OPEN ACCESS POWER CONTRACTING OF SOLAR POWER

Rameez Shaikh
(Senior Manager, RSM GC Advisory Services Pvt Ltd)

Suryacon Conference, 04 October, 2016 @ The Westin, Koregaon Park, Pune

Agenda
• RSM GC – Introduction
• Open Access – Regulatory Framework for Solar Power
• Drivers – Push & Pulls
• Requirements & Operational Modes
• Transaction Costs & Challenges
• Typical steps, process and timeline
• Case Study
About us – RSM GC
• Leading player in Energy and Sustainability Services

• Led more than 500 sustainability service offerings (CSR, EIAs, LCAs, CDM,
Environmental Finance etc.)

• Sectors( Energy and Infrastructure, Mines and Metals, Manufacturing, Habitats, Forestry,
Agriculture) and
• Geographies (India, Srilanka, Thailand, Philippines, Indonesia, Nigeria, Kenya, Tanzania)
• Clients (Governments, Multilaterals, UN, Business groups, NGOs)

• Delivered more than 500 million USD benefits to clients

• Operating across India, South East Asia and Africa

• RSM International is the 7th largest network of independent audit, tax & advisory firm in
the world with over USD 4 billion in fee income and presence in over 700 offices in 103
countries
• RSM Astute is the 6th largest accounting and consulting group in India has 1000 people
strength and located in 19 offices in 13 cities with delivery capabilities in 90+ cities
• Some Clients of RSM Astute
RSM GC
What We Do
Energy Sustainability
• Energy Audit / Energy Management Systems [ISO • CSR – Planning and Implementation Support
50001) [Companies Act 2013]
• PAT Advisory and ESCerts Trading • Environmental and Social Due Diligence / ESG
• Renewable Energy Purchase Obligation (RPO) / Assessments
Renewable Energy Certificate (REC) Advisory and • Carbon and Water Footprinting / Management,
Trading enabling International Certifications [ISO, CDP, etc.]
• RE Power Contracting and Trading
• Carbon Credits [CDM, VCS, PoA, GS]
• RE project management, techno-commercial advisory
• Business Responsibility Reporting [Under SEBI
and due diligence support
Regulations]
• Financial, commercial, regulatory & legal advisory
support for RE projects • Sustainability Reporting [GRI and Similar Standards]
• Owner’s Engineer, Quality Assurance, Third party • Sustainability ERP Tools and Performance
inspection services Improvement
Advantages - RSM GC
• Deep insight: Thought leaders, Helped in capacity building exercise in
major states for open access.
• Rich Experience:
– Advised IPPs on power sale strategy at the stage of finance raising to
operations
– Advised some of the largest industrial groups on power procurement
strategies for their facilities across states
– Advised one of the largest business groups on achieving carbon
neutrality through RE procurement options
– Reduced power procurement cost of few large commercial
establishments by over 25%
Experience - RSM GC
• Experience with over 8000 MWs power project portfolio
– Wind projects of over 2000 MWs across India
– Over 350 MW of REC projects across India
• Client list includes some of the largest IPPs & CPPs in India
– Tata Power, Lanco, GVK, GMR, Renew, GreenKo, JSW, Mahindra, etc.
• Broad spectrum of technological expertise
– Wind, solar, hydro, biomass, Waste to Energy, etc.
• Executed innovative contract structures
– Some of first third party sale contracts for renewable energy project
• Experience in project finance and project evaluation for renewable energy
projects
RSM GC – a One Stop Solution for RE…!!!
• Power / REC Transactions through exchange, bilateral, group captive route
Transaction • Turnkey transaction support, PPA facilitation, Open access process management,
documentation & liaison
• REC project development, accreditation, registration, issuance & liaison activities
Project Management
• Project management and consultancy for wind / solar power project

Project Finance & • Investment and Financial Advisory Services to RE projects

Insurance • Renewable energy insurance solutions - Transit, Construction and Operational
• Project valuation, feasibility studies, due diligence & financial analysis including asset
Commercial & acquisition support
Regulatory
• Policy & Regulatory analysis for projects, power sale structures in various states
• Legal review of positions /cases in power domain, particularly renewable energy
Legal
• Petition / representation at regulatory forums (SERCs, CERC, APTEL, etc.)
• Wind turbine portfolio management & performance improvement
Technical • Owner’s engineer and Third Party Inspection to enhance Quality & Reliability through
independent Engineering opinion & Inspection
Advantages- RSM GC Advisory

Leadership team with expertise and extensive consulting experience, more than
Leadership 500 sustainability service offerings; developed over 250 emission reduction projects
with a potential of >400 million CERs; assisted and advised over 8000 MW power
Team project portfolio & over 2000 MW wind power projects, over 350 MW REC projects;
delivered value of over US$ 500 Million to businesses in India

Policy Active participation in policy formulation and thought leadership

Formulation

Strong
Strong track record of project delivery, combined with risk mitigation
Track and structuring capabilities
Record
Diverse
Working experience in diverse geographies & sectors, and a potent combination of
Work technical & financial resources
Experience
RSM GC – Some Clients - Energy and Sustainability
Open Access: Regulatory Framework for Solar Power
• The Electricity Act 2003… 13 year old intention?
• Inter-state and intra-state open access
regulations
• NAPCC, NTP (8% solar by 2022), JNNSM,
Revised Solar Targets (100GW by 2022)
State level
• RPO – Discoms, CPPs & other OA consumers regulations
Central & &
of thermal power State RE notifications
policies
• Promotional policy benefits for RE in general & NAPCC/
JNNSM/
solar in particular RPO/ REC
– Concessional transmission/ wheeling Electricity
charges, losses, CSS, banking benefit, ED Act 2003

waivers, AD benefit, etc.

Key Drivers – Solar Open Access – Push & Pulls
• Falling module prices & solar power tariffs
– Over Rs 12/kWh (2010) to Below Rs 5/kWh
Voluntary –
now Sustainabilit
y / CSR
• Increasing grid power rates goals
– Grid parity of solar power?
– Maharashtra: Industrial (~Rs 8/u)
– Maharashtra: Commercial (~Rs 14.5/u)
Compliance
• Sustainability & CSR goals - RPO
– Corporate targets, RE100, etc.
• RPO compliance
Economics – Grid
• Favourable policies Parity
– Concessional benefits
• Not so favourable policies
– Not signing PPAs at feed-in tariff?
– RPO quota full?
Requirements & Operational Modes
• Requirements –
– Above 1MW contract demand; 700KVA recorded maximum demand
– ABT meter installation
– PPA between the parties
– Open access approval
• Contract Structure -
– Exchange?
– Inter-state?
– Third Party Sale Mode
• Through a trading licensee or directly
• OA charges concessional, though CSS also applicable
• Higher flexibility: Counterparty & tenure
– Captive / Group Captive Mode
• Operates as per Electricity Rules 2005 (min. 26% equity & 51% of power consumption)
• Additional CSS cost saving (on top of concessional OA charges)
• Preferential open access approval
• Stronger agreements structuring
Transaction Costs & Challenges
• One-time: ABT meter at both the ends
• On-going:
– Processing & Operating cost
– Wheeling & Transmission losses / charges
– CSS
– Additional Surcharge?
– ED?
– Demand penalty / temporary charges for breaching CD?
• E.g.
Category Losses (%) W&T charges CSS Total OA cost
(Rs/u)
HT-I E (Industrial) – 33KV 3.92% + 6% 0.28 + 0.11 0.37 9.92% + Rs 0.76/u
HT-II N (Commercial) – 11KV 3.92% + 9% 0.28 + 0.83 1.08 12.92% + Rs 2.90/u

• Challenges: Approval process, new charges, frequent changes in policy

Typical Process for RE Power tie-up

Term
Set-up
Sheet
• Intent to • Power • Open
sell / Purchase , access
purchase • Matching • ABT meter,
Share • Regulatory
• Qty, period buyer/ seller etc.
holding, etc. filings
& price • High level
terms
LOI Agreement Approvals

Mo
n th
Billing & Payment ly P
roc
es s
Credit Adjustment Power Generation

Open access
charges
Case Study – Solar power sale to commercial bldg
• Mandate to source power for a commercial undertaking facilities across India
• Suitability study for their operation in various states, applicable policies & available power sources
• Contracted 1 MW Solar for one of their commercial malls in Maharashtra

• Present Power Procurement : MSEDCL

– Business : Commercial stand alone mall
– Category : HT 2 (Commercial Category)
– Annual consumption : 18- 20 lac units
– Current Variable Power Tariff : around Rs 15/u

• Solar Power Procurement : 1 MW solar plant

– Annual Supply : 15 lac units
– Annualized Saving : 45-50 lacs/year

• Highlights:
– About 20% saving in electricity bills
– Hassle free transaction with complete liaison & implementation support
– Contracting to power flow – within 3 months
 THANK YOU FOR
YOUR TIME AND
ATTENTION

Contact: RSM GC Advisory Services Pvt. Ltd https://twitter.com/GC_Advisors

Rameez Shaikh 7th Floor, B Wing, Kukreja Centre,
M: 9920033866, Plot No-13, Sec -11, CBD Belapur,
E: rameez.shaikh@general-carbon.com) Navi Mumbai, India www.linkedin.com/company/general-carbon