The document discusses various regulatory issues related to wind power infrastructure development in India. It covers key stakeholders in wind energy, risks and their mitigation, factors to consider in project development, the tendering and contracting processes, ownership and financing models, and the relevant legal frameworks and incentives. The overall regulatory landscape for wind power is explained, with a focus on policies at central and state levels that promote renewable energy generation and address issues like land acquisition, permits, grid connectivity, and power purchase.

1. INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR
• INTRODUCTION
• STAKE HOLDERS
• RISK MITIGATION
• DEVELOPMENT CONSIDERATIONS
• TENDERING
• CONTRACT
• OWNERSHIP
• FINANCE MODELS
• LEGAL FRAMEWORK
• INCENTIVES
• WIND POWER IN INDIA
Presented by: P R AT E E K D A S G U P TA
PRANAV MISHRA

2. WIND ENERGY
India is blessed with 7517 km of coastline and
territory up to 12 nm into the sea. This is
where lies the potential of sustained energy
growth.
India is 5th largest producer of wind energy in
the world, with 16078 MW of installed
capacity ( Dec. 2011)
658 wind monitoring stations are set up by
MNRE, of which 75 are in operation.
Tamil Nadu, Maharashtra, Gujarat, Karnataka
are leading wind energy producers in India.
Short construction period and low O&M cost
makes it an attractive proposition.
Project life is 25 years.
INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR

3. S TA K E H O L D E R S
PRIMARY SECONDARY
Ministry of New &
Renewable Energy
Ministry of power
Ministry of environment and forest
IREDA (Finance) C-WET( R&D) (State agencies)
Department of science and technology
Implementing agencies and NGO’s
Central and state regulators
Manufacturer / vendors
Multilateral agencies
Users or consumers Education and research institutes
INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR

4. R I S K S A N D M I T I G AT I O N
Risk Mitigation
Wind availability Minimum 1-2 year site specific data
Equipments Performance data, warranties
Operations and maintenance Experienced managers, maintenance
contracts
Revenue Power purchase agreements
Construction Fixed completion dates and penalties,
performance bond
Force majeure Insurance
Transmission Interconnection agreements
Tax benefit utilizations
INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR

5. D E V E L O P M E N T C O N S I D E R AT I O N S
Legal issues
Choice of investment Contractual obligations
Type of development: •Land agreements
• Third party wind developer •Option to purchase
•Small turbine or lease
•Commercial scale wind •Purchase
project Major concerns •Lease
•Easement
•Covenant
•License
•Siting
Financial issues
•Environment
•Sources of initial project financing. •Electricity
•Steps in acquiring finance. •Other permissions
•Seed money to evaluate feasibility.
•Equity investment for pre construction
development
•Debt/equity for construction and operation. Business structure
•Financial models
INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR

6. D E V E L O P M E N T C O N S I D E R AT I O N S
ENERGY AND ELECTRICITY SUPPLY POLICIES
• National Development policies and plan.
• Implementation mechanisms for National Development plan.
• National policies for the Energy and Electricity sectors. Perceptions of major constraints, priorities.
• Electricity tariff policies.
• Environmental Protection Policies and their impact on the energy sector.
FINANCIAL MECHANISM
• Mechanisms for International Financing.
• Mechanisms for Local Financing.
INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR

7. TENDERS
Information provided by the owner Information requested from bidders
1. INVITATION LETTER 1. GENERAL INFORMATION
2. ADMINISTRATIVE INSTRUCTIONS 2. GENERAL TECHNICAL ASPECTS
3. GENERAL INFORMATION 3. TECHNICAL DESCRIPTIONS
4. TECHNICAL REQUIREMENTS 4. SCOPE OF SUPPLY AND SERVICES
5. SCOPE OF SUPPLY AND SERVICES 5. ALTERNATIVES AND OPTIONS
6. NATIONAL PARTICIPATION 6. QUALITY ASSURANCE PROGRAMME
7. BID EVALUATION CRITERIA 7. TRAINING
8. DRAFT CONTRACT TERMS AND CONDITIONS 8. PROJECT SCHEDULE
9. COMMERCIAL CONDITIONS 9. TECHNOLOGY TRANSFER
10. SAFETY AND SECURITY CONSTRAINTS 10. GUARANTEES AND WARRANTIES
11. DEVIATIONS AND EXCEPTIONS
12. COMMERCIAL CONDITIONS
INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR

8. CONTRACT
Contract Components
•Definitions •Licensing
•General clauses •Delivery times
•Object of the contract •Documentation
•Planning and execution of the work •Spare and wear parts, consumables and special
•Information, inspection, testing and control tools
•Assignment of the work and subcontracting •Guarantees or warranties
•National participation and technology transfer •Take-over
•Training of personnel •Prices, price adjustments and terms of payment
•Changes and additional work •Force majeure
•Transport and customs clearance •Termination and suspension of the contract
•Risks and transfer of title •Guarantee of title and proprietary information
•Liability •Execution of the contract
•Insurances •Applicable law
•Quality assurance •Arbitration
INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR

9. CHOICE OF INVESTMENT
A landowner has a windy site and he wants to utilize the wind, he can choose to :
Negotiate with the third party to develop project on his site
Install small turbine for on site energy use
Commercial scale production
Deciding factors for a landowner may be :
•Their financial situation
•Their comfort level with risk
•Time they can commit to develop the project
•Degree of interest
INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR

10. OWNERSHIP
Negotiate with the third party Install small turbine for on site energy use
•Selling or leasing their rights to someone else •Energy is used for own purpose
who will construct and operate wind energy •May cell excess electricity to grid.
power plant. •Net metering
•The developer will do all the work to develop, •Will have to comply vast array of regulations like
build and operate the plant. land use restrictions, environmental regulations.
•The owner will receive some rental or part of
revenue, as decided between them.
Commercial scale production
•Less risk to land owner.
•No initial capital investment required.
•Owner may invest directly on his own or with
•Land owner’s risk lies in carefully negotiating
collaboration with others.
legal agreements to ensure fair compensation,
•Power generated is sold for profit.
allocation of rights, responsibilities and risk.
•Expensive, time consuming and risky
•Usually, a developer approaches a land owner.
endeavor.
•Legal issues related to land, government laws
and liability concerns.
•Financing to be secured.
•Contract to sell in advance or PPA
•Business structure
•Access to the grid for transfer of electricity.
INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR

11. FINANCING
Sole ownership Models Local investor ownership
If the land owner has resources •Groups of individuals who
to put the project and can have purchased shares in the
provide required equity. project.
• formed as LLC (Limited
Liability Corporations)
•Investors are insulated from
liability and profit losses
Loan to own flows through to individual
members.
•Local investor group makes a loan to corporate
investor.
•Local investors would earn interest only over Joint ventures
term of the loan.
•Initially, corporate body is 100% owner and •An outside corporate investor joins hand with
receives all the project’s income, losses and tax local investors.
benefits. •Entails complex legal and tax challenges.
•At the end of the specified period, corporate
investors sell the project to local investors at a
pre negotiated price.
INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR

12. FINANCING
Project ‘lease’ Models Sweat equity
•It involves, leasing the •It is similar to the project lease
development rights to outside model.
investors. •But in this model, local investors
•Land owners will do the pre- are not retaining any ownership
development work. ( wind stake, either upfront or later.
monitoring, zoning, permissions, P •Rather, they receive a more
PA ) and contracting with project generous royalty stream.
operator. •It avoids legal tax and
• they lease the wind rights and management issues associated
assign a portion of PPA to with splitting ownership interests
investors. between corporate and local
•The investor would own the investors.
project for pre negotiated period
and landowner would receive a
negotiated royalty. Joint ventures
•At the end of the
period, landowners have option to •An outside corporate investor joins hand with local
purchase the project at fair market investors.
price. •Entails complex legal and tax challenges.
INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR

13. FINANCING
Sources
EQUITY DEBT
•One of the greatest hurdles for •Can be a challenging and time
wind projects consuming process.
•Potential sources for equity •Requires developers to
financing are : complete all the pre
•Strategic investors, such as development work.
utility companies or their •Potential sources of debt
subsidiaries. financing are :
•Institutional •Local lenders
investors, usually for large •Regional agricultural
commercial scale projects. lenders
•Corporate investors, who •Commercial banks
wants to reduce their tax •Commercial finance
liabilities by investing in •Vendor financing
green energy projects •Most projects are structured
with 40-70 % debt.
INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR

14. FINANCING
For getting a project financed…
Following information are required :
•A comprehensive wind monitoring study (minimum 1 year of data) conducted at the site
•A project feasibility study by a credible consultant
•Proven expertise in managing a wind project or an agreement with a qualified 3rd party project
manager
•Zoning and site permitting approval
•Turbine performance data
•Turbine warranties and operations and maintenance agreement
•A completed interconnection study
•A long-term power purchase agreement (at least 10 years and preferably 15 years) with a
creditworthy utility that will purchase the electricity generated at specified prices
•Commitments for all required equity
•A business, financial and risk management plan for the project including complete proforma
•financial statements
INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR

15. FINANCING
Schematic summary of wind financing structures
INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR

16. LEGAL FRAMEWORK
Siting Other issues to regulate are :
•Measuring the wind resource. •Duration of agreement.
•Access to electric grid. •Compensation.
•Impact on neighbors. •Uses of land
•Environmental impacts •Taxes
•Liabilities
•Assignment of contract by developer.
•Termination of agreement.
Wind and land agreement •End of project life.
•Dispute resolution.
•Property requirements.
•Eminent domain
•Property rights.
•Land
•Wind ( easements )
•Type of agreement Permissions
•Option to lease or purchase
•Right to first refusal •Land use
•Sale •Environment ( air, water, land, wetland)
•Lease •Local building and electrical codes
•Easement •Permission from aviation ministry.
•Permit or license •Historic preservation.
•Statement of need
INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR

17. LEGAL FRAMEWORK
Electricity regulatory commissions act, 1988
•The state commissions are key players for regulating the electricity sector
and including determining electricity tariffs
Electricity Act. 2003
•Promotes generation of electricity from renewable energy.
•Section 3 - National Electricity policy and plan including optimal
utilization of renewable energy.
•Section 4 – national policy permitting stand alone system for those
based on renewable source of energy.
•Section 61- appropriate commission while determination of tariff
shall be guided by promotion of generation and co generation of
electricity from renewable energy.
National Electricity Policy, 2005
•Aims at accelerated development of power sector, providing supply of
electricity to all areas and protecting interests of consumers and other
stakeholders
INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR

18. LEGAL FRAMEWORK
Integrated Energy Policy, 2006
•It emphasizes the use of renewable energy to reduce dependency on
energy imports
Rural Electrification Policy, 2006
•The policy recognized that non-conventional energy sources can be
appropriately and optimally utilized to make available reliable supply of
electricity to each and every household.
National Tariff Policy, 2006
•SERCs to fox minimum percentage of purchase of energy from renwable
energy sources, taking into account availability of such resources into the
region and its impact on retail tariff.
INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR

19. LEGAL FRAMEWORK
Renewable Energy Policy
•The broad objective of the draft policy are to meet a minimum energy
needs through renewable energy.
Foreign Investment Policy
•Foreign investors can enter into a joint venture with an Indian partner for
financial and/or technical collaboration and for setting up of RE-based
power generation projects
•Hundred per cent foreign investment as equity is permissible with the
approval of the Foreign Investment Promotion Board (FIPB).
•The Government of India encourages foreign investors to set up power
projects on BOO basis. Investors are required to enter into a power
purchase agreement with the concerned state government
•No prior approval of the government is required to set up an industrial
undertaking with Foreign Direct Investment (FDI) by Non-Resident Indians
(NRIs) or Overseas Corporate Bodies (OCBS)
•The Reserve Bank of India (RBI) has permitted Indian companies to
accept investment without obtaining prior approval from RBI. Investors
are required to notify the regional office of RBI, of receipt of inward
remittances within 30 days of such receipt.
INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR

20. LEGAL FRAMEWORK
Power Purchase Policy
•Policies introduced/incentives declared by the State Governments for
private sector Wind Energy projects
Industrial Policy
•MNES is promoting medium, small, mini and micro enterprises for
manufacturing and servicing of various types of RE systems and devices.
•Industrial clearances are not required for setting-up of an RE industry
•No clearance is required from Central Electricity Authority (CEA) for
power generation projects up to Rs 1,000 million
•A five-year tax holiday is allowed for RE power generation projects
•Soft loans are available through IREDA for RE equipment manufacturing
•Financial support is available to RE industries for R&D projects in
association with technical institutions
•Import of power projects are allowed
•Private sector companies can set up enterprises to operate as licensee or
generating companies
•Excise duty on a number of capital goods and instruments in the RE
sector has been reduced or exempted
INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR

21. INCENTIVES
Incentives for Investing in Renewable Energy Technology
•MNES provides financial incentives, such as interest and capital subsidy
•Soft loans are provided through:
•IREDA, a public sector company of the Ministry
•Nationalised banks and other financial institutions for identified
technologies/systems
•The government also provides various types of fiscal incentives for the RE
sector, which include:
•Direct taxes - 100 per cent depreciation in the first year of the
installation of the project
•Exemption/reduction in excise duty
•Exemption from Central Sales Tax, and customs duty concessions on
the import of material, components and equipment used in RE
projects
INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR

22. INCENTIVES
Concession under Income Tax Rules
•Section 32 - Accelerated 80% depreciation on specified RE- based
devices/projects.
•Section 80 IA - Industrial undertakings set up in any part of India for the
generation or generation and distribution of power, a 100% deduction is
allowable from profits and gains for first five years and thereafter 30% of
the profits and gains. Further, the Budget has also proposed a 10-year tax
holiday for the generation and distribution of power, to be availed during
the initial 15 years.
INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR

23. WIND POWER IN INDIA
The Ministry of New and Renewable Energy (MNRE) is the nodal Ministry of the Government of India
for all matters relating to new and renewable energy. The broad aim of the Ministry is to develop
and deploy new and renewable energy for supplementing the energy requirements of the
country. Creation CASE and Ministry:
•Commission for Additional Sources of Energy (CASE) in 1981.
•Department of Non-Conventional Energy Sources (DNES) in 1982.
•Ministry of Non-Conventional Energy Sources (MNES) in 1992.
•Ministry of Non-Conventional Energy Sources (MNES) renamed as Ministry of New and Renewable
Energy (MNRE) in 2006.
Ministry of New & Renewable Energy
Indian Renewable Energy Centre for Wind Energy State Renewable Energy
Development Agency Technology Development Agency
(Finance) (Research) (State agencies)
INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR

24. WIND POWER IN INDIA
Other financial institutions Consultants
•PTC India •TCS,
•Gujarat Industrial Investment •TERI,
•ICICI •Hitech Wind Solutions,
•Industrial Finance Corporations •Sri Ganesh Wind Power,
•NABARD •Power & Energy Consulatants,
•SIDBI • Resurge Energy
Associations/societies
•Indian Wind Energy Association, Testing and certification
•Indian Wind Power Association, •Bajaj Allianz,
•Indian Wind Turbine Manufacturers •ICICI Lomabard,
Association, •IFFCO Tokio,
•Winrock International India, •National insurance Company,
•World Institute of Sustainable Energy • Oriental Insurance,
•New India Assurance,
Testing and certification •Reliance general Insurance,
•C-WET, •Royal Sundaram,
•Det Norske Veritas AS, • Tata AIG,
•Germanischer Lloyed •United India Insurance
INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR

25. WIND POWER PROJECTS
INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR