Compiled by the United States Energy Association With funding from the U.S. Department of State in support of the Asia Pacic Partnership on Clean Development and Climate
Acknowledgements
The Handbook on Best Practices for the Successful Deployment of Grid-Connected Renewable Energy, Distributed Generation, Cogeneration, and Combined Heat and Power in India (handbook) is made possible by the generous support of the U.S. government through the Asia-Pacific Partnership on Clean Development and Climate (APP). The contents are the responsibility of the U.S. Energy Association (USEA) and do not necessarily reflect the views of any of the APP partner countries. The author wishes to thank the peer reviewers for their thorough review and constructive recommendations. While these experts provided valuable guidance and information, this consultation does not constitute endorsement by their organizations of this handbook. The following professionals reviewed this document: Vijay Barthwal, Assistant Vice President, PTC India Ltd. Richard Brent, Director, Government Affairs, Solar Turbines and U.S. member of the Renewable Energy and Distributed Generation Task Force of the Asia-Pacific Partnership David Brown, Principal Distribution System Engineer, Distribution Services, Sacramento Municipal Utility District S.P. Gon Chaudhuri, Director, West Bengal Green Energy Development Corporation Lalnunmawia Chuaungo, Managing Director, Gujarat Urja Vikas Nigam Ltd. Rakesh Kumar, Executive Vice President of Corporate Development, PTC India Ltd. Surendra Pimparkhedkar, Senior Research Associate, World Institute of Sustainable Energy Balour Singh, Director, Punjab Energy Development Agency V. Subramanian, former Secretary, MNRE S. Seth Vedantham, Advisor, PTC India Ltd. Barry Worthington, Executive Director, USEA Disclaimer: The information provided in this handbook is intended only to be general summary information to the public. It is not intended to take the place of either the written law or regulations. For documents available from this handbook, the USEA does not warrant or assume any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed. Some content in this handbook may be subject to copyright by journals and publishers. Use of the copyrighted material is subject to the terms and conditions of use established by the journal or publisher. By using links provided on this site that lead to sites other than the USEA site, the user agrees to hold the USEA harmless from any liability resulting from your use of those sites.
TABLE OF CONTENTS
Acronyms I. Introduction and Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
A. Asia-Pacific Partnership on Clean Development and Climate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 B. Renewable Energy and Distributed Generation Task Force . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 C. Handbook Outline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 D. Indian Scenario . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 E. Promotion of Alternative Energy In India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
III. Barriers to the Successful Deployment of Renewable Energy and Cogeneration in India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
A.Cross Subsidies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 B. Subsidies for Conventional Fuels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 C. Investment Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 D. Interconnection at 66 kv vs. 11 kv . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 E. Utility Objections Due to Problem of Intermittency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 F. Lack of Programs for Residential Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 G. Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 H. Environmental Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 I. Power Sector Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
V.
6. Utility Rates Too Low for Renewable to Compete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 7. Loss of Utility Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 8. Retail Buy-back Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 9. Payments for Locational Marginal Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 10. Cogeneration Deferral Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 11. Remittance for Line Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 12. Exit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 B. Acquiring Renewable Energy and Cogeneration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 1. Competitive Bidding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 2. Renewable Portfolio Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 3. Tradable Renewable Energy Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 C. Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 1. Investment Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 2. Production Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 3. Clean Renewable Energy Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 4. Accelerated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 5. Capacity Payment Tariff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 6. Demand Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 7. Buy Down Capital Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 8. Carbon Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 9. Property Tax Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 10. Other Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 D. Refund of Salvage Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 E. Insurance and Liability Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Handbook on Best Practices for the Successful Deployment of Grid-Connected Renewable Energy, Distributed Generation, Cogeneration, and Combined Heat and Power in India
11. Area Utility System Fault Detection and Clearing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 12. Faults and Reclosing Coordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 13. Grounding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 14. Momentary Paralleling Allowed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 15. Protection from Electromagnetic Interference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 16. Surge Withstand Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 17. Limitation of DC Injection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 B. Equipment Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 1. Isolation Device (disconnect switch) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 2. Paralleling Device . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 3. Customer Responsible for Protecting Their Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 4. Requirements for Metering/Meters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 5. Telemetering/Communication Channels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127 6. Net Metering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 7. Synchronous Generators Special Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 8. Induction Generators Special Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132 9. Static Power Converter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 10. Static Inverters/Inverter Systems Special Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 11. Equipment Pre-certification/Pre-approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 C. Testing Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
VII. Approvals and Application Processing Issues and Best Practices. . . . . . . . . . . 138 VIII. Contractual Issues and Best Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
A. Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146 B. Power Purchase Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
IX. Concluding Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148 Appendix A Appendix B Glossary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149 Sample Power Purchase Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 154
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170
Handbook on Best Practices for the Successful Deployment of Grid-Connected Renewable Energy, Distributed Generation, Cogeneration, and Combined Heat and Power in India
Acronyms
AC ANSI app AWEA CDM CEA CEC CER CERC CHP CII CPUC CREB CVPS DC DG DR DSIRE FERC GBI GHG Hz IEEE IPP IREDA kV kVA kW kWh LMP MERC MNRE Alternating current American National Standards Institute Asia-Pacific Partnership on Clean Development and Climate American Wind Energy Association Clean Development Mechanism Central Electricity Authority California Energy Commission Carbon Emission Reduction credits Central Electricity Regulatory Commission Combined heat and power Confederation of Indian Industry California Public Utilities Commission Clean Renewable Energy Bond Central Vermont Public Service Corporation Direct current Distributed generation Distributed resource Database of State Incentives for Renewable Energy Federal Energy Regulatory Commission Generation-based incentive Greenhouse gas Hertz Institute of Electrical and Electronics Engineers, Inc. Independent Power Producer Indian Renewable Energy Development Agency Kilovolt Kilovolt-ampere Kilowatt Kilowatt-hour Locational marginal pricing Maharashtra Electricity Regulatory Commission Ministry of New and Renewable Energy
Handbook on Best Practices for the Successful Deployment of Grid-Connected Renewable Energy, Distributed Generation, Cogeneration, and Combined Heat and Power in India
MRET MW NRECA NRSE PBR PCC PPA PSE&G PTC PUCT PV RE REC REDGTF RPS Rs SCADA SCCR SCE SDG&E SERC SGIP SMUD SRP TOU TREC UI UL USEA VAr WISE
Mandatory Renewable Energy Target Megawatt National Rural Electric Cooperative Agency New & Renewable Sources of Energy (Policy) Performance-based regulation Point of common coupling Power purchase agreement Pacific Gas & Electric Production tax credit Public Utility Commission of Texas Photovoltaic Renewable energy Renewable energy certificate Renewable Energy and Distributed Generation Task Force Renewable portfolio standard (also called renewable purchase obligation, renewable power purchase obligation, and renewable purchase specification in India) Rupees Supervisory control and data acquisition Short-circuit current ratio
Southern California Edison San Diego Gas & Electric
State Electricity Regulatory Commission Self-Generation Incentive Program Sacramento Municipal Utility District Salt River Project Time of use Tradable Renewable Energy Certificate (also called Renewable Energy Certificate, or REC) Unscheduled interchange Underwriters Laboratories United States Energy Association Volt-ampere reactive World Institute of Sustainable Energy
Handbook on Best Practices for the Successful Deployment of Grid-Connected Renewable Energy, Distributed Generation, Cogeneration, and Combined Heat and Power in India
Handbook on Best Practices for the Successful Deployment of Grid-Connected Renewable Energy, Distributed Generation, Cogeneration, and Combined Heat and Power in India
Results in Gujarat: The Gujarat Energy Transmission Company accepted the Indian Wind Power Associations invitation to come to Tamil Nadu and meet with the utility and developers to learn how they overcame intermittency and other grid reliability issues related to connecting wind generation to the grid, The Gujarat Urja Vikas Nigam Ltd. requested a pilot project on solar, both photovoltaic and solar thermal, and The workshop created a more open forum between regulators, developers and utilities. Results in Kolkata: Participants agreed to begin to analyze the concept of micro grids and the effects of harmonics, The West Bengal Electricity Regulatory Commission will review current standby and variable rates, The West Bengal Electricity Regulatory Commission and the West Bengal Energy Development Agency agreed to analyze tax incentive schemes, CESC Limited and developers will work towards finding solutions for inverter problems due to frequency fluctuations and islanding issues, The West Bengal Green Energy Development Corporation requested a consultant on waste to energy notably landfill technology to assist them in starting a demonstration project. There is currently no institutional knowledge in India on waste to energy technology or operations of such a facility, and Participants will give greater counseling to potential developers about interconnection rules. Results in Punjab: The Punjab State Electricity Board requested the Punjab Energy Development Agency speak to the Punjab government to encourage the sale of power from IPPs, The Punjab Energy Development Agency requested the Punjab State Electricity Board and the Punjab State Electricity Regulatory Commission streamline their procedures to make it easier for renewable energy and cogeneration to connect to the grid, especially small generators, The Punjab Energy Development Agency will propose a state policy to provide Renewable Energy Credits (REC), The Punjab Energy Development Agency will work with the state government on ways to improve access to biomass fuels and will suggest new policies urging farmers not burn paddy straw prior to collection by biomass generators, The Punjab Energy Development Agency requested Orb Energy an Indian solar project developer to expand its portfolio by developing solar projects in Punjab, The Punjab Energy Development Agency requested additional information from Turbomach India a project developer and manufacturer of medium size gas turbines on their equipment and its potential applications in Punjab, and The Punjab State Electricity Board requested a demonstration project in biomass, possibly using Agripower technology.
Handbook on Best Practices for the Successful Deployment of Grid-Connected Renewable Energy, Distributed Generation, Cogeneration, and Combined Heat and Power in India
Handbook on Best Practices for the Successful Deployment of Grid-Connected Renewable Energy, Distributed Generation, Cogeneration, and Combined Heat and Power in India
C. Handbook Outline
This handbook was developed as a tool to assist in the removal of barriers to the deployment of clean energy technologies. The handbook is intended for policy makers, utility executives, regulators, and project developers and is a compilation of open-source documents that are cited and listed at the end of each topic as well as in the bibliography. The handbook compiles information from multiple sources on the major barriers confronting the deployment of renewable energy and distributed generation, cogeneration and combined heat and power (alternative energy) projects into one document. It is not intended to be a comprehensive report on each barrier, but rather an overview with different stakeholder perspectives to facilitate discussion and understanding. Each topic lists the issue; perspectives of the utility, regulator, and developer; best practices; and links for additional information. All links were accessed between January 31 and February 14, 2009, and were functional at that time. The term best practice as used throughout the handbook refers to practices that have been effective in the deployment of renewable energy and cogeneration. Effective policies and practices have a positive impact on a range of factors such as increased installed capacity, reductions in cost and price, technological advances, and public acceptance. The handbook does not advocate one best practice over another nor does it necessarily contain all practices and policies that have been effective. The handbook is divided into eight main sections. Section 1 introduces and summarizes the handbook. Section 2 outlines current laws and policies in India and gives brief assessments. Section 3 discusses the main barriers to the deployment of cleaner energy projects in India. Section 4 analyzes policy and regulatory issues and best practices. Section 5 discusses financial incentives that have been successful in increasing the deployment of renewable energy, distributed generation, cogeneration and combined heat and power. Section 6 outlines requirements to maintain grid stability and protect the system. Section 7 outlines streamlined application processes to reduce the time and cost associated with project development. Section 8 reviews other issues related to contracts and disputes. It is hoped that the handbook will serve as a useful reference for those interested in grid-connected renewable energy, distributed generation, cogeneration and combined heat and power (CHP) and will expedite locating additional information on these topics. Questions regarding this handbook can be addressed to the author Tricia Williams at twilliams@usea.org. A glossary of terms used in this handbook is attached as Appendix A.
capacity will need to serve the rural areas, which are often not connected to the grid, necessitating the addition of alternative energy facillities and/or new transmission lines to connect facilities and future consumers to the grid. As part of the national energy plan, in April 2006 India launched a rural energy initiative titled Rajiv Gandhi Grameen Vidyutikaran Yojana to fulfill the commitment of the National Common Minimum Programme to electrify all villages and provide electricity access to all households by 2009. This national energy plan relies heavily on interconnections and extensions of the current transmission system and targets existing utilities to provide power to unserved areas. Each state was required to submit a Rural Electrification Plan by February 2007 to address these issues. In addition, the Indian Electricity Act of 2003 created open access to the grid whereby generators can sell power to entities other than the local utility. However, the actual implementation of this plan has been complicated for even the traditional utilities.
Source: http://www.geni.org/globalenergy/library/national_energy_grid/ india/indiannationallectricitygrid.shtml Though wind projects have achieved some success over the past few years, many other renewable and alternative energy technologies have been much slower to be included in the energy mix. Alternative energy technologies such as reciprocating engines, microturbines, combustion gas turbines, fuel cells, photovoltaics, bagasse cogeneration, waste heat recovery systems, biomass gasification, and waste-to-energy systems have met great challenges in obtaining approvals to build and interconnect. The cost for interconnection and the higher costs to build renewable projects have led to slower deployment of renewable energy projects in India and around the world.
Problems with building and operating renewable, distributed generation, cogeneration and CHP projects can be summarized as follows: Longer cost recovery period due to low tariff rates and higher development costs (for some technologies). Limited access to the transmission grid for the purpose of selling power to a wider consumer base. Lack of interest by transmission utilities in extending the transmission network to the remote areas where most renewable energy projects are located. Absence of grid connectivity standards and grid codes for renewable energy projects. Difficulty in intra- and interstate transfer of renewable energy due to stringent open-access regulations that are basically framed for conventional energy projects.
Handbook on Best Practices for the Successful Deployment of Grid-Connected Renewable Energy, Distributed Generation, Cogeneration, and Combined Heat and Power in India
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Regulated energy policies and tariffs that favor conventional energy sources by not internalizing externality costs. Lack of government policies for distributed generation. Economic viability of projects given the need to recover higher development costs than conventional energy sources at regulated tariff prices. Subsidies and cross-subsidies that mask the true cost of conventional energy. Complicated and lengthy project approval processes. Inconsistent implementation and application process to meet renewable portfolio standards (RPS orders) amongst states. Resistance of major Indian utilities to the integration of significant amounts of power from renewable energy and DG power into their grids due to availability, intermittency, reliability compared to conventional sources, and cost.
Handbook on Best Practices for the Successful Deployment of Grid-Connected Renewable Energy, Distributed Generation, Cogeneration, and Combined Heat and Power in India
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I. Power from renewables A. Grid-interactive renewable power 1. 2. 3. 4. 5. 6. Biomass power (agro residues) Wind power Small hydro power (up to 25 MW) Cogeneration-bagasse Waste to energy Solar power Subtotal (in MW) (A) 50.80 MW 764.80 MW 40.15 MW 193.00 MW 656.60 MW 9521.80 MW 2220.99 MW 993.83 MW 55.75 MW 2.12 MW 13,450.59 MW
1,048.75 MW
B. Off-grid/distributed renewable power (including captive/CHP plants) 7. 8. 9. 10. 11. Biomass power / cogen. (non-bagasse) Biomass gasifier Waste-to-energy Solar PV power plants and street lights Aero-generators/hybrid systems Subtotal (B) Total ( A + B ) 41.70 MW 2.42 MWeq 4.36 MWeq 0.29 MWp 136.70 MW 102.21 MWeq 31.07 MWeq 8.01 MWp 0.72 MW 48.77 MWeq 252/NIL Villages/Hamlets 278.71 MWeq 13,729.30 MW 4237 villages + 1142 hamlets
II.
III. Decentralized Energy Systems 12. 13. 14. 15. 16. 17. 18. Family-type biogas plants Home lighting system Solar lantern SPV pumps Solar water heating collector area Solar cookers Wind pumps 0.66 lakh 31,754 nos. 27,360 nos. 0.15 Mln. sq.m. 40.32 lakh 4,34,692 nos. 6,97,419 nos. 7,148 nos. 2.45 Mln. sq.m. 6.37 lakh 1342 nos.
IV. Other Programmes 19. 20. Energy parks Akshay Urja shops 18 nos. 516 nos. 269 nos.
Handbook on Best Practices for the Successful Deployment of Grid-Connected Renewable Energy, Distributed Generation, Cogeneration, and Combined Heat and Power in India
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Renewable Portfolio Standards State Electricity Regulatory Commissions (SERCs) are required to specify renewable energy as a percentage of consumption in the distribution licensees area under Section 86 of the Electricity Act.
Handbook on Best Practices for the Successful Deployment of Grid-Connected Renewable Energy, Distributed Generation, Cogeneration, and Combined Heat and Power in India
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The State Commission shall discharge the following functions. . . . . . (e): promote cogeneration and generation of electricity from renewable sources of energy by providing suitable measures for connectivity with the grid and sale of electricity to any person, and also specify, for purchase of electricity from such sources, a percentage of the total consumption of electricity in the area of a distribution license.
Tariff Section 61 of the Act outlines the tariff for cogeneration and renewable energy.
The Appropriate Commission shall, subject to the provisions of this Act, specify the terms and conditions for the determination of tariff, and in doing so, shall be guided by the following, namely . . . . . . the promotion of cogeneration and generation of electricity from renewable sources of energy.
Open Access The provision mandating open access has important implications for renewable energy and cogeneration facilities. The Act includes the non-discriminatory provision for the use of transmission lines or distribution system or associated facilities with such lines or system by a licensee or consumer or a person engaged in generation in accordance with the regulations specified by the Appropriate Commission. <http://powermin.nic.in/acts_notification/electricity_act2003/preliminary.htm> Assessment The Act did direct RPS orders but gave no timeline for the SERCs to do so, enabling a large percentage of states to avoid the issue for years. In addition, allowing the individual states to determine the percentages with no minimum requirement has led many states to create extremely low percentages with little to no increases over time. As mentioned in the previous section assessing the Electricity Act 2003, allowances could be made for utilities to purchase renewable power from states with greater resources and thus a lack of resources should not be accepted as a rationale for low RPS.
This act does not use the phrase preferential tariffs mentioned in the Tariff Policy 2006; however, a preferential tariff is implied. The open-access provision is critical for grid-connected renewable energy and cogeneration projects as it mandates the utility must provide nondiscriminatory access and cannot deny valid interconnection requests. At present, most generators are not selling energy via the open-access route as preferential tariffs are payable only if the generator sells to local utilities. However, open access may become more important as the energy market becomes more vibrant and Tradable Renewable Energy Credits become a reality. However, renewable energy facilities are treated the same as conventional energy facilities without consideration for intermittent and low plant load factor characteristics, which is causing dispatch problems. The Federal Energy Regulatory Commission of the United States (FERC) recognized these challenges and issued open access for renewables that created conditional firm service to design imbalance charges that reflect the difference between scheduled and actual energy.
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The difference between scheduled energy and the actual energy is called Unscheduled Interchange (UI) in the Indian Electricity Grid Code and Central Electricity Regulatory Commission (CERC) Tariff Regulations. UI is being used by the distribution utilities to draw their peak energy requirements from the grid. Injecting renewable energy in the grid during off-peak hours will create an imbalance and increase frequency, which will require the State Load Dispatch Centres to give instructions to thermal generating stations to back down their generation during this time, provided the quantum of renewable energy to be injected can be predicted. Therefore, to the extent that the amount of renewable energy can be predicted, it can be accommodated as UI in the state grid. The concept that infirm energy injected by a generator should be treated as UI is currently not in state grid codes and should be included for greater clarity, as it is in the Indian electricity grid code.
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Section 5.12.3 promotes the benefits of cogeneration: Industries in which both process heat and electricity are needed are well suited for cogeneration of electricity. A significant potential for cogeneration exists in the country, particularly in the sugar industry. SERCs may promote arrangements between the co-generator and the concerned distribution licensee for purchase of surplus power from such plants. Cogeneration system also needs to be encouraged in the overall interest of energy efficiency and also grid stability.
<http://powermin.nic.in/indian_electricity_scenario/national_electri,city_policy.htm> [sic]
Assessment The National Electricity Policy 2005 does mention the benefit of cogeneration and requests that the SERCs promote it and renewable energy. As with other legislation, the SERCs are given full responsibility for promoting alternative energy but have no deadlines, percentages, or penalties for noncompliance, which has allowed some SERCs to move very slowly or not at all on deploying these resources.
In general, India has some feed-in laws, standardized power purchase agreements (PPAs), financing from IREDA, and market supports such as banking and wheeling which have helped make sugar cane bagasse cogeneration successful.
Assessment The policy states that the competitive bidding process should be with suppliers offering the same type of energy source, which will encourage development if a percentage of each renewable energy source is mandated.
While Section 86(1)(e) directed the development of RPS orders and special tariffs for energy, several problems arose. To begin with, there was no penalty or enforcement for the creation of portfolio standards and thus many states still do not have RPS orders two years after the deadline. In addition, allowing the individual states to determine the percentages based on their available sources has led many states to create extremely low percentages (2%) with little to no increases over time. Though some states have more resources than others, allowances could be made
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for utilities to purchase renewable power from states with greater renewable energy production. Because every state may not be able to generate the renewable energy target, the scheme of renewable energy certificates should be implemented so that interstate transfer of renewable power could be settled through a market-based commercial mechanism. The CERC is currently advocating this policy. The Tariff Policy states that the appropriate commission should fix the minimum percentage of energy from cogeneration and renewable energy, taking into account the availability of such resources in the region and its impact on retail tariffs. There is lack of clarity in Tariff Policy 2006 stipulations as to which commission should fix what, as the CERC is responsible for the region and the SERC for the state. The Electricity Act requires SERCs to promote renewable energy and cogeneration, fix the percentage of generation from such sources as a percentage of total consumption of electricity, and fix tariffs within the state under sections 86(1)(a) and (e). Thus, the role of the CERC as per the Tariff Policy seems to be limited to determining the amount of generation from renewable energy and cogeneration within the region or as a percentage of total generation within the region. Past trends in India show that generation of renewable energy and cogeneration takes place more by incentive than penalty mechanisms (UI and response to photovoltaic [PV] solar energy proposals for the first 50 MW under the new incentive scheme). Because the promotion of clean energy technologies is an issue of national importance, there is a need in the initial stages for the central MNRE to provide more financial assistance such as concessional funding and exemption of taxes with the balance cost to be paid for by consumers through billing by distribution companies with the approval of the SERC. Because this is supposed to be a long, drawn-out process, the percentage of renewable energy and cogeneration for each type may have to be increased progressively from year to year, allowing a gestation period for developing such generation resources, both within and across states. The phrase preferential tariffs has been widely interpreted among the individual state commissions and stakeholders. The general interpretation of this phrase is that the tariff should be considerably higher. Commissions are often reluctant to grant high tariff rates for fear they will lead to higher rates for consumers.
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(iii) Procurement of renewable based power by the SEBs/other power utilities should, in so far as the applicable renewable standard (DMRPS or SERC specified) is concerned, be based on competitive bidding, without regard to scheduling, or the tariffs of conventional power (however determined). Further, renewable based power may, over and above the applicable renewable standard, be enabled to compete with conventional generation on equal basis (whether bid tariffs or cost-plus tariffs), without regard to scheduling (i.e. renewable based power supply above the renewable standard should be considered as displacing the marginal conventional peaking capacity). All else being equal, in such cases, the renewable based power should be preferred to the competing conventional power. (http://pmindia.nic.in/Pg01-52.pdf)
Assessment The recommendations in the plan are consistent with those in this handbook. The minimum renewable portfolio standard of 5% applied to all states will greatly assist India in meeting its overall renewable energy goals. Worldwide, most nations are not meeting their target RPS and one reason is a failure to mandate the percentage at the state level. Most nations state a desired percentage of energy from renewable sources but leave it up to the states to mandate. As an example, India would like to have 10% renewable energy by 2012; however, only four states have an RPS of 10% or higher.
Allowing the procurement of renewable energy through tradable certificates and power trade is an excellent solution for states with low renewable energy resources. The concept of competitive bidding to procure renewable energy is a good option; however, historically, competitive bidding in India has not resulted in anticipated capacity addition for conventional power so further study on this issue is needed. These solutions are outlined in greater detail in the Financial Issues and Best Practices section of the handbook under Acquiring Renewable Energy and Cogeneration.
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III. Barriers to the Successful Deployment of Renewable Energy and Cogeneration in India
Climate change concerns coupled with high oil prices, peak oil and increasing government support are driving increasing alternative energy legislation, incentives and commercialization. However, significant barriers to deployment of alternative energy exist in most countries. USEA organized workshops on grid connected renewable energy, distributed generation, combined heat and power and cogeneration in Gujarat, Punjab and West Bengal to determine the major barriers to their deployment in India. Participants in these workshops identified several key barriers to the successful deployment of alternative energy sources. The barriers can be broken down into four general categories which correspond to the outline of this handbook: financial, regulatory and policy, financial, and technical. This section highlights the key barriers mentioned during these workshops: Cross Subsidies Subsidies for Conventional Fuels Investment Tax Credit Interconnection at 66 kv vs. 11 kv Utility Objections Due to Problem of Intermittency Lack of Programs for Residential Customers Cost Environmental Regulations Power Sector Reform
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A. Cross-Subsidies
Policy All regulatory commissions in India include cross-subsidies in their tariffs. The cross-subsidization benefits residential consumers. Thus any policy that reduces industrial and commercial consumption will adversely affect the utilitys profits and ability to assist residential consumers. Cogeneration and combined heat and power (CHP) have the potential to be a major problem for Indian utilities for this reason; it takes away their revenue base. In addition, there is a huge problem in India with residential consumers paying their bills but very few problems with industry and commercial payments. Assessment Tariffs are determined based on the average cost of generation for all categories of consumers and the distribution costs and line losses, which are far lower for high-tension industrial consumers than low-tension residential customers. Thus, industrial customers in India carry more than their share of the cost of electricity, which makes CHP look more attractive. In fact, industrial and commercial tariffs are much higher than generating ones own electricity from CHP. If the cross-subsidy were decreased and industrial rates were lowered, CHP would be less attractive, which would reduce the deployment. Eliminating or reducing cross-subsidies would thus assist the utilitys revenue stream if industrial customers added CHP but would conversely decrease the incentive to add CHP. It is clear that subsidies cannot be changed without additional policies to address this conundrum.
If CHP is built solely to sell to the market to address energy shortages and does not take away utility revenue, there is no barrier to CHP development. However, if the industrial or commercial load is partially met through CHP, the reduced revenue would affect the utilitys ability to cross-subsidize residential customers and may not be welcomed.
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Practice in the United States The Internal Revenue Service (the entity that gave the investment tax credit) investigated developers who received the credit and instigated legal proceedings to get the money back from those not generating energy.
As of January 1, 2009, the U.S. federal government allows a 30% tax deduction for the entire installed cost of residential systems. The U.S. government removed the up to $2,000 of the installed cost clause; the whole cost of the system is now eligible for the deduction.
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D. Interconnection at 66 kV vs. 11 kV
Policy Every state in India has a grid code that states interconnection standards. Many of them, however, state interconnections only at the 66 kV level. For instance, the Gujarat grid code states that the captive power plant, or cogeneration facility, can be interconnected at the 400/220/132/66/22/11 kV level or as agreed with the transmission utility. However, 22 and 11 kV is the distribution utility level, not the transmission utility level, so it is unclear whether interconnection with the distribution company is allowed. The only other interconnection it mentions for nonutility or non-transmission companies is for extra high voltage consumers of 66 kV or higher. In practice, although it states interconnections can occur at the 22 or 11 kV level, in India they are mostly connecting renewable and cogeneration projects at the 66 kV level. Assessment There are several concerns with the state grid codes with regards to interconnections of renewable energy and cogeneration facilities. The first is that the Electricity Act 2003 does not specify the voltages for transmission and distribution systems. The Indian power sector has adopted the best practices of 66 kV and above as transmission and 33 kV and below as distribution. In some states, transmission utilities also maintain 33 kV lines and some distribution utilities have 66 kV so there is overlap. These voltages should be clearly defined and uniform , between states. One possible definition is that lines that are intrastate or connect different utility service areas are transmission as these tend to be 66 kV and higher.
Some states, such as Gujarat, do allow interconnection at the distribution level, especially for wind and biomass projects. However, interconnection with the distribution system depends on the installed capacity of the generating station, the nature of generation, the electricity demand in that area, and the condition of the distribution infrastructure. The last point is the most problematic as in most cases problems in the distribution system, especially in terms of the availability of capacitor banks, frequent faults, and energy accounting, are a serious deterrent to providing interconnection at the lower distribution levels. Perhaps one of the greatest concerns is that there are no stated standards for interconnecting smaller facilities to the grid. Connecting at the 66 kV level can add significant costs and equipment to a project and may ruin its economic feasibility. The costs in the United States illustrate the problem. Connecting a facility at the 11 kV level or below would simply require at most a small pad-mounted transformer that would cost thousands of dollars. Interconnecting at the 66 kV level requires a single step-up transformer or small substation that costs substantially more ($1 million). A facility that generates only 5 MW or less would find the costs of interconnecting at the 66 kV level unfeasible. In the Central Electricity Authority (CEA) Regulations on Grid Connectivity, the term Distribution System has been defined as the system of wires and facilities between the delivery points on the transmission lines or generating stations and the points of connection to the installation of the consumers and may comprise lines and equipment of any distribution voltage, according to which generation can be at 11kV also. However, in CEAs specification of generating units, it has been stated that all generating units shall have standard protections to protect the units not only from faults within the units and within the station but also from faults in transmission lines, which implies that generating units are connected to the transmission system. There is a need for CEA to suitably amend its regulations to permit small generating stations to be connected to the distribution system and correspondingly SERCs should modify the state grid code to have clarity. Furthermore, the grid code states the cogeneration facility can be interconnected at various levels but leaves it to the utilitys discretion as to which level it will be interconnected. At the USEA-facilitated workshops in India, many utilities and regulator experts expressed the view that 66 kV and above is the transmissionnot the distributionlevel
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in India. Some regulators consider distribution to be part of the grid so codes would apply but clearly there is currently no codification at the distribution level. In addition, interconnection rules at the distribution level are much simpler. When grid problems occur, the connected facilities would simply disconnect from the system, making it possible for them to utilize cheap and simplified radial connected equipment (an underlying concept of Rule 21). At the transmission level, the utility often wants them to stay on the system to try to help, which would require additional equipment such as power system stabilizer for droop compensation, protection requirements for fault/trip, and transfer trips, which can get expensive.
India In Gujarat, 66 kV and above is considered transmission and is owned and operated by the transmission company. The grid code and distribution code of Gujarat allow the injection of small amounts of power from renewable energy at 22 or 11 kV levels and a small number of generators are injecting at the 11 kV level. However, for technical and commercial reasons, the utilities are not promoting injection below 66 kV Participants in USEAs workshops state . that additional regulatory orders are needed to address the concerns of utilities and generators to increase the number of interconnections at lower levels.
The Punjab Energy Development Agency recently issued a PPA for a PV facility that allowed interconnection at the 11 kV level. The Punjab state grid code does state that voltage may be 66 kV 33 kV or 11 kV or as agreed with the , , state transmission utility. However, the choice to use 11 kV or 6 kV is also dependent upon the extent of the grid layout in various parts of the State. In Punjab, the state utilities are now part of the Northern Grid and have to strictly maintain both the frequency and voltage; the shortages in power are met by load shedding which takes place only at 11 kV and never at 66 kV Hence, some DG and renewable energy facilities have no option but to feed power at 66 . kV even though it requires higher capital costs. At the same time, small solar PV power plants at the 1 MW scale would need a special provision to allow evacuation of power at the 11 kV level with the creation of an additional substation near the plant at the states expense.
United States The standard definition of transmission in the United States is operating voltages of 69 kV and up while distribution is less than 69 kV. Sources and For More Information: Central Electricity Authority: <http://india.smetoolkit.org/india/en/content/en/8221/Ministry-of-Power-Notification-No-12-X-STDCONN-GM-CEA-21-Feb-07-The-Central-Electricity-Authority-Technical-Standards-for-Connectivity-to-the-Grid-Regulations2007>. Gujarat grid codes: <http://www.pgvcl.com/regulations/DistributionCode.pdf> and <http://www.pgvcl.com/regulations/GridCode.pdf>. Punjab grid codes: <http://pserc.nic.in/pages/state_grid_code.html>.
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Assessment Wind energy is the most intermittent source but with proper planning it can be mitigated. While firming power, such as with a hybrid solar/wind installation, is an alternative, the American Wind Energy Association (AWEA) argues that it is better to look not at firming the individual generator, which is expensive and inefficient, but at how the system as a whole is to be shaped to reliably absorb more variability. AWEA suggests that it is essential to understand that wind is an energy resource, not a capacity resource, and that utilities should take the wind energy when it is available and rely upon other system resources when it is not. Though India is facing a shortage and does not have spinning reserves or capacity to offset generation lost from renewable sources, the concept of Unscheduled Interchange (UI) can be useful. In Tamil Nadu, a state with a large percentage of wind, the State Load Dispatch Centre can balance the load and generation by either backing down thermal generation and/or regulating pumped storage hydro generating stations. The wind energy generating facilities are able to maintain a high power factor by installing automatic capacitance controls which should be utilized in other states as well to address power factor issues. In India many feel there is a need to provide physical and regulatory facilities to facilitate the flow of renewable energy (particularly of wind) beyond a particular state. Gujarat has wind potential of around 10,000 MW, of which 1,300 MW is already harnessed, 500 MW is ready for commissioning, and another 880 MW is in the approval process. In addition, requests for transmission system studies have been received by the Gujarat Transmission Utility for installation of another 4,300 MW of wind. This much capacity has the potential to cause problems for the state utilities in their efforts at commercially sustainable load management unless there is facilitation for export to the regional and/or national grid. Practices for Scheduling Issues Xcel, a large multistate utility serving portions of Colorado, Minnesota, Texas, and other states, will be looking to wind as the major source of new energy for its system, with Xcel eventually becoming dependent upon wind for about 30% of the energy on the system. There are two keys to moving in this direction:
Xcel is relying upon strategically placed high-efficiency gas turbines for about 6% of the new energy added to the systemthis provides the necessary operational flexibility. Xcel is participating in a large regional electric power market, the Midwest Independent System Operator, which allows them to effectively utilize more of a variable resource than a small electric system or control area would allow. Another example is the PJM Interconnection, which can absorb enormous amounts of a variable resource such as wind because of its geographic scope, making wind variability a nonissue within such a complex system. Indias new energy market could help alleviate some of the problems with intermittency.
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Practices for System Reliability Issues A GE Energy executive stated in a USEA-facilitated workshop that India can avoid large voltage variations and uncontrollable power from wind turbines by installing turbines with grid-friendly performance features that regulate voltage and ride-through faults and control power output. Voltage control will regulate the grid voltage at the point of interconnection, regulate total wind plant reactive power through the control of individual turbines, and minimize grid voltage fluctuations even under varying wind conditions. Voltage regulation is very important as the wind generator cannot be in constant power factor mode. Ride-through capability allows the generator to stay online and feed reactive power into the grid through system disturbances while meeting transmission reliability standards similar to those of thermal generators. New technology can support reactive power even when there is no wind but regulators will need to insist on the use of the technology in order for everyone to begin using it. Reactive power drawal should be incentivized or disincentivized based on local voltages, generators should be able to ride through transient faults, and active power control that limits the rate of change in power under varying wind conditions should be utilized based on system frequency. Sources and For More Information:
AWEA:< http://www.awea.org/utility/pdf/Wind_and_Reliability_Factsheet.pdf>. GE:<http://www.usea.org/Programs/APP/Punjab_Workshop/01_GE_Wind.pdf>.
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G. Cost
A major issue for all countries, and especially developing countries, is the issue of the higher cost of renewable energy and cogeneration compared to conventional energy sources. Many residential customers in India already cannot pay their energy bills, and increasing the cost by adding expensive alternative energy could strain the society.
Assessment It is undeniable that alternative energy sources cost more than conventional sources as they are currently priced. However, if environmental externalities and diversification values are used instead of discounted cash-flow accounting, then renewable energy is more economical. These are policy decisions that should be addressed at both the central and state level.
Traditional financial analysis using discounted cash-flow undervalues future fuel price risks and ignores environmental and health costs of conventional energy sources. When fuel prices and social impacts are assessed, renewable energy is close toor competitive withconventional energy sources. Even in discounted cash-flow accounting, though, fuel price escalation needs to be taken into account to reflect long-term tariff calculations, which is sometimes neglected because it is a pass through to consumers. Subsidies are another way the cost is artificially lower. Removing these subsidies would lead to consumers paying the true cost of energy and would narrow the gap between the cost of renewable and cogeneration and conventional energy. In addition, the argument that alternative energy sources cost too much is not entirely accurate. Most utilities in India have shortages and are forced to purchase energy on the spot market, where prices are far higher. As an example, it is believed that the cost of a 6% RPS target will increase the consumer tariff in Maharashtra by 2%. Maharashtra was purchasing more costly power from energy traders and found that the cost of purchasing conventional power at the margin was higher than the average 3.32 Rs per unit cost from all renewable energy sources. Procuring power from renewable energy sources at the existing tariff rates will thus not only add to the availability of energy but also be cheaper than power purchased in the market and thus will not adversely affect consumers. One way to address the cost is to establish a market for tradable renewable energy certificates. In this way, states that may have high renewable energy costs could purchase energy from lower cost facilities in other states or utility service areas to meet their RPS. The RPS orders in Maharashtra and Rajasthan both allow for purchasing energy to meet RPS targets but do not include a tradable renewable energy certificate (REC) feature.
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H. Environmental Regulations
Environmental regulations help internalize the social and environmental costs of conventional energy sources, which makes renewable energy and cogeneration more competitive. They are also considered as critical to promote technology transfer to developing countries. Regulations can encourage renewable energy and other clean energy sources indirectly through offset credits (tradable renewable energy credits), or directly as utilities and developers begin to favor cleaner technologies that do not require emissions reductions. However, any environmental regulation must be enforced. China has environmental regulations at the national level but enforcement is low and local governments often do not require coal-fired plants in their territory to adhere to the regulations. India included environmental protection rights and duties in its Constitution and has an elaborate framework of environmental legislation, policy statements, rules and notifications. Key policies and legislation are listed below. National Environment Policy of 2006 National Environmental Appellate Authority Act of 1997 National Environmental Tribunal Act of 1995 National Policy on Pollution Abatement (1992) National Conservation Strategy and Policy Statement on Environment and Development (1992) Public Liability Insurance Act of 1991 Water (Prevention and Control of Pollution) Cess Act of 1977, amended in 1991 Water (Prevention and Control of Pollution) Act of 1974, amended in 1988 Air (Prevention and Control of Pollution) Act of 1981, amended in 1987 Environment (Protection) Act of 1986 (EPA) Despite the exhaustive legislative efforts in environmental regulation, the level of compliance and enforcement is low. According to the Central Pollution Control Board, as of June 2006, 73% of the highly polluting industries were in compliance with environmental regulations, a decrease of 14% from 2004. Small and medium-sized enterprises have a much lower compliance rate and contribute an estimated 70% of the total industrial pollution in India (see <http://www.oecd.org/dataoecd/39/27/37838061.pdf> and <http://www.ijbe.org/table%20of%20content/pdf/vol21/02.pdf>). The lack of enforcement of environmental standards in India may be a barrier to the development of renewable energy and cogeneration. Recommendations to improve enforcement can be found at <http://www.oecd.org/ dataoecd/39/27/37838061.pdf>.
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Consistent Rules
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It further states that Special Protection Scheme such as under frequency relay for load shedding, voltage instability, angular instability, generation backing down or Islanding Schemes may also be required (pg. 9). This broad latitude given to utilities may create a barrier to interconnection for smaller alternative energy facilities. Individual states and utilities within those states can have different interconnection policies which create uncertainty among investors and can substantially increase costs. To combat this problem in the U.S., the Institute of Electrical and Electronics Engineers (IEEE) created a series of rules including 1547 which is cited in the technical portion of this handbook. IEEE 1547 provides a uniform standard for interconnection of alternative energy facilities with electric power systems and includes requirements relevant to the performance, operation, testing, safety considerations, and maintenance of the interconnection. The creation of a similar set of standards in India may prove useful in removing barriers to interconnecting alternative energy facilities.
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Key policies that were effective in promoting alternative energy sources included the following: Energy taxes were kept high and not lowered after fossil fuel prices dropped in the 1980s;
A feed-in tariff requiring utilities to buy all power produced from renewable energy technologies at a rate equal to 70 to 85% of the consumer retail price of electricity in a given distribution area; Environmentally friendly zoning that forced cogeneration units to replace district heating units and prohibited the use of oil, diesel, and coal for many generators; Long-term financing reduced the risk of building larger projects; Open and guaranteed access to the grid where transmission system operators are required to finance, construct, interconnect, and operate the transformer stations and transmission and distribution infrastructure for renewable energy technologies; A general carbon tax on all forms of energy, adding around 1.3 Euro cents per kWh of additional income for renewable energy generators; and Streamlined permitting that made the Danish Energy Authority the one-stop-shop for tendering of bids for renewable energy construction; approval of pre-investigation of sites, environmental impact assessments, construction, and operation; and licenses to produce electricity.
Key Danish laws include the following: Law No. 3 of 3 January 1992 which set up a CHP fund to support the conversion from biomass-based district heating to CHP; Law No. 837 of 7 October 1992 known as the Development and Demonstration Programme for Renewable Energy; and Energy 21, which set long-term planning and targets (1996). United States The Interstate Renewable Energy Council created the Database of State Incentives for Renewable Energy (DSIRE), a comprehensive source of information on state, local, utility, and federal incentives that promote renewable energy and energy efficiency. States with particularly good policies include California, New Jersey, Texas, and Pennsylvania. Australia Australia passed the Renewable Energy (Electricity) Act 2000 to add 9,500 gigawatt hours of renewable energy per year. The act includes a framework titled the Mandatory Renewable Energy Target (MRET) scheme to create, trade, and surrender RECs. The MRET scheme allows renewable energy credits to be created by accredited entities such as utilities that generate renewable energy and traded to others to meet their RPS targets. Australia has found that the cost for MRET compliance per megawatt hour is about 2% higher. Australia has since amended the MRET scheme in two key areas. RECs must now be created within 12 months of the electricity being generated to give clear market signals of availability and make pricing more transparent. RECs can also now be surrendered voluntarily even when not used to meet mandatory targets. China China passed the Renewable Energy Law 2006 with the aim of increasing the use of renewable energy up to 10% by 2020. The law requires transmission companies to provide grid connection to renewable energy facilities and to purchase power from these facilities. In addition, it offers financial incentives such as discounted lending and tax preferences for renewable energy projects. The tariff for renewable energy is set by the National Development and Reform Commission at the national level and is spread out among consumers.
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European Union In 1997, the European Commission issued a white paper setting targets to increase the renewable share of energy production from 5.3% in 1995 to 12% in 2010. The European Union subsequently issued a Renewables Directive in 2001 with targets for each member state commensurate with their situation and capability. Armed with constitutional authority, the targets issued by the European Union are mandatory. These targets are renewable standards for each country; however, these standards do not obligate any specific producer to achieve them. Germany The Renewable Energy Sources Act of 2004 was created to contribute to the increase in the percentage of renewable energy sources in power supply to at least 12.5% by 2010 and to at least 20% by 2020. The Act outlines procedures for priority connections to the grid for plants generating electricity from renewable energy sources and from mine gas; the priority purchase, transmission, and payment for such electricity by the grid system operators; and the nationwide equalization scheme for the quantity of electricity purchased and paid for. The Act also includes feed-in tariffs and outlines who pays for various interconnection costs.
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This section of the handbook focuses on four areas: A. B. C. D. E. Tariff Pricing, Acquisition of Alternative Energy, Incentives, Refund of Salvage Value, and Insurance and Liability Requirements.
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Tariff Pricing
A. Tariff Pricing
Utilities often add fees and other cost-related barriers to Power Purchase Agreements, increasing the overall cost of the project for the developer. Many policies attempt to compensate for cost-related barriers to alternative energy facilities by establishing special pricing rules and by lowering transaction costs. In this section of Financial Issues and Best Practices, the following tariff practices are evaluated: Standby Charges Pricing Laws Feed-In Tariffs Retail Natural Gas Rates for Wholesale Applications Interconnection Charges Utility Rates Too Low for Renewable to Compete Loss of Utility Revenue Retail Buy-back Rates Payments for Locational Marginal Pricing Cogeneration Deferral Rates Remittance for Line Losses Exit Fees
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Tariff Pricing
1. Standby Charges
Issue: Policy makers want to facilitate the deployment of cogeneration, combined heat and power and renewable energy. Standby charges are levied on renewable and cogeneration projects for the cost of having standby power accessible when their systems are unavailable to cover the additional costs of generating, transmission, or distribution capacity required to supply intermittent service. Utility Perspective: Standby rates should reflect the full cost of service as it does for all other customers and should include all fixed costs for the system capacity to replace the units generation output. System planners cannot presume an alternative energy facility will operate at any given time, especially during peak load; this uncertainty must be mitigated by standby rates. Furthermore, the utility has to plan to serve all standby load on a circuit in the event of a circuit outage and must incur additional distribution infrastructure costs to serve the load. When a circuit is de-energized, the facility is separated from the distribution circuit to prevent backfeed and the utility must be able to supply 100% of its power until the facility comes back online. Utilities are also concerned that when an alternative energy facility does not operate, the entire circuit will have an increase in load. They also argue that the commission cannot take systemwide benefits to all ratepayers into consideration. Until there are multiple facility on a distribution circuit, it will not be possible to assume diversity values due to the radial design of distribution circuits. Developer Perspective: Standby rates often reflect neither the reliability of the facility requiring backup nor the contribution to grid stability through ancillary services which leads to overcharges. As these facilities rarely use backup, they should not be charged as high a rate as the utility wants. When the utility charges for the worst-case scenarioall facilities shutting down simultaneouslycharges are higher than necessary. Developers can offer several types of assurance, including physical assurance, which states that if the facility goes down, the customer will reduce its load accordingly to address the utilities concern about whether a facility will be operating during peak demand. If standby charges are too high, the developer receives an incentive to go off-grid, and the system loses the benefit. The standby rate should charge only the costs the utility had to incur for the facility and should allow maintenance and backup power charges to be assessed separately. The standby rates should be a stand-alone tariff that reflects diversity factors and the systemwide benefit that the facility adds such as deferral of distribution upgrades, extension of equipment life, and the decrease of electricity prices in peak periods to send the correct price signals to potential customers and developers. Standby service should also be adjusted based on the reliability of the facility to reward units for system support during peak periods. Utilities should unbundle the components of the distribution system and assign cost responsibility based on realistic calculations of how often the customers will need to use the system and the load the facility serves. Another option is to make the rates usage-based (demand charge) versus fixed (standby charge) since distribution costs vary with customer usage and usage-based rates encourage demand-response behavior. Standby charges should also have a capacity reservation fee for quantity, firmness, time, and location of use to allow customers to decide how much they need, when and how firm they need it, and how much it is worth to them. Standby charges can greatly impact the payback periods for renewable energy, cogeneration and CHP facilities. For example, an analysis of standby charges in New York State (Energy Nexus Group and Pace Energy Project 2002) showed that for an 800 kW engine with CHP, the simple economic payback ranged from less than two years with no standby charges to six years with the utilitys proposed standby charges.
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The most important issue for developers regarding standby rates is that utilities should not be allowed to charge a departing load charge, standby charge, and facility charge as these are all charges for the same thing. Regulator Perspective: Balance must be struck between the utilitys need to set aside generation it could otherwise sell and the developers need to keep costs down so the project is economically viable. Best Practice: In California, on-site generators that begin operations in the next two years are exempt from standby charges for the next ten years except for diesel-fired generators and facilities with capacity over 5 MW. Net energy metering of wind and solar facilities allows some of them to avoid standby costs. When a customer gives physical assurance, the customer should not have to pay for facilities or peak-demand-related costs and should be allowed to opt out of standby service or take only maintenance or nonfirm service. Standby Service Types: Supplemental power should be priced the same as full requirements power, but backup power should be priced higher than maintenance power because it is on-demand and has distribution infrastructure costs associated with it. Maintenance power should be lower as it will be used during times when capacity is available and thus does not need any infrastructure. Backup reservation capacity should be determined by the customer but if the customer goes over the amount in any billing period, the amount the customer used is the new capacity for the next year. Diversity: Because there are so few alternative energy facilities on the distribution system currently, the utility must plan without taking the system-wide benefits into account so standby rates should reflect this reality to avoid promoting cogeneration at the expense of other ratepayers. Standby Rates: Standby rate design should be cost-based and any costs that vary with usage such as peak demand costs should be reflected in a usage-based charge. Utilities can offer nonfirm standby rate offers to those customers who give physical assurance. Cost Allocation: Standby rates should be based on embedded, not incremental, costs of service. California, Massachusetts, and New York exempt standby rates as a policy tool to encourage certain cogeneration facilities. The exemption is based on size (too small to be cost-effective for separate standby tariff) or technology (want to promote environmentally friendliness). Some states also waive standby charges in constrained areas or in cases where the customer will guarantee load reduction.
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2. Pricing Laws
In general, pricing laws provide a fixed payment for renewable energy that varies based on technology, load, and location. Germany, Brazil, and China have legislation that combines pricing laws and mandated capacity targets. Pricing laws are especially effective in developing countries where power markets are often small and dispersed, which tends to favor smaller companies and incremental investment. The German Wind Energy Association and the European Renewable Energies Federation both believe minimum price systems perform better and are more efficient than quota systems (such as RPS). The downside to pricing laws is that the tariff is difficult to set as the true costs associated with the project are not always known, and overpayments have often occurred with static feed-in tariffs that increase rates to consumers. In general, pricing laws have increased predictability and consistency in markets and have been responsible for most additional capacity in renewable energy. Sawin provides the following comments on the pros and cons of pricing and quota systems:
Pricing systems
To date, they have been most successful at developing renewable markets and domestic industries, and achieving the associated social, economic, environmental, and security benefits. Flexiblecan be designed to account for changes in technology and the marketplace. Encourage steady growth of small- and medium-scale producers. Low transaction costs. Ease of financing. Ease of entry. If tariffs are not adjusted over time, consumers may pay unnecessarily high prices for renewable power. Can involve restraints on renewable energy trade due to domestic production requirements.
Quota systems
Promote least-cost projectscheapest resources used first, which brings down costs early on. Provide certainty regarding future market share for renewable (often not true in practice). Perceived as being more compatible with open or traditional power markets. More likely to fully integrate renewable into electricity supply infrastructure. Tend to favor large, centralized merchant plants and not suited for small investors. Concentrate development in areas with best resources, causing possible opposition to projects and missing many of the benefits associated with renewable energy (jobs, economic development in rural areas, reductions in local pollution). Targets can set upper limits for developmentthere are no high profits to serve as incentives to install more than the mandated level because profitability exists only within the quota. Tends to create cycles of stop-and-go development. Source: National Policy Instruments: Policy Lessons from the Advancement and Diffusion of Renewable Energy Technologies around the World. http://www.renewables2004.de/pdf/tbp/TBP03-policies.pdf High risks and low rewards for equipment industry and project developers, which slows innovation. Price fluctuation in thin markets, creating instability and gaming.
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Assessment The fixed price over time means that it is difficult to pass on the benefits of increased technological efficiency to consumers. Instead, benefits accrue at the level of the generating plant owner, who may be able to access high rates of return. One possible solution is to lower the tariff rate over time in a transparent manner to minimize investor uncertainty; however, there is no guarantee that reductions will match the actual improvements in the technology.
Though tariff mechanisms fix the price available to renewable energy generators, the level of capacity is subject to the market; there is no way of predicting how many investors will build generation due to the tariff price. This means it is not possible to predict the overall costs of the mechanism in either the short or long term, which can be unattractive to governments and consumers/taxpayers. Distribution network operators are compelled to accept all electricity from renewable generators, regardless of the demand for electricity at the time of generation. This can lead to network balancing issues, and these tend to increase with the level of intermittent generation on the network. This leads to increasing potential for technological problems and to increased costs for the network operator. Compelling network operators to accept all renewable generation means electricity from renewables is always the first to be bought. This effectively interferes with any open market for general electricity generation, and affects the ability of traditional generators to compete in the electricity sector which can be problematic where governments are committed to maximizing competition in markets. Price-setting policies should include the following: Incremental adjustments built into the law that allow for periodic adjustments of the premium to eliminate excess rent payments by the state to renewable energy/cogeneration suppliers, Tariffs based on technology and location that are high enough to cover costs and encourage development, are provided for all developers including the utility, and are for a long enough period of time to ensure rates of return, Costs shared equally across the region or country, and The elimination of barriers to grid connection.
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Tariff Pricing
3. Feed-In Tariffs
Issue: Feed-in tariffs are a fixed price for every unit of electricity produced by a renewable source that is usually above the tariff rate for conventional sources. They offer investors access to the grid and a fixed minimum price for electricity generated for a specified number of years, which often makes the project more viable. Either the tariff can be paid from a subsidy or the utility can pass the additional cost on to consumers. Investors have a reduced risk with feed-in tariffs as they are guaranteed a price for a fixed time at an economical rate. Furthermore, if a government wishes to support a new technology it can require a tariff specific to that technology and thus encourage it to move closer to market. The balance of evidence suggests that this provides long-term benefits in terms of developing more competitive technologies. Tariff mechanisms have been widely applied in Europe, and have enjoyed particular success in Germany, Denmark, and Spain. Their employment has led to significant increases in renewable electricity-generating capacity, particularly of wind energy. Some have argued that feed-in tariffs might have a greater impact if customers receive TOU rates for energy sold to the grid. However, TOU may not be desirable if customers have to pay TOU for energy bought from the utility. The success in attracting investment in renewable energy/cogeneration depends on limits set on participation, the price paid, grid connection standards, and enforcement mechanisms; net metering alone cannot work without other financial incentives. Utility Perspective: It is impossible to plan generation when neither the amount nor the timing of the alternative energy facilitys excess electricity is known in advance. Developer Perspective: Allowing the alternative energy facility to sell power to the grid greatly changes the economic viability of the project and often makes it possible. Regulator Perspective: The price for renewables may be set too high and the cost to the consumer will be higher than it would have been under a more market-based incentive. However, the market incentives are not always sensitive to the need for open access and low transaction costs. Best Practices: Punjabs New & Renewable Sources of Energy (NRSE) Policy 2006 clearly outlines tariff prices for each type of generation from renewable energy and cogeneration sources with annual escalations for five years. After the declaration of the Generation Based Incentives (GBI) by the MNRE (see section Other Incentives), many state regulatory commissions declared feed-in tariffs for grid-connected solar power projects. The present status is given below:
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Tariff Pricing
Max Rs 12 / kWh Max Rs 11.40 / kWh (GBI + tariff capped at Rs 15/kWh) Rs 15.78 / kWh (Rs 3.78 /kWh wind) Rs 15.96 / kWh (cost plus basis) Equivalent to highest tariff offered from among the various RE in WB (Rs 5/kWh biogas power) Rs 11/kWh Rs 15.18 / kWh Rs 15.16 / kWh GBI will be reduced by 5%
Rs 10/kWh
Allowed
Rs 3.00/kWh (without GBI) Rs 3.15/kWh (without GBI) Equivalent to highest tariff offered from among the various RE in TN (biomass)
Allowed
Equivalent to highest tariff Not allowed offered from among the various RE in TN (biomass) with 5% reduction
Not allowed Not allowed Not allowed Not allowed Not allowed
Rs 3.15/kWh GBI will be reduced by 5% Equivalent to highest tariff offered from among the various RE in TN (biomass)
Notes. GBI = generation-based incentive; IT Act = Income Tax Act; kWh = kilowatt hour; MNRE = Ministry of New and Renewable Energy; RE = renewable energy; RERC = Rajasthan Electricity Regulatory Commission; Rs = Rupees; TN = Tamil Nadu; TNERC = Tamil Nadu Electricity Regulatory Commission; WBERC = West Bengal Electricity Regulatory Commission. Source. Charts courtesy of the World Institute of Sustainable Energy.
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Tariff Pricing
As there are different rates for distributed generation and regular consumption, a separate meter is required for commercial or industrial cogeneration facilities to distinguish the portion of the customers consumption priced at the distributed generation rate from the usage priced at the non-distributed generation rate. Cogeneration customers should pay for any system reinforcements to the electricity grid needed to serve them and should take the expected revenues from the cogeneration unit into account when determining the reinforcement costs. Cogeneration customers can receive firm or interruptible service and are treated in the same manner as any other firm or interruptible customer.
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Tariff Pricing
5. Interconnection Charges
Issue: Utilities charge a cost-based fee for any facility to connect to the grid. In addition, they might charge for the cost of a line to connect to the grid, system upgrades, and separate meters for the facilities. Utility Perspective: Renewable energy and cogeneration facilities must pay to receive permission to connect and operate parallel to the grid as it is not right to force other consumers not benefiting from the facility to pay. Developer Perspective: Renewable energy and cogeneration facilities are often not located close to the grid and the cost of connecting would be prohibitive. As the costs are higher for renewable energy generators due to lower plant load factors and the distance from the grid, interconnection charges can be a significant deterrent. Furthermore, system upgrades might benefit other customers as well and there is no clear methodology for determining the percentage of the total cost each customer should pay. The utility also keeps the upgrades so it is not reasonable to force customers to pay for them. Regulator Perspective: Policies should encourage renewable energy and cogeneration development while not adding to the cost for other consumers. Best Practice: In Germany, the renewable energy/cogeneration developer pays for grid-connection costs and metering; the utility pays for any system upgrades. Similar practices are followed in Gujarat, Maharashtra and Tamil Nadu. Gujarats recent tariff order for demonstration solar power plants stated the following regarding interconnection costs: 6.3 Evacuation Facilities: a. The interfacing line of appropriate capacity and voltage as per the CEA (Technical Standard for connectivity to the grid) Regulations, 2007 shall be provided by the STU/ Distribution Licensee at their cost. The intending generator shall apply to the STU/ Distribution Licensee concerned well in advance. b. The cost of switch gear, metering and protection arrangement at generator end shall have to be borne by the owner of solar generators. (Page 4).
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The Potential Benefits of Distributed Generation and Rate-Related Issues That May Impede its Expansion.
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7. 8. 9. 10.
3.40 fixed for 10 yrs 3.14 fixed for 20 yrs 3.973.30 3.50 Esc @ 0.15 per yr 2.91 Esc@0.05 for 10 yrs 2.70 (fixed)
2.50 2.90
11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24.
Kerala Madhya Pradesh Maharashtra Manipur Meghalaya Mizoram Nagaland Orissa Punjab Rajasthan Sikkim Tamil Nadu Tripura Uttar Pradesh
*Rs 2.48 per unit at 5% escalation (esc) for 9 years (2000-01) for off-season power generation using coal/lignite (subject to ceiling of 90% of high-tension tariff). Source: http://mnes.nic.in/policy/policy-programme-wise.htm
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12. Exit Fees Issue: Many utilities assess exit fees on departing load to recover the fixed costs associated with the stranded asset the load no longer uses. Utilities argue that without these exit fees, other customers would have to pay for these costs. However, many factors can affect utility rates and revenue and it is not necessarily true that a reduction in load will result in cost increases.
Utility Perspective: The utility built its distribution network and contracted for generation based on the load. Large-load customers (1 MW or larger) are those most likely to build cogeneration facilities, and their reduction of load on the system will increase the stranded asset, forcing either the remaining customers to pay more or the utility to take a loss. Developer Perspective: Exit fees can be prohibitive, especially when it is a small cogeneration facility. While it is understood the utility will not recover all its stranded assets when a customer leaves its service, the utility should receive additional gains in the form of system reliability, a decrease in transmission congestion, and a reduction in system expansion that should make up for these losses. Regulator Perspective: Renewable energy and cogeneration projects must be encouraged as RPS orders must be met. At the same time, it is the regulators responsibility to keep rates low, fair, and reasonable for all consumers. Best Practices: Regulatory commissions should include a requirement of proof that an asset is actually being stranded, resulting in higher costs to the utility. India Regulators are required to provide these charges in the form of an additional surcharge. However, in view of the large capacity shortages, most regulators have not added this charge. United States Some U.S. states have exempted CHP and renewable energy projects from the exit fees in recognition of their positive impact on grid congestion and reliability enhancement benefits. California: Systems smaller than 1 MW that are net metered are exempt from exit fees, as are zero-emitting, highly efficient (>42.5%) systems. Illinois: Utilities could assess exit fees but only until December 31, 2006. However, a departing customers facility must be sized to meet its thermal and electrical needs and must use all the energy produced. Massachusetts: Exit fees can be assessed for facilities over 60 kW but renewable energy and fuel cell technologies are exempt. Utilities cannot charge exit fees unless there is a significant revenue loss, but significant is not defined, which has led to problems.
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Acquiring Capacity
<http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTENERGY/EXTRETOOLKIT/0,,contentMDK:20772244~isCURL:Y ~menuPK:2069939~pagePK:64168445~piPK:64168309~theSitePK:1040428,00.html>.
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Acquiring Capacity
1. Competitive Bidding
Issue: Competitive solicitations specify a target or share of generation and allow developers to submit bids. Utility Perspective: The main concern with competitive bidding is that projects will be underbid and thus never built, affecting the utilitys ability to serve load. Alternatively, all the bids could be higher than expected, leading to higher rates passed on to consumers. Developer Perspective: Competitive bidding can lead to bids below cost to obtain contracts that are often not financially feasible. These low bids hurt developers with more reasonable costs; reasonable bidders fear making realistic bids and losing to low-quality bidders. Regulator Perspective: Competitive bidding can be a valuable tool in increasing renewable energy development, but policies must be in place to ensure the projects are built according to their contract. India Competitive bidding has not been very successful in India to date even for conventional power projects and some believe it is too early to introduce it. In India competitive bidding for conventional power projects (coal, gas) is not encouraging and did not resulted in the anticipated capacity addition. Since 1992, only a few thermal-gas-based power projects have been commissioned via competitive bidding. However, competitive bidding for renewables has been suggested in Andhra Pradesh by the Andhra Pradesh Electricity Regulatory Commission. Best Practice: California uses an incentive program based on competitive bidding that uses a system benefit charge. It also has production-based incentives that can be paid over a five-year period at most and has a cap of 1.5 cents per kWh. Projects that come online early receive a 10% bonus on top of their incentive bid to be no more than 1.5 cents total and also receive 10% reductions in the incentive payment if there are project delays. If the project is delayed one year, the incentive payment is reduced 50% and if it is over a year, there is no incentive payment. Competitive bidding has been more successful in Ireland and California because they apply very stringent criteria for prequalifying bidders, ensuring the quality of bidders is at a similar level and ensuring the bidders they can make more realistic bids and not lose to a low-quality bidder. The bid process is also designed so that the tariff is set at the second lowest bid price. Competitive bidding is practiced in Canada, China, and the United Kingdom.
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Only Maharashtra and Rajasthan have penalties for noncompliance with the RPS percentages. In West Bengal, Andhra Pradesh, and Maharashtra, distribution companies can waive the penalties if they can prove the renewable energy is not available. Assessment The different RPS orders in India make the cost of power different in each state. This difference could favor industries in the states with lower RPS as the price of renewable energy is usually higher than conventional energy sources. While there are inherent discrepancies in pricing between states based on costs, forcing one state and not others to purchase higher power could increase the discrepancy and lead to discord or states refusing to increase RPS to maintain a competitive advantage for their industries. A central-governmentmandated RPS could alleviate this potential problem. In a report titled Identifying Optimal Legal Frameworks for Renewable Energy in India funded by the APP, the authors found some minimum requirements for effective RPS schemes:
SERC orders setting out Renewable Portfolio Standards need to cover resource availability, present and future capacity addition (both conventional and renewable), eligible renewable energy sources, implementation, operating and settlement mechanisms and the impact of RPS on retail electricity tariff. In this respect the MERC and Rajasthan Renewable Energy Corporation Standards [sic] are good model orders for other SERCs. SERCs should specify aggressive short and medium term targets for renewable energy (keeping in mid climate change, shortage of electricity in the country and the environmental attributes of renewable energy) to establish policy and regulatory stability and to promote investment in renewable energy. Heavy penalties such as those specified in the MERC order provide financial incentives for Distribution Companies, captive users and open access consumers to comply with minimum percentages. Resource studies detailing the potential for all sources of renewable energy within the State are required. Existing resource studies upon which most States have based their RPS calculations are out of date and therefore underestimate the potential of renewable energy. (pp. 3031) Best Practices: RPS percentages should increase slowly each year and should specify aggressive short- and medium-term targets to establish stability and encourage investment. No maximum limits should be set; anything over the minimum RPS should be encouraged if economically viable. In addition, the RPS should not specify a particular renewable resource or a percentage of energy from a particular resource, such as 5% from wind generation. Utilities should also be allowed to procure the renewable energy if the resources are not available in their service territory. Maharashtra In Maharashtra, the RPS increases by 1% each year for four years to increase the amount of renewable energy from 3 to 6% by 2010 with no specific limit for each renewable energy resource within the overall RPS percentage. In order to promote regulatory certainty and create an effective RPS policy framework, the applicable tariffs must also be specified. The Maharashtra Electricity Regulatory Commission (MERC) stated the multiyear tariff for renewable energy will last three years. Heavy penalties for noncompliance such as those in Maharashtra will incentivize renewable development, but enforcement should be introduced gradually, especially when the RPS framework is still evolving. RPS compliance
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penalties have been levied by the state regulatory commissions in Maharashtra, Rajasthan, and Gujarat. In Maharashtra, the Maharashtra Energy Development Agency has issued penalty notices to the distribution licensees who do not meet the RPS obligation in 200708. Penalties levied on utilities for noncompliance in renewable energy procurement will not be allowed as a pass through expense in their Annual Revenue Requirement. It is believed that the cost of a 6% RPS target will increase the consumer tariff in Maharashtra by 2%. In addition, the cost of purchasing conventional power at the margin is higher than the average 3.32 Rs per unit cost from all renewable energy sources. Procuring power from renewable energy sources at the existing tariff rates will thus not only add to the availability of energy but also be cheaper than power purchased in the market and thus will not adversely affect consumers.
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Desired design features of TRECs: Sufficient duration of scheme to provide investment certainty given a 15- to 30-year payback time frame Large enough TREC target that it cannot be met in the short term Penalties for noncompliance Market that is large enough to be liquid and competitive Coverage of small generation plants Identical transmission and distribution costs across jurisdictions Available data on renewable resources Exchange of information on the total amount of electricity that has been generated and the amount generated from renewable resources Limited and reasonable transaction costs Renewable energy verification standards Utility Perspective: The TRECs could assist the utilities in meeting mandatory RPS goals, but only if renewable energy is available for purchase. Developer Perspective: TRECs can create a market for renewable energy and may improve revenue opportunities that are central to the deployment of renewable energy.
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Regulator Perspective: In theory, policy-driven TREC schemes could assist utilities in meeting their RPS goals. However, care should be taken to ensure fines are sufficiently large to avoid utilities simply electing to pay the penalty, which would not achieve the goal of increased deployment of renewable energy. Best Practices: TREC schemes are effective if they are well designed to ensure harmonization with existing measures, domestic laws, and local context; efficient with low transaction costs; and mandatory and enforceable. Australia The electricity generator requires regulator accreditation to be eligible to gain accreditation under the mandatory scheme. The electricity that the generator produces from renewable energy sources must then also be recognized in accordance with the scheme rules, so that the TRECs can be registered for each megawatt hour of electricity that is generated by the generator. The Australian mandatory RPS set a contained legal framework for the creation and surrender of RECs. United States Under the model used in some states, TRECs might not be registered under the state law. The retailer must ensure that the benefit of the renewable energy purchased comprises electricity that meets scheme requirements. The scheme might set minimum requirements for electricity that is entitled to be included in the renewable energy portfolio. Some U.S. states adopted a flexible framework that allows TRECs to not be formally accredited as long as they meet prescribed criteria.
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Incentives
C. Incentives
Renewable energy projects are typically small with disproportionately high transaction costs (feasibility studies, etc.) with higher capital costs but lower operational costs than traditional energy sources. The large upfront costs require high external financing that must be amortized over the life of the project. Developers usually find incentives are necessary to make alternative energy projects competitive with conventional energy sources. Utilities do not object to incentives as long as they do not affect the utilitys finances. Best Practices: There are five general design principles to follow when developing and implementing effective funding and incentive programs: Develop specific target markets and technologies based on technical and economic analyses. Use funding and incentives as part of a broader policy to encourage renewable energy and cogeneration development. Establish specific financial and technical criteria for investments in renewable energy and cogeneration. Track and evaluate details of program participation, costs, savings, and production to improve the program and ensure goals are met. Create a stable and long-term program (over five years) to remove the barrier of uncertainty. Types of incentives can vary but the most common are investment tax credits, production tax credits (PTCs), accelerated depreciation, capacity payments, demand credits, buy-down capital costs, carbon credits, and property tax and other tax incentives. These incentives will be discussed in the next section.
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Incentives
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Los Angeles County Sanitation District 15 - $2,621,080 for a landfill gas project Merced Irrigation District - $1,340,000 for a hydropower project Regents of the University of Minnesota - $1,500,000 for an open-loop biomass project Electric cooperative borrowers received about $143 million of volume cap allocations for projects in 13 states ranging from $300,000 to $30 million. Approved electric cooperative projects included: 14 wind facilities, four landfill gas facilities, six hydropower facilities, one solar facility and one open-loop biomass facility. Electric cooperative borrowers included: New Ulm, MN Public Utilities - $2,975,000 for a wind project Wabash Valley Power Association Inc. - $4,500,000 for a landfill gas project CFC, National Rural Utilities Cooperative in Livingston, TX - $10,200,000 for a hydropower project CFC, National Rural Utilities Cooperative in Park Rapids, MN - $30,000,000 for an open-loop biomass project CFC, National Rural Utilities Cooperative in Tavernier, FL - $1,000,000 for a solar project A complete list of the recipients can be found on the IRS website (http://www.irs.gov/pub/irs-tege/creb_2007_disclosure.
pdf).
CREB issuers must spend 95% of the proceeds within five years for that project, or they may not receive any tax credits.
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4. Accelerated Depreciation
Issue: Accelerated depreciation is similar to investment tax credits in that it allows renewable energy developers to receive their tax benefits much sooner. However, as with the investment tax credits, allowing accelerated depreciation can lead to investments with lower capacity factors. Utility Perspective: Accelerated depreciation must take long-term operating performance and maintenance into account to ensure capacity factors are not lower. In addition, the developer could take all the credits, and then not operate the facility. This has happened with a few wind projects in India. Developer Perspective: Accelerated depreciation greatly decreases the risk associated with projects and is a great way to incentivize the development of renewable energy projects. Regulator Perspective: Care must be taken to ensure renewable energy projects are correctly incentivized to maximize capacity and minimize cost. India: Section 32 Rule 5 of the Income Tax Act currently allows accelerated depreciation at the rate of 80 to 100% on a written-down value basis for various renewable energy items. Best Practice: Germany included technical standards and certification requirements that must be met by developers to ensure capacity factors were not lower. In the United States, business can recover investments in renewable facilities by depreciating them over a period of five years instead of the more typical 15 to 20 years. Depreciation schedules should account for technology improvements and societal values such as carbon reduction.
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6. Demand Credit
Issue: Demand credits are credits given to the cogeneration facility based on previous generation capability. Cogeneration can provide capacity during peak periods, reducing demand charges from the supplier that increase with peak demand. Utility Perspective: Any firm capacity that can assist during peak periods is welcome. Developer Perspective: Demand credits are very beneficial to the financial viability of a project. Regulator Perspective: Demand credits can encourage cogeneration, combined heat and power and distributed generation that may benefit the grid, especially during peak times. Best Practices: The United Kingdom created a demand credit to encourage cogeneration in areas with transmission congestion. This reduces the congestion on the system and negates the need for the utility to build costly new lines or substations. The MERC, in its Order dated 25 January 2006, in Case No. 29 of 2005, in the matter of Confederation of Indian Industry (CII) Proposal to use captive power to mitigate load shedding in Pune Urban Circles of MSEDCL, ordered as follows on page 2: a) Considering that the demand-supply gap is expected to prevail to a certain extent for the next five years at least, there is an urgent need to see how best the situation can be mitigated. The CII proposal to utilise surplus captive power during peak hours and making available the grid power for supply to other consumers is a well intentioned proposal to mitigate the load shedding in certain areas of the State, provided all the incremental cost is internalized by the consumers residing within those areas. Based on the responses received from stakeholders in writing as well as during public hearing, the Commission has observed that a broad majority of consumers have welcomed this CII initiative. Considering the current and expected demand-supply gap, the Commission accepts the CII proposal to utilise surplus captive power during peak hours and making available the grid power for supply to other consumers. However, all the incremental costs of this proposal need to be internalized by the consumers of Pune Urban Circle. . . . e) The Commission will adopt the principles of normative pricing, in relation to the fuel used and the heat rate, to determine the cost at which the captive generators would be generating the electricity. The price of fuel will be benchmarked to publicly available data on fuel prices from sources such as IOC, HPCL, BPCL, RIL, etc. The difference in the peak hour variable tariff applicable to the industrial units and the normative price of generation determined above, will be payable to the captive generators, for the reduction in the quantum of electricity consumed from the grid (which will also correspond to the quantum of electricity generated by the captive unit). The peak hours for the purpose of this computation will be 0900 to 1200 hours in the morning and 1800 to 2200 hours in the evening. f) As the approval of additional charge to be levied on the consumers of Pune Urban circle to mitigate this load shedding is a tariff design issue, the Commission will address this issue while approving the ARR and Tariff of MSEDCL.
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This MERC Order, also called the Pune Model, helped save 90 MW of power during peak time. Consumers with monthly consumption of more than 300 units paid a reliability charge of 42 paise per unit.
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8. Carbon Credits
Issue: The Clean Development Mechanism (CDM) is a facilitating mechanism under the Kyoto Protocol that was designed to assist countries to meet GHG emission reduction targets and achieve sustainable development targets. The CDM is intended to be, among other things, a vehicle for investment and technology transfer between developed countries and developing countries including India. The book Wind Energy Development in India notes in Chapter 13 (Carbon Credits as an additional revenue source) that CDM in developing countries can: attract foreign capital for projects that assist in the shift to a more prosperous but less carbon-intensive economy; encourage and permit the active participation of both private and public sectors in sustainable Projects; provide a tool for technology transfer if investment is channelled into projects that replace old and inefficient fossil-fuel technology or create new industries in environmentally sustainable technologies; and help define investment priorities in projects that meet sustainable development goals. Utility Perspective: The utility should receive the carbon credits, especially if it granted the facility a rebate. In fixing the renewable energy tariff, the regulator already assures that a return of 50 to 100% of the carbon credits should go to the utility. Developer Perspective: Many renewable energy projects that may be eligible under the CDM have had difficulty attracting financial support due to lower emissions reduction potential of renewable energy projects and the long lifespan of facilities that can extend beyond Kyotos commitment period. Transaction costs associated with CDM projects, such as the costs of registration and legal fees, may be prohibitively high compared to the volume of Carbon Emission Reduction credits (CERs) expected to be generated by the projects. Regulator Perspective: The carbon credits belong to the facility that creates them but that facility can sell them to the utility (California Commission view). India To qualify as a CDM project, a project activity must demonstrate that GHG emissions were reduced against the baseline scenario, a representation of GHG emissions under normal circumstances. However, Indian policies and regulations encouraging renewable energy are not to be taken into account when calculating the baseline scenario (this is known as Type E additionality under the CDM rules). The baseline is calculated as the hypothetical scenario without the regulations being implemented. This benefits developers in India because it is easier to meet the requirement of additionality. India designated one authority to clear all projects, the Indian Designated National Authority for the CDM, which decreases the length of the evaluation process. According to the REIL report, variations between the number of wind power CDM projects in different Indian states illustrate that CDM alone will not be sufficient to fully develop renewable energy. A tradable renewable energy credit could help overcome the difficulties of variations between States.
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11.5 + 5% success fee (of the CER revenue) depending on consultant chosen 34 (one-off) See table below. 23 (yearly) 2% deduction of CER + $0.10 per CER for adaptation fund and administration expenses of the CDM executive board 12% of CER volume
Source: Wind Energy Development in India, Chapter 13, Carbon credits as an additional revenue source.
Best Practices: The international CDM rules now allow the bundling of large-scale projects (not just small-scale projects) to further reduce transaction costs. This additional flexibility in the CDM rules should reduce transaction costs for renewable energy projects. In addition, many contractors now exist to facilitate CDM who receive a fee only if they succeed in capturing CDM credit. Programmatic CDM involves the aggregation of a number of small GHG reduction activities into a larger program, which is then submitted to the CDM Executive Board as a single activity (using one baseline and monitoring methodology) to overcome the cost barriers to smaller projects.
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1.
4. 5.
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6. 7.
Nil Lucknow, Bareilly, Saharanpur, Muradabad Gorakhpur Development Authority Residential building having plot area 500 sq m Bangalore Municipal Corporation
Incentive of Rs 1500 to domestic user of SWHS from ANERT. Subsidy of Rs 4,000 per 100 LPD SWHS installation in govt and semi-govt establishments by NEDA.
8.
Karnataka
Rebate in electricity tariff 50 paise/unit to a max of Rs 50 per installation to domestic consumer using SWHS Rebate in electricity bill Rs 100 /100 LPD up to Rs 300/LPD to users of SWHS
9. 10.
Harayana Maharashtra
Nil
Pune, Thane, Nagpur, BMC, Bhivandi, Nashik, Amravati, Kalyan, Pimpri Chinchwad, Jalgaon Municipal Corporation 11. West Bengal Durgapur Rebate in electricity tariff 40 paise/unit up to max of Rs 80 per installation to domestic consumer using SWHS for first two years. 12. Delhi Residential/commercial building developed on plot area 500 sq m and above 13. Tamil Nadu Nil 14. Madhya Pradesh Nil 15. Himachal Pradesh Nil 16. Chandigarh Nil 17. Nagaland Nil 18. Dadar & Nagar Haveli Nil Source: World Institute of Sustainable Energy, http://www.wisein.org
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Generation-Based Incentive (India) The MNRE of India released a GBI for solar and grid-connected wind power in spring 2008. These incentives are in addition to any feed-in tariffs given by the SERCs and are given through IREDA. Generators cannot receive accelerated depreciation if they receive these incentives. These incentives are available only for a maximum of 50 MW for solar.
Solar
Eligibility Over a certain size commissioned prior to 31 December 2009 Photovoltaic commissioned after 31 December 2009 Solar thermal Incentive Rate Rs 12 per kWh Rs 11.40 per kWh Rs 10 per kWh Limit on Incentive (power tariff Length of Incentive (yrs) plus incentive payment) No more than Rs 15 per kWh for photovoltaic and 10 yrs Rs 13 per kWh for solar thermal plants Slightly less than Rs 15 per kWh Slightly less than Rs 13 per kWh 10 yrs 10 yrs
Grid-Connected Wind Incentive MNRE provides a feed-in tariff of Rs 0.50 per kWh for projects over 5 MW for a period of 10 years. Eligible project investors include Independent Power Producers (IPPs), registered companies, nongovernmental organizations, trusts, academic and research institutions, and state nodal agencies. This tariff will be reviewed after 49 MW of capacity has been installed. Assessment Because they are new and untested, it is impossible to assess the impact of these incentives on the increased deployment of solar and wind projects. In theory they appear to be a powerful incentive to developers as the average tariff in India is about Rs 3. There has been some concern in India that the solar energy incentive is so high that it might attract less qualified developers interested in profits. In addition, India has as much as 600,000 MW of solar potential but as of 2007 has only 18.2 MW of installed solar capacity. While a 50 MW addition through this incentive would more than double the current installed capacity, it is a very small percentage of the total potential solar capacity. It is not clear whether the wind power scheme will continue after 49 MW of capacity is installed. 49 MW is a very small amount given that India currently has 7,660 MW of wind energy and has 45,195 MW potential.
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California Public Utilities Commission Self-Generation Incentive Program In September 2000, Assembly Bill 970 (AB 970) was approved, which called for the creation of more energy supply and demand programs. As a result, in March 2001, the California Public Utilities Commission (CPUC) issued a decision creating the Self-Generation Incentive Program (SGIP) to offer financial incentives to their customers who install certain types of distributed generation facilities (in the U.S. these are grid connected) to meet all or a portion of their energy needs. This program initially provided incentives for customers of investor-owned utilities to use microturbines, small gas turbines, wind turbines, photovoltaics, fuel cells, and internal combustion engines to provide some or all of that customers electricity. As of January 1, 2008, the SGIP offers incentives only for wind and fuel cell projects; internal combustion engines, microturbines, and small and large gas turbines can no longer receive incentives through this program. Generation must be certified to operate in parallel with the electric system grid (not backup generation) and meet other criteria established by the CPUC. While residential customers are not barred from the program, it was designed primarily with business and large institutional customers in mind. The California Energy Commission (CEC) offers a similar program that is available to customers who install renewable generation, such as fuel cells and wind turbines, less than 30 kW in size. The SGIP is one of the largest DG incentive programs in the United States, with nearly 1,200 projects online and an average rate of 43 MW per year. By the end of 2007, the total online capacity of SGIP projects was 300 MW. Cogeneration technologies represent over 50% of that online capacity, while PV represents 40%. The following table describes the incentive payments and maximum incentive and system size limits. Please note that the CEC also has a program similar to Level 1 and consumers may qualify for incentives with the CEC and the CPUC program but up to a maximum of $4.50/W: The incentive levels for 2008 are as follows:
Incentive Levels Level 2 Renewable Level 3 Nonrenewable
Notes: MW =megawatt.
Eligible Technologies Wind turbines Renewable fuel cells Nonrenewable fuel cells
None
5 MW
1 MW
For projects that are greater than 1 MW up to 3 MW, the incentives identified above decline according to the schedule below:
Capacity 0 1 MW >1 MW 2 MW >2 MW 3 MW 100% 50% 25% Incentive Rate (% of Base)
Source: http://www.pge.com/mybusiness/energysavingsrebates/selfgeneration/equipment/
California Energy Commission Emerging Renewables Buy-down Program The buy-down program is available to customers of Californias investor-owned utilities. Technologies: Photovoltaics, small wind (less than 10 kW), fuel cells (renewable fuels only), solar thermal electric.
Incentives: $3.00/W for small residential systems (under 10 kW), up to a maximum 50% of system cost. $2.50/W for larger systems (over 10 kW), up to a maximum of 40% of system cost.
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Project Limits: Renewable energy systems installed under this program must be interconnected with the utility grid. A system should primarily offset part or all of the customers electrical needs, but must not be sized greater than 200 percent of on-site peak demand. The maximum buy-down amount is $2.5 million for a single project. Buy-down Process: Customers make a reservation of funds with the CEC prior to construction of the project. This reservation will expire after 9 months for smaller systems (under 10 kW) or 18 months (all other systems). Once the system is completely installed and operational, customers then request the buy-down payment by submitting the required documentation to the CEC. Within 30 days of receipt of a completed claim form, the CEC will issue the incentive payment. This completes the buy-down process.
California Energy Commission Solar Energy and Distributed Generation Grant Program California residents who are purchasers, sellers, owner-builders, or owner-developers of eligible solar energy or DG systems are eligible to apply. Technologies: Solar domestic water heating systems, solar swimming pool heating systems, battery backup for PV systems, DG.
Incentives: $750 for solar water heaters, $750 for PV system battery backup, $250 for solar pool heaters. Up to $2,000 or 10% of system cost, whichever is less, for the following DG systems: Microcogeneration Gas turbines Fuel cells Reciprocating internal combustion engines Electricity storage (other than for eligible solar energy systems)
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2. Pre-interconnection Studies
Issue: Utilities and developers often disagree over whether a pre-interconnection study is needed to consider the distributed generators impact on the regional power system and the grid as a whole. Utility Perspective: Prior to connecting distributed generators, the utility must conduct a pre-interconnection study to determine if the facility will create any adverse effects on the distribution system and whether any upgrades or additions to the system are needed to interconnect the facility. The cost of these studies should be borne by the developer of the facility because, without its facility, the upgrades and expenses would not be necessary. Simple studies for small generators could be provided for free. Developer Perspective: Pre-interconnection studies are usually prohibitively expensive and can take too much time. There often are no limits to the amount of time a utility can take to complete the study or how much money it will cost. Furthermore, most alternative energy facilities are so small that they would have a negligible effect on the distribution system and thus the study is unnecessary and may be a tactic to block the developer from completing the project. Regulator Perspective: The utility should conduct a study if deemed necessary to ensure system reliability. The developer seeking the interconnection should pay for the study as he is its sole beneficiary. Best Practices: Different states in the United States are taking slightly different approaches, but typically, the type of study required depends on the size of the proposed cogeneration facility. New York For systems of 15 kW or less, utilities are not permitted to charge applicants for completion of the Preliminary Review or the Coordinated Electric System Interconnection Review. For systems exceeding 15 kW, the applicant pays a $350 nonrefundable application fee. This fee can be refunded/ recovered under certain circumstances. The utility has five days to inform the applicant if it has provided all necessary information and then has five more days to finish the preliminary review. If the proposed interconnection is viable, the utility provides a cost estimate for the completion of the Coordinated Electric System Interconnection Review. Texas In Texas, if the proposed site is not on a networked secondary, no study fee may be charged to the applicant if all of the following apply: Proposed equipment is precertified Proposed capacity is 500 kW or less Proposed facility is designed to export no more than 15% of the total load on feeder (based on the most recent peak load demand) Proposed facility will contribute not more than 25% of the maximum potential short-circuit current of the feeder
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Certain aspects of secondary network systems create technical difficulties that may make interconnection more costly. If the proposed site is serviced by a networked secondary, no study fee may be charged to the applicant if Proposed equipment is precertified Aggregate generation, including the proposed system, represents 25% or less of the total load on the network (based on the most recent peak load demand) and either Proposed facility has inverter-based protective functions, or Proposed facility rating is less than the local applicants verifiable minimum load. Otherwise, the transmission and distribution utility may charge the applicant a fee to offset the costs of the interconnection study. The transmission and distribution utility must advise applicants requesting interconnection on secondary networks about the potential problems and costs before initiating the study. Texas also requires that interconnection studies not take more than four weeks to complete and the utility must give the developer an estimate of the cost prior to beginning. The study must include both the costs and benefits of the interconnection to the utility and a copy of the findings must be given to the developer.
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3. Unintentional Islanding
Issue: Islanding occurs when a section of the grid with both load and generation is separated from the larger grid. If a facility is located at the end of a long radial feeder and the breakers at the base of the feeder open, the facility and all the customers from the open breaker to the end of the feeder will be islanded. Islanding creates a number of very serious dangers to the system, as a whole, and to the cogeneration facility. Utility Perspective: The biggest concern utilities have about adding cogeneration to their system is unintentional islanding. Utilities must protect against islanding and usually do so by using mechanical relays and transfer switches to automatically isolate a generator from the grid when the grid is de-energized. This also helps avoid damage to the cogeneration facility when it is reconnected to the local grid. Developer Perspective: The cost of mechanical relays and transfer switches is too expensive for small generators and the insistence that they be included prohibits alternative energy facilities from being integrated into the grid. Furthermore, new electronic circuitry can now be integrated into inverter components of the facility at a substantially reduced cost. This equipment is just as effective and there is a functional test for the anti-islanding circuitry and IEEE standards that ensure adequate system protection. Regulator Perspective: To ensure the grids protection, regulators will usually defer to the utilities, as they have the most experience in technical matters of protection. Best Practices: The risk of unintentional islanding can be minimized by using induction generators, by installing proper protective equipment, and by sizing and operating the facility to avoid the situation. (More specific solutions are offered below in the appropriate sections.) Texas To make sure that power is not exported to the grid, without the use of explicit nonexport protective functions, the capacity of the facility must be less than or equal to the customers verifiable minimum annual load. Even when generation levels are below this threshold, anti-islanding equipment may still be required to ensure worker and equipment safety. Avoiding unintended islands is more complicated when the facility supports load beyond the point of common coupling (PCC). Rules in Texas specify a threshold to address these concerns. Facilities cannot generate more than 15% of the total load on a single radial feeder. The total load, in this case, is defined as the maximum load of the feeder over the previous 12-month period. This threshold, expressed in equation form, is as follows: DGexport max 0.15 FeederLoad max As long as the facility meets this criteria, it is assumed that the facility will not cause the complications listed above and it can export power without incurring costly system changes. If a facility exceeds this threshold, a thorough study may be required to determine whether it could cause islanding or adverse power flows.
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4. Synchronization
Issue: In order to reconnect an islanded portion of the grid to the larger system, various parameters of the power on the separated portion must match those on the larger grid. Closing in (reconnecting) two mismatched systems can cause catastrophic damage to equipment. Utility Perspective: Synchronization matches voltage magnitude, frequency, phase rotation, and phase angle of the DG facility with the utility prior to closing the paralleling device. When systems are paralleled out of phase, very high torques in rotating machines can occur, which can damage both the utilitys system and the distributed generator equipment. Out-of-range voltages, particularly low voltages, can cause motors, semiconductors, and controls to malfunction, and may create dangerous situations for utility personnel because they can extinguish mercury vapor and fluorescent lamps. It is imperative that the alternative energy facility can parallel the utilitys system without causing a voltage fluctuation of more than +/-5% at the PCC and can meet the flicker requirements. Developer Perspective: Synchronization is mostly a major concern for synchronous generators. Induction generators may be driven to near synchronous speed by the prime mover before closing the paralleling device, but they will connect very similarly to an induction motor before actually generating a voltage of concern. Most inverters will simply start generating voltage when the power is present on the utility system. Regulator Perspective: Power from the alternative energy facility must be in synch with the utility for safe and reliable operations. Best Practices: When synchronicity is an issue, use automatic synchronization devices instead of manual devices, because manual synchronization requires a highly skilled operator and unsuccessful synchronization can be quite damaging. Types of automatic synchronizers include the following: Synch-check relays check the voltages of the utility and generator and close a contact when the voltages are within certain limits for a particular period of time. These are the least costly and simplest devices to operate and may also be used as a signal to automatically close the breaker at the PCC. Automatic synchronizing relays and electronic transducer combination packages have adjustable ranges to monitor and control the synchronism, frequency, phase or power factor, and the voltage levels of the distributed generator. They can also include dead bus relays. Manual synchronization equipment is very rare and used only on generator equipment that is less than 100 kW or as a backup to an automatic system. Electric power systems over 10 kW that could potentially be islanded and rely on manual synchronization should have, at a minimum, the following equipment: two voltmeters, two frequency meters, and a synchroscope. Both the utility and the generator can monitor the system with one of the volt and frequency meters. The synchroscope will check the phase angle between the two systems and ensure they are in phase. Synchronizing lights may substitute for the synchroscope.
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The California Interconnection Guidebook requires the following: If the short-circuit current ratio (SCCR) 0.05 (small relative to the size of local distribution system), then the generating facility can use either manual or automatic synchronizing methods. If the SCCR > 0.05 (large relative to the size of the local distribution system), the generating facility must use automatic synchronizing methods. In this case, the generating facility must be equipped with loss of synchronism protective functions. California does not allow manual synchronizing when the generating facility is large, compared to the local distribution system, because of the risk of severe voltage problems during synchronization that has the potential to damage equipment.
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95
For larger units without the new inverter technology, an isolation deviceusually an electrical disconnect switchis required and should adhere to the following guidelines: The distributed resource (DR) owner should use an external, visible, gang-operated disconnect switch that meets all applicable standards and is readily accessible, at all times, for operation and locking by the utility. The switch should be externally operable without exposure to live parts. A power-operated switch should also have manual capabilities (can be opened manually). The disconnect switch should be within 10 feet of the PCC or between the DR and the PCC with a map showing the location of the switch permanently mounted near the PCC. The switch must be rated for the DR facilitys voltage and current requirements. The switch must be clearly marked Disconnect Switch in large permanent letters. If the switch is energized from both sides, it must have a marking indicating such. The switch should be installed, owned, and maintained by the owner of the DR facility. The operation of this switch is the utilitys responsibility. However, the utility must give appropriate notice defined in its contractto the facility prior to operation. If the utility concurs, a draw-out circuit breaker can be used as an isolation device if it has pad locking at the draw-out position. In Texas, various types of disconnecting devices are required.
2 MW 10 MW 25.212(e) (3)(D)
Interrupting devices (capable of interrupting maximum available fault current) Interconnection disconnect device (manual, lockable, visible, accessible) Generator disconnect device
either redundant or listed devices.
[4]
X X
X X
X X
X X
X X
X X
Notes: kW = kilowatt; MW = megawatt; PUCT = Public Utility Commission of Texas; X = Required feature; [4] = Systems exporting shall have
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6. Power Quality
Issue: Power quality is a major technical concern for utilities and their customers. Clean power is necessary for the proper operation of electronic equipment and appliances. Dirty power can damage equipment, cause equipment to malfunction or fail, and/or shorten equipment life. Some power quality issues include transients, harmonics, power factor problems, direct current (DC) injection, and voltage fluctuations. Transients are short, nonrepeating fluctuations in voltage or current. These are typically created by switching or other momentary disruptions. Harmonics, on the other hand, repeat in each cycle. Harmonics are typically created by nonlinear loads that switch current on and off. This discontinuous current draw is independent of the voltage and creates overlapping sinusoids that can deform the fundamental waveform.
Power factor is the ratio of true electric power (watts) to apparent power (kilovolt-ampere [kVA]). A power factor of less than (or more than) 1 means the current and voltage waveforms are out of synch. DC injection occurs when direct current is injected into an alternating current (AC) system by nonrotating generators. This can damage transformers. The problem can be prevented by proper inverter design. IEEE 1547 limits DC injection to 0.5% of the inverters current output. Voltage fluctuations reveal themselves in the form of flicker, or the periodic flickering of incandescent light sources. This typically occurs when cogeneration plants start up or shut down. IEEE 1547-2003 allows for a 5% voltage fluctuation, but also notes that regardless of the standards, cogeneration operations should not create objectionable flicker for other customers. Utility Perspective: Utilities are concerned about voltage and frequency disturbances, voltage flicker, and waveform distortion, so they require that cogeneration facilities install over/undervoltage and over/underfrequency relays and other protective devices. Developer Perspective: All these protective devices are unnecessary and too costly. New technology, notably in the generators themselves, meets all power quality requirements. Inverter manufacturers and others design their products according to IEEE standards (519-1992). Utilities simply do not have the knowledge or experience with the new equipment to recognize it is safe to interconnect to their system without additional protective devices. Regulator Perspective: Power quality must be maintained at reasonable levels.
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Best Practices: Aspects of power quality, such as harmonic distortion, voltage sag, and flicker, are discussed in more detail in their appropriate sections. Overall, though, two points are repeatedly made in interconnection plans. First, cogeneration facilities shall in no way degrade the reliability or power quality of the distribution system. Second, it is the utilitys responsibility to make sure the cogeneration facility is connected in a way that will prevent power quality problems. The utility has the obligation to serve all its customers, and it must therefore make sure that generators connected to their system do not interfere with the power quality or operation of the system. IEEE Standard 929-2000, Recommended Practice for Utility Interface of Photovoltaic (PV) Systems provides guidance to insure compatibility of photovoltaic equipment that is connected in parallel with the electric utility. By compatibility, IEEE means ensuring personnel safety, equipment protection, power quality, and utility system operation.
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7. Monitoring Provisions
Issue: If an alternative energy facility is exporting power to the utility, utilities must monitor the status of the generator to properly operate the system and to protect workers. Monitoring is less necessary when the facility does not export power to the utility and when reverse power relaying and/or power inverter logic prevents power export. Specific types of monitoring equipment will be discussed in their appropriate sections below (e.g., frequency, voltage, and harmonics). Utility Perspective: Facilities must be monitored for their connection status, real power output, reactive power output, and voltage at the point of connection to ensure personnel safety and to avoid operating problems, especially if the facility is exporting power to the utility. Developer Perspective: Utilities often insist on performing the monitoring themselves and since there is a fee associated with the monitoring, it increases the cost to develop the project. Furthermore, utilities are not always familiar with the equipment and insist that familiar and more expensive monitoring equipment be used. Utilities do not realize that most modern alternative energy facilities have multifunction microprocessor-based control systems with the capacity to log and store data around fault conditions. Regulator Perspective: Monitoring of equipment is important to maintain system integrity and is included in the contract or tariff between the developer and the utility. Best Practices: No monitoring is required for units under 200 kW. Units between 200 kW to 1 MW do not require monitoring if protective relaying prevents the facility from injecting energy into the utilitys network. All units over 1 MW require monitoring. The monitoring arrangement should include remote terminal units that provide supervisory control and data acquisition (SCADA), communications equipment, telephone circuit protection equipment, transducers, potential and current transformers, electrical energy and demand information, reactive power information, voltage information, and alarms. The monitoring should display two seconds of data from before and after any fault and should keep data for the past 10 fault conditions. The utility should also be able to receive signals for remote monitoring of the isolation device status and normal voltage and frequency levels and notice that the distributed generator is unable to connect to the utility network.
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8. Frequency
Issue: Maintaining frequency within acceptable limits is critical to the proper operation of the grid. Higher or lower frequencies can lead to improper operation of customer equipment. Programmable logic controllers can malfunction and cause dangerous and/or costly problems in plants. Changes in frequency even for small parts of AC waveform can cause catastrophic damage to transformers and capacitors, leading to their failure. In AC systems, the impedance of nonlinear loads is dependent on frequency. Therefore, changes in frequency can change system loading and therefore affect voltage levels. Utility Perspective: All sources of power must be able to maintain proper frequency levels. To ensure that proper frequencies are maintained, utilities use under/overfrequency sensing devices to de-energize circuits that threaten system frequency stability. Developer Perspective: Facilities that are less than 30 kW have less impact on system operations and reliability. These facilities can also quickly disconnect from the utility. Furthermore, facilities over 30 kW actually improve the utilitys reliability and should receive some credit for this function. Regulator Perspective: Frequency changes that can affect system operation or customer equipment must be avoided. Best Practices: In New York, the cogenerating facility must have, as a minimum, an automatic disconnect device that is operated by over/undervoltage and over/underfrequency protection. For three-phase installations, the over/undervoltage protection should be included for each phase and the over/underfrequency protection on at least one phase. All phases of a generator or inverter must disconnect when voltage or frequency problems are detected. In general, frequency and voltage trip pickup settings for induction generators and static power converters can be relaxed by the utility if they create too many nuisance trips for the facility. Frequency trip points should be adjustable in increments, with a setting resolution of 0.5 hertz (Hz) or better. In Texas, cogenerating units must not deviate more than +0.5 Hz or 0.7 Hz from a 60 Hz base. The generator must automatically disconnect its equipment from the utility system within 15 cycles if these limits cannot be maintained. The customer may reconnect when the utility system voltage and frequency return to normal range and the system is stabilized. Trip times for frequency fluctuation are based on a 60 Hz system and the assumption that there is a relatively low penetration of alternative energy facilities. The generator should follow the voltage and frequency imposed by the utility and should disconnect under abnormal conditions as defined in the table below. Since the generator is not regulating voltage or current, the allowable operating ranges are relatively wide. If the facility is separated from the utility (tripped offline) due to a voltage or frequency issue, the facility can reconnect once the utility voltage and frequency have returned to normal and have stabilized for two minutes (or a shorter time if such an agreement is in place).
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Source: Public Utility Commission of Texas Distributed Generation Interconnection Manual 05/01/02, p. A7-5.
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9. Voltage
Issue: On any utility grid, set voltage levels must be maintained to prevent damage to utility and customer equipment. Current levels rise or fall depending on the demand for power, but voltage levels are constant. Utilities have equipment to detect and de-energize circuits that have voltages above or below acceptable levels. Utility power systems are designed to deliver power from main circuits to outlying areas. When cogeneration plants are added, power may flow back along feeders. To address this fundamental change, detailed engineering analysis may be needed. For example, voltage regulators are placed on lines to control voltage levels, which typically decline the further the line extends away from a substation. But, if a cogeneration plant is injecting power into the utilitys system, voltage levels near the end of a line may be higher. As a result, voltage protection schemes may need to be modified to protect the utility and maintain voltage levels. Utility Perspective: Correct voltage levels must be maintained. Voltage sensing equipment is used to identify voltage problems. Developer Perspective: Small generating plants and plants that never or rarely export power to the utility will have minimal or no effect on the utility. Complicated studies can be expensive and delay installation of generator facilities. Regulator Perspective: Proper voltage levels must be maintained, but studies and system modifications are not needed in all situations. Best Practices: There are several ways to look at the issue of voltage stability. The National Rural Electric Cooperative Agency (NRECA) Guide to IEEE 1547 focuses on voltage set-points, voltage monitoring, and concerns about nuisance tripping. If other fault detection equipment is in place, the abnormal voltage protection trip times can be set longer than default values, which will reduce nuisance trips. Voltage Set-Points Voltage set-points can be fixed or field-adjustable. Field-adjustable set-points give the utility operator some discretion. Set-points cannot be changed or modified by either party at any time. Distribution resources with a peak capacity of less than or equal to 30 kW will have fixed or field-adjustable setpoints. Distribution resources more than 30 kW will have field-adjustable set-points.
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Voltage Detection The voltages shall be detected at the PCC, if any of the following occurs: Aggregate capacity of the facility is less than or equal to 30 kW; The DRs interconnection equipment is certified to pass a nonislanding test for the utilitys system; or If export of real or reactive power is not allowed and the aggregate capacity is less than 50% of the utilitys minimum annual integrated electrical demand for a 15-minute time period. Self-excited induction generators should have an overvoltage trip level below the equipment insulation level with an instantaneous trip. For transformers connected to the utility system by grounded wye-wye or single-phase installations, phase to neutral voltage shall be detected. For all other transformer interconnections, each phase-to-phase voltage shall be detected.
Interconnection Type Single-phase Three-phase, three-wire Four-wire grounded Three-phase, four-wire grounded Measure Phase-to Ground X X X Measure Phase-to-Phase X
Three-phase facilities must have over- and undervoltage detection on all three phases. In Australia, renewable energy facilities may have more latitude when it comes to voltages at the PCC. Steady-State Voltage The connection of wind power generation to a transmission network can affect voltage levels at the point of common coupling. Utilities require that this steady-state voltage be within certain percentage limits of the normal voltage to ensure that sensitive equipment not fail, malfunction or trip. In Australia, these steadystate limits range from 6% to 10%, depending on the value of the normal voltage and whether or not the location is rural, according to the Distribution Code 2006 and the Victorian Electricity System Code. There are a number of methods for controlling steady-state voltage, which include: on-line tap changing (OLTC) transformers; switched capacitors and reactors to provide reactive power support; or flexible alternative current transmission system (FACTS) devices, such as static VAr compensators (SVCs), synchronous condensers or static compensators (STATCOMs). As wind power generation output can vary widely and at times relatively quickly, the impact on local voltages needs to be managed within allowable ranges, and traditional tap changer transformers are generally too slow to compensate. (Capacity of the Victorian Electricity Transmission Network to integrate Wind Power, prepared by Vencorp December 2007, p. 53.) In Texas, trip times for frequency fluctuation are based on a 60 Hz system and the assumption that there is a relatively low penetration of alternative energy facilities.
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The generator should follow the voltage and frequency imposed by the utility and should disconnect under abnormal conditions as defined in the table below. Since the generator is not regulating voltage or current, the allowable operating ranges are relatively wide. If the alternative energy facility is separated from the utility (tripped offline) due to a voltage or frequency issue, the facility can reconnect once the utility voltage and frequency have returned to normal and have stabilized for two minutes (or a shorter time if such an agreement is in place).
Trip Time[2] Voltage[1] <84 84108 108126 126132 >132 Seconds 0.166 30.0 & 0.166 Normal Operating Range 30.0 & 0.166 0.166 1800 (Delay) & 10 (Trip) 10 (Delay) & 10 (Trip) Cycles 10 (Delay) & 10 (Trip) 1800 (Delay) & 10 (Trip)
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<http://www.wecc.biz/documents/library/TSS/Voltage%20Ride-Through%20White%20Paper_6-13-07.pdf>.
Wind Power and Grid Reliability. <http://www.amsc.com/newsroom/documents/AMSC_Wind%20Power%20and%20Grid%20 Reliability_0208.pdf>.
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The various fault protection devices and the coordination between them should be reviewed to minimize the amount of the system that must be isolated for faults. Coordination works best when the protective devices have similar operating characteristics. If the facility relies on the utilitys fault detection devices, communication from these devices to the facilitys interconnection system is critical and can be achieved with a dedicated communication channel, like the ones used in a direct transfer trip scheme. However, for small facilities with low fault-current contributions, the cost of adding a dedicated communication channel is prohibitively expensive. In this case, the cogeneration facility can use an indirect detection method. The utility detects a fault and islands the cogeneration facility and the fault. The alternative energy facility then detects the island and stops energizing the circuit. The main difference between the direct and indirect fault detection is the time lag (up to two seconds) for the island or open-phase detection. Generator/Inverter The type and setting of the interrupting device depend on the nature of the alternative energy facility, the type of technology used, and the method of integration with the utilitys system. Synchronous Interconnections A synchronous generator requires special protective equipment to isolate it from the utility under fault conditions. Synchronous generators can produce fault currents for extended periods of time and they can be as high as six times the generator full-load current. Protective relays to detect multiphase faults should be located on the generator or generator breaker. The relays can be either voltage-controlled or voltage-restrained overcurrent relays. Induction Interconnections Whether an inductor can provide fault current during a sustained fault depends on how it is configured and excited. If the only source of excitation is the utility system, the induction generator will not be able to produce phase fault current, but may be able to supply phase-to-ground current. If the VArs (reactive volt-amperes) are supplied by the induction generator, it may supply phase fault current and will likely require protection like that used for synchronous generators. Inverter Interconnections Inverters are unable to supply excessive currents under fault conditions, and fault detection schemes that rely on overcurrent principals are not effective. The facilities with inverter interconnections must use other detection schemes to isolate from the fault such as voltage-sensing circuitry within the inverter or detection of off-frequency operation.
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Best Practices: IEEE 1547 requires that the alternative energy facility must stop energizing any utility circuit to which it is connected, if the utility de-energizes the circuit. This requirement allows the alternative energy facility to ignore faults seen on other circuits and relieves it from responding to faults the utility does not see. Synchronous Interconnections If the fault involves multiple phases, the synchronous interconnections can have fault currents for extended periods of time. Induction Generators Induction generators will usually cease to produce current during a fault due to the loss of VArs. Transfer Trips If the control devices at the distributed resource cannot separate from the feeder prior to the feeder reclosing, additional protection may be required. Direct transfer trips, undervoltage permissive relaying at the feeder breaker, or automatic line sectionalizing devices can all be used. Synchrocheck relaying is another option; however, it can increase the reclosing time, so it might not be a good option for all facilities. Feeder Reconfiguration Many utilities use loop designs for their feeders by joining two feeders with a normally open recloser. This configuration creates problems when connecting distributed resources as coordination must now be maintained at all feeders, raising the price for the developer. One way to avoid the additional cost, while protecting feeders, is to prohibit the facility from generating on the alternate feeders. Reclosing Scheme Modification Utilities can modify their reclosing schemes to ensure the alternative energy facility has been isolated prior to reclosing. One way to do this is by controlling the circuit breakers and reclosers by monitoring the voltage on the load side of these devices. In this way, the utility can determine if voltage is present and delay the reclose until it detects next-to-zero voltage. Voltage monitors are necessary only if the alternative energy facility could possibly energize an unintentional island prior to the first attempt to reclose. A study will be needed to determine the utilitys ratio of peak to minimum load to compare it with the size of the alternative energy facility. In general, rural lines in the United States typically have a 5:1 ratio of peak to minimum load, suburban lines are 4:1, and urban lines are 3:1. The utility will then apply a safety factor so that the remaining load isolated with the alternative energy facility is two to three times more than the maximum generation, which will lead to rapid overload of generation and operation of protection.
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13. Grounding
Issue: Incorrect grounding can cause overvoltages or disrupt the coordination of the ground fault protection of the utilitys system. The concern is that during temporary islanding conditions, the generating facility may have damaging phase-to-ground voltages during the time the island forms and when it is detected and de-energized by the facility operator. If a generation island that serves customers on a faulted system develops, customers on unfaulted phases could see massive voltage increases, which could damage customer equipment. Utility Perspective: Utilities also want to be sure the cogeneration facility can detect ground faults and avoid resulting problems. Developer Perspective: An interconnection that is effectively grounded can significantly desensitize the ground fault protection on the utility distribution system. Regulator Perspective: Proper and coordinated grounding schemes are necessary to ensure safe and reliable operation. Best Practices: Grounding practices can be quite complex, but there are several good sources of information. The Application Guide for Distributed Generation Interconnection: 2006 Update, The NRECA Guide to IEEE 1547 discusses grounding at length. Some recommendations follow. For multigrounded neutral systems, all facilities large enough to sustain an island must be an effectively grounded source, as this design will limit voltage swells during a fault. For interconnections to primary feeders of three-wire grounded or ungrounded systems, there should be no metallic path to ground from the primary feeder except through suitably rated surge arresters, high-impedance devices used only for fault detection purposes, or both. For installations with both parallel and isolated operating modes, the grounding system should be designed to be effective in both modes as per IEEE 446-1995. Consolidated Edisons Handbook of General Requirements for Electrical Service to Dispersed Generation Customers also provides specific guidelines on pages 21 and 22: In order to assess the generators grounding as it appears to the [utilities] distribution system the generator grounding design must include details describing the neutral grounding arrangement of the generator and the winding configuration/grounding arrangement of any interface transformers. In cases where the customer wishes to use its existing step-down transformer that has been serving their load as the interface to the [utility] distribution system, it is important to recognize that an existing transformer that is perfectly suitable for serving load at a site may not always be satisfactory to serve as a generator interface transformer because it may not provide proper grounding with respect to the company distribution system. The installation of a generator at a customer site may necessitate changing out the existing transformer with a new transformer that has appropriate grounding or adding a second transformer that is meant just for the generator.
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Another important consideration is that the generator installation, depending on where it ties into the customers system, will need to provide grounding that complies with all applicable requirements of the National Electrical Safety Code (NESC), National Electric Code (NEC) and the [utility]. The proper method of generator system grounding to be used with a particular power system interconnection point is unique for each installation. Table [below] indicates the [utilitys] distribution system grounding methods.
Phase / #Wire
Transformer Connection Primary / Secondary Delta / wye-ground Delta / wye-ground Wye-ground / wyeground Delta/ Wye** Delta / Wye** Delta / Wye **
Grounding Method Multigrounded Solid neutral Multigrounded Solid neutral Multigrounded Solid neutral Unigrounded Unigrounded Unigrounded
3 Phase / 4 Wire 3 Phase / 4 Wire 3 Phase / 4 Wire 3 Phase / 4 Wire 3 Phase / 4 Wire 3 Phase / 4 Wire
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Equipment Requirements
B. Equipment Requirements
Issue: The equipment necessary to successfully operate and integrate an alternative energy facility with a utility grid varies from site to site, but all aspects of a facilitys installation can be greatly simplified when standard equipment is used. Utility Perspective: Utilities require that the developers equipment meet certain standards (IEEE, National Electrical Code, etc.), but some leave the overall design of the facility up to the developer. Other utilities create specific lists of the types of equipment the facility must have, usually based on generator output. Once a list of required equipment is created, the utility can proceed with more confidence that the system will work reliably. Developer Perspective: While developers may not agree that all the listed equipment is really necessary, all developers will be on equal footing as they all have to have the same types of devices. Regulator Perspective: Using a standard equipment list simplifies the application/approval process and provides an incentive to developers to use pre-approved equipment. For example, the Public Utility Commission of Texas specifies what type of interconnection equipment is required for generators based on output which eliminated arguments about necessary equipment and simplified engineering plans. Distributed Generation Interconnection Requirements
Closed Transition Feature PUCT Rule Reference 10 MW 25.212 (g) SinglePhase 50 kW Three-Phase Capacity 10 kW 10 kW 500 kW 25.212 (e)(3) (B)
2 MW 10 MW 25.212 (e)(3)(D)
Interrupting devices (capable of interrupting maximum available fault current) Interconnection disconnect device (manual, lockable, visible, accessible) Generator disconnect device Overvoltage trip
[4]
X X X
X X X
X X X
X X X
X X X
X X X
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Undervoltage trip Over-/underfrequency trip Synchronizing check (A: Automatic, M: Manual) Ground overvoltage or overcurrent trip Reverse power sensing If exporting, power direction function may be used to block or delay underfrequency trip Automatic voltage regulator Telemetry/transfer trip
X X A [2]
X X A/M [1]
X X A/M [1]
X X A [1]
[1] X
[1] Required for facilities with stand-alone capability. [2] May be required by TDU; selection based on grounding system. [3] Required, unless generator is less than applicant minimum load, to verify nonexport. [4] Systems exporting shall have either redundant or listed devices. Notes: kW = kilowatt; MW = megawatt; PUCT = Public Utility Commission of Texas; X = Required feature; blank = not required. Source: PUCT, http://www.puc.state.tx.us/electric/business/dg/dgmanual.pdf, p. 3-3.
Some interconnection requirements list specific manufacturers and devices that meet requirements. For example, New York State has a list of certified equipment that must meet all functional requirements of IEEE Std. 1547 and must be protected by utility-grade relays using utility-approved settings.
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Equipment Requirements
Capstone Turbine 65 7/26/06 Underwriters Laboratories, Nemko 65kW, 480V, Three-Phase Microturbine
Source: http://www.dps.state.ny.us/08E1018/SIRDevices.pdf.
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Equipment Requirements
If the alternative energy facility has a nonislanding inverter, an isolation device is not necessary. For projects less than 10 kW, such as small PV units, the isolation device requirement can be met by the meter. For larger units without the new inverter technology, an isolation deviceusually an electrical disconnect switch should adhere to the following guidelines: The facility owner should use an external, visible, gang-operated disconnect switch that meets all applicable standards and is readily accessible for operation and locking by the utility at all times. The switch should be externally operable without exposure to live parts. If the switch is power operable, it should also be able to be opened manually. The disconnect switch should be within 10 feet of the PCC or between the facility and the PCC with a map showing the location of the switch permanently mounted near the PCC. The switch must be rated for the DR facilitys voltage and current requirements. The switch must be clearly marked Disconnect Switch in large permanent letters. Also, a warning label must be installed for the benefit of firefighters. If the switch is energized from both sides, it must have a marking indicating such.
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The switch should be installed, owned, and maintained by the owner of the facility. The operation of this switch is the utilitys responsibility. However, it must give appropriate noticedefined in its contractto the facility prior to operation. If the utility concurs, a draw-out circuit breaker can be used as an isolation device if it has pad locking at the draw-out position.
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Equipment Requirements
2. Paralleling Device
Issue: Parallel operation occurs when the generating facility produces AC power while electrically interconnected with the utility distribution network. A parallel connection allows the customer to serve its load either with its own generator, with utility power, or from both sources simultaneously. To operate in parallel, the generating facility must match the voltage and frequency of the utilitys distribution system. Most distributed generators and all renewable energy facilities, which can be either exporting or nonexporting facilities, will operate in parallel. Nonexporting facilities consume all energy created to meet the customers load, while exporting facilities send some power to the grid. The paralleling device is located at the PCC where the two systems meet and coordinates with other protective devices to ensure that voltage and frequency do not deviate from the utility distribution system. Utility Perspective: In order to protect the system from damage due to voltage, a paralleling device must be installed. The device should have consistent opening and closing times to limit damage and provide better coordination with the utility. A synch-check device must be installed on synchronous generators. Developer Perspective: Paralleling equipment is necessary only when synchronous generators are used. Regulator Perspective: Paralleling devices are critical to the safe operation of the system and must be carefully selected so that they meet all requirements. Best Practices: The paralleling device should have consistent opening and closing times and must be able to withstand 220% of the rated voltage across the open contacts. On synchronous generators, a digital, auto paralleling system should be in place and it should be supervised by synch-check relays.
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5. Telemetering/Communication Channels
Issue: Telemetering is the electronic transmission of real-time metering data to the utility. For larger generating facilities, utilities may require alternative energy facilities to communicate real-time information about generator status. Utilities want this information to better assess the ongoing operation of their system. Utility Perspective: This information is necessary to properly integrate the alternative energy facility into the grid. Since telemetering is a necessary part of cogeneration, the developer should pay for it. Developer Perspective: Telemetering is just another unnecessary expense as there are other ways to collect operations data and properly assess charges. Regulator Perspective: Whether or not telemetering is required varies, and the issues (cost, ownership, access to, and operation of equipment) are complicated. Best Practice: For large generators, telemetering may be required. SRP requires telemetering any time a transfer trip scheme is necessary. This includes generators (or an aggregate of generators) that can supply the minimum load of the feeder or support an islanded section of the feeder. Telemetering is also necessary if the generator sells power to the grid or is remotely controlled or dispatched by SRP. Likewise, California may require telemetering for large generators, allowing the utility to better monitor their impact on the distribution system.
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Equipment Requirements
6. Net Metering
Issue: Net metering is a term used to describe the netting of excess electricity that a facility generates with that of those electrons consumed in a contractual relationship with the utility. If a facility generates more electricity than it uses, the electricity is credited to the facilitys account. Utilities may or may not pay for net excess power provided to the grid. In California, only solar electric and wind generators less than 1 MW in size are eligible for net metering. In addition, there is a common misconception that the utility will pay customers for the amount of the excess energy. Instead, excess electricity from the PV system is banked with the utility, effectively spinning the customers meter backward. When the customer consumes more electricity than is produced (i.e., takes electricity from the grid), the meter spins forwardso the utility grid acts as a bank for the energy. The transaction occurs at the retail rate or the appropriate TOU rate for customers with TOU meters, which record their time-of-day usage (and thus they are billed for energy at different rates on that basis). At the end of a yearly billing cycle, any net excess energy sent to the utility system is zeroed out and credited to the utility; the customer is not paid for this energy. Some utilities, like SMUD, do pay for excess power. SMUD cashes out net power supplied to the grid by some customers. These customers are paid a wholesale rate. Note that SMUD is not under Californias net metering law. Utility Perspective: Standard net metering programs can be created to simplify the billing/accounting process. Also, net metering is a subsidized program and therefore should have defined limits. Developer Perspective: Net metering is desirable and should be offered for all facilities, not just renewable energy sources. Regulator Perspective: Net metering encourages the installation of cogeneration, and standard contracts can be created. Best Practices: Different utilities deal with this issue in different ways. Having a net metering standard will simplify the situation. West Bengal Net metering has been adopted for rooftop solar PV systems in West Bengal. The West Bengal Electricity Regulatory Commission allows net metering in its latest order on solar power. The order states that the slab tariff shall be applicable for the net energy supplied by the licensees in a billing period if the supplied energy by the licensees is more than the injected energy by the roof-to-solar PV sources of the consumers, after taking into account the amount of energy carried forward from an earlier billing period of that financial year. The regulator may consider mandating the installation of a generator meter or import-export meter to determine compensation payable to the investor. Due to the lower tariffs for residential consumers in comparison to commercial and industrial tariffs, net metering needs to be studied in detail as an option for such consumers in the future. SDG&E 100% of total annual consumption of energy can be stored on the grid. At this time, any stored surplus energy cannot be sold back to SDG&E at the end of the 12-month cycle. This annual program automatically renews at the end of each 12-month cycle.
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Equipment Requirements
SCE Generating facility customers may be required to install net generating output meters to evaluate, monitor, and verify output; determine applicable standby and nonbypassable charges as defined in SCEs tariffs; satisfy applicable California Independent System Operator reliability requirements; and plan and operate distribution systems. However, a generating facility does not need to install these meters if less intrusive and/or more cost-effective options are available, as long as the meter can provide the appropriate generator data to SCE. The generating facility may opt to have SCE estimate its load data in accordance with SCEs applicable tariffs to determine or meet applicable standby and nonbypassable and other applicable charges and tariff requirements. However, if a generating facility objects to SCEs estimate, the customer may elect to install the net generating output meters, or have SCE install one at the customers expense. Whatever meter is chosen, it must meet the SCEs Rule 22 requirements. If it does not, SCE has the right to install a utility-owned net generating output meter at the customers expense. Some things to consider when choosing a meter, especially the more expensive net generating output meter: Data requirements in relation to the need for information Cogenerators decision to install equipment that adequately addresses SCEs operational requirements Accuracy and type of required metering consistent with purpose of collecting data Cost of metering relative to the need for and accuracy of the data The generating facilitys size relative to the cost of the metering/monitoring Other means of obtaining the data (e.g., generating facility logs, proxy data, etc.) Requirements under any interconnection agreement On a quarterly basis, SCE reports to the California Public Utilities Commission and explains its rationale for requiring net generating output meters at each facility, along with the size and location of the facility.
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<http://www.puco.ohio.gov/emplibrary/files/media/Publications/Fact_Sheets/generating%20your%20own%20electricity%20-%20 advice%20for%20getting%20started.pdf>.
The NRECA Guide to IEEE 1547. <http://www.nreca.org/Documents/PublicPolicy/DGApplicationGuide-Final.pdf>.
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Equipment Requirements
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Equipment Requirements
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Testing Requirements
C. Testing Requirements
Issue: When an alternative energy facility is being connected to the utility system, four kinds of testing are required: Type testing makes sure the equipment meets specifications. Production testing includes voltage and frequency variation tests. (See UL1741, Manufacturing and Production Tests, Section 68.) Commissioning testing is done the first time the facility operates in parallel with the utility system or when equipment or software that could affect the operation of the interconnection is changed. The utility may require that its representative is present during commission testing. This testing can include (if applicable) Over- and undervoltage testing Over- and underfrequency testing Nonislanding function testing Nonexporting function testing Testing inability to energize dead line Testing time delay on restart after utility source is stable Utility system fault detection testing Testing synchronizing controls Other testing required by the interconnection agreement Periodic testing is specified by the equipment manufacturer and must be performed every four years or more frequently. Utility Perspective: Testing is critical to ensure the safe and reliable operation of the system. Precertified equipment reduces the number of tests the utility must observe, reduces liability, and streamlines the approval process. Developer Perspective: In order to keep costs down, testing should be kept to a minimum. Regulator Perspective: Appropriate testing must be performed to ensure the stability of the grid but should be kept to a minimum cost. Best Practices: Different utilities have their own specific testing requirements, but most are consistent with IEEE 1547. SRP, for example, requires the protective devices to be calibrated and field-tested by qualified personnel prior to witness testing. Results of the field test have to be sent to SRP at least five days prior to the witness test.
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Testing Requirements
Witness/Commissioning Test Requirements: On the day of witness testing, the Customer shall demonstrate, in the presence of SRP personnel that: (a) Relay settings are consistent with the written calibration tests previously provided by the Customer. (b) Operation of each protective output contact results in the desired operation of the appropriate protective device (usually a breaker or contactor). For static inverters rated less than 50 kW, a triptiming test with simulated loss of voltage will be sufficient. (c) The [distributed generator] DG is capable of synchronizing with the SRP grid. (d) The DG properly disconnects from the SRP system under simulated disturbance conditions. (e) SRP remote visibility or control of any devices associated with the DG function[s] properly, if applicable. (f) Settings of programmable logic devices are correct, if applicable. (Page 9-1, SRP Interconnection Guidelines for Distributed Generators, December, 2000)
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ii.
4. Applicant and electrical corporation enter into a generation interconnection agreement: The utility provides the applicant with an executable version of the interconnection agreement, net energy metering agreement, or PPA (whichever is appropriate for the technology used and its mode of operation). 5. Applicant installs or constructs the generating facility to interconnect with the electric grid: The applicant interconnects in accordance with the provisions of the interconnection agreement, net energy metering agreement, or PPA.
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6. Applicant arranges for and completes testing of the distributed resource (DR) device: Before operating in parallel with the electric grid, the DR device and associated interconnection equipment must be tested to ensure compliance with the safety and reliability provisions of the CPUC-approved rules and regulations. 7. Electrical corporation authorizes interconnection: The applicants DR device may commence parallel operation with the utilitys electric grid. The flow chart below outlines the initial review process for applications to interconnect DR devices.
YES
YES
NO
NO
SUPPLEMENTAL REVIEW
YES Starting Voltage Drop Screen Met? YES kVA 11 of Less? NO Meets short Circuit Current Contribution Screen? YES YES Meets Line Configuration Screen? YES NO NO NO
YES
QUALIFIES FOR INTERCONNECTION SUBJECT TO SUPPLEMENTAL REQUIREMENTS
NO
UTILITY PROVIDES COST ESTIMATE AND SCHEDULE FOR INTERCONNECTION STUDY
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A full coordinated interconnection review may not be needed if The aggregate generation is less than 50 KW on a single-phase branch of a distribution circuit; or The aggregate generation is less than 150 KW on a single three-phase distribution feeder; or The proposed installation is not interconnected to a network system; or The proposed generator has no power export capability. Note: Units without export capability must either be sized for 50% or less of peak facility load or be equipped with reverse power relays to prevent power export into the PSE&G system. Framework for standardized interconnection study costs for net metered qualified systems that do not meet the criteria outlined above: For requests to interconnect single-phase systems on single-phase branches ( total aggregate generation is greater than 50 KW but less than or equal to 100 KW) or single-phase and three-phase systems on three-phase feeders (total aggregate generation is greater than 150 KW but less than or equal to 300 KW), the study cost may be up to, but not exceed, the cost of three man-days of study labor at the current PSE&G loaded labor rate. Requests to interconnect any generation up to 100 KW for network service installations may incur a maximum study cost based on five man-days of study labor at the current PSE&G loaded labor rate. Study costs for proposed installations that fall outside of the standards will be estimated for the facility owner before any work is performed and billed at PSE&Gs loaded labor rate. 5. Applicant Commits to PSE&Gs Coordinated Interconnection Review of the Project Design. If discussions with the applicant, review of the application, or review of the proposed design indicate a major impact on the interconnected PSE&G facilities, the applicant will be required to Provide PSE&G with a cost-based advance payment for the PSE&G review of the proposed generator. Submit a detailed design package. Confirm with PSE&G a mutually agreeable schedule for the project based on the applicants work plans and the discussions with the utility. Additional exchanges of information between PSE&G and the applicant may be required to complete the design package according to PSE&Gs technical requirements for interconnection. 6. PSE&G Review of Applicants Design Package PSE&G will Conduct a review of the design package to ensure that the plans/design satisfy the technical requirements for interconnection. Upon completion of the review, notify the applicant of its final acceptance of the applicants design or an explanation of the technical requirements the design fails to meet. For type-tested systems, will complete its initial review in 10 business days.
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7. Applicant Commits to PSE&G Construction of PSE&Gs System Modifications The applicant will Execute a standardized interconnection agreement or commit in writing to the applicable tariff requirements. Provide PSE&G with an advance payment for PSE&Gs estimated costs associated with system modifications, metering, and on-site verification. 8. Project Construction The applicants facility will be constructed in accordance with PSE&G-accepted design. PSE&G will commence construction/installation of system modifications and metering requirements. 9. The Testing of the Applicants Facility in Accordance with PSE&Gs Technical Requirements The applicant will develop a written testing plan to be submitted to PSE&G for review and acceptance. This testing plan will be designed to verify that the facility complies with the applicants PSE&G-accepted drawings and details of the interconnection. The final testing will be conducted at a mutually agreeable time, and PSE&G shall be given the opportunity to witness the tests.
<http://www.bakernet.com/NR/rdonlyres/0251961F-DACD-4C9E-9415-A7A24A28485C/44792/RenewableenergyinIndia.pdf>.
(pages 6 and 80).
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Dispute Resolution
A. Dispute Resolution
Issue: Utilities, developers, and alternative energy facilities often have disputes over payments, operations, and interconnections. Utility Perspective: A formalized procedure to address disputes is necessary to ensure fairness and address issues quickly. Developer Perspective (Operator of facility): A formalized procedure to address disputes is necessary to ensure fairness and address issues quickly. Regulator Perspective: A formalized procedure to address disputes is necessary to ensure fairness and address issues quickly. Best Practices: California Rule 21 states that the regulatory commission has the authority to interpret, add, delete, or modify any agreements between the utility and the renewable energy/cogeneration facility to implement the tariff and to resolve disputes over the renewable energy/cogeneration facilitys performance of its obligations under its tariffs. For disputes over the facilitys performance, the procedure begins with a letter from the aggrieved party to the other party with all relevant known facts, the specific dispute and the relief sought, and notice that it is officially opening a dispute. Each party must designate a representative responsible for reviewing this dispute within seven calendar days. If no resolution has been reached within 45 calendar days of the original dispute letter, either party can request an additional 45 calendar days to continue negotiations or request the commission mediate. With agreement from both parties, mediation can be through a third party with costs shared equally between both parties. If the dispute is not resolved within 90 calendar days, either party may file a formal complaint with the commission. Minnesota Minnesotas statute states that either party may request that the commission decide the dispute but that the burden of proof is on the electric utility. If the utility prevails and the renewable energy/cogeneration facilitys claims were made in bad faith, or were a sham or frivolous, the renewable energy/cogeneration facility must pay the utilitys costs and attorneys fees. However, if the renewable energy/cogeneration facilitys claims were reasonable, it will not have to pay the utilitys costs even if the utility prevails. If the renewable energy/cogeneration facility prevails, the utility must pay its costs and attorneys fees.
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Concluding Comments
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Glossary of Terms
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Glossary of Terms
Distribution service: All services required by, or provided to, a customer pursuant to the approved tariffs of the utility other than services directly related to the interconnection of a facility. Distribution system: All electrical wires, equipment, and other facilities owned or provided by the utility, other than interconnection facilities, by which the utility provides distribution service to its customers. Electric utility (utility): A person or authority that owns or operates equipment or facilities to produce, generate, transmit, distribute, sell, or furnish electricity for compensation; excluded from this definition are municipal corporations, power generation companies, exempt wholesale generators, power marketers, electric cooperatives, and retail electric providers. The utility can be vertically integrated or unbundled. Facility: A grid-connected electrical generating installation consisting of one or more on-site generation units. In this handbook, the facility can be renewable energy, distributed generation, cogeneration, or combined heat and power. Field testing: Testing performed in the field to determine whether equipment meets the utilitys requirements for safe and reliable interconnection. Generator: A device converting mechanical, chemical, or solar energy into electrical energy, including all of its protective and control functions and structural appurtenances. One or more generators comprise a facility. Harmonic distortion: Nonlinear distortion of a system or transducer characterized by the appearance in the output of harmonics other than the fundamental component when the input wave is sinusoidal. Host load: Electrical power that is consumed by the customer at the property on which the facility is located. IEEE: The Institute of Electrical and Electronics Engineers, Inc. In-rush current: The current determined by the in-rush current test. Interconnection; interconnected: The physical connection of a facility in accordance with the requirements so that parallel operation with the utilitys distribution system can occur (has occurred). Interconnection agreement: An agreement between the utility and the producer that gives certain rights and obligations to effect or end interconnection. Interconnection facilities: The electrical wires, switches, and related equipment that are required in addition to the facilities required to provide electric distribution service to a customer to allow interconnection. Interconnection facilities may be located on either side of the point of common coupling, as appropriate to their purpose and design. Interconnection facilities may be integral to a facility or provided separately. Interconnection study: A study to establish the requirements for interconnection of a facility with the utilitys distribution system. Inverter: A machine, device, or system that changes DC power to AC power.
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Glossary of Terms
Island; islanding: A condition on the utilitys distribution system in which one or more facilities deliver power to customers using a portion of the utilitys distribution system that is electrically isolated from the remainder of the utilitys distribution system. Isolation device: A device in one circuit that prevents the malfunctions in one section of the circuit from causing unacceptable influences in other sections of the circuit or other circuits. kV: kilovolt, an amount of voltage equal to 1,000 volts. kW: kilowatt, an amount of power equal to 1,000 watts. Metering: The measurement of electrical power flow in kW and/or kWh, and/or energy in kWh, and, if necessary, kVAr at a point, and its display to the utility, as required. Metering equipment: All equipment, hardware, software including meter cabinets, conduit, etc., that are necessary for metering. Momentary parallel operation: The interconnection of a facility to the distribution system for one second or less. MW: Megawatt, an amount of power equal to one million watts. Nationally recognized testing laboratory (NRTL): A laboratory accredited to perform the certification testing requirements. Net generation metering: Metering of the net electrical power or energy output in kW or energy in kWh, respectively, from a given facility. This may also be the measurement of the difference between the total electrical energy produced by a generator and the electrical energy consumed by the auxiliary equipment necessary to operate the generator. Nonexport; nonexporting: Designed to prevent the transfer of electrical energy from the facility to the utility. Nonislanding: Designed to detect and disconnect from a stable unintended island with matched load and generation. Parallel operation: The operation of on-site distributed generation by a customer, while the customer is connected to the utilitys distribution system, either on a momentary or on a continuous basis. Periodic test: A test performed on part or all of a facility at a predetermined time or operational intervals to achieve one or more or the following: 1) verify specific aspects of its performance; 2) calibrate instrumentation; and 3) verify and re-establish instrument or protective function set-points. Point of common coupling (PCC): The transfer point for electricity between the electrical conductors of the utility and the electrical conductors of the producer. Point of interconnection: The electrical transfer point between a facility and the distribution system. This may or may not be coincident with the point of common coupling.
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Glossary of Terms
Power factor: The ratio of the resistance to the impedance at power frequency of an equivalent circuit supposed to be formed by an inductance and a resistance in series. Power purchase agreement (PPA): An agreement for the sale of electricity by the producer to the utility. Precertified equipment: A specific generating and protective equipment system or systems that have been certified as meeting the applicable parts of this section relating to safety and reliability by an entity approved by the commission. Pre-interconnection study: A study or studies that may be undertaken by a utility in response to its receipt of a completed application for interconnection and parallel operation with the utility system. Pre-interconnection studies may include, but are not limited to, service studies, coordination studies, and utility system impact studies. Producer: The entity that executes an interconnection agreement with the utility. The producer may or may not own or operate the facility, but is responsible for the rights and obligations related to the interconnection agreement. Protective function(s): The equipment, hardware, and/or software in a facility (whether discrete or integrated with other functions) whose purpose is to protect against unsafe operating conditions. Reactive power: The reactive power is defined as the square root of the square of the apparent power minus the square of the active power. Reactive power is developed when there are inductive, capacitive, or nonlinear elements in the system. Reclosing: The act of automatically re-energizing a line in an attempt to quickly restore power to customers.
Renewable energy: Energy derived from natural processes that are replenished constantly. In its various forms, it derives directly from the sun, or from heat generated deep within the earth. In India, renewable energy includes electricity and heat generated from solar resources, wind, ocean, hydropower (up to 25 MW), biomass, waste-to-energy, geothermal resources, and biofuels.
SCADA (supervisory control and data acquisition): A smart distribution system, including remote terminal unit sensors, telemetry, or other communication capability and automated control of distribution system components. Stabilization; stability: The return to normalcy of the utilitys distribution system, following a disturbance. Stabilization is usually measured as a time period during which voltage and frequency are within acceptable ranges. Switchgear: An enclosed metal assembly containing components for switching, protecting, monitoring, and controlling electric power systems. Synchronous speed: The speed of rotation of the magnetic flux, produced by or linking the primary winding. System integrity: The condition under which a distribution system is deemed safe and can reliably perform its intended functions in accordance with the safety and reliability rules of the utility. Telemetering: The electrical or electronic transmittal of metering data in real-time basis to the utility.
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Glossary of Terms
Total load: The sum of all customer loads on a distribution feeder. Transfer switch: An automatic or nonautomatic device for transferring one or more load conductor connections from one power source to another. Transfer trip: A protective function that trips a facility remotely by means of an automated communications link controlled by the utility. Unintended island: The creation of an island, usually following a loss of a portion of the utilitys distribution system, without the approval of the utility. Unsafe operating conditions: Conditions that, if left uncorrected, could result in harm to personnel, damage to equipment, loss of system integrity, or operation outside pre-established parameters required by the interconnection agreement. Utility grade relays: Relays specifically designed to protect and control electric power apparatus, tested in accordance with ANSI/IEEE standards. Visible disconnect: An electrical switching device that can separate the facility from the utilitys distribution system and is designed to allow visible verification that separation has been accomplished. This requirement can be met by opening the enclosure to observe the contact separation.
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Appendix B
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Appendix B
Commencement of commercial operations means the date on which the project is capable of delivering Active Power and Reactive power on regular basis after having successfully completing the commissioning tests as per Prudent Utility Practices. Commission means the Punjab State Electricity Regulatory Commission. Conventional Source of Energy means sources conventionally used to generate electricity including interalia, coal, coke or any petroleum product, natural gas or any other similar source. Dispute means any dispute or difference whatsoever arising between the parties, out of or relating to the construction, meaning, scope, operation or effect of this Agreement, or the validity, breach or termination thereof. DPR means the Detailed Project Report prepared by the Company and as approved by PEDA or any revision thereof approved by PEDA. Debt Component means the Debt proposed to be raised from the Financial Institutions/Banks for financing a part of the project cost as per the D.P.R. Due Date means 30 days after receipt of invoice from the Board or the generating Company as the case may be. Duration of the Agreement means 30 ( thirty) years from the date of Commissioning of the project as per clause-12 of the agreement.Effective Date means the date of signing of this Agreement. Energy Unit means one Kilo Watt Hour (KWh) of electrical energy. Financial Closure means the first business day on which sufficient funds are available for the implementation of the project including Debt component. Generating Facility means the ___MW generating station comprising of ______units of _______MW capacity each located at __________. GOP means the Government of Punjab and includes all agencies and authorities under its control/ regulation including but not limited to PEDA, PID, and PPCB. GOI means Government of India and includes all agencies, authorities under its control/ regulation including but not limited to Ministry of non Conventional Energy Sources. Grid means the total system of electrical transmission circuits, transformers, switchgear and other equipment (including Interconnection Facilities) on the Boards side of Interconnection Point. Interconnection Facilities means all the facilities to be installed by the Generating Company on the Boards side of the Interconnection Point to enable the Board to provide stable and adequate start up power to the Generating Company and to receive and utilize power from the Project in accordance with this Agreement. Interconnection Point means the point at which interconnection is made between the Generating Companys Generation Facility and the Grid of the Board and shall be located on the High Voltage (HV) side of the Generating Facility of the Generating Company. Installed Capacity means ____MW which is the installed capacity of the Project as per the D.P.R. Invoice Date shall have the meaning ascribed to in Article 3.3.0 Monthly Invoice means the invoice required to be prepared in line with Article 3.2.0 of the Agreement. NRSE Policy, 2006 means the policy notified by GOP to incentivize the generation of power from new and renewable sources of energy and any amendment there to. Non Conventional source of Energy means sources other than conventional sources which are set out in NRSE Policy, 2006. Project means ____MW Solar Photovoltaic Power Project (Generating Facility) including all the land, civil structures, residential colony, electrical and mechanical plant and equipment, 11or 66KV switch yard (as the case may be) including transformer, breaker, CT/ PTs , wave traps, structures, isolators etc., dedicated telephone lines, telephone and wireless system, components, appurtenants, communications, access road off the village road, foot paths, carriage ways etc located at Village _________.
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Appendix B
Project Cost means the cost of setting up the project as per DPR. Prudent Practices means the Prudent Utility Practices applicable to Solar Photovoltaic Power Projects. Prudent Utility Practices means those practices, methods, techniques and standards as adopted from time to time that are generally accepted for use in electric utility industries taking into account applicable law, conditions in India and commonly used for the designing, construction, testing, operation and maintenance of the Generating Facility, lawfully, safely, efficiently and economically as applicable to the generating stations of the size, service and type being set up by the Generating Company and those generally conform to the manufacturers operation and maintenance guidelines. Site means village _____________ in District ________ where the Project is located. Scheduled Date of Synchronization means the date on which the project shall be synchronized with the Grid for first time, which shall be______days (______years) from the date of signing of this agreement (to be provided as per the MoU / Implementation Agreement signed with PEDA). State Grid Code: - State Grid Code notified by the Commission to which the generating utility has to comply in respect of its various sections. Term means the time period set out in Clause-12 of this Agreement. 2.0.0 ENERGY PURCHASE AND SALE 2.1.0 Sale of Energy by Generating Company. 2.1.1 The Board shall purchase and accept all energy made available at the Interconnection Point from the Generating Companys Facility, pursuant to the terms and conditions of this Agreement at the rate approved by the Commission in its order dated 13.12.07, which is set out below: (i) Rs. 7.71/-per unit (for the year2008-09) with 5% annual escalation up to 2011-12. At the end of the above specified escalation period, the tariff payable shall be the last escalated tariff for the year 20112012 and shall remain in force during the remaining term of the PPA. Any enhancement in tariff after the last escalation shall be as determined and approved by the Commission. (ii) This escalated tariff will be applicable from 1st day of April, 2008. The rate would be uniform throughout the day for the entire year. No additional payment shall on any account, be payable by the Board. 2.1.2 The Generating Company shall also generate matching MVARs corresponding to 0.88 PF lagging, so that there is no adverse effect on Boards system. Monthly average PF shall be computed from the ratio of KWH to KVAH injected into Boards system during the month. 2.1.3 In order to protect the interest of the Board and the consumers in general, the Generating Company shall continue to supply whole of the generated power to the Board at the rate prescribed in Article 2.1.1 above during the term of the Agreement. Further, the Generating Company will lay transmission line to the Boards Grid Sub Station only and will not be allowed to erect radial feeders to any other Distribution Licensees/Consumers/Sister Concern from its Generating Facility. 2.2.0 PURCHASE OF ENERGY BY GENERATING COMPANY 2.2.1 During construction of the project, the Generating Company shall purchase power from PSEB as per the then prevailing instructions for similar consumers of the Board. 2.2.2 The energy supplied to the Generating Company during the shut down/ start up and synchronization of the plant in any month, as measured at the Export Meter of PSEB (Import Meter of Generating Company) shall be set off from energy generated during that month and billing will be for the net energy sold to the Board. In case, there is no generation in the month, then energy exported to the Generating Company shall be set off from the energy generated during next month. But, if, there is no generation, even in the next month, then the energy exported to the Generating Company will be billed by the Board at the tariff applicable to LS Industrial consumers (General Category) or sale rate of energy generated from the Project applicable for that period, whichever is higher.
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Appendix B
3.0.0
BILLING PROCEDURE AND PAYMENTS: 3.1.0 The designated representative of the parties shall record joint readings of the meters at the Interconnection Point and at premises of third parties to whom power is being wheeled. The meter reading in the first instance shall be at the time of synchronization and thereafter at 12.00 Hrs. on the first day of every calendar month. Readings will also be recorded at 12.00 Hrs. on the dates the change of tariff becomes effective. Readings will be taken by Senior Executive Engineer (Sr. Xen)/Asstt. Executive Engineer/ Asstt. Engineer operation and CBC (to be specified at the time of signing of this Agreement depending upon the capacity of the project) in charge of the area, under which the Generating Facility and the premises of third parties fall. It will be the responsibility of the Sr.Xen(s) in charge of the area to designate two more officers for taking the reading in the event Sr.Xen(s) in charge of the area is not available. However, in the event Sr.Xen(s) in charge do not make themselves present, the Generating Company shall also contact SE(s) of the area who would ensure taking of the joint reading either by one or two of the designated officers or by himself. 3.2.0 Monthly energy account shall be prepared by the Board. This account shall depict energy delivered to the Board at the Interconnection Point, energy imported by the Generating Company during shut down/ start up of the Project and net energy sold to the Board during the month. In case wheeling and banking of power is undertaken by the Board under Clause 14.00 and 15.00 of this Agreement, then the monthly energy account will also include the quantum of power delivered by the Generating Company for wheeling, the quantum of power set off towards charges payable to the Board for wheeling the power and quantum of energy banked by the Generating Company, which shall be determined in terms of the agreement executed under the said clauses. In the event monthly energy account depicting energy delivered to/ supplied by Board, is not prepared and provided by the Board within two (2) working days then the Generating Company will be entitled to prepare the monthly energy account of its own under intimation to Board for the purpose of raising necessary invoices. However, if the monthly energy account involves accounting of energy wheeled and/ or energy banked, then in that case if the monthly energy account is not prepared by Board within four (4) working days then the Generating Company shall be entitled to prepare monthly energy account of its own under intimation to Board. Preparation of monthly energy account by the Generating Company in such case shall be subject to adjustment of verification of facts. 3.3.0 The monthly invoice pursuant to Clause 3.2.0 shall be delivered by the Generating Company to the Board at its designated office on or before the fifth day of the month hereinafter called the Invoice Date. However, if the energy account involves Wheeling/ Banking of energy, then the Monthly invoice shall be raised by the Generating Company on or before the seventh day of the month. If the Invoice Date i.e. fifth or seventh day of the month, as the case may be, happens to be a holiday then the Monthly Invoice will be submitted on the next working day. The Board shall make full payment of such Monthly Invoice within 30 days of receipt of the Monthly Invoice hereinafter called the Due Date On request of the Company in writing for early payment for a particular period, payment shall be made by PSEB within 7 days from the date of receipt of invoice for which a rebate of 2% on full payment shall be availed by the Board. All payments shall be made by Cheque payable at Patiala. 3.4.0 In case there is no Generation at the Generating Facility, the Monthly Invoice Pursuant to Clause 2.2.3 shall be delivered by the Board to the Generating Company at its designated office on Invoice Date and shall be paid by the Generating Company by the Due Date by cheque payable at Patiala. 3.5.0 In case the payments are delayed beyond the Due Date, the Board and the Generating Company would be liable to pay interest for the delayed amount as per State Bank of India short term Prime Lending Rate as applicable from time to time plus 2% for the actual period of delay.
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3.6.0 Board will provide to the Generating Company, an irrevocable and revolving Letter of Credit (LC) issued by any Nationalized Bank equal to one months bill amount, calculated in accordance with terms set out in Clause 3.7.0 of this Agreement, subject to the condition that all kinds of LC charges will be borne by the Generating Company. 3.7.0 For the first year of the operation of the Generating Facility, after synchronization, the amount of quarterly LC shall be determined on the basis of the quarterly designed energy of the Generating Facility, as per the detailed Project Report.. Thereafter the amount of quarterly LC shall be based on the monthly average of the bills for three (3) months for the corresponding period last year. 3.8.0 The Board reserves the right to make direct payment of any bill by cheque before or on the Due Date of payment in which case, the Generating Company shall not present the bill for payment against the Letter of Credit. 4.0.0 PARALLEL & INTEGRATED OPERATIONS 4.1.0 The Board shall allow the Generating Company to interconnect its Generating Facility and operate it in parallel with the Boards system subject to the terms and provisions of this Agreement. The Generating Company shall run the Generating Facility as a part of the integrated system to generate power in parallel with the grid and shall inject three phase 50 Hz (nominal) AC Supply into Boards system at 11/66KV The Generating Company shall be under an obligation to comply with directions received . from the Boards Load Dispatch Centre. 5.0.0 GENERATION FACILITIES-OPERATION & MAINTENANCE 5.1.0 The Generating Company shall be responsible for obtaining and keeping in force at its own cost, all consents, clearances and permits required for establishing and operating the Generating Facility viz clearances from National Airport Authority, Competent Authority for Environment & Forests, Chief Electrical Inspector etc. required for keeping each unit of Generating Facility in operation in accordance with the terms of this Agreement through out its operation period. 5.2.0 The Generating Company shall be responsible at its own expense for ensuring that the Power Station is operated and maintained in accordance with all legal requirements including the terms of all consents/clearances /permits and Prudent Utility Practices within the acceptable technical limits so as not to have an adverse effect on the Grid system or violation of applicable law or violation of any provision of State Grid Code. 5.3.0 The terms and conditions of employment of Personnel employed by the Generating Company shall meet all applicable laws, rules, regulations and requirements in force from time to time in the State of Punjab/Union of India. 5.4.0 Board shall have the right to designate from time to time its officers/officials who shall be responsible for inspecting the Generating Facility for the purpose of verifying the Generating Companys compliance with this Agreement. 5.5.0 The details of the following procedures and requirements shall be supplied by the Generating Company to the Board as soon as possible, but in no event later than 30 (Thirty) days prior to the Scheduled Date of Synchronization:i) Detailed procedure for synchronization of the Generating Facility with the Boards Grid under different conditions of operation. ii) Shut down and start-up procedures. 5.6.0 The Generating Company shall carry out regular maintenance and overhauls of the Generating Facility as per recommended schedules and procedures of the equipment suppliers. The schedule of maintenance and overhauls which require a shut down of the Generating Facility shall be intimated to the Boards Load Dispatch Centre to which the Generating Facility is attached. However, capital maintenance/major overhaul of the Generating Facility shall not be scheduled in Paddy Season i.e. 15th June to 15th October of any year as far as possible.
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6.0.0
7.0.0
The Generating Company shall supply the particulars of the generator as well as Generator Transformer and control gear to the Board for examining stability of Generating Facility. The Generating Company shall also install and whenever required, augment the equipment at its own cost to match it with the fault level of Boards system during the tenure of this Agreement. 5.8.0 The Generating Company shall use all reasonable efforts to give advance notice to the Board to the extent possible of any unscheduled outage and shall provide the Board with an estimate of duration and scope of such outage. 5.9.0 For matters relating to grid operations and load dispatch, the directions of the Boards Load Dispatch Centre or any other officer which may be authorized by the Board shall be strictly complied with by the Generating Company. Any dispute on this account shall be referred to Chief Engineer In Charge System Operation & Communication Organization whose decision shall be final. 5.10.0 Open Access and Other Charges:The Open Access and other fees, charges, Surcharges, if any shall be leviable as per Open Access Regulations as approved by PSERC for NRSE Projects. SYNCHRONISATION AND INTERCONNECTION FACILITIES. 6.10 The synchronization equipment will be installed by the Generating Company at its Generating Facility at its own cost. Generating Company shall synchronize its system with the Boards system only after the approval of synchronization scheme is granted by Chief Engineer (C.E), Sub-Station of the Board and checking/verification is made by the concerned Senior Executive Engineer (Sr. Xen), Protection of the Board. The Generating Company shall, immediately after each synchronization/ tripping of generator, inform the grid substation to which the Generating Facility is electrically connected. 6.2.0 The Generating Company shall provide step up transformers, panels, kiosks, protection & metering equipment at the Generating Facility and fully equipped line bay(s) in its switch yard for termination of interconnecting transmission line(s) of the Board. The Generating Company shall also provide proper and reliable communication between the generation facility and Grid Sub-Station of the Board where power is to be delivered by the Generating Facility. The cost of these works will be borne by the Generating Company. 6.3.0 The Generating Company shall provide and maintain at its own cost required transmission line(s) from the Switch Yard of the Generating Facility to the nearest technically feasible Boards Grid Sub-Station. Associated equipment (s) at Boards Grid Sub-Station for accepting energy from the Generating Facility shall be provided and maintained by the Board. However, the Board may take up as deposit work, construction of transmission line/works for evacuation of power on behalf of the Generating Company on their specific request for which the cost of transmission line/works shall be deposited by the Generating Company within one month from the date of achieving financial closure of the Project. 6.4.0 The Generating Company and the Board shall consult with each other and jointly decide on the scheme for protection of the interconnection line (s) and of the facilities at both its ends. All electric equipments installed shall be consistent with the orders of the Chief Electrical Inspector, Government of Punjab. 6.5.0 Notwithstanding the provisions of this Agreement, the Board will not be responsible for any damage that may occur to the Generating Facility with the Boards system. PROTECTIVE EQUIPMENT & INTERLOCKING 7.1.0 The Generating Company shall provide necessary protective equipment and interlocking devices at Generating Facility, so co-ordinated that no adverse effect is caused to Boards Grid System. The Generating Company shall obtain approval of the Board for the protection logic of the generator system and synchronization schemes and any modification thereto subsequent to commissioning of the Generating Facility.
5.7.0
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8.0.0
9.0.0
The Generating Company shall energize its equipment/synchronizing scheme only after the approval of the Chief Engineer (C.E) Protection & Maintenance of the Board at the time of commissioning and thereafter and rectification of the defects/observations pointed out by him. Routine checking/ testing shall be carried out of the Generating Companys substation/equipment on the same basis as is being done for Boards Sub-Station. 7.3.0 Testing charges shall be borne by the Generating Company for commissioning as well as routine checking. 7.4.0 Notwithstanding such checking/verification in any event, the Board shall not be responsible for any damage caused to the Generating Facility on account of any mistake in such checking/verification. LIAISON WITH AND ASSISTANCE FROM THE BOARD 8.1.0 The Generating Company shall closely liaise with the Boards Load Dispatch Centre and/or other designated officers/officials of the Board during the Term of this Agreement. During the term of this Agreement the Generating Company shall give seven (7) days prior intimation of synchronizing programme for the first time, after completion of its annual maintenance programme and also furnish in the last week of every month supply plan indicating the total quantum of electricity likely to be delivered in the next month. 8.2.0 The Generating Company shall also inform the date of commencement of delivery of power, one month in advance and arrange for testing and commissioning of the protection system before synchronization. METERING 9.1.0 ABT compliant Energy Meters (export and import) of 0.2S class or better accuracy meeting with the specification laid down in State Grid Code for use on IPP/CPP generating plants shall be installed at Interconnection Point by the Generating Company, capable of recording and storing 15 minutes averages of all the Electrical Parameters for a minimum of 45 days (hereinafter called Main Meters). Similar meters, (export and import) of the same accuracy shall be installed by the Generating Company at the Grid Substation of PSEB where power is received (hereinafter called Check Meter). Dedicated Current Transformers (CTs) and Potential Transformers (PTs) of 0.2S class or better accuracy shall also be made available by the Generating Company at the Interconnection Point. 9.1.1 One set of metering equipment having 0.2S or better accuracy class and features identical to those described in Clause 9.1.0 above should also be provided in the premises of each of the third parties. 9.2.0 All the Meters, CTs and PTs described in Clause 9.1.0 above shall be jointly inspected and sealed on behalf of both Parties and shall not be interfered with except in the presence of the representatives of both Parties. For testing and calibration of meters, a notice of at least seven (7) days shall be given by the Party requesting for the testing, to enable the authorized representatives of both the Parties to be present. 9.3.0 All meters, CTs & PTs shall be checked in Boards Laboratory and effectively sealed by Board and the Generating Company jointly for accuracy prior to commissioning and once in every six (6) months by both Parties and shall be treated as working satisfactorily so as long the errors are within the limits prescribed for such meters. 9.4.0 Meter readings of the Main Meters will form the basis of billing, so long as the half yearly checks there of are within the prescribed limit. If either of the meters is found to be defective during these checks they will be immediately calibrated. 9.5.0 Where the half yearly check indicates errors in the Main Meters beyond the prescribed limit but no such error is noticed in the Check Meters, billing for the month up to the date & time of such test check will be done on the basis of Check Meters and the Main Meters will be re-calibrated immediately. Billing for the period after the Main Meters are calibrated shall be as per the calibrated meters.
7.2.0
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9.6.0 If during the half yearly checks, both the Main Meters and the Check Meters are found to be beyond permissible limits of error, the meters shall be immediately re-calibrated and the correction shall be applied to the consumption registered by the Main Meters to arrive at the correct consumption of energy for billing purposes for the period of the month up to the time of such check, billing for the period thereafter till the next monthly meter reading shall be measured by re-calibrated Main Meters. 9.7.0 Corrections in billing, whenever necessary, shall be applicable to the period between date and time of the previous last test calibration and the date and time of the test calibration in the current month when the error is observed and this correction shall be for the full value of the absolute error. For the purpose of the correction to be applied the meter shall be tested at 100, 75, 50, 25 and 10 percent load at unity, 0.85 Lag and 0.75 lag power factors. Of these fifteen values, the error at the load and power factor nearest the average monthly load served at the point during the period shall be taken as the error to be applied for correction. 9.8.0 The billing will be normally done on the basis of readings recorded by the meters installed at the interconnection Point (Main Meters). In case, the metering equipment at the Interconnection Point becomes defectives, the billing shall be done on the basis of meter readings of the meters installed at Boards Grid substation. The defective metering equipment shall however be replaced by the Generating Company within two (2) months of the detection of the defect by either party. 9.9.0 If both the Energy Meters located at the Interconnection Point and Boards Grid Substation fail to record the electricity supplied then the electricity supplied will be computed from the log sheets maintained at Boards Grid Substation for that period of defect which shall be final and binding on both Parties. 9.10.0 For the purpose of test and calibration, the sub standard meter shall be got calibrated and sealed from a reputed Govt. testing Laboratory. This meter shall be calibrated once in every 2 years. 9.11.0 In addition to the above metering clauses the Generating Company has to comply with the State Grid Code (Meter Section). 10.0.0 COMMISSIONING OF GENERATING FACILITY 10.1.0 The Generating Company shall commission the Generating Facility and synchronize with the Boards Grid which shall be______days (______years) from the date of signing of this agreement (to be provided as per the MoU / Implementation Agreement signed with PEDA). 11.0.0 CONTINUITY OF SERVICE 11.1.0 The Board may require the Generating Company to temporarily curtail or interrupt deliveries of energy only, when necessary in the following circumstances;11.1.1 For repair, replacement and removal of the Boards equipment or any part of its system that is associated with the Generating Companys facility. However, as far as practicable such an event shall be scheduled during the annual shut-down period of the Generating Facility. 11.1.2 Load crash in Boards Grid System due to wide spread rains, cyclones or typhoons. 11.1.3 Conditions leading to over - loading of interconnecting transformers, transmission lines and Switchgears due to outage of some equipment at the Boards interconnecting Grid. 11.1.4 If the Board determines that the continued operation of the Generating Facility may endanger the safety of the Boards personnel or integrity of the Boards electric system or have an adverse effect on the electric service to the Boards other customers. 11.1.5 Under Force Majeure Conditions of the Board. 11.1.6 In line with directions received from the Boards Load Dispatch Centre. 11.1.7 Instructions for the disconnection of the Generating Facility from the Boards system shall be notified by the Boards Load Dispatch Centre for the period/ duration indicated by it. However, the Board shall take all reasonable steps to minimize the number & duration of such interruptions, curtailments or reductions.
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12.0.0 TERM OF THE AGREEMENT 12.1.0 Except where terminated by default, this Agreement shall remain in force for a period of 30 (Thirty) years from the date of commissioning of the Project, which could be extended through mutual agreement. 13.0.0 EVENTS OF DEFAULT AND TERMINATION 13.1.0 The occurrence of any or combination of the following events at any time during the term of this Agreement shall constitute an Event of Default by the Generating Company:a) Failure to pay to the Board any amount payable and due under this Agreement within sixty (60) calendar days after receipt of Monthly Invoice, or b) Failure on the part of the Generating Company to use reasonable diligence in operating, maintaining or repairing, the Generating Facility, such that the safety of persons and property, the Boards equipment or the Boards service to others is adversely affected, or c) Failure or refusal by the Generating Company to perform its material obligations under this Agreement, or d) Failure to use Solar Photovoltaic Energy Sources for generation of power as per NRSE Policy 2006. e) Abandonment of its Generating Facility by the Generating Company or the discontinuance by the Generating Company of service covered under this Agreement unless such discontinuance is caused by Force Majeure or an event of default by the Board. 13.2.0 The occurrence of any of the following at any time during the term of this Agreement shall constitute an Event of Default by the Board: a) Failure to pay to the Generating Company any amount payable and due under this Agreement within sixty (60) calendar days after receipt of Monthly Invoice, or b) Failure to use reasonable diligence in operating, maintaining or repairing the Boards interconnecting facilities, such that the safety of persons or property, the Generating Companys equipment or the Generating Company is adversely affected, or c) Failure or refusal by the Board to perform its material obligations under this Agreement. 13.3.0 Except for failure to make any payment due within sixty (60) calendar days after receipt of Monthly Invoice, if an Event of Default by either party extends for a period of sixty (60) calendar days after receipt of any written notice of such Event of Default from the non-defaulting party, then the non defaulting party may, at its option, terminate this agreement by delivering written notice of such termination to the party in default. (i) If the default pertains to the Board, then provisions of Article 14.0.0 and 15.0.0 below shall apply. (ii) If the default pertains to the Generating Company the Board may at its option: a) Require the Generating Company to cure the default and resume supply to the Board within sixty (60) days of receipt of notice from the Board. b) If the Generating Company is unable to cure the default and resume supply within the stipulated time frame and in consequence thereof, the Project is sold or transferred or assigned to any third party, in compliance with the provisions of any agreement(s) executed by the Generating Company with any third party for raising equity/debt for the Project or in terms of the Implementation Agreement executed with PEDA, require such third party to cure such Generating Company Default and resume supply from the Generating Facility to the Board for the remaining Term of the Agreement. c) Terminate the Agreement. iii) The parties agree that all third parties, successors and permitted assigns of the Generating Company shall be bound by the provisions of this Agreement which shall be binding and have full force, and effect on such third parties.
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If the supply is not resumed at the Generating Facility by the Generating Company or by the third party (who takes over the Generating Facility from the Generating Company) in accordance with Clause 13.3.0 (ii) (b) of this Agreement, the Board shall be well within its rights to approach PSERC for deciding the compensation payable to Board for purchase of costly power from the Generating Facility in the initial years of this PPA and not supplying power to PSEB for entire period of the Agreement in line with PSERC decision dt. 13.12.07. 13.4.0 The non-defaulting party may also institute such legal action or proceedings or resort to such other remedies as it deems necessary. 13.5.0 Failure by either the Board or the Generating Company to exercise any of its rights under this Agreement shall not constitute a waiver of such rights. Neither Party shall be deemed to have waived any failure to perform by the other unless it has made such waiver specifically in writing. 13.6.0 Either the Board or the Generating Company may terminate this Agreement upon notice to the other party, if the Generating Facility fails to begin producing electric energy within three (3) years from the planned commercial operational date. 14.0.0 WHEELING OF POWER 14.1.0 Only in the event of default by the Board as provided under clause 13.3.0 (i) of this Agreement, the Board will subject to and in accordance with directions, orders or regulations issued by the Commission provide access to its Transmission and Distribution System for wheeling of power generated at the Generating Facility to the third parties under separate tripartite agreement among, Generating Company, Board and third party and at a uniform wheeling charges @ 2% of the energy injected into Boards Grid, for wheeling purposes. These wheeling charges will be applicable irrespective of the distance of the third party from the Generation Facility. The Generating Company would not sell power at any time to any third Party consumer(s) at a rate lower than the Boards tariff/rate applicable to such consumer(s). The third Party shall be existing 11 KV or high voltage consumers of the Board having a minimum load of one (1) mega watt (MW) and shall include only those consumers to whom open access has been allowed by the Commission and who are entitled to enter into agreement for supply or purchase on mutually acceptable conditions. 14.2.0 The tripartite agreement for sale of power to third parties shall be initially for a period not exceeding 6 months extendable for 6 months each time until the default is cured by the Board. After rectification of the default, the Board shall inform the Generating Company. The Generating Company in such an event shall resume power supply to the Board after the expiry of the then existing tripartite agreement. 14.3.0 The Generating Company shall also bear transmission and distribution losses, surcharges, operation charges, additional surcharges, UI Charges and reactive energy charges and/or any other charge/cess specified by the Commission as per Open Access Regulations framed by the Commission for such wheeling of power to third parties from New & Renewable Sources of Energy (NRSE) based power projects. 14.4.0 The quantum of energy towards charges for wheeling of power as per clause 14.1.0 and 14.3.0 above shall be deducted from the energy delivered to the Board system for wheeling as measured at the Interconnection Point and monthly energy account pursuant to clause 3.2.0 shall be prepared by the Board accordingly. 14.5.0 For the energy delivered by the Generating Company and wheeled to third parties, the Generating Company shall raise Monthly Invoices on the party(ies) directly. For the energy sold by the Board to third parties, bills shall be raised by the Board directly on third parties as per applicable commercial instructions issued by the Board and the applicable tariff.
iv)
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14.6.0 Out of the energy delivered by the Generating Company to the Board for wheeling to consumers, the quantum of energy not used by the consumers, shall be treated as energy banked with Board in terms of Clause 15.0.0. 14.7.0 The third Parties would continue to be governed by commercial instructions in respect of their agreements with Board already executed including monthly minimum charges. 15.0.0. BANKING OF POWER Only in the event of default by the Board as provided under Clause, 13.3.0 (i), facility for banking of the power generated shall be allowed to the Generating Company for a period of one year by the Board. Further, the Generating Company willing to avail facility of banking of Power would indicate every month the energy offered to Board for wheeling and to be banked. During the period starting from 15th June to 15th October of every year, no drawl of energy will be allowed. Chief Engineer (C.E.), In charge of the System Operation Organization of the Board may allow drawl of banked energy during this period at his option and if Board does not allow drawl of banked energy, during the whole or part of the said period, the period of one year will be extended accordingly. 16.0.0 DISPUTES AND ARBITRATION 16.1.0. Both Parties shall comply with the provisions of this Agreement and discharge their respective obligations. In the event any Dispute arises out of or in connection with any of the terms of this Agreement between the Parties, hereto, the Parties shall attempt resolving the Dispute by mutual discussions, to be held between designated representatives of the Generating Company and the Chief Engineer In charge/System Operation& communication Organization or any other officer authorized by him. In case the Dispute remains unresolved, it shall be resolved in accordance with the provisions of Clause 16.2.0. 16.2.0 All Disputes between the Parties arising out of or in connection with this Agreement which the Parties are unable to resolve by mutual discussions in terms of procedure set out in Clause 16.1.0, shall be determined by arbitration, by such person or persons as the Commission may nominate in that behalf on receipt of application by either party (unless it is otherwise expressly provided in the license issued to the Board or its successor entity) in terms of provisions of the Electricity Act, 2003. The venue for arbitration shall be Patiala, Punjab. 16.3.0 The arbitration shall be conducted in accordance with the provisions of the Arbitration and Conciliation Act 1996 as amended from time to time. 16.4.0 Notwithstanding the existence of any question, disputes and difference referred to arbitration the Parties hereto shall continue to perform their respective obligation under this Agreement and the payment of any bill preferred shall not be with held by the Board for any reason whatsoever including the pendency of the arbitration. 17.0.0 INDEMNIFICATION 17.1.0 The Generating Company shall indemnify, defend and hold harmless the Board and its Members, Directors, Officers, employees and agents and their respective heirs, successors, legal representatives and assigns from and against any and all liabilities, damages, costs expenses (including attorneys fees), losses, claims, demands, action, cause of action, suits and proceedings of every kind, including those for damage to property of any person or entity (including the Co.) and/or for injury to or death of any person (including the Generating Companys employees and agents) which directly or indirectly result from or arise out of or in connection with negligence or willful misconduct of the Generating Company. 17.2.0 The Board shall indemnify and hold harmless the Generating Company and its Directors, Officers, employees and agents and their respective heirs, successors, legal representatives and assigns, from and against any and all liabilities, damages, costs, expenses (including outside attorneys fees), losses, claims, demands actions, cause of action, suits and proceedings of every kind, including those for
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damage to the property or any person or entity (including the Board) and/or injury to or death of any person (including the Boards employees and agents) which directly or indirectly result from partial/ total grid failure or arise out of or in connection with the negligence or willful misconduct of the Board. 18.0.0. ASSIGNMENT 18.1.0 This Agreement may not be assigned by either the Board or the Generating Company, without the consent in writing of the other party, except that either party may assign its rights under this Agreement, or transfer such rights by operation of law, to any corporation with which or into which such party shall merge or consolidate or to which such party shall transfer all or substantially all of its assets provided that such assignee or transferee shall expressly assume, in writing, delivered to the other party to this Agreement, all the obligations of the assigning or transferring party under this Agreement. 19.0.0 FORCE MAJEURE 19.1.0 If any party hereto shall be wholly or partially prevented from performing any of its obligations under this Agreement by reason of or on account of lightning, earthquake, fire, floods, invasion, insurrection, rebellion, mutiny, civil unrest, riot, epidemics, explosion, the order of any court, judge or civil authority, change in applicable law, war, any act of God or public enemy or any other similar cause or reason reasonably beyond its control and not attributable to any negligent or intentional act, error or omission, then such party shall be excused of its obligations/liabilities under this Agreement and shall not be liable for any damage, sanction or loss resulting there from to the other party. 19.2.0 The party invoking this clause shall satisfy the other party of the existence of any Force Majeure event and give written notice within seven(7) days of the occurrence of such Force Majeure event to the other party and also take all reasonable and possible steps to eliminate, mitigate or overcome the effect and consequence of any such Force Majeure event. 19.3.0 In the event of a Force Majeure event or conditions, any payment due under this Agreement shall be made as provided herein and shall not be withheld. 20.0.0 AUTHORITY TO EXECUTE 20.1.0. Each respective party represents and warrants as follows:20.2.0 Each respective party has all necessary rights, powers and authorities to execute, deliver and perform this Agreement. 20.3.0 The execution, delivery and performance of this Agreement by each respective party will not result in a violation of any law or result in a breach of any government authority, or conflict with or result in a breach of or cause a default under any agreement or instrument to which either respective party is a party or by which it is bound. No consent of any person or entity not a party to this Agreement, including and government authority is required for such execution, delivery and performance by each respective party. 21.0.0 LIABILITY AND DEDICATION 21.1.0 Nothing in this Agreement shall create any duty or standard of care with reference to or any liability to any person not a party to it. 21.2.0 No undertaking by one party to the other under any provision of this Agreement shall constitute the dedication of that partys system or any portion thereof to the other party or to the public or effect the status of the Board as a public utility or constitute the Generating Company or the Generating Facility as a public utility.
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22.0.0 NODAL AGENCY OF THE BOARD 22.1.0 Chief Engineer In charge/System Operation Organization of the Board shall act as a nodal agency for implementing this Agreement. 23.0.0 AMENDMENTS 23.1.0 Any waiver, alteration, amendment or modification of this Agreement or any part hereof shall not be valid unless it is in writing and signed by the Parties. 24.0.0 BINDING EFFECT 24.1.0 This Agreement shall be binding upon and enure to the benefit of the Parties hereto and their respective successors, legal representatives and permitted assigns. 25.0.0 NOTICES 25.1.0 Any written notice provided hereunder shall be delivered personally or sent by registered post acknowledgement due or by Courier for receipted delivery with postage or courier charges prepaid to the other party at the following address: Board: Before commissioning of the Project: Chief Engineer (Hydel Projects) (Investment Promotion Cell) A-4, Shakti Vihar, PSEB, Patiala 147001. Ph: 0175-2215415/2220784 Telefax: 0175-2207753/2220784 After commissioning of the Project Chief Engineer/System Operation & Communication, SLDC Building, 220 KV Grid Sub-Station, PSEB, Ablowal, Patiala. Phone: 0175-2366007 Fax: 2367490 Generating Company: M/S Phone
E-mail:
Notice delivered personally shall be deemed to have been given when it is delivered to the Generating Company at address set forth above and actually delivered to such person or left with a responsible person in such office. Notice sent by post or Courier shall be deemed to have been given on the date of actual delivery as evidenced by the date appearing on the acknowledgement of delivery. 25.2.0. Any party hereto may change its address for written notice by giving written notice of such changes to the other party hereto. 26.0.0. EFFECT OF SECTION HEADINGS 26.1.0. The headings or titles of the several sections hereof are for convenience of reference and shall not effect the construction or interpretation of any provision of this Agreement. 27.0.0. NON-WAIVER No delay or forbearance of either party in the exercise of any remedy or right will constitute a waiver thereof and the exercise or partial exercise of remedy or right shall not preclude further exercise of the same or any other remedy or rights.
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28.0.0. RELATIONSHIP OF THE PARTIES 28.1.0 Nothing in this Agreement shall be deemed to constitute either party hereto as partner, agent or representative of the other party or to create any fiduciary relationship between the Parties. 29.0.0. ENTIRE AGREEMENT 29.1.0 This Agreement constitutes the entire understanding and Agreement between the Parties. 30.0.0. GOVERNING LAW 30.1.0 This Agreement shall be governed by and construed in accordance with applicable laws of the State of Punjab. 31.0.0.NO PARTY DEEMED DRAFTER The parties agree that no party shall be deemed to be drafter of this Agreement and that in the event this Agreement is ever construed by arbitrators, or by a court of law, they shall not construe this agreement or any provision hereof against either party as the drafter of the Agreement. The Board and the Company acknowledging that both parties have contributed substantially and materially to the preparation of this Agreement. 32.0.0. USE OF NON CONVENTIONAL ENERGY SOURCES: 32.1.0. The Generating Company will produce power using only Solar Photovoltaic energy sources for which the project has been approved. A suitable proforma shall be devised at least one month before commissioning of the Project through which Generating Company shall report on a monthly basis the continuous use of non-conventional sources(s) for which the Project has been approved for the power generated and sold to the Board. Occasional checks shall be executed by the Board to ensure the use of non-conventional source usage. In case the Generating Company is found using sources other than these, Board shall be well within its right to get the tariff rates revised suitably by making reference to Commission. 33.0.0. APPROVAL 33.1.0. Wherever either Board or Generating Company approvals are required in this Agreement, it is understood that such approvals shall not be unreasonably withheld. 34.0.0. FURTHER INSTRUMENTS 34.1.0. Each of the Parties agrees to execute and deliver all such further instruments and to do and perform all such further acts and things, as shall be necessary and required to carry out the provisions of this Agreement and to consummate the transactions contemplated hereby.
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35.0.0. INTERPRETATION 35.1.0 The headings used in this Agreement are inserted for convenience of reference only and shall not effect the interpretation of the respective clauses and paragraphs of this Agreement. (a) This Agreement has been executed in the English language only and thus the English language shall be the controlling language for interpretation thereof. (b) This Agreement together with the Annexure constitutes the whole and only Agreement as at the date hereof between the Parties with respect to the subject matter described herein. IN WITNESS WHERE OF, the Board and the Generating Company have executed this Agreement as of the____ day of_________, in the year 2008. For the Generating Company by For the Board by
Its
Its
ANNEXURE-I DETAILS OF _________________SOLAR PHOTOVOLTAIC POWER PROJECT. S.No. Name of Project District Capacity (MW) Commissioning Schedule Feeding Grid of Board Remarks.
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Appendix B
United States
PG&E Schedule E-SRG and a Small Generator PPA for purchases of renewable generation for eligible facilities. <http://www.pge.com/tariffs/tm2/pdf/ELEC_SCHEDS_E-SRG.pdf>. Power Purchase Agreement Between Del Marva Power and Light Company and Bluewater Wind Delaware LLD. <http://www.ocean.udel.edu/Windpower/DE-Qs/Delmarva-Bluewater-PPA-10-December-07.pdf>.
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Websites:
American National Standards Institute http://www.ansi.org/ American Wind Energy Association http://www.awea.org Danish Wind Industry Association http://www.windpower.org/en/futuresupply.htm Database of State Incentives for Renewables and Efficiency http://www.dsireusa.org IEEE http://www.ieee.org Interstate Renewable Energy Council http://www.irecusa.org/ Mid-Atlantic Distributed Resources Initiative (MADRI) http://www.energetics.com/madri/ Ministry of New and Renewable Energy http://mnes.nic.in Reegle - the Information Gateway for Renewable Energy and Energy Efficiency http://www.reegle.info Solar Energy Industries Association http://www.seia.org World Institute for Sustainable Energy (WISE) http://www.wisein.org
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