The art of war....

The enemy invariably attacks on two occasions:
1. when they're ready.
2. when you're not.

Energy Efficiency Services Limited (EESL)...

It has been estimated that energy efficiency can result in energy savings to the tune of 75.36 billion units. This consists of 27.79 billion units in agriculture pumping, 1.98 billion units in commercial buildings/commercial establishments with connected load of more than 500 KW, 2.88 billion units in municipalities, 24.16 billion units in domestic sector and, 18.57 billion units in industry including SMEs.

S.No.	Sector		Consumption (Billion KWh)		Saving Potential (Billion KWh)
1.	Agriculture Pumping		92.33		27.79
2.	Commercial Buildings/ Establishments with connected load > 500 KW		9.92		1.98
3.	Municipalities		12.45		2.88
4.	Domestic		120.92		24.16
5.	Industry (including SMEs)		265.38		18.57
Total		501.00		75.36

The above figures have been arrived at in a recent report of National Productivity Council which assessed energy saving potential in these sectors. This does not include thermal energy saving potential in industries. It can therefore be said that 15% of the electrical energy consumed in the country can be saved through energy efficiency efforts. Every unit that is saved on the demand side is equal to around two units being generated and this indicates that more than double of these numbers need not be generated on the supply side once energy efficiency measures are undertaken. Electricity generation being twice the electricity consumed is due to plant load factor and aggregate technical and commercial losses (AT&C). Out of our total generation capacity of more than 140,000 MW, approximately 21,000 MW capacity additions can be avoided if we can harness the energy efficiency potential. 1 MW generation capacity based on coal requires between Rs. 4 – 5 crores of investment whereas avoided generation capacity addition through energy efficiency measures requires less than Rs. one crore. Simply put, Energy efficiency is a source of energy available at 25% of the cost of a thermal power plant and is waiting to be harnessed.

Renewable Energy Certificates..!!

Promotion of Renewable Energy Sources:
The Electricity Act 2003 has specific provisions for development of Renewable Energy Sources. Section 86(1)(e) and Section 61(h) are key sections providing promotional measures for RE. Several Regulators have determined ‘‘Feed-in’’ tariffs form purchase of renewable energy by distribution licensees. More than 20 Regulators have also determined percentage of energy to be procured by distribution licensees from renewable energy sources. These percentages popularly referred to as RPS or Section 86(1)(e) obligation have proved successful for promotion of RE in India.

Section 86(1)(e):(Functions of State Commission): promote co-generation and generation of electricity from renewable sources of energy by providing suitable measures for connectivity with the grid and sale of electricity to any person, and also specify, for purchase of electricity from such sources, a percentage of the total consumption of electricity in the area of a distribution licensee;

Section 61(h) (Tariff regulations): the promotion of co-generation and generation of electricity from renewable sources of energy;

Renewable Energy Certificates (RECs) are a type of environmental commodity intended to provide an economic incentive for electricity generation from renewable energy sources. If Renewable energy such as wind or solar power is to be supported for global, environmental or a country’s energy security objective, it does not matter where the solar or the wind plant is located. In such a case, RECs are ideal because they can come from the location where wind or solar resources make its use practical or cost effective. In addition, even if an area is windy, it may not be suitable for a wind project because of proximity to habitation, bird flyways, or parks or wilderness areas, REC’s are good option as they address the constraints related to the site specific nature of many renewable.

An REC is created when one megawatt hour of electricity is generated from an eligible renewable energy resource.REC represents the entire benefit of renewable energy based electricity over electricity from non-renewable resources. Typically, RECs are unbundled and sold separately, from the underlying electricity generated. When purchased, the owner of REC is considered to have purchased renewable energy. While traditional carbon emissions trading programmes promote low carbon technologies, RECs can create an incentive mechanism to promote renewable energy by providing an additional revenue stream to electricity generated from renewable sources.

Market for Renewable Energy Certificates: The demand for renewable energy certificates can be created through compliance or voluntary markets. Compliance markets are often created by a policy that stipulates a Renewable Portfolio Standard through which the electric utilities are required to supply a certain percentage of their electricity from renewable generators by a specified year. Voluntary markets are created where customers choose to buy renewable power, out of range of concerns such as reducing their climate change footprint or due to a broader attempt to become ‘green’. Renewable Energy Generators that do not have a Renewable Portfolio Standard can sell their RECs to voluntary buyers, usually at a cheaper price that compliance market RECs.

Potential Application in India: In India, with the rising demand for power and the depleting energy resources for power generation, Renewable Energy Certificates (REC) are set to bring about a paradigm shift in the way the renewable based electricity would be promoted in future. It would prove to be a market-based instrument to promote renewable energy and facilitate renewable energy portfolio obligations which can make the renewable electricity market stable and predictable by maximizing the benefits of renewable generation while reducing costs. Besides, introduction of tradable REC could provide one additional source of revenue to the RES based power generators and these could also be used by those states, which do not have substantial RE resources, to meet their RPO.

There is an uneven distribution of renewable energy potential in the country, certain states are generating high percentage of electricity from renewable sources while others are not procuring even a minimum percentage; resulting in uneven tariff burden on consumers across the country. A REC system could help offset, to a certain extent, this anomaly. REC Mechanisms enable market growth and improve the commercial viability of the RE electricity. REC measures can provide a greater push to RE electricity by way of removing the bottlenecks like higher costs, uneven distribution of RE resources across India, and scheduling or despatchability of RE electricity, in procurement of RE electricity by utilities. REC's mechanisms merit considerations, and has been used extensively as a successful market based policy instrument to promote renewables in many countries and which would be relevant in the current legal and regulatory set-up of the Indian Power sector for facilitating compliance with RPO/RPS. The ministry of new and renewable energy is conducting a feasibility study for introducing renewable energy certificates. "One certificate will be equal to 1 MW he of renewable energy generated. The certificates can be traded to meet the mandatory targets of renewable energy purchase.

Day by day the cycle of climate on earth is changing. Rapid economic development and incessant tapping of natural resources have posed severe problems for the life system on our planet. Mankind now confronts by far the biggest environmental challenge in the form of Global Warming: the gradual increase in the Earth’s temperature, which brings about noticable change in the climatic condition. Global Warming has led to season shifting, changing landscapes, rising sea levels, increased risk of drought and floods, stronger storms , increase in heat related illness and diseases all over the world. Across the world, there is growing concern about global warming and its impact on the earth’s ecosystem. Carbon dioxide levels are at their highest since
the industrial revolution and are continuously rising. Today, most scientists agree that global warming in the last few decades has primarily been caused due to human activities which have increased the release of Greenhouse Gases in the atmosphere, deforestation, urbanization etc. Day by day the cycle of climate on earth is changing. Rapid economic development and incessant tapping of natural resources have posed severe problems for the life system on our planet. Mankind now confronts by far the biggest environmental challenge in the form of Global Warming: the gradual increase in the Earth’s temperature, which brings about noticable change in the climatic condition. Global Warming has led to season shifting, changing landscapes, rising sea levels, increased risk of drought and floods, stronger storms , increase in heat related illness and diseases all over the world. Across the world, there is growing concern about global warming and its impact on the earth’s ecosystem. Carbon dioxide levels are at their highest since
the industrial revolution and are continuously rising. Today, most scientists agree that global warming in the last few decades has primarily been caused due to human activities which have increased the release of Greenhouse Gases in the atmosphere, deforestation, urbanization etc.

FFTs : Food for thoughts...!!

Murphy's law: "Anything that can go wrong, will go wrong".

The Dilbert Principle : "Leadership is nature's way of removing morons from the productive flow".
                                                                                            .                                     
The Peter Principle : "In a hierarchy every employee tends to rise to his level of incompetence".
                                                                                                                            
Dunning–Kruger effect : "The miscalibration of the incompetent stems from an error about the self, whereas the miscalibration of the highly competent stems from an error about others" or,
"The best lack all conviction, while the worst are full of passionate intensity".

Parkinson's Law: "Work expands so as to fill the time available for its completion".

Putts Law: "Technology is dominated by two types of people:  those who understand what they do not manage and those who manage what they do not understand."

Delhi power "Codes"..!!

Supply Code:

http://www.derc.gov.in/Regulations/DERCRegulations/Regulations2007/SupplyCode.pdf

Grid Code:

http://www.delhisldc.org/resources/regulation.pdf

R-APDRP (Part A/Part B Project) Guidelines..

Introduction
The Govt. of India has proposed to continue R-APDRP (Restructured - Accelarated Power Development and Reforms Programme) Power during the XI Plan (2007-2012) with revised terms and conditions as a Central Sector Scheme. The focus of the programme shall be on actual, demonstrable performance in terms of sustained loss reduction. Establishment of reliable and automated systems for sustained collection of accurate base line data, and the adoption of Information Technology in the areas of energy accounting will be essential before taking up the regular distribution strengthening projects.

Programme Coverage
It is proposed to cover urban areas - towns and cities with population of more than 30,000 (10,000 in case of special category states). In addition, in certain high-load density rural areas with significant loads, works of separation of agricultural feeders from domestic and industrial ones, and of High Voltage Distribution System (11kV) will also be taken up.

Further, towns / areas for which projects have been sanctioned in X Plan R-APDRP shall be considered for the XI Plan only after either completion or short closure of the earlier sanctioned projects.

Proposed Scheme

Projects under the scheme shall be taken up in Two Parts. Part-A shall include the projects for establishment of baseline data and IT applications for energy accounting/auditing & IT based consumer service centres. Part-B shall include regular distribution strengthening projects. The activities to be covered under each part are as follows:

Part - A: Preparation of Base-line data for the project area covering Consumer Indexing, GIS Mapping, Metering of Distribution Transformers and Feeders, and Automatic Data Logging for all Distribution Transformers and Feeders and SCADA / DMS system (only in the project area having more than 4 lacs population and annual input energy of the order of 350 MU). It would include Asset mapping of the entire distribution network at and below the 11kV transformers and include the Distribution Transformers and Feeders, Low Tension lines, poles and other distribution network equipment. It will also include adoption of IT applications for meter reading, billing & collection; energy accounting & auditing; MIS; redressal of consumer grievances; establishment of IT enabled consumer service centres etc. The base line data and required system shall be verified by an independent agency appointed by the Ministry of Power. The list of works is only indicative.

Part - B: Renovation, modernization and strengthening of 11 kV level Substations, Transformers/Transformer Centers, Re-conductoring of lines at 11kV level and below, Load Bifurcation, feeder separation, Load Balancing, HVDS (11kV), Aerial Bunched Conductoring in dense areas, replacement of electromagnetic energy meters with tamper proof electronics meters, installation of capacitor banks and mobile service centres etc. In exceptional cases, where sub-transmission system is weak, strengthening at 33 kV or 66 kV levels may also be considered.

Eligibility Criteria for R-APDRP assistance

The States / Utilities will be required to:

1).  Constitute the State Electricity Regulatory Commission

2).   Achieve the following target of AT&C loss reduction at utility level:

a).  Utilities having AT&C loss above 30%: Reduction by 3% per year

b).   Utilities having AT&C loss below 30%: Reduction by 1.5% per year

3).   commit a time frame for introduction of measures for better accountability at all levels in the project area

4).   submit previous year’s AT&C loss figures of identified project area as verified by an independent agency appointed by Ministry of Power (MoP) by 30th June; the independent agency would verify that:

a).   All input points are identified and metered with downloadable meters for energy inflow accounting in scheme area

b).   All outgoing feeders are to be metered in substation with downloadable meters

c).    Scheme area should be ring fenced i.e. export and import meters for energy accounting shall be ensured besides segregating the rural load of the scheme area by ring fencing if not on separate feeder

d).   The above shall provide the input energy and corresponding cash collected for calculating AT&C losses. The same shall be carried out for at least for three billing cycles and got verified by the independent agency. This loss level will be the baseline for considering conversion of loan into grant for Part B projects

5).   Devise a suitable incentive scheme for staff linking to achievements of 15% AT&C loss in the project area.

Funding Mechanism

1).   GoI will provide 100% Loan for part A of the R-APDRP schemes which shall include projects for establishing Base Line data and IT applications for energy accounting/ auditing and IT based consumer services etc.

2).   GoI will provide up to 25% (90% for special category States) Loan for Part B of the R-APDRP schemes which shall include regular distribution strengthening projects.

3).   The entire loan from GoI will be routed through PFC/REC (FIs) for the respective schemes funded by them.

4).   The counterpart funding will be done by PFC/REC (FIs) as per its prevailing policy.

5).   PFC / REC will be the prime lender for funding these schemes. In case of default by the utility the commercial loan of PFC / REC will be recovered first (being the primary Lender) before that of any other lender for funding such schemes.

Conversion of GoI Loan to Grant:

1).   The entire amount of GoI loan (100%) for part A of the project shall be converted into grant after establishment of the required Base-Line data system within a stipulated time frame and duly verified by TPIEA.

2).   Up to 50% (90% for special category States) loan for Part-B projects shall be converted into grant in five equal tranches on achieving 15% AT&C loss in the project area duly verified by TPIEA on a sustainable basis for a period of five years.

4).   If the utility fails to achieve or sustain the 15% AT&C loss target in a particular year, that year’s tranche of conversion of loan to grant will be reduced in proportion to the shortfall in achieving 15% AT&C loss target from the starting AT&C loss figure.

Competitive Bidding Guidelines - Power Procurement [Case I/Case II]

For long-term procurement under these guidelines, a two-stage process featuring separate Request for Qualification (RFQ) and Request for Proposal (RFP) stages shall be adopted for the bid process under these guidelines. The procurer may, at his option, adopt a single stage tender process for medium term procurement, combining the RFP and RFQ processes. Procurer or authorized representative shall prepare bid documents including the RFQ and RFP in line with these guidelines and standard bid documents.

5.2. The procurer shall publish a RFQ notice in at least two national newspapers, company website and preferably in trade magazines also to accord it wide publicity. The bidding shall necessarily be by way of International Competitive Bidding (ICB). For the purpose of issue of RFQ minimum conditions to be met by the bidder shall be specified by the procurer in the RFQ notice.

5.3. Procurer shall provide only written interpretation of the tender document to any bidder / participant and the same shall be made available to all other bidders. All parties shall rely solely on the written communication and acceptances from the bidders.

5.4. Standard documentation to be provided by the procurer in the RFQ shall include,

(i) Definition of Procurer’s requirements, including:

• Quantum of electricity proposed to be bought in MW. To provide flexibility to the bidders, this may be specified as a range, within which bids would be accepted. Further, the procurer may also provide the bidders the flexibility to bid for a part of the tendered quantity, subject to a given minimum quantity.
• The procurer may separately specify distinct baseload requirements and peakload requirements through the same bid process. Seasonal power requirements, if any, shall also be specified;
• Term of contract proposed; (as far as possible, it is advisable to go for contract coinciding with life of the project in case of long term procurement). The bidder shall be required to quote tariff structure for expected life of the project depending upon fuel proposed by him. The expected life project is estimated to be 15 years for gas/liquid fuel based projects, 25 years for coal based projects and 35 years for hydro projects.
• Normative availability requirement to be met by seller (separately for peak and off-peak hours, if necessary);
• Definition of peak and off-peak hours;
• Expected date of commencement of supply;
• Point(s) where electricity is to be delivered;
• Wherever applicable, the procurer may require construction milestones to be specified by the bidders;
• Financial requirements to be met by bidders including, minimum net-worth, revenues, etc with necessary proof of the same, as outlined in the bid documents;

(ii) Model PPA proposed to be entered into with the seller of electricity. The PPA shall include necessary details on:

• Risk allocation between parties;
• Technical requirements on minimum load conditions;
• Assured offtake levels;
• Force majeure clauses as per industry standards;
• Lead times for scheduling of power;
• Default conditions and cure thereof, and penalties;
• Payment security proposed to be offered by the procurer.

(iii) Period of validity of offer of bidder;

(iv) Requirement of transfer of assets by the selected bidder (if any) to the procurer at the end of the term of the PPA.

(v) Other technical, operational and safety criteria to be met by bidder, including the provisions of the IEGC/State Grid Code, relevant orders of the Appropriate Commission (e.g – the ABT Order of the CERC), emission norms, etc., as applicable.

(vi) The procurer may, at his option, require demonstration of financial commitments from lenders at the time of submission of the bids. This would accelerate the process of financial closure and delivery of electricity;

(vii) The procurer and the supplier may exercise exit option subject to the condition that the new player satisfies all RFP conditions.

5.5. RFP shall be issued to all bidders who have qualified at the RFQ stage. In case the bidders seek any deviations and procurer finds that deviations are reasonable, the procurer shall obtain approval of the Appropriate Commission before agreeing to deviation. The clarification/revised-bidding document shall be distributed to all who had sought the RFQ document informing about the deviations and clarifications. Wherever revised bidding documents are issued, the procurer shall provide bidders at least two months after issue of such documents for submission of bids.

5.6. Standard documentation to be provided by the procurer in the RFP shall include,

(i) Structure of tariff to be detailed by bidders;

(ii) PPA proposed to be entered with the selected bidder.
The model PPA proposed in the RFQ stage may be amended based on the inputs received from the interested parties, and shall be provided to all parties responding to the RFP. No further amendments shall be carried out beyond the RFP stage;

(iii) Payment security to be made available by the procurer.
The payment security indicated in the RFQ stage could be modified based on feedback received in the RFQ stage. However no further amendment to payment security would be permissible beyond the RFP stage.

(iv) Bid evaluation methodology to be adopted by the procurer including the discount rates for evaluating the bids.

The bids shall be evaluated for the composite levellised tariffs combining the capacity and energy components of the tariff quoted by the bidder. In case of assorted enquiry for procurement of base load, peak load and seasonal power, the bid evaluation for each type of requirement shall be carried out separately. The capacity component of tariffs may feature separate non-escalable (fixed) and escalable (indexed) components. The index to be adopted for escalation of the escalable component shall be specified in the RFP. For the purpose of bid evaluation, median escalation rate of the relevant fuel index in the international market for the last 30 years for coal and 15 years for gas / LNG (as per CERC’s notification in (vi) below) shall be used for escalating the energy charge quoted by the bidder. However this shall not apply for cases where the bidder quotes firm energy charges for each of the years of proposed supply, and in such case the energy charges proposed by the bidder shall be adopted for bid evaluation. The rate for discounting the combination of fixed and variable charges for computing the levellised tariff shall be the prevailing rate for 10 year GoI securities;

(v) The RFP shall provide the maximum period within which the selected bidder must commence supplies after the PPA is entered into by the procurer with the selected bidder, subject to the obligations of the procurer being met. This shall ordinarily not be less than four years from the date of signing of the PPA with the selected bidder in case supply is called for long term procurement. The RFP shall also specify the liquidated damages that would apply in event of delay in supplies.

(vi) Following shall be notified and updated by the CERC every six months for the purpose of bid evaluation:

1. Applicable discount rate
2. Escalation rate for coal
3. Escalation rate for gas /LNG
4. Inflation rate to be applied to indexed capacity charge component.

Bid submission and evaluation

5.7. To ensure competitiveness, the minimum number of qualified bidders should be at least two other than any affiliate company or companies of the procurer. If the number of qualified bidders responding to the RFQ/RFP is less than two, and procurer still wants to continue with the bidding process, the same may be done with the consent of the Appropriate Commission.

5.8. Formation of consortium by bidders shall be permitted. In such cases the consortium shall identify a lead member and all correspondence for the bid process shall be done through the lead member. The procurer may specify technical and financial criteria, and lock in requirements for the lead member of the consortium, if required.

5.9. The procurer shall constitute a committee for evaluation of the bids with at least one member external to the procurer’s organisation and affiliates. The external member shall have expertise in financial matters / bid evaluation. The procurer shall reveal past associations with the external member - directly or through its affiliates - that could create potential conflict of interest.

5.10. Eligible bidders shall be required to submit separate technical and price bids. Bidders shall also be required to furnish necessary bid-guarantee along with the bids. Adequate and reasonable bid-guarantee shall be called for to eliminate non-serious bids. The bids shall be opened in public and representatives of bidders desiring to participate shall be allowed to remain present.

5.11. The technical bids shall be scored to ensure that the bids submitted meet minimum eligibility criteria set out in the RFP documents on all technical evaluation parameters. Only the bids that meet all elements of the minimum technical criteria set out in the RFP shall be considered for further evaluation on the price bids.

5.12. The price bid shall be rejected if it contains any deviation from the tender conditions for submission of price bids.

5.13. Wherever applicable, the price bid shall also specify the terminal value payable by the Procurer for the transfer of assets by the selected bidder in accordance with the terms of the RFP.

5.14. The bidder may quote the price of electricity at the generating station bus-bar (net of auxiliaries), or at the interface point with the State transmission network. For purposes of standardization in bid evaluation, the tariffs shall be compared at the interface point of the generator/supplier with the State transmission network. In case the bidder quotes his rate at the generating station bus-bar, normative transmission charges for the regional/inter-regional network, if applicable, based on the prevailing CERC orders shall be added to the price bid submitted. The charges for the State transmission network shall be payable by the procurer, and shall not be a part of the evaluation criteria.

5.15. The bidder who has quoted lowest levellised tariff as per evaluation procedure, shall be considered for the award. The evaluation committee shall have the right to reject all price bids if the rates quoted are not aligned to the prevailing market prices.

Deviation from process defined in the guidelines
5.16. In case there is any deviation from these guidelines, the same shall be subject to approval by the Appropriate Commission. The Appropriate Commission shall approve or require modification to the bid documents within a reasonable time not exceeding 90 days.

Arbitration
5.17. The procurer will establish an Amicable Dispute Resolution (ADR) mechanism in accordance with the provisions of the Indian Arbitration and Conciliation Act, 1996. The ADR shall be mandatory and time-bound to minimize disputes regarding the bid process and the documentation thereof.

If the ADR fails to resolve the dispute, the same will be subject to jurisdiction of the appropriate Regulatory Commission under the provisions of the Electricity Act 2003.