The Ministry of New and Renewable Energy (“MNRE”) has on October 17, 2022, published the “Draft National Repowering Policy for Wind Power Project, 2022” (“Draft Repowering Policy”). The Draft Repowering Policy has been published by MNRE after incorporating the feedback received from the stakeholders to the previous draft policy issued on August 5, 2016. The primary objective of the Draft Repowering Policy is to provide a facilitative framework for repowering of the old wind projects with sub megawatt (“MW”) scale wind turbines.
The National Institute of Wind Energy has estimated the repowering potential of the country to be 25.406 Gigawatt (“GW”) taking into consideration all wind turbines below the capacity of 2 MW. The Draft Repowering Policy has been framed based on the fact that latest indigenously developed wind turbines are providing a wind power harnessing capacity of more than 3 MW, and such repowering is necessary for optimum utilization of wind energy resource and maximizing energy (kWh) yield per sq. km of project area.
Certain pertinent points of the Draft Repowering Policy have been set out below:
- Eligibility: The Draft Repowering Policy identifies certain categories of wind turbines as eligible for repowering. This includes wind turbines: with less than 2 MW capacity; whose design life has expired; identified in accordance with quality control order issued under Bureau of Indian Standards Act, 2016. Further, a set of existing wind turbines over an area shall also be eligible if the project land is contiguous, all turbines being considered are connected to a single pooling sub-station and more than 90% of the total project capacity has completed design life.
- Repowering Project: The Draft Repowering Policy classifies any project satisfying the abovementioned eligibility criteria and where the enhancement potential is 1.5 times the aggregate capacity of old turbines as a repowering project. It further classifies a repowering project basis ownership of wind turbines as Standalone Project (owned by single entity); and Aggregation Project (owned by multiple owners with shared common infrastructure).
- Implementation Arrangement: The Draft Repowering Policy is to be implemented by the respective State Nodal Agencies (“SNA”) or the Central Nodal Agencies (“CNA”) in the following manner:
1. Standalone Project:
- SNA/ CNA will identify the potential turbines and elicit interest from project owner;
- Project owner may submit detailed project report (“DPR”) to SNA/ CNA;
- Based on the DPR, SNA/ CNA will coordinate with respective STU/CTU for transmission capacity availability/ augmentation; and
- Post such scrutiny, SNA/ CNA may provide consent letter to project owner after obtaining in-principle consent of incumbent distribution company (“DISCOM”).
2. Aggregation Project:
- SNA/ CNA will identify the potential turbines;
- SNA/ CNA may nominate any State/ Central public sector enterprise as Wind Repowering Project Aggregators or elicit interest from private developers (“WRPA”);
- The selection process of private developer as WRPA shall be transparent and based on minimum technical criteria and post obtaining consent letters from identified turbine owners;
- Role of WRPA: The WRPA will be responsible for preparation of the DPR; land acquisition; acquisition of the wind turbines and other related assets (valuation of such assets shall be as per standard market practices, the indicative methodology of which has been annexed to the Draft Repowering Policy), decommissioning of the existing assets, removal and lawful disposal of all scraps from site as per the applicable anti-pollution norms, preparation and development of the site without encumbrances as if it is a greenfield project;
- WRPA shall submit the DPR to concerned SNA and then the concerned SNA/CNA can proceed with the DPR in the same manner as under Standalone Project. However, the SNA/CNA is also required to facilitate acquisition of additional land, if required, for repowering of Aggregation Project.
3. Repowering Implementation Framework: Within 1 (one) month of announcement of finalized version of the Draft Repowering Policy, MNRE will appoint a monitoring and advisory committee named as Wind Repowering Committee to assist MNRE in implementation of the Draft Repowering Policy.
4. Arrangement of Power Purchase: The Draft Repowering Policy provides the following arrangement for power purchase:
- The average of 3 years generation prior to repowering will be continued to be purchased as per the terms of the relevant power purchase agreement (“PPA”) till the end of its tenure. In an event where the PPA tenure is less than 25 years, the relevant DISCOM will extend the tenure of the PPA such that it is equivalent to 25 years from the date of commencement of the project.
- Project developers will have the liberty to sell excess power generated to incumbent DISCOM at the discovered tariff, or to any third party, subject to the DISCOMs refusal to purchase such excess power.
- Wind project undergoing repowering will be exempted from supplying power to purchasing entity during the repowering of wind project which should not exceed 2 years from the date of commencement of works.
- Project developers will have the liberty to seek early termination by mutual consent of both parties.
- Incumbent DISCOM will neither have a right nor an obligation to purchase additional power generated after repowering.
- In case of repowering of wind project under captive/ third party sale PPAs, the consumer will be allowed to purchase power from grid during the repowering, as per relevant rules & regulations. SNA/ CNA may coordinate with DISCOMs for facilitating such connection/ load for a temporary period, as per existing provisions of DISCOM.
5. Incentive: The Draft Repowering Policy identifies the following incentives for repowering a wind project:
- Additional interest rate rebate of 0.25% over and above the interest rate available to new wind project financed by Indian Renewable Energy Development Agency.
- Fiscal and financial benefits available to new wind projects will be available to the repowering project as per applicable conditions.
- Central and State government may consider a scheme to provide additional financial incentives for repowering project, in order to support additional investment required in repowering projects in comparison to greenfield projects. Further, repowering project sites may also be considered under the relevant renewable park schemes and avail similar benefits.
- Wind renewable purchase obligations of concerned States will be exempted for the remaining period till commissioning of the repowered project (plant load factor from the repowering projects will be calculated based on the average PLF over the last 3 years prior to the commencement of repowering of the project).
- An enhanced RPO multiplier will be provided for the repowered project, for the remaining period of the PPA (as per the formula provided in the Draft Repowering Policy).
- Additionally, for long term PPAs, the Draft Repowering Policy takes note of the fact that the WRPA would incur additional cost for decommissioning and disposal of old wind assets. The Draft Repowering Policy provides that the said cost may be partly compensated by income from sale of scrap metal. Accordingly, the Draft Repowering Policy provides a set of equations in Annexure 1 for calculation of the Repowering Site Preparation Cost.
MNRE has invited comments on the Draft Repowering Policy from the stakeholders by November 1, 2022.
Please find attached a copy of the Draft Repowering Policy.
This update has been contributed by Rachika A. Sahay (Partner) and Siddhant Satapathy (Associate).
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