KERC regulations a challenge to wind, solar energy: ICRA

The Karnataka Electricity Regulatory Commission's (KERC) recently approved mechanism for forecasting, scheduling and deviation settlement is likely to pose a challenge for wind and solar power generators in Karnataka, says ICRA.
"The recent KERC regulations pose a challenge to wind and solar energy generation entities in Karnataka due to the variable and intermittent nature of generation from these sources and the limited track record and experience of the Indian renewable energy (RE) players in forecasting with the required accuracy (+/-15%)," ICRA Senior Vice President Sabyasachi Majumdar said in a press release.
According to statement, this forecasting framework is likely to have a negative impact on the cash flows and project internal rate of return (IRR) for wind and solar power projects, especially if the actual overall deviation (mix of over-generation and under-injection) exceeds 30 per cent of the scheduled generation.

Among the two main RE sources, namely wind and solar, impact for solar energy generation projects due to the deviation penalty mechanism is expected to be relatively lower due to lesser variability in solar energy generation.
In order to comply with these regulations, so as to avoid the aforementioned hit on cash flows, generators would need to upgrade the requisite IT infrastructure, mainly for metering at pooling substations and transmission of energy generation data on a spot basis to the state load dispatch centre, it said.
KERC, vide its notification dated May 31, 2016, has approved the KERC (Forecasting, Scheduling, Deviation settlement and related matters for wind and solar generation sources) Regulations, 2015.

As per the approved framework, scheduling and forecasting of generation is required on a day-ahead and weak-ahead basis, at intervals of 15 minutes for wind and solar power projects connected to the intra-state grid and selling power within the state, with the permissible deviation in scheduled generation in the range of +/- 15 per centand deviation charges applicable for a higher range, it said.

The regulation's objective is to facilitate the integration of wind and solar power projects with the grid, while maintaining grid security, stability and reliability.
Final regulation by KERC follows CERC regulations on the forecasting and scheduling framework issued in August 2015, which are applicable to the regional / inter-state entities.

ICRA also notes that SERCs in the other states - namely Rajasthan, Tamil Nadu, Odisha and Jharkhand - are expected to come out with final orders in the near term, where draft regulations are currently under evaluation.