Clean Energy and Regulation in India : Role and Challenges of Civil Society Participation

1. Clean Energy and Regulation in India: Role and Challenges of Civil Society Participation M. Thimma Reddy Shantanu Dixit Prayas (Energy Group) India Electricity Governance Initiative

2. Agenda • Overview • Legal, Policy framework, Regulatory initiatives • Current Status of Clean Energy in five Indian states • Challenges to maintaining CE momentum • Role and importance of civil society participation • Barriers to enhanced CSI Participation : Lessons from five Indian states • Concluding comments

3. Electricity Act 2003 : Promising Provisions for Clean Energy • Preamble : Promotion of efficient and environmentally benign policies • S. 61, S. 86 : Promotion of co-generation and renewable energy sources (RE) • Tariff, Grid Connectivity, Sale to any person, Specify % of RE use • S. 61 : Tariff to encourage efficiency, economical use of resources, optimum investments

4. National Policies: (EP 05, TP 06, NAPCC 08)Strengthened mandate for clean energy • Full exploitation of feasible RE potential • Preferential feed-in tariff • High priority to Demand Side Management (DSM) • Adoption of load management techniques, Time of Use tariff • RE contribution target of 15% by 2020

5. Regulatory Initiatives:Accelerating Deployment of Clean Energy ..1 • Central Regulatory Commission Initiatives • Terms and conditions for RE tariff determination • Renewable Energy Certificates • Multi-state program for accelerated deployment of efficient appliances

6. Regulatory Initiatives:Accelerating Deployment of Clean Energy ..2 • Technology specific feed in tariffs (yr 2002 to 2006) • Typical tariff preferential of about Rs. 0.80 – 1.20 / kWh • Higher rate of return • Long term power purchase agreements (13 to 20 years) • Connectivity • Payment security

7. Regulatory Initiatives:Accelerating Deployment of Clean Energy ..3 • Renewable portfolio standards / Renewable Purchase Obligations (2006 –2010)

8. Clean Energy Deployment: Current status of renewables

9. Clean Energy Deployment: Current status of energy efficiency • Sporadic regulatory efforts to promote EE • Maharashtra • CFL DSM program - over 10 MW saving • Load Management Charge • Time of Use tariff, Capacitor programs

10. Clean Energy Deployment: Challenges to maintain momentum • Un-even development across states • Emphasis on high positive cost RE options, while low / -ve cost EE getting less attention • Increasing tariff impact (MH ~ Rs. 900 Crore/Yr.) • Lukewarm, at times, negative response by some utilities and large consumers (Spenser's case)

11. Clean Energy Deployment: Challenges to maintain momentum R E Potential: Biomass – Andhra Pradesh NEDCAP Estimate: 627 MW ASCI Estimate: 225 MW Projects Sanctioned: 270 MW Existing Capacity: 220 MW

12. Clean Energy Deployment: Challenges to maintain momentum R E Potential: Biomass – Maharashtra Estimated Potential: 781 MW Present installed capacity is only 12% of the estimated potential. Already availability of biomass fuel has become a problem “…the price of the biomass is also increasing because of the unavailability of biomass fuels” (para 22, Order Dt. 14-12-2009)

13. Clean Energy Deployment: Challenges to maintain momentum R E Potential: Biomass – Tamil Nadu 2006 Estimate: 500 MW 2009 Estimate: 868 MW MNRE Estimate: 967 MW Exiting Capacity: 272 MW

14. Clean Energy Deployment: Challenges to maintain momentum R E Potential: Wind – A.P. NEDCAP Estimate: 2110 MW InWEA Estimate: 8675 MW Maharashtra: MEDA Estimate: 6500 MW ABPS Estimate: 4584 MW Orissa: OREDA Estimate: 1700 MW WISE Estimate: 2430 MW

15. Clean Energy Deployment: Challenges to maintain momentum R E Potential: Solar – Orissa OREDA Estimate: 14,000 MW WISE Estimate: 5,000 MW

16. Clean Energy Deployment: Challenges to maintain momentum Past Policies: • Capital subsidies – Accelerated depreciation • The Scheme was misused • Generation Based Incentive • Who will finance RE intervention? • Present attention is to add massive conventional capacities • RE is not being looked at as an alternative

17. Clean Energy Deployment: Challenges to maintain momentum Government Intervention:A.P. Wind Tariff: GoAP Order Dt. 11-04-2008 = Rs.3.10/U GoAP Order Dt. 09-09-2008 = Rs.3.50/U APERC Order Dt. 01-05-2009: adopted corresponding tariff A.P. Biomass: GoAP Order Dt. 12-11-2008 = Rs.3.79/U APERC Order Dt. 31-03-2009 = Rs.3.95/U These Orders were given under S.108 of E. Act 2003

18. Clean Energy Deployment: Challenges to maintain momentum Lack of Coordination: • Multiple departments are involved • Lack of coordination among these departments • Orissa: OREDA, Dept. of Science and Technology, Irrigation Dept., State Technical Committee, GRIDCO • Tamil Nadu: TEDA, TNEB, Irrigation Department

19. Clean Energy Deployment: Challenges to maintain momentum Lack of capacity of EDAs: • Do not have adequate manpower • The existing staff does not have capacity • Some times/places All India Service personnel head them, and they consider it as a punishment posting • Political interference

20. Clean Energy Deployment: Challenges to maintain momentum Lack of Transparency: Capital Cost: A.P. – Wind Energy APERC approved capital cost: Rs. 4.70 Crore/MW

21. Clean Energy Deployment: Challenges to maintain momentum Lack of Transparency:Fuel Price – Maharashtra Biomass: MERC Order Dt. 14-12-2009: Biomass variable cost increased from Rs. 1.34 per unit to Rs. 3.28. Total cost increased to Rs. 4.98 per unit “discrepancies and reliability of data was a major issue in arriving at necessary conclusion”. (Para 54) Same biomass price continued in RE Tariff Regulation 2010 (Para 46.1)

22. Clean Energy Deployment: Challenges to maintain momentum Lack of Transparency:Fuel Price – Maharashtra Bagasse: MERC Order Dt. 11-01-2010: Cogen power tariff increased from Rs. 3.50 per unit to Rs. 4.79 due to hike in bagasse price “The Petitioner has neither provided any statistics, computations of cost of generation nor any supporting documents for the operational cogeneration projects” (Para 49) Same bagasse price continued in RE Tariff Regulation 2010 (Para 55.1)

23. Clean Energy Deployment: Challenges to maintain momentum Lack of Transparency: Project Cost – Orissa Project cost decided by State Technical Committee • Incase of dispute OERC advises the parties to settle it through discussions • Then OERC approve the outcome of the discussions

24. Clean Energy Deployment: Challenges to maintain momentum Lack of Transparency: Solar tariff What is appropriate tariff for Solar power? Whether competitive bidding provides solution.

25. Clean Energy Deployment: Challenges to maintain momentum Absence of Performance Monitoring: • EDAs • Pollution Control Boards • ERCs

26. Clean Energy Deployment: Challenges to maintain momentum Environmental and Social Impacts: Biomass Power Plants: A.P. Municipal Solid Waste based Plants Wind Energy Plants

27. Civil Society Participation: Critical for addressing emerging challenges • Support for innovative solutions and managing trade-offs • Push for balanced, rational but ambitious deployment of clean energy • Make regulators, utilities, project developers and large consumers accountable

28. Civil Society Participation: Huge opportunity • Many spaces for CSI intervention • Regulatory commissions required to function in a transparent manner (public notice etc.) • CSIs can file petitions • Participate in public hearings • Large no. of ‘green’ CSIs  Create ‘demand pull’

29. Civil Society Participation: ….. but limited use • Civil society intervention in RE cases

30. Barriers to enhanced CSI ParticipationLessons from five Indian states • Awareness amongst CSIs • Role and process of regulatory decision making • Opportunities / Spaces for CSI intervention • Potential and feasibility of CE options • Importance of appropriate RC and utility actions

31. Barriers to enhanced CSI ParticipationLessons from five Indian states ..2 • Resources and capability of CSIs • Analytical resources - Technical, financial, legal • Financial resources • Hire analytical resources • Long drawn, sustained interventions needed for success • Stakeholder engagement and interactions

32. Barriers to enhanced CSI ParticipationLessons from five Indian states ..3 • Transparency about RE generation costs • In-adequate information about costs and performance norms • Significant upward changes in fuel / capital costs • Lack of transparency about nature and scale of subsidies, concessions • Concerns about excessive tariff and profiteering by developers • Consumers’ inputs not taken into account: e.x. AP  Concerns about ‘Is the premium reasonable ?’

33. Barriers to enhanced CSI ParticipationLessons from five Indian states ..4 • Effective performance monitoring systems • Little monitoring of project performance after clearances and power purchase agreements by authorities  Concerns about ‘is the premium justified?’

34. Barriers to enhanced CSI ParticipationLessons from five Indian states ..5 • Consideration of social and environmental impacts of RE generation • Biomass projects – De-forestation, un-availability of cooking fuel • Wind – Compensation for land, impact on common property rights • Recognition of CSIs role • ERCs, Utilities, Developers should appreciate and encourage role of CSIs

35. Concluding comments • Enhanced CSI participation in RC is crucial for sustained and ambitious CE program • RCs and funding agencies can play a significant role in enhancing CSI role • RCs – Ensure better transparency (costs, potential ) and performance monitoring • Development organizations and funding agencies – Support Awareness and capacity building of CSIs • Government and Project Developers – Transparency about costs and performance, mechanisms to address local social and environmental concerns

36. Thank you. M. Thimma Reddy Shantanu Dixit Member, Prayas (Energy Group), India www.prayaspune.org/peg shantanu@prayaspune.org Electricity Governance Initiative www.electricitygovernance.org