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Global warming, rising fossil fuel prices and ever increasing supply demand gap has
catapulted the status of wind from playing a peripheral role to becoming a significant
source of electricity generation. Recognizing the pivotal role of providing critical and
clean, carbon free energy and thereby addressing climate change, India is seeking to
implement a large wind-based electricity generation program 1 . The wind capacity in
India has grown at an average of 33% over the last five years and contributes over 6%
to the current capacity mix with total installed grid interactive capacity of 8,739 MW 2 .
This is primarily due to engineering and technology developments, provisions under
Electricity Act 2003, and financial incentives. In order to promote the needed
investments, the Indian government is introducing policies such as renewable purchase
obligations, financial motives such as income tax benefits, accelerated depreciation and
generation based incentives. Table 1 shows a summary of wind potential in key states in
India and the financial incentives and policy mandates that exist in those states. In
addition to these stimuli, sale of accrued carbon credits in the CDM market provides
additional revenue source for wind generators.
Even as these incentives stimulate development of large wind based power plants,
transmission limitations are increasingly becoming roadblocks to the continued growth of
wind in the foreseeable future. These transmission limitations force curtailment of wind
generation to ensure in reliable system operation and also act as an inhibitor to wind
installations in system planning. For example, in 2005-06, around 15 percent of wind
generation in Tamil Nadu was lost due to congestion and shortage of evacuation
facilities 3 . The current impediments in transmission that concern the wind developers,
system operators, policy makers and regulators are summarized below:
Who should pay for the evacuation facility up to interconnection point: developer, power purchaser,
transmission utility or distribution company?
What are the various methods to fund and attract investments for developing the wind transmission
infrastructure?
How to address grid connectivity and transmission infrastructure development under transmission
planning?
What is the role of State Transmission Utility (STU) in developing transmission infrastructure for
renewable energy projects?
Should the technical parameters of interconnections like voltage level, number of circuits,
interconnection points etc be revisited?
So far, no standard renewable related standards are available in CEA Regulations. Should the
connection standards and Grid Code be modified to accommodate wind energy sources?
What are the ideal transmission and wheeling charges, T&D losses and other charges for wind
under current regulations?
At present, SERCs have exempted wind from intra-state ABT regime. How to link wind with UI
mechanism and Intra-state ABT?
Is there a need to study the dynamic interaction between wind farms and power systems including
effects on and, due to unit commitment, balancing and reserve capacities?
1
The Perspective Plan of grid-interactive wind power by the Ministry of New and Renewable Energy (MNRE) at the end of XI Plan is 10,500 MW and by the end of
XIII Plan (2022) is 22,500 MW.
2
CEA (as on 31.02.2008)
3
Overcoming Power Shortages,, Business Line, 13.05.2008
Table 1: Wind Potential and Policies introduced by State Governments
Andhra West Madhya
Item Maharashtra Rajasthan Tamil Nadu Gujarat Kerala Karnataka
Pradesh Bengal Pradesh
Potential (MW) 3,650 5,400 5,500 9,675 875 8,275 6,620 450 5,500
Installed Capacity
1,756 539 3,857 1,253 11 123 1,011 1 188
(MW)
2% of Rs.0.3/unit 2% of energy
2% of energy energy in which +
+ 5% 10% of 5% of 4% of 5% of addition to 2% of would be Transmission
Wheeling
Transmission energy energy energy energy very high energy revised charges per
Losses transmission time to regulatory
charges time Commission
2% per
5% (12 9 Months
Banking 12 months 3 months - 12 Months month for 12 6 months Not Allowed
months) (Jun-Feb)
months
Rs.3.97 (with
Rs.3.59
decrease if 7
per unit for
paise up to
Rs.3.50/kWh Jaisalmer,
To be 4th year)
Escalation of Jodhpur, Rs.3.37/kWh
decided then fixed at
Rs.0.15 per etc. and Rs.3.37/kWh Rs.3.14/kWh for FY 2004- Rs.3.40/kWh
Rs.2.90/kWh on case to Rs.3.30/kWh
Buy Back unit per year Rs.3.67 fixed for 20 fixed for 20 05 w.e.f. fixed for 10
(Levelized) case with from 5th year
for 13 years per unit for years years 1.4.2004, for years
a cap of onwards
from DOC of other 5 years
Rs.4/kWh uniformly for
the project districts
20 years
(base year
(w.e.f.
2008-09)
11.6.2004)
Open Access Allowed Allowed Allowed Allowed Allowed Allowed Allowed Allowed Allowed
06-07 3%
07-08 4%
RPO √ √ √ √ √ √ √ √
08-09 5%
09-10 6%
25
5 paise 10 paise 10 paise
paise/kVARh
per year per kVArh per kVArh
up to 10% of
w.e.f. up to 10% of upto 10% of
net active
Reactive energy 25 paise per 01/04/2006 active power Rs. 0.40 active power 27 paise per
power - -
charges kVArh with supplied & Per kVArh supplied & kVArh
supplied &
escalation 20 paise 25 paise
50 paise per
of 5% per per KVArh per kVArh
kVARh
year above 10% above 10%
above 10%
16% post tax 14% post tax
17.63% pre with MAT at with MAT at
ROE adopted by SERC 16% pre tax - 14% post tax - - 16% pre tax
tax 7.5% on 10.1% on
ROE ROE
Source: MNRE and CERC
Grid Interconnections: rethinking the cost sharing for transmission evacuation and
upgrades
In India as in other countries, temporal and spatial variations in wind speed are for the
most part, dependent on geography and spread across the states. Integrating a
generation resource such as wind with its uncertainties requires a robust and flexible
transmission infrastructure which is the primary responsibility of State Transmission
Utilities (STU). However, due to the poor financial health of the STUs, they are often not
in a position to invest the necessary capital for the required transmission upgrades.
Therefore, some STUs are demanding prior payment for transmission augmentation
carried out upstream of interconnection point. Grid upgrades and enhancements are
needed for integrating planned large scale wind capacity. Without significant increases in
the transmission capacity all the wind energy generated cannot be accommodated in the
power system. This lack of sufficient transmission capacity acts as a dis-incentive that
could result in less than expected additions in wind generation. Resolving this issue
requires the involvement of state and central government entities, STUs, power plant
developers and power purchasers. In such a forum, the need of introducing a better cost
sharing formula that clearly outlines the process of cost recovery, determination of rate
of return, the entities that are responsible for building the needed transmission (either
utilities or private players) and, the process for allocating the cost of new transmission to
loads and wind power plant owners, should be discussed and proper methodologies and
processes and plans to increase transmission capacity formulated.
The Maharashtra Experience: Novel solution for socializing transmission infrastructure funding
Maharashtra has been the front runner in adopting innovative structures and schemes to develop and
fund the evacuation infrastructure for renewable energy projects.
Maharashtra Electricity Regulatory Commission (MERC) has directed the STU to bear the cost of
transmission lines and associated facilities downstream of the interconnection point. However, the
developers have to provide interest free advance to STU for an amount equal to 50% of the cost of works
carried out by the STU. The STU has to refund the amount in five equal installments. The commencing of
installments starts one year after the date of commissioning of the project.
Government of Maharashtra has also devised a scheme of Green Energy Fund. A green cess at 4 paise
per unit is levied on commercial and industrial consumers within state. The Green Energy Fund takings
are exclusively used for funding the transmission system and other infrastructure requirements of
renewable energy projects.
The Tamil Nadu Experience: Things have to worsen before they get better
Realizing the pace of growth and inability to develop the transmission systems, Tamil Nadu Electricity
Board (TNEB) has been working with wind project developers for faster development of power evacuation
infrastructure. The proactive support of TNEB to developers has resulted into high levels of growth.
To tackle the inadequate transmission planning, Tamil Nadu Electricity Board (TNEB) constituted a task
force to monitor augmentation of transmission infrastructure for wind energy. Noting that the prime
locations for wind mills had become congested, MNRE made efforts to develop alternative locations.
Wind farms in areas that didn’t have inadequate infrastructure were not approved by TNEB until
transmission and distribution facilities were upgraded. The wind developers were asked to give their
projections for the next couple of years to streamline the development of transmission system. TNERC in
its Order directed STU in the state to create necessary infrastructure.
Grid Integration: lacks grid codes that incorporate the behavior of renewable generation
One of the major constraints in harnessing the full wind potential is the inability of the
grid to absorb the power generated by all the wind turbines simultaneously. This is a
problem because wind farms are located in remote areas, with limited transmission
capacity and limited local power demand. Moreover, most of wind power plants are small
in size and hence are connected into the distribution network with distribution licensees
holding the primary responsibility to evacuate wind power. In some cases where
significant load is present closer to the wind power plants, increased renewable power
injection at distribution level will relieve stress on transmission network to a certain
extent. However, as the size of wind power plants get larger, they need to be connected
to the transmission network to supply load in other areas. In remote areas where large
wind farms are planned the existing transmission grid is limited and at a lower voltage
level. Thus, transmission over long distances to load centers and at lower voltage levels
could result in higher technical losses and potential system instability in case of faults or
other problems. These issues can be addressed by modifying the existing connection
standards and grid codes in addition to upgrading the transmission network.
Currently, no standard renewable related provisions are available in CEA Regulations.
The existing grid codes needs to be modified to provide standards for system stability
and reliability. These standards should include the impact of significant penetration of
renewable based generation such as wind, on the operation of the transmission network.
One of the challenges in reforming grid codes to account for renewable generation is in
the contribution of wind generation to faults on the network. For example, if all wind
generation trips off the grid immediately during a fault, the system may lose its capability
for a quick recovery. Therefore, one requirement from the wind turbines could be to stay
on the grid during a low-voltage event for a period of time before eventually
disconnecting from the grid. Other challenges include provision of sufficient reactive
power by the wind turbines and, maintaining voltage profiles at the point of
interconnection.
Thus, grid codes that include standards for wind integration are required to ensure that
wind farms do not adversely affect the power system operation with respect to security
of supply, reliability of the grid and power quality of the injected power.
Prior to joining ICF Dr. Banunarayanan was employed at General Electric in their Energy
division. During his 10 year tenure at GE, Dr. Banunarayanan developed expertise in
generation asset evaluation, transmission congestion analysis, energy and capacity
price forecasts, market power considerations, impact of emerging environmental rules
on power plants and power system reliability, in all regions of the U.S. He has worked
with a variety of clients ranging from internal GE Energy divisions, utilities, government
organizations such as the DOE and finance firms. His international experience includes
study of power tariffs imposed by companies in India, Japan, Norway and Germany. He
has also been involved in developing production simulation models of UK, Australia,
Germany, India, China, Mexico and Canada power systems. Dr. Banunarayanan’s
consulting background includes a two year overseas assignment in India where he was
responsible for the startup and operation of the Indian arm of GE Energy’s consulting
division.
Dr. Banunarayanan holds a Ph.D. degree and a M.S. degree in Electrical Engineering.
His research work at North Carolina State University focused on quantifying and
allocating transmission/ancillary services such as real power losses and reactive power
support, to power transactions in the new electricity market using load flow based
methods. His work has been published in IEEE Transactions in Power Systems and
also presented in conferences such as CIGRE and North American Power Symposium.
Dr. Banunarayanan is an expert user of GE-MAPSTM and has received training in
power markets analysis, economics, finance and marketing.
Yasir Altaf
Yasir Altaf is currently working as an energy analyst with ICF Consulting, Inc., with over
4 years of experience in energy economics and energy engineering issues. The most of
his work has been in the areas of transmission studies and utility restructuring. His
expertise includes power system modeling, transmission asset valuation, generation
interconnection assessments, forecasting transmission Interface capabilities (ATCs and
TTCs), Locational Marginal Prices, transmission congestion and losses and their effect
on the plant dispatch and cost benefits in the US and Indian power markets. He also
specializes in Load Flow Studies, Optimal Power Flow simulations, Contingency
Analysis and Power System Stability Studies.