1. Prayas - EGI Presentation - 14 IACC, Bangkok, Nov. 20101 Clean Energy and Regulation: Challenge of information asymmetry and weak oversight Shantanu Dixit Prayas (Energy Group) Electricity Governance Initiative

2. Prayas - EGI Presentation - 14 IACC, Bangkok, Nov. 20102 Agenda Clean energy challenge Clean energy regulation – cases from India Clean energy and regulatory governance

3. Prayas - EGI Presentation - 14 IACC, Bangkok, Nov. 20103 Clean energy challenge … 1 Rapid growth in renewable energy India current installed capacity 18 GW Need to grow to 65 GW in 5 years Potential revenue ~ US $ 10 B / yr. Significant public fund support Direct Subsidies, Tax concessions, Preferential tariff

4. Prayas - EGI Presentation - 14 IACC, Bangkok, Nov. 20104 Clean energy challenge … 2 Multiple players – public sector, private sector and government / regulatory interface Evolving technology and performance Uncertain costs – Capital as well as fuel  Good governance – Transparency, Accountability and Public Participation in Clean Energy development is crucial

5. Prayas - EGI Presentation - 14 IACC, Bangkok, Nov. 20105 Case of Solar Program in India Dec. 2009 – Central Commission fixed tariff at Rs. 17.14 / unit constant for 25 yrs. Jan 2010 – Gujarath Commission fixed tariff at Rs. 15 / kWh for 12 yrs and Rs. 5 / kWh for next 13 yrs. Gujarath signed 500 MW agreements in just six months  Tariff fixed by Central Commission was clearly excessive Clean Energy Regulation

6. Prayas - EGI Presentation - 14 IACC, Bangkok, Nov. 20106 Case of Sugar cogeneration projects in Maharashtra … 1 Project developers filed petition for increase in fuel cost Commission ’ s observations (Order dt. 11 Jan 2010) “ the petitioner has neither provided any statistics, computations of cost of generation nor any supporting documents for the operational cogeneration projects in order to substantiate the cost of generation ” Clean Energy Regulation

7. Prayas - EGI Presentation - 14 IACC, Bangkok, Nov. 20107 Case of Sugar cogeneration projects in Maharashtra … 2 Fuel price of only 4 to 6 projects submitted to commission, even though 21 operational projects in the state “ Thus, relying on un-audited information based on limited number of projects with wide variation may not be prudent ”  Still commission increased purchase price by 35% Clean Energy Regulation

8. Prayas - EGI Presentation - 14 IACC, Bangkok, Nov. 20108 Case of Wind Projects in India ….1 Largest Renewable Energy Capacity in India Preferential, Feed In Tariff, cost plus approach Widely varying capital cost claims by project developers before commissions (table on next slide) (InWEA Submissions before APERC) Clean Energy Regulation

9. Prayas - EGI Presentation - 14 IACC, Bangkok, Nov. 20109 Case of Wind Projects in India ….2 Clean Energy Regulation

10. Prayas - EGI Presentation - 14 IACC, Bangkok, Nov. 201010 Case of CFL DSM Program in Maharashtra After repeated demands by consumer groups and commission utility implemented CFL DSM program Nearly 3,80,000 CFLs sold on installment basis Prayas Review of the program Estimated peak saving - 7 – 9 MW 50% CFLs failed in first six months! Clean Energy Regulation

11. Prayas - EGI Presentation - 14 IACC, Bangkok, Nov. 201011 Clean energy and regulatory governance … 1 Rapid shift towards clean energy (renewables and energy efficiency) is essential Need to strengthen regulatory governance For maintaining consumer confidence For maximum benefits within given financial resources

12. Prayas - EGI Presentation - 14 IACC, Bangkok, Nov. 201012 Clean energy and regulatory governance … 2 Specific attention required towards Removing information asymmetry Capital costs as well as fuel costs Mandatory disclosure requirements for project developers Third party, independent analysis Oversight on implementation Periodic performance reviews Stringent monitoring and verification mechanisms

13. Prayas - EGI Presentation - 14 IACC, Bangkok, Nov. 201013 Thank you. Shantanu Dixit Prayas Energy Group, Pune India shantanu@prayaspune.org www.prayaspune.org/peg Electricity Governance Initiative www.electricitygovernance.org