Highlights of 3 rd Generation SPP Rules 2017

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1 Mobile: ENERGY AND WATER UTILITIES REGULTORY AUTHORITY Highlights of 3 rd Geeratio SPP Rules 2017 A presetatio at the WRI-TATEDO Report lauchig at the Serea Hotel, Dar es Salaam 04 October, 2017 By Eg. Godfrey Chibuluje Director of Electricity - EWURA

2 EXEMPTION FROM LICENSING q The Electricity Act, 2008 Sectio 18 exempts some mii grids i rural areas from the licesig requiremets Sectio 18(3) exempts geeratio activities of istalled capacity at a sigle site is less tha 1MW Sectio 18(4) exempts off-grid distributio ad supply activities where the maximum demad i the off-grid system is below 1MW q q Sectio 18(5) empowers EWURA to make rules o exempted activities ad Sectio 18(6) o gettig reports However, EWURA may also exempt ay perso from the requiremet to obtai a licece irrespective of the capacity (refer Sectio 18(1)) 2

3 EXEMPTION FROM LICENSING q Rule 18(1) of the Electricity (Geeratio Services) Rules, 2012 ad Rule 18(1) of the Electricity (Distributio Services) Rules, 2012 cover Exemptios q Rule 18(2) of both Geeratio ad Distributio Rules require all exempted operators to be registered with EWURA. However, Ø The above two 2012 Rules ad did ot provide for registratio procedures or requiremets, ad Ø The SPP Rules, 2016 did ot provide for obligatio to register Hece the eed for revisios to cover these issues 3

4 Registratio Requiremets Requiremets for registratio icludes Applicatio i a prescribed Form Name, Address of Applicat Etity registratio documets (legal idetificatio) Descriptio of Geographic area to serve Descriptio of ifrastructure (geeratio or distributio) Iitial size of geeratio facility Descriptio of geeratio techology Evirometal clearace (or proof of iitiatio) Proof of lad use rights Other iformatio prescribed i EWURA guidelies EWURA has the discretio to issue a umbrella registratio or licece to a developer usig the same techologies at multiple sites. 4

5 New Editio - SPP Rules, 2017 q The SPP Rules, 2017 were drafted to address grey areas i the SPP Rules, 2016 o issues icludig - q compesatio to mii grid operators whe the grid arrives, q mii grids tariffs, ad q registratio requiremets q Provisioal licece--evirometal review eed ot be completed. q Possibility of umbrella registratio for multiple sites usig a similar techology q The Electricity (Developmet of Small Power Projects) Rules, 2017 (SPP Rules, 2017) have bee approved by EWURA Board ad are awaitig publicatio i the Govermet Gazette 5

6 Cocers of Mii-grid Developers Mii-grid ivestors were cocered as to what will happe to their mii-grid busiess whe the mai grid arrives? left with straded assets allowed to operate i islad mode Operate as a frachise of the Distributio Compay Sell assets to utility (with what fiacial cosideratio) Ø The 3 rd Geeratio Rules address these issues i Rule 36

7 SPP Rule 36 Rule 36 (1) If a Mii-grid is built to stadards that allow itercoectio to Mai Grid, the Mii-grid may apply to Authority to operate as: Optio 1: A Small Power Producer (SPP) sellig electricity to (DNO) Optio 2: A small power distributor (SPD) purchases electricity TANESCO (bulk supply tariff) ad resells some or all to the SPD s retail customers Optio 3: A combiatio of a SPP ad a SPD NB EWURA shallvot withhold approval uless it is deemed for the iterest of the populatio i the area covered by the mii-grid vgive approval by EITHER modificatio of existig licece, OR by letter of approval to projects that are ot required to have a licece

8 SPP Rule Rule 36(2) The Mii-grid operator may either take - Optio 4: Removig some or all of its geeratio ad distributio assets or Optio 5: Sellig some or all of its distributio assets to the DNO (ot the geeratio assets) presumably with subsequet trasfer to DNO ØBUT - How ad at what cosideratio (compesatio)? 8

9 SPP Rule Rule 36(2) - Compesatio Scheme for sale of the mii-grid s Assets based o Sub Rule 36(2)(a) ad 36(2)(b) Merits of the Compesatio scheme is fair to the fiacial iterests of TANESCO/REA ad the mii-grid developers, ad ca be admiistered by EWURA at a reasoable cost ad effort

10 Compesatio Sub-Rule 36(2)(a) Evaluatio of Distributio assets based o REA s Average capital Costs over a year (cost/km) MINUS Depreciatio /provided Grats portio be proportioal reductio of grats portio Discouted if Mii-grid is built to TBS stadards that are lower tha REA specificatios Meters are ot icluded uless same as or compatible with DNO billig & collectio system MV lies ot eligible uless used to coect villages served by the same mii-grid Sub-Rule 36(2)(b) mii-grid ower s assets added to meet icreasig demad will be computed to reflect i time of istallatio 10

11 Eligibility for compesatio Compesatio for SPP, SPD ad VSPP will be made provided - Assets are built at least to TBS Stadards that would allow the DNO to provide retail services Coectio to Mai grid is made withi 2 ad 15 years of miigrid s commercial operatio The SPP ad VSPP is registered or licesed, ad Proof that the Miistry Resposible for electricity had approved the project priori I case of disagreemet o eligibility of asset for trasfer or the compesatio value either party may request EWURA to determie the same; EWURA may hire a third party to assist i the determiatio 11

12 CONCLUSION q Mii-grid operators should study the opportuities ad cosider the risk of the mai grid arrivig i the area ad the appropriate risk mitigatio optio q The Compesatio scheme is easier ad trasparet provided the REA mii-grids costs data base is updated timely q Service delivery efficiecy has high ifluece o the acceptability of the tariffs by mii-grid retail cosumers 12

13 THANK YOU FOR YOUR ATTENTION

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