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Clean Energy and Regulation: Challenge of information asymmetry and weak oversight

Clean Energy and Regulation: Challenge of information asymmetry and weak oversight. Shantanu Dixit Prayas (Energy Group) Electricity Governance Initiative. Agenda. Clean energy challenge Clean energy regulation – cases from India Clean energy and regulatory governance.

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Clean Energy and Regulation: Challenge of information asymmetry and weak oversight

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  1. Clean Energy and Regulation: Challenge of information asymmetry and weak oversight Shantanu Dixit Prayas (Energy Group) Electricity Governance Initiative Prayas - EGI Presentation - 14 IACC, Bangkok, Nov. 2010

  2. Agenda • Clean energy challenge • Clean energy regulation – cases from India • Clean energy and regulatory governance Prayas - EGI Presentation - 14 IACC, Bangkok, Nov. 2010

  3. 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 Prayas - EGI Presentation - 14 IACC, Bangkok, Nov. 2010

  4. 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 Prayas - EGI Presentation - 14 IACC, Bangkok, Nov. 2010

  5. Clean Energy Regulation 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 Prayas - EGI Presentation - 14 IACC, Bangkok, Nov. 2010

  6. Clean Energy Regulation 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” Prayas - EGI Presentation - 14 IACC, Bangkok, Nov. 2010

  7. Clean Energy Regulation 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% Prayas - EGI Presentation - 14 IACC, Bangkok, Nov. 2010

  8. Clean Energy Regulation 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) Prayas - EGI Presentation - 14 IACC, Bangkok, Nov. 2010

  9. Clean Energy Regulation Case of Wind Projects in India ….2 Prayas - EGI Presentation - 14 IACC, Bangkok, Nov. 2010

  10. Clean Energy Regulation 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! Prayas - EGI Presentation - 14 IACC, Bangkok, Nov. 2010

  11. 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 Prayas - EGI Presentation - 14 IACC, Bangkok, Nov. 2010

  12. 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 Prayas - EGI Presentation - 14 IACC, Bangkok, Nov. 2010

  13. Thank you. Shantanu Dixit Prayas Energy Group, Pune India shantanu@prayaspune.org www.prayaspune.org/peg Electricity Governance Initiative www.electricitygovernance.org Prayas - EGI Presentation - 14 IACC, Bangkok, Nov. 2010

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