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Forecasting regulations a tough proposition for developers


18 September 2019 | BRIDGE TO INDIA

Forecasting regulations a tough proposition for developers

In response to a petition filed by the Indian Wind Power Association (IWPA), the Rajasthan High Court has recently upheld validity of the forecasting and scheduling regulations. The IWPA had challenged validity of these regulations on the grounds of high penalty charges and poor forecasting ability of the Qualified Coordinating Agencies (QCAs). The Rajasthan High Court has clarified that technical constraints cannot be a justifiable reason for disregarding the regulations.

  • The developers are finding it difficult to implement the regulations due to poor quality weather forecasts and lack of appropriate IT infrastructure;
  • The developers are also struggling to bear the compliance cost of the regulations, estimated at 1-2% of project revenues;
  • The internationally accepted practice seems to be to use real-time balancing markets to address deviations in RE power output rather than to penalise the developers;

Fifteen Indian states have so far issued individual regulations on forecasting, scheduling and deviation settlement. Four other states have issued draft regulations. Together, these states account for 97% of operational solar and wind power capacity in India (total 64.7 GW as on 31 July 2019). Renewable power plants are required to intimate their generation schedule to respective load despatch centres on a day-ahead basis in 96 blocks of 15 minutes each. They can revise the schedule up to 16 times a day, limited to one revision for each time slot of 1.5 hours.

The state regulations are broadly in line with the CERC framework barring some procedural differences:

  1. The project size threshold for the regulations is 5 MW and above except in Andhra Pradesh, Gujarat, Meghalaya, Tamil Nadu, Tripura and Haryana (1 MW and above) and wind projects in Karnataka and Madhya Pradesh (10 MW and above);
  2. Andhra Pradesh, Karnataka and Jharkhand follow state level aggregation; most other states follow pooling station level aggregation;
  3. Most states (Andhra Pradesh, Jharkhand, Karnataka, Madhya Pradesh, Maharashtra, Punjab, Rajasthan and Telangana) have kept the penalty charges at INR 0.50/ kWh for deviation above +/-15% and up to +/-25%. In Uttar Pradesh, Chhattisgarh and Tamil Nadu, penalties are levied on the basis of (average) PPA tariffs of pooled projects;

The developers have been facing significant financial and operational challenges in implementing the regulations – high cost, poor quality weather forecasts and lack of appropriate IT infrastructure. Average penalty hit is estimated in the range of INR 0.04-0.05/ kWh for solar power and INR 0.07-0.08/ kWh for wind power at pooling station or plant level. There are additional costs for enabling infrastructure and QCA fee. Total cost impact is estimated at about 1-2% of revenue for larger projects but can be much higher for smaller projects/ developers.

The industry is struggling to bear the financial burden of the regulations. Most RE projects, particularly those commissioned before 2019, have no budgeted provision for the compliance costs. The Rajasthan order sets a notable precedent and it seems unlikely that RE generators would be given any relief from these regulations.

There is no denying that the forecasting and scheduling regulations are an essential policy tool for managing variability in RE power output. But our quick survey of some high RE penetration countries shows that most countries use real-time balancing market rather than penalising RE developers to address deviations in power demand and supply.


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