Independent power producer

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An independent power producer (IPP) or non-utility generator (NUG) is an entity [1] that is not a public utility but owns facilities to generate electric power for sale to utilities and end users. [2] NUGs may be privately held facilities, corporations, cooperatives such as rural solar or wind energy producers, and non-energy industrial concerns capable of feeding excess energy into the system. [3]

Contents

An independent water and power producer (IWPP) is similar to an IPP, but with a unified process to also output usable treated water. [4]

Economic situation

For most IPPs, particularly in the renewable energy industry, a feed-in tariff or power purchase agreement provides a long-term price guarantee.

IPPs have been successful in driving the electricity sector's transition to renewables globally, owning the majority of the currently operating renewable energy generation capacity. [5]

Germany

Rare in Germany for decades, the IPP business model has grown more common since the EEG (for renewable energy). Success in the approach depends on finding a partner for distributing the produced energy to the customer.

Canada

In 2002, the government of British Columbia stipulated that new clean renewable energy generation in the province [6] would be developed by "independent power producers" (IPPs) not BC Hydro, save for large hydro-electric facilities. The role of the private sector in developing BC's "public" resources is one of the more controversial issues that British Columbians are currently grappling with.

Taiwan

Taiwan's electricity market was liberalized in January 1995. Nine IPP companies are currently operating in Taiwan. [7]

United States

NUGs were rare before the enactment of the US Public Utility Regulatory Policies Act (PURPA) of 1978. The few existing NUGs were seldom able to distribute power, as the cost of building the conveyance infrastructure was prohibitive. Public utilities generated power and owned the generating facilities, the transmission lines, and the local distribution-delivery systems. PURPA, however, established a class of non‐utility generators, called Qualifying Facilities (QFs), that were permitted to produce power for resale.

PURPA was intended to reduce domestic dependence on foreign energy, to encourage energy conservation, and to reduce the ability of electric utilities to abuse the purchase of power from QFs. A QF is defined as a generating facility that produces electricity and another form of useful thermal energy through the sequential use of energy, and meets certain ownership, operating, and efficiency criteria established by the Federal Energy Regulatory Commission (FERC).

Section 210 of PURPA now requires utilities to purchase energy from QFs at the utility's avoided cost. This allows QFs to receive a reasonable to excellent price for the energy they produce and ensures that energy generated by small producers won't be wasted. [3]

Pakistan

In 1994, the Government of Pakistan announced an investor-friendly policy to develop IPPs based on oil, coal and gas. Following the policy, 16 IPPs were established. The next year, a hydro power policy was announced, which resulted in the development of the country's first Hydro IPP.

In 2002, the new government adopted a new policy, under which another 12 IPPs began operations. For the development of Independent Power Producers (IPPs), Private Power and Infrastructure Board operates as one window facilitator on behalf of all the departments and Ministries of the Government of Pakistan to; process power projects in IPP mode, monitor their development, and facilitates in providing all required support on behalf of the Government of Pakistan.

In 2015, Pakistan adopted a new power policy by which another 13 IPPs were established, mostly by Chinese companies. A transmission policy for development of transmission line in the private sector was also announced.

More than 40 IPPs were operating in Pakistan as of 2018.

India

India also has many IPP's like ReNew Power, Adani, Hero, Mytrah, Ostro, Greenko, Alfanar, Mahindra Susten, Jakson Ltd.Etc.

South Africa

The Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) is an initiative by the South African government aimed at increasing electricity generation through private sector investment in solar photovoltaic and concentrated solar, onshore wind power, small hydro (<40 MW), landfill gas, biomass, and biogas. As of 2021, there were 117 allocations, totalling 8891.86 MW, for private sector generation.

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A feed-in tariff is a policy mechanism designed to accelerate investment in renewable energy technologies by offering long-term contracts to renewable energy producers. This means promising renewable energy producers an above-market price and providing price certainty and long-term contracts that help finance renewable energy investments. Typically, FITs award different prices to different sources of renewable energy in order to encourage the development of one technology over another. For example, technologies such as wind power and solar PV are awarded a higher price per kWh than tidal power. FITs often include a "digression": a gradual decrease of the price or tariff in order to follow and encourage technological cost reductions.

As of August 2020 Chile had diverse sources of electric power: for the National Electric System, providing over 99% of the county's electric power, hydropower represented around 26.7% of its installed capacity, biomass 1.8%, wind power 8.8%, solar 12.1%, geothermal 0.2%, natural gas 18.9%, coal 20.3%, and petroleum-based capacity 11.3%. Prior to that time, faced with natural gas shortages, Chile began in 2007 to build its first liquefied natural gas terminal and re-gasification plant at Quintero near the capital city of Santiago to secure supply for its existing and upcoming gas-fired thermal plants. In addition, it had engaged in the construction of several new hydropower and coal-fired thermal plants. But by July 2020 91% of the new capacity under construction was of renewable power, 46.8% of the total solar and 25.6% wind, with most of the remainder hydro.

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Independent power producer (IPP) projects have had a significant presence in British Columbia since the 1980s. Their relationship with BC Hydro grew from the province's need to supply growing energy demands and implementation of the 2002 Energy Strategy, which mandated that BC Hydro would purchase its energy supply from IPPs rather than generating the supply itself. There are a variety of power projects in BC, with the most popular being hydroelectricity and biomass projects. In recent years, more attention has been placed on the environmental effects of IPP projects and the social implications it has to residents living around the project development sites. Despite the decline in demand for new IPP projects, in 2016 they supplied 20,000 GWh, one-third of BC Hydro's total.

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References

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  2. "Independent Power Producer (IPP) - Americas Generators". Gopower.com. Archived from the original on 10 February 2012. Retrieved 8 February 2012.
  3. 1 2 "independent power producer (IPP), non-utility generator (NUG)". Energyvortex.com. Archived from the original on 17 January 2013. Retrieved 8 February 2012.
  4. "Water and Power: Will Your Next Power Plant Make Both?". 9 January 2012. Retrieved 6 June 2019.
  5. Alova, G. (2020). "A global analysis of the progress and failure of electric utilities to adapt their portfolios of power-generation assets to the energy transition". Nature Energy. 5 (11): 920–927. Bibcode:2020NatEn...5..920A. doi:10.1038/s41560-020-00686-5. ISSN   2058-7546. S2CID   225179903.
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