IDS, I am impressed you found this story :-)  I am not sure if people realize, but running your grid with a potential for 50% contribution from solar and WITH a mandatory feed in tarriff without the whole grid crashing is such an amazing engineering achievement.  This is the rosy side of the story.  There are impacts on their base load plants and other operators for this choice which probably will come in a different, engineering focussed story.  What is impressive is that Germany, thus far, has mostly stuck to their solar choice despite higher electricity prices as a result of the choice.

BTW, verno response from anybody to the questions I posed in the main post.  Anybody? Somebody?

BESCOM meeting

A meeting on solar rooftop was organized at BESCOM offices on 16^th October, Tuesday. It was attended by MD BESCOM and many BESCOM top officials, by MD KREDL and a GM from KREDL, representatives from groups such as CSTEP, SEMI (PV manufacturers association), manufacturers such as EMVEE solar and  EPC people such as EMVEE and Simplex, a rep from the British Commission, a rep from A Ravindra’s office, BPC member Pradeep K and myself.  Some of the citizen invitees on the list did not show up. (Raghu... I did not inform you... that was my bad... just slipped my mind).

Now, in my personal opinion, the outcome from the meeting was a bit disappointing.  I will not try to recap individual positions. The conclusions and learning in the meeting was the following.

1. BESCOM has already met its RPO (Renewable Power Obligation)
2. KREDL is not particularly inclined to this rooftop route, though MD KREDL expressed that rooftop is a good idea.
3. MD BESCOM wants to consider rooftop solar as a demand side measure and is targeting 10 MW installed in 6 months
4. However, BESCOM has no money to pay any incentive or high feed in tarriff for solar produced power given that it is not budgeted and considering the state of its finances. I agree with that.
5. Neither the state or center has any schemes currently, though there are some noises coming from the center (link).
6. BESCOM wants interconnection at 11 kV and not at 415 V LT.
7. A decision was made to sort of follow the Gujarat model and ask for aggregators to tender for providing 5MW of power each by renting rooftops.  However, these aggregators have to connect at 11 kV.  Gujarat allows interconnection at 415Volts.
8. Some 7-8 systems are already connected to the grid (supplying power for free).  They all had a tough time to connect since no clear procedures are defined.  There are few more people with some 200kW of power (estimated by me) wanting to connect!

Gujarat Story

It will be pertinent to go into what is happening in Gujarat before I make further points. In Gujarat, they started with a Gandhinagar Photovoltaic Rooftop Program.(Click to follow link).  In this program, the target was 5 MW.  They wanted about 80% from government buildings and 20% from individual households.  The idea was to have companies come forward and bid to install systems on rooftops.  Two vendors were selected through bidding to install 2.5MW each – Sun Edison and Azure Power.

The broad details of the program is that the vendors would get a certain rate for electricity (Feed in Tariff) for a period of 25 years and the rooftop owners were to get Rs 3 per unit of power generated by the system on their roof. Recently, GPCL has announced an intention to expand the scope to other cities for a capacity of 25 MW. See here.

The Gujarat Energy Regulatory Commission has considered solar energy in great detail.  Some relevant orders that make interesting reading are here, here and here (final order).

The tariff order passed by GERC on solar energy in 2012 can be found here.  Note that I will refer to this document below several times.  Would be good to have it open to follow the discussion. A more detailed discussion paper is also found here.

Looking at the relevant sections from the tariff order (See page 22)

1-6 kW is identified as rooftop and evacuation is at 230V single phase.

6-100 kW is for evacuation of power at 415V, three phase

100 kW – 1MW at 11kV, 3 phase.

Tariff applicability is the kilowatt scale tariff.

Now in order to determine the tariff, the following assumptions have been made:

Performance Assumption:

Capital cost:(panel plus mechanicals plus installation)  1.2 lakhs per kW 

O&M cost: 0.75% of capital cost

Escalation in O&M: 5.72% annually

Inverter replacement year: 13^th year (assumed inverter will go bad and has to be replaced)

Inverter cost during replacement 3.81% of capital cost

Capacity utilization factor: 18% annually

Performance Degradation: 1% annual

Aux consumption: 0.25% of energy generated

Useful life: 25 years

Financial parameters:

Debt: Equity ratio 70:30

Loan tenure: 10 years

Interest rate: 13%

Insurance cost: 0.35% annually

Interest on working capital: 1 months O&M expense + 1 month’s energycharges at normative CUF

Rate of depreciation: 6% pa for first 10 years and 2% pa for next 15

Minimum Alternate TAX rate: 20.008% pa for first 10 years

Corporate tax rate: 32.445% anually

Return on equity: 14% annually

Discount factor: 10.74% anually

From page 25 of the order,  Similarly, the levelized tariff including return on equity for kilowatt-scale solar photovoltaic power projects availing accelerated depreciation is calculated and finalized at ` 11.14 per kWh, while the tariff for similar projects not availing accelerated depreciation is calculated and finalized at ` 12.44 per kWh. The Commission has decided that there shall be a flat levelized tariff for 25 years for the kilowatt-scale photovoltaic power projects. Tariff is to decline 7% pa for subsequent two financial years.  Clearly the tariff order has not considered any rooftop incentive.  I am not sure of the tariff announced by the Gandhinagar program.  But if the Gandhinagar rooftop incentive has to be provided, an additional cost of Rs 3 should be added to the tariff.

What should BESCOM do - recommendation

Now BESCOM and KREDL want to go with an aggregator model (where a company installs on the rooftop and aggregates and supplies to the 11 kV line).However, they have no money to pay incentives and they are worried about the risks of installing such plants.  My concern is the following.

1. Clearly, from the Gujarat tariff order calculations which seem to be based on reasonable assumptions, it will not be viable to an operator without a higher tariff which has to come from some pot of money, presumably from the state government. which does not exist now.  Further, a 10MW target means a capex of 120 crores, which is not a small sum of money.
2. Secondly, for an aggregator to connect to 11 kV line, he needs to have a lot of rooftops collector together at 415V to add up to 100 kW at least and then he can think of step it up.  Otherwise, the cost of the smallest 11kV rated cable will itself kill him. They do not sell 11 kV cable of sub 10amp rating!
3. There was a lot of discussion surrounding the feasibility of connecting plants to 415V.  I am not too convinced with the arguments.  Gujarat allows LT interconnection and I have forwarded a document received by me from GERC (via email) to BESCOM..  Their tariff order also clearly allows LT interconnection.  Further, the world over people have been interconnecting at LT and feeding in.  There is an argument being made that grids outside India have a lot of instrumentation and automation at the LT level also while BESCOM has all its instrumentation at 11kV. I am not too convinced by that argument. I strongly feel this interconnection is possible at the low total powers of solar interconnection expected.  It will only be a problem when the percentage of solar connections grows to constitute say 10% of BESCOM consumption (just a number I have heard cited).  But this is a question answerable via proper analysis by experts.

Considering this reality, I propose that the aggregator model be abandoned and the following steps taken up:

1. Announce a program that lets individual rooftop owners to connect their PV systems to the grid.  Grid connected systems do not need batteries and will be much cheaper.  Without incentivized tariffs, there will not be a lot of applicants, but at least some people will want to connect.  Already there are people who want to!  The key is to make the process simple since the permissions process can add to costs for people installing (see this study looking at costs in US and Germany). German costs are low.
2. Figure out the 415 V issue. I am fairly confident interconnection would be possible safely without any grid stability issues at the scales that this will happen at for the time being
3. Determine  if BESCOM wants to offer net metering or FIT and at which rate. Get meters qualified for net metering / bi directional metering.  These are available in the market. Customers have to pay for the meters.
4. One of the attendees, Pradeep Konapoor also suggested that it would be great if there was a way to trade the REC (Renewable Energy Credits) for the power generated and pass the benefit to the consumers

Sit back and let those who want to interconnect do so. You will not get a flood of applications, but some enthusiasts will always connect. These become good pilot studies for you until either GoK or GOI put some incentives in place or for when PV prices crash further. Currently, given the incentives available and what BESCOM is willing to pay. knowing that their Renewable Power Obligations are met, and looking at the stance of KREDL, nothing more is possible in this policy environment. This is the story the numbers say. So why waste time calling tenders for the aggregator model and aim for a 10MW target.Let us get started somewhere.