and amply surprised by its achievements.

Author Bio

Qualification: Post Graduate
Company: subramanian natarajan cpa firm
Location: NEW DELHI, New Delhi, IN
Member Since: 09 May 2017 | Total Posts: 131
A banker with 27 years of experience, a CPA from USA with specialization in US taxation, individual, partnership, S corporation or LLC taxation etc View Full Profile

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