Interview with Arvind Singh

“Maharashtra has completely shifted to competitive bidding”

Arvind Singh, Principal Secretary, Energy Department, Government of Maharashtra

Over the past one year, the Maharashtra government has been taking several initiatives to promote renewable energy development. The state has emerged as the leader in the country’s rooftop solar segment with the highest number of installations. It came up with utility-scale tenders for both solar and wind projects and received a huge response from the industry. Besides, it is actively taking steps to encourage investments in the bioenergy and decentralised renewable energy generation segments. In an interview with Renewable Watch, Arvind Singh, principal secretary, energy, Government of Maharashtra, highlighted the state’s progress in renewables, its plans for the sector and outstanding challenges. Excerpts…

What is the current power scenario in Maharashtra?

In the summer, the state had to manage a peak demand of about 25,000 MW while during the monsoon, the demand went down to 18,000 MW. The state has to prepare for this power demand range. Of the total installed capacity, approximately 70 per cent power comes from thermal plants, 20 per cent from non-conventional sources and 7 per cent from hydro projects. We expect the share of thermal to go down and that of non-hydro renewable sources to go up in the near future. We are planning to increase the share of non-hydro renewable energy to 30 per cent of the total installed power base in the state.

What have been the highlights in the renewable energy sector for Maharashtra so far in 2018?

The biggest highlight is that the state has completely shifted to a competitive bidding regime for allocating renewable energy projects. Earlier, all renewable energy PPAs were based on feed-in tariffs. The change has been smooth and has also garnered a good response from developers. Tariffs have dropped substantially since then. The auction to set up 1,000 MW of solar projects got the lowest bid of Rs 2.72 per unit while for a 500 MW wind tender, the lowest bid was Rs 2.65 per unit. Tariffs for bagasse-based cogeneration projects fell as well. For one such bid, the tariff fell below Rs 5 per unit. Now, the state has put a cap of Rs 4 per unit on the bidding of such projects. The state also introduced various programmes for decentralised solar generation. Last year, it launched the Chief Minister’s Solar Agricultural Feeder Scheme. We have also signed an MoU with Energy Efficiency Services Limited to set up solar projects on the vacant land near Maharashtra State Electricity Distribution Company Limited’s (MSEDCL) substations. In addition, the state is scaling up its solar pumps programme.

What has led the state government to move to competitive bidding?

We did not foresee any investments coming from the private sector to increase coal-based capacity as the thermal segment is under stress. For this reason, the state government took the initiative to invest money in the thermal space. State genco is playing a crucial role in scaling up the thermal capacity as well as in the replacement of old thermal stations. But for the renewable energy segment, the trends were different. We recognised investor appetite for renewable energy projects, specifically wind and solar. This was seen as an opportunity as the state has a huge wind and solar potential. This was also the reason behind the shift to the competitive bidding regime for renewable projects.

What are the state’s plans for the wind segment?

Apart from our own tender, the state has also participated in wind tenders floated by the Solar Energy Corporation of India and NTPC Limited. No new wind tender is planned in the near future. Our focus now will be to convert the old wind plants into hybrids. To facilitate this, we are thinking about coming up with a wind-solar hybrid bid and are also working on a few pilot hybrid projects in the state. We are confident that developers will be interested in investing in this segment. Earlier, this segment was facing the issue of delayed payments from discoms. However, the improvement in the financials of discoms has sorted this problem. The Indian Renewable Energy Development Agency and the Rural Electrification Corporation helped ease the financial strain on discoms by providing funds, making it possible for them to make timely payments.

What is the status of the Chief Minister’s Solar Agricultural Feeder Scheme?

The state currently has separate feeders for agricultural and provides uninterrupted power to commercial and industrial, and residential consumers in both urban and rural areas. But for agricultural consumers, power was supplied for just 8 to 10 hours and that too at night. This was done to achieve better load management and to avoid exploitation of groundwater by farmers. This was, however, not sufficient to meet the continuous rise in the demand for power for agricultural purposes. Also, the availability of power only at night caused inconvenience to farmers. In certain pockets of the state, there was an additional danger of getting attacked by wild animals at night. To solve these issues the state decided to supply power to agricultural feeders during the day. As part of this scheme, we are setting up small decentralised solar plants near agricultural feeders. With this, power will be supplied to agricultural pumps located in that area during the day.

Moreover, the pressure on the existing thermal projects to supply electricity to agricultural feeders will reduce and the grid will be in a position to supply electricity to new pumps that are being added. Work on setting up these solar projects has already started. The state generation and distribution companies have identified potential locations to set up solar projects. Both have also floated tenders for even 500 MW of projects each. The power purchase agreements (PPAs) are being appraised by the regulator. And once the PPAs are approved by the regulator, most of these projects will be on ground. Meanwhile, two pilot projects of 2 MW each have been executed and connected to the grid.

What is the current status of open access renewable energy segment in Maharashtra?

Maharashtra has the highest installed capacity of rooftop solar projects in the country. In a way, this promotes the open access of renewable energy. Regulations on captive power plants are already in place. We are in touch with all stakeholders who want changes in these regulations. The response from consumers for open access has been positive, although discoms have been wary of these developments. Discoms do not want to lose their high-end customers. If the high-paying consumers move away, how will they subsidise electricity for other consumers? Solving this problem is not easy. We will have to come up with some models where a win-win situation for both discoms and open access customers can be achieved. The state cannot have a model where some people gain at the expense of others.

Was Maharashtra affected by the whole issue of safeguard duties?

Most of our bids were carried out before the safeguard duty was imposed. And our next round of bidding will take place in the last quarter of the current financial year (when the duty will not be applicable). Nevertheless, developers are concerned about the uncertainty caused by these duties.

What steps are being taken to upgrade the state’s transmission infrastructure?

We are part of the Green Energy Corridors project, jointly funded by the Ministry of New and Renewable Energy and KfW. The state will receive approximately Rs 371 crores to build transmission lines for the evacuation of renewable energy. There are 23 individual projects for which we are building transmission infrastructure in wind-rich parts of the state such as Nashik, Satara and Aurangabad. This will help in faster evacuation of energy while reducing the congestion in the existing transmission network. (Transmission lines of 2,500 MW capacity have already been bid and will be developed by mid-2020). We are also working with Power Grid Corporation of India Limited to set up a renewable energy management centre at the SLDC.

What is the targeted energy mix over the next five years? What are the likely challenges?

In the long term, we want to generate 40 per cent of the total energy mix from renewables. However, renewable energy is highly intermittent. This leads to the challenge of uncertainty in generation and causes power fluctuations. We have to not only forecast the power generated but also make provisions to integrate it with the grid. I believe, in the coming years, the integration of renewables with storage technologies will change the face of this segment.

Last but not the least, we cannot completely ignore the role of thermal power. In the coming years, our baseload will continue to come from thermal plants as Maharashtra has to deal with heavy demand. This will propel us to have a balanced approach by focusing on both renewables and thermal energy.

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