The Ministry of New and Renewable Energy has made a strong pitch before the central electricity regulator seeking that wind developers who have bagged projects at recent bidding exercises and those who go on to win bids in future auctions be accorded “priority” for getting transmission connectivity to the grid. The ministry, in its August 11 missive to the Central Electricity Regulatory Commission (CERC), has cited the need for “regulatory support” as a prerequisite to achieve the Centre’s 60,000-MW wind capacity target by 2022. The CERC is slated to hold a hearing on the issue on Wednesday based on a petition by state-owned transmission major Power Grid Corporation of India Ltd.
The ministry’s missive comes in the wake of Solar Energy Corporation of India’s (SECI’s) first-ever reverse auction for wind projects for 1,000 MW in February this year. Initially, bids worth 2,600 megawatts (MW) were received and after a two-stage vetting process, final bids were awarded for 1,050 MW. The winners were Mytrah Energy, Green Infra Wind Energy, Inox Wind Infrastructure Services and Ostro Kutch Wind — who were all awarded 250 MW each — and Adani Green Energy, which was awarded 50 MW, all at a discovered tariff of 3.46 per kwh (unit).
There is, however, a paradoxical situation in light of the fact that the developers who were granted connectivity in existing sub-stations earlier did not go on to win any capacity in the recent auctions, while those who were allotted capacity in these auctions are pushing the ministry, to seek connectivity approval for future sub-stations. According to a sectoral expert, given that the quantum of inter-state transmission system (ISTS) grid connectivity granted till date is more than 17,000 MW, if in the first round of selection of 1,000 MW wind projects, there is an ‘apparent’ non-availability of ISTS grid connectivity for successful players, the need for the CERC to re-examine its regulations comes to the fore.
The ministry’s plea to the regulator cites the experience in the recent past, where wind developers have sought connectivity at specific sites expecting that they will be able to leverage it to secure a power purchase agreement or PPA. Some developers subsequently received connectivity in existing sub-stations while others got approval for future sub-stations.
As the developers who were granted connectivity in existing sub-stations did not go on to win any capacity in the auctions conducted since February, the ministry has buttressed the point that given the transfer of connectivity is not allowed as per the CERC regulations — (Grant of Connectivity, Long-term Access and Medium terms Open Access in inter-state Transmission and related matters) Regulations 2009 — the awarded projects will come up in a shorter time frame that the estimated time taken to build a new sub-station. Also, the argument likely to be presented before the regulator is that while the existing sub-stations have the capacity, it will remain unutilised till these developers are awarded projects in the near future. The ministry’s pitch for “regulatory support” is aimed at seeking a clarification on the procedure for connectivity grant for such cases so that a developer who wins a bid for a wind farm gets required grid connectivity on a priority basis.
There are some intrinsic features of renewable energy generation projects, especially wind, which weakens some of the arguments presented by the ministry in its missive to the regulator. One of these pertains to the labelling of developers of wind farms as entities that are ‘squatting on connectivity’, something that these players argue does not factor in the role played by the developer of wind farm in setting up the common facilities, including the development of dedicated transmission lines.
Firstly, wind potential assessment is a highly-localised activity and the ultimate cost of wind energy is a direct function of the correct assessment of wind energy potential. Unlike solar farms, wind turbines of the current size of 2-2.5 MW have to be located at a distance of not less than 300-500 metres, subject to some other factor. As a result, the business of setting up a wind farm is an extremely land-intensive exercise. Subsequent to the overall survey of potential and feasibility, the location of the pooling station has to be optimised and land needs to be acquired for the project, including the charting of the route between the developer’s pooling station and dedicated line to the nearest ISTS point-of-connectivity has to be decided and obstacles, including right of way hurdles, have to be tackled. Even as this process is on, the developer applies for connectivity to ISTS pooling station to seek grid connectivity. Without this, it becomes extremely risky to undertake investments in pre-developmental activities. In light of all of these prerequisites, there is an extended time gap between the date of grant of connectivity and actual installation of the wind turbines.
The general practice is that after studying wind capability, a wind farm developer applies for connectivity and once the connectivity for the wind farm is granted, the developer starts undertaking preliminary activities and development of common infrastructure. After preliminary activities are visible on the ground, interested wind generators approach the wind farm developer and set-up their individual wind generating plants.
Under the recent bids invited by the SECI, the minimum lot size was 25 MW. Under the Connectivity Regulations, an applicant must either have installed capacity of 50MW or should agree to be the lead generator for various generators, who in aggregate have total installed capacity of more than 50 MW. Therefore, an applicant under the SECI bids may not be capable of applying for connectivity on its own and would have to necessarily partner with another applicant who ultimately may or may not be successful in the bids invited by SECI. That, according to market players, is one of the shortcomings of the current process.
Also, the time period available by wind generator after successful bidding and signing of PPA is limited, say around 18-20 months. Before putting the wind turbines in place, it is necessary to carry out extensive studies for the different patches of the land in windy areas and identify the turbine locations. The argument placed by players who have transmission access but have not bagged projects under the recent auctions is that the commissioning schedule, as provided in the SECI bids, actually assumes that only such entities that have already undertaken preliminary activities or are either part of a wind farm where preliminary activities have been undertaken for the entire area would participate in the bids. That premise is unraveling now.
Since October 2016, SECI has called only two bids of 1,000 MW each for supply of inter-state power in October 2016 and July 2017 totalling just 2,000 MW, as against the already granted ISTS connectivity of 17,270 MW.
A regulatory intervention could mean making amendments in the connectivity regulations to take care of this previously unforeseen situation. Aspiring bidders do not have flexibility to share connectivity with any entity as per the current CERC Connectivity Regulations.
“The paradox of shortage of grid connectivity for winning wind power developers, when thousands of MW of connectivity given by Power Grid Corporation is lying under-utilised, shows that CERC regulations are not aligned with the nature of wind and solar farms, as distinct from conventional power plants. The quantum of ISTS grid connectivity granted till date is more than 17,000 MW. If in the very first round of selection of 1,000 MW wind projects, there is ‘apparent’ non-availability of ISTS grid connectivity for successful players, it clearly indicates a lacuna in CERC regulations, and highlights the urgency to permit sharing of connectivity at par with the practice followed in all RE rich states in the state transmission network,” said the expert.
One of the solutions could be leaving the development responsibility and the resultant costs entirely to the developer of the wind farm and prospective wind power developers. Therefore allocation of bays at sub-pooling station can be decided by market forces and any person interested in setting up a wind generating station can enter into discussion with a wind farm developer who has been granted connectivity and has developed the common infrastructure and will share the connectivity so granted. Permitting the sharing of connectivity is a practice followed in all RE rich states for connectivity to the state grid.