1. (PACE-D) Partnership to Advance Clean Energy-Deployment (PACE-D) “Strategy for Development of RE Hybrids in Karnataka” September 11, 2015

2. Background Technical Aspects of RE Hybrids Commercial/Financial Aspects of RE Hybrids Regulatory Aspects of RE Hybrids Potential Policy & Regulatory Intervention Measures 2 Content

3. Background 3

4. With deployment of over 23 GW of Wind Power installations and over 4 GW Solar Power, we have a matured market for Wind and Solar Government has announced ambitious target of over 100 GW of Solar and 60 GW of Wind capacity addition by 2022 However, development of standalone Sol ar and Wind power projects have following limitations : Limited scope for optimization of Land & harnessing of RE resource Higher capital cost and higher project development time Separate connectivity & evacuation infrastructure High cost of interconnection & evacuation infrastructure and lower utilisation Variable power generation profile with seasonal variation in power output 4 Driving Factors for Utility Scale Hybrid RE (Wind-Solar)  Large scale deployment of Wind Solar RE Hybrid can be preferred solution to achieve the ambitious plans to accomplish RE capacity targets of 100 GW Solar and 60 GW Wind by 2022  This is crucial as vast requirement for land acquisition (procurement/lease) for 100 GW Solar can be optimized and PE infrastructure available at existing wind farms can be exploited

5. Karnataka is bestowed with vast Renewable Energy potential. Parts of the State is blessed with Wind and Solar Energy resources, ideal sites for implementation of utility scale Hybrid RE (Wind-Solar) Projects However, no utility scale Hybrid RE Project (Wind-Solar) has been implemented in any State across India In this context, a Comprehensive study for development of suitable framework for promotion of Wind-Solar Hybrid RE Projects in the state is necessary Study initiated by PACE-D TA program to comprehensively cover technical, commercial and regulatory aspects of RE Hybrid development : –Identifying challenges for deployment of RE Hybrids in the state of Karnataka –Formulating suitable regulatory intervention measures and policy framework necessary to address the challenges –Enabling framework for existing Wind / Solar Power Developers in the state to explore options for development of Brownfield & Greenfield Hybrid RE projects in the State 5 Background to Hybrid RE Study in Karnataka

6. Assessment of RE Hybrid potential in Karnataka 6

7. Progress in RE development in Karnataka ( As of July 2015, KREDL ): While 65% of the state RE potential has been allocated for RE Project development, only about 25% of such allotted RE project capacity has been commissioned so far Several high wind resource rich sites have not been exploited despite allotment. Difficulty in establishing sustainable supply chains has resulted in stranded investments Land acquisition is the biggest challenge to the deployment of RE in the state* *Climate Parliament Nov’14 Report on Re-Energizing Karnataka 7 RE Potential & Assessment in Karnataka RE Source Potential Capacity (MW) Capacity Allotted (MW) Capacity Commissioned (MW) Wind 13,98313,2452,686 Small Hydro 3,0003,001811 Solar Grid 10,0001,100101 Co-generation 2,0001,7791,191 Biomass 1,000370113 Municipal Solid Waste 135260 TOTAL 30,11819,5214,902

8. 8 Typical Load and Wind Generation Profile in Karnataka  Maximum Generation from Wind Energy at any point was ~ 1200 MW as against installed Wind Power Plant capacity of 2686MW in Karnataka. Thus, surplus capacity in existing Evacuation/Transmission N/W can be exploited  This presents an opportunity to improve Utilization factor for Grid/Tx network through Solar Power and combination of Wind-Solar Hybrid RE installations Source: Karnataka SLDC : Sample Daily Load-Wind Generation Profile

9. Wind & Solar Potential in Karnataka Wind Power Potential in Karnataka Potential (MW) Allotment (MW) Commissioned (MW) Solar Radiation (kWh/m 2 /day) in Karnataka < 5.0 5.31-5.40 5.0-5.10 5.41-5.50 5.11-5.20 5.50 & above 5.21-5.30

10. 10 RE resource (Solar & Wind) potential mapping for Karnataka Solar Radiation (kWh/m 2 /day) in Karnataka Below 5.0 5.01-5.10 5.11-5.20 5.21-5.30 5.31-5.40 5.41-5.50 Above 5.50 Total No. of Substations (Belgaum) 124 220 kV7 110 kV53 33 kV64 Total No. of Substations (Bagalkot) 64 220 kV3 110 kV36 33 kV25 Total No. of Substations (Chitradurga) 42 220 kV3 110 kV39 Total No. of Substations (Gadag) 22 220 kV1 110 kV14 33 kV7 Total No. of Substations (Karnataka) 1401 Mapping of Solar & Wind Resource Potential suggests ideal location for Wind Solar Hybrids RE are Chitradurga, Bagalkot, Gadag and Belgaum

11. 11 Voltage-wise Line Loading Capacity of substations – 1/2  However, CEA has published Manual for Transmission Planning Criteria, 2013 which outlines special dispensation and additional criteria for Wind and Solar Projects. Sr. No. Voltage (kV)Line Loading Capacity (MW) Sub-station Capacity (MVA) as per CEA Technical Standards 14004501500 MVA 2220250500 MVA 313290150 MVA 4662775 MVA CERC in its Regulations for ‘rates and charges for intervening transmission facility’ has specified the voltage-wise line loading capacity. Further, CEA (Technical Standards for Construction of Electrical Plants and Electric Lines) Regulations, 2007 and amendment in 2010, outline conditions for design of Substation Capacity and Transmission Lines

12. CEA’s Transmission Planning Criteria (Manual, 2013) The capacity factor for the purpose of maximum injection to plan the evacuation system, both for immediate connectivity with the ISTS/Intra-STS and for onward transmission requirement, may be taken as under: The ‘N-1’ criteria may not be applied to the immediate connectivity of wind/solar farms with the ISTS/Intra-STS grid i.e. the line connecting the farm to the grid and the step-up transformers at the grid station. As the generation of energy at a wind farm is possible only with the prevalence of wind, the thermal line loading limit of the lines connecting the wind machine(s)/farm to the nearest grid point may be assessed considering 12 km/hour wind speed. 12 Voltage-wise Line Loading Capacity of substations – 2/2  Additional Wind & Solar Generation capacity at Existing Grid S/S can be absorbed without significant augmentation requirement.

13. 13 Typical Generation Curve for Hybrid RE (Wind & Solar) Typical Daily Solar Power Generation Pattern Karnataka Typical Daily Wind Generation Pattern Solar generation results in flattening of the generation curve of Wind farm and increases its predictability

14. Simulation of Energy Mix of Wind & Solar (1/2) Wind Generation Profiling Solar Generation Profiling Simulation of Hybrid RE Gen. at Pooling S/S Sample data for Wind Power Project 3 days for 3 months June to August Time-blocks Sample data for Solar Power Project 3 days for 3 months (same sample days) June to August Time-blocks Extrapolation for 100 MW Wind PP Extrapolation for Solar PP Capacities ( 20/ 30 / 35 / 40 / 45 MW) Boundary Conditions Evacuation Capacity Minimizing Generation curtailment

15. 15 Simulation of Energy Mix for Wind & Solar (2/2)

16.  Exploring the appropriate Wind – Solar Mix for Brownfield as well as for Greenfield projects is the key for Optimum Utilization of the Evacuation system & cost saving  In the above scenarios, utilization of PE system up to 30-35% of existing Wind Capacity is possible without constraint  Thus, additional Solar capacity upto 30% - 35% is feasible for RE Hybrid Projects 16 Simulation results for Wind & Solar Generation Scenario

17. Technical Aspects of RE Hybrids 17

18. I.Interconnection Point II.Metering Point III.Transmission and Evacuation IV.Energy Accounting V.Scheduling and Forecasting 18 Key Technical Aspects for RE Hybrid

19. Interconnection & Metering Point: (1/2) Solar Capacity to be added in existing wind farm through separate feeders

20. Interconnection & Metering Point: (2/2) To be JMR point for Hybrid RE Existing JMR point Level of MeteringDescription 0Individual WTG/SG level 1 & 233 kV feeder level 3EHV side of pooling S/S at site 4Grid Substation of KPTCL Clear demarcation of Solar Generation and Wind Power Generation is important from perspective of energy accounting, scheduling requirement and RPO compliance Rules for Interconnection, Metering arrangement for RE Hybrids need to address these requirements

21. 21 Interconnection Point  Presently Grid substation to which the Wind project is connected Metering Point  Presently Grid substation  Existing framework not suitable for Hybrid  Existing framework considers single metering point for entire wind farm  Single metering point cannot account for Wind & solar generation separately for RPO  From perspective of RPO compliance Wind and Solar need to be separately metered  Interconnection point to be defined as HV side of Pooling substation  Metering points to be defined as either feeder level or individual generator level (i.e., level ‘0’ or ‘1’)  As a pre-condition, incoming feeders of pooling station to have all solar or all WTGs connected to it Existing Practice Challenges Recommendation for Hybrid Technical Aspects -Interconnection & Metering Point

22. 22  JMR conducted at grid substation  Energy credit on account of individual generator arrived at based on JMR reading & WTG controller data  Loss apportioning done among WTGs based on JMR reading & WTG controller data  Separate energy credit for Solar generators is not possible with no separate feeder metering at pooling station  Separate loss apportionment for Solar generator is not possible  JMR to be done at HV side as well as at incoming feeder level of the pooling substation  Additional Metering infrastructure to be in place at each incoming feeder level  Energy accounting and loss apportionment to individual generator to be based on JMR reading at new metering point at pooling substation and the controller reading Existing Practice Challenges Recommendation for Hybrid Technical Aspects -Energy & Loss accounting

23. 23  Entity for connectivity & planning -STU /Utility  Responsibility of setting up evacuation facility up to grid S/S – by Generator  Cost of setting up evacuation facility up to grid S/S – by Generator  Evacuation infrastructure in RE pockets to be strengthened  Evacuation infrastructure planning - no specific consideration for RE evacuation  No mechanism in place for sharing cost of evacuation with Utility  Transmission infrastructure planning to strengthen grid at wind-solar pockets of State  State level planning code to give priority for grid planning for RE Hybrid  SNA to assess & notify Hybrid Potential areas to STU to enable timely grid strengthening Existing Practice Challenges Recommendation for Hybrid Technical Aspects -Transmission & Evacuation Brownfield project  Upstream evacuation infrastructure need not be upgraded – avoided cost for Utility Green field project  Optimum capacity evacuation substation to be planned depending on Wind-Solar Hybrid potential in the region

24. Scheduling & Forecasting Forecast: Composite tool to be deployed for forecasting both wind and solar at the same site Generation schedule: Schedule to be generated at pooling station level Challenge: Treatment for deviation settlement for wind and solar is still evolving. IEGC/SEGC: Grid codes to have special provisions of deviation settlement of RE hybrid projects 24 Technical Aspects -Scheduling & Forecasting

25. Commercial/Financial Aspects of RE Hybrids 25

26. Case I- Wind (Existing) & Solar (New) - Brownfield Existing PE facilities could be shared, however some augmentation would be required like in transformers/Bays at the pooling stations for Dynamic loading Additional land would be required avoiding the area falling under zone of shadow Savings in O&M Cost (Common manpower for managing SCADA, security etc); O&M is panel cleaning, which requires water and such are not common to wind O&M Case-2: Wind & Solar (Both New) – Greenfield The infrastructure will be utilised optimally by the Hybrid RE system The general facilities like approach roads and logistical support will be shared. Allocation of common costs and shared infrastructure cost between wind and solar could be challenge. 26 Cost Benefit Parameters

27. Impact on CUF Shear Effect Defined as the variation of wind speed with height above ground level Have significant impact on wind turbine performance, aerodynamics and structural loads Wake Effect Depends on the thrust and the turbulence level at the turbine Generally considered in the design of a wind farm in order to maximize the energy output & lifetime of machines Main effects are reduction in wind speed & increase in wind turbulence Shadow Effect Bullet Alternating changes in light intensity that can occur at times when the rotating blades of wind turbines cast moving shadows on the ground or on structures Dependent upon wind direction and time of day Result in 1% to 2% loss in Solar CUF Additional Impacts: Decrease in wind PLF due to roughness factor of surface area by 0.5% if the solar panels are installed betn two turbines Turbine Blades flicker to impact the CUF of Solar

28. COG & Tariff Workings Assumptions Capital cost savings in terms of –Land Cost and site development cost –Cables and Transformers –Evacuation Infrastructure Savings in terms of O&M expense –(Sharing of common O&M contract) Reduction in CUF of Wind and Solar owing to –Shear Effect –Wake Effect –Shadow Effect

29. COG & Tariff Workings Capital Cost (Considering W:S capacity ratio of 70:30) S. NoParticulars Solar (Rs. Lakh/MW) Wind (Rs. Lakh/MW) Total Cost (Rs.Lakh /2MW) Total Cost (Rs. Lakh/MW) Total Cost (Rs. Lakh /2MW) Remarks Total Cost (Rs. Lakh/MW) A+B Wind+Solar (without cost saving) Hybrid (A, B) Capacity1MW 2MW1MW2MW 1MW 1Cost of Module per MW 356330686343686 343 2Land and Site development cost 253055284620% reduction23 3Civil and Ground works 5030804080 40 4Mounting Structure/tower 506011055110 55 5Power Conditioning Unit 450 2345 23 6Cables and Transformers4342854380 5% reduction @pooling S/S 40 7 Preliminary and operative expense IDC etc. (10% of total capital cost) 496010954109 54 8Evacuation transmission charges1042522652 20% reduction on Evacuation cost 26 9Connectivity Charges26848 4 10Total capital cost63060012306151216 608

30. COG & Tariff Workings Capital Cost scenario analysis for various Wind Solar Mix

31. COG & Tariff Workings CUF scenario analysis for various Wind Solar Mix

32. COG & Tariff Workings COG scenario analysis for various Wind Solar Mix

33. Estimated Benefit for Utility No. of Districts with predominant RE- hybrid potential in Karnataka Chitradurga, Bagalkot, Gadag & Belgaum Installed capacity of wind farms in each such Districts Chitradurga 726 MW Bagalkot ~50 MW Gadag 716 MW Belgaum 317 MW Total 1809 MW Solar capacity that could be added to existing Wind farms without PE infrastructure augmentation 30% of 1800 MW = 540 MW (considering 30% additional of existing wind installed capacity) Avoided cost for KPTCL of setting up of evacuation infrastructure for 540 MW (including transmission substation and line cost for 400 kV or 220 kV level) Rs. 540 Crore - Rs 650 Crore (Considering expected per MW cost of 1 Cr to 1.2 Cr for PE infrastructure)

34. Regulatory Aspects of RE Hybrids 34

35. 35 Tariff Aspects Separate FIT for Wind & Solar generation. Actual generation for Wind & Solar need to be metered separately Every unit of generation whether from wind or solar will receive the same tariff. Capacity share of Wind & Solar shall be the key determinant For each hybrid project separate tariff order depending on case specific parameters will have to be issued

36. 36 Tariff Aspects: A Comparison Separate Wind/Solar FITComposite TariffCase Specific Tariff Limited Regulatory Process Regulatory Process required to get tariff approved Regulatory Process required to get Tariff Approved for every project Flexibility for choosing the most economical wind: solar ratio will be highest Flexibility for choosing the most economical wind: solar ratio will be low. The regulators are unlikely to determine tariff for a range of ratios. Flexibility for choosing the most economical wind: solar ratio will be retained. But the rationale behind the ratio may have to be explained before the Commission during the proceedings For commercial purposes, wind and solar units will be operating separately Commercially and technically, the plant will be identified as a single source of energy Suitable for Greenfield as well as Brownfield project since it does not require revision of existing PPA Suitable for Greenfield projects since the existing PPA will not be applicable for and tariff is re- determined Suitable for Greenfield projects since the existing PPA will not be applicable for and tariff is determined for every project Exploring appropriate Tariff Model for Wind-Solar Hybrid is need of the hour Ease of implementation with separate accounting of Wind/Solar is important for RPO compliance Selected tariff model to be suitable for both Greenfield and Brownfield Projects Considering the above benefits, Separate Wind/Solar FiT Tariff is recommended

37. Potential Policy & Regulatory Intervention Measures 37

38. 38 Required Intervention Measures PolicyRegulationUtility Process Enabling Regulatory environment for RE Hybrid by KERC Facilitative framework of FiT, RPO and REC regulations and grid connectivity for RE Hybrids to be in place Guidelines & Eligibility Criteria for recognition of Hybrid RE Funding Support to STU/CTU through NCEF Provisioning of Fiscal Incentives/Benefits Amendment to Metering Procedure/Protocol Simplified procedures for Energy Accounting & Commercial Settlement Priority of preference in Transmission /Evacuation Planning

39. 39 Potential Policy Interventions Guidelines & Eligibility Criteria for recognition of Hybrid RE –MNRE to formulate suitable policy guidelines for promoting Hybrid RE –Eligibility criteria for Brownfield/Greenfield RE hybrids and eligible technology options to be framed; –Potential for Hybrid RE to be assessed or SNA to be identified for the same Funding Support to STU/CTU through NCEF –Funding support to STUs/CTUs through NCEF for augmenting Evacuation infrastructure development for Greenfield/Brownfield Wind-Solar Hybrid projects –Soft funding for Hybrid RE project developers from IREDA/REC/PFC Fiscal Incentives/Benefits –To attract wind farm owners to set up hybrid RE projects (brown field/green field) in the form of VAT exemptions, Tax benefits (Brownfield), continuation of AD benefits etc. –Concession/ Exemption on stamp duties, local taxes/entry taxes etc. –To compensate Loss of revenue to Wind farm owners due to loss of generation during construction & commissioning of Solar Power in case of Brownfield Hybrid RE project

40. 40 Potential Regulatory Interventions Grid Code provision for RE HybridGrid Code –Planning Code to be amended to add provision for consideration of strengthening of Evacuation Infrastructure in RE pockets of the State –Grid connectivity framework to be in place –Planning standards for Pooling S/S and Transmission Line Loading conditions to be modified to address RE Hybrid Installed Capacity requirements. FiT frameworkFiT framework –Notifying norms for composite tariff for Greenfield Hybrid RE project & Hybrid RE tariff determination –Provision for Brown field & Green field projects : project specific tariff and separate Solar – wind tariff to be continued to be applicable for Brownfield Hybrid RE projects Modification to RPO and REC regulations for RE Hybridto RPO and REC regulations –Separate RPO target for hybrid RE projects –Alternately, multiple Factor for RECs for Wind/Solar Generation by Hybrid RE project

41. 41 Potential Utility Process Interventions Amendment to Metering Procedure/ProtocolAmendment –JMR to be carried out at incoming feeder of LV side of pooling station –Additional JMR to be carried out at HV side of Pooling substation Simplified procedures for Energy Accounting & Commercial Settlement –Generation credit notes to be issued based on new JMR practice separately for Solar and Wind for hybrid RE projects Priority of preference in Transmission /Evacuation Planning –Transmission planning to consider potential RE hybrid pockets in the State –SNA to undertake hybrid RE potential assessment at clusters and intimate STU for grid strengthening in the region –Cost of strengthening of evacuation infrastructure beyond pooling substation (inter-connection point) to be borne by STU/Utility

42. 42 Way Forward Model Policy Guidelines for Hybrid RE Project development –Brownfield Hybrid RE projects –Greenfield Hybrid RE projects Model Regulatory Framework for RE Hybrid –FIT Framework and norms for hybrid RE –Modifications for Grid connectivity, Metering Code and Planning Code Development of Pilot Hybrid RE project scheme –Support in development of Brownfield hybrid RE project scheme and implementation support through regulatory process

43. Thank You 43

44. 44 Potential Regulatory Interventions Grid Code  Part 5 of the Karnataka Electricity Grid Code cover the transmission system planning and security standard.  Clause 1.0 under Part 5 of the Grid Code provides the scope of the standards which currently focus on conventional generation sources based transmission planning.  The said scope to be amended for including ‘additional criteria for evacuation planning for Wind-Solar Hybrid projects’ Provisions for consideration:  The ‘N-1’ criteria may not be applied to the immediate connectivity of wind/solar farms with the grid i.e. the line connecting the farm to the grid and the step-up transformers at the grid station.  The thermal line loading limit of the lines connecting the wind machine(s)/farm to the nearest grid point may be assessed considering average annual wind speed of the region.  Transmission infrastructure shall be planned on priority to evacuate power from RE pockets (wind-solar resource rich area) of the States...

45. 45 Potential Regulatory Interventions FIT frame work RPO frame work Greenfield  KERC to issue the Composite FIT for RE-Hybrid projects specifying tariff norms  Tariff norms under Composite FIT order could act as ceiling norms for projects wanting ‘project specific tariff’ in the State Brownfield  KERC Wind tariff order dated Feb 24, 2015 and Solar tariff order dated July 30, 2015 may be extended to hybrid technology such that Brownfield hybrid projects can avail separate FIT for wind and solar  Similar to model PPA for wind & solar technologies, model PPA for hybrid RE projects to be approved by KERC  KERC RPO Regulation, 2011 to is up for amendment (third)  Definition of ‘Renewable sources of energy’ in the said regulations, to be amended as below: “Renewable sources of energy means non-conventional, renewable electricity generating sources such as mini hydel, micro-hydel, wind, solar, biomass, urban/municipal waste, hybrid non-conventional sources or such other sources as approved by the MNRE, Govt. of India or Govt. of Karnataka”

46. 46 Potential Utility Process Interventions PPA for RE Hybrid  Model PPA for Wind-Solar hybrid projects approved by KERC to provide clarity on following aspects which shall be considered by Utility while executing PPA with Hybrid RE projects :  Interconnection Point : HV side of pooling substation  Metering points: at interconnection point as well as at individual incoming feeders at LV side of the pooling substation and wind generation and solar generation shall be separately metered.  Joint Meter Reading (JMR) to be carried out both the metering points (at interconnection point as well as at individual incoming feeders at LV side of the pooling substation); Utility may be paid additional administrative charges as approved by the Commission  Generation Credit Note shall be issued separately for wind and solar generation and separately accounted for.