REC status
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  • 1. Overview of RENEWABLE PURCHASE OBLIGATION (RPO) & RENEWABLE ENERGY CERTIFICATE (REC) Framework & status in INDIA Presentation by Sanjeev jain Additional Director CREDA ,RAIPUR E mail- sjain218@yahoo.co.in
  • 2. Key Objectives for Introduction of REC Mechanism 2  Effective implementation of RPO .  Increased flexibility for participants .  Overcome geographical constraints .  Reduce transaction costs for RE transactions .  Enforcement of penalty mechanism .  Create competition among different RE technologies .  Development of all encompassing incentive mechanism .  Reduce risks for local distributor by limiting its liability to energy purchase .
  • 3. Concept of REC Mechanism in India 3 Avg. PP Cost of Host Utility (regulated) Market Rate as per Power Exchange At Tariff Determined by Regulatory Commission Renewable Energy Electricity REC Distribution Company Renewable Energy Electricity REC Distribution Company Obligated Entity (Buyer) Existing Mechanism REC Mechanism OA / Trader Bilateral agreement (de-regulated)
  • 4. Entities involved in REC Mechanism operation 4 Institutional Framework Central Entities State Entities  Forum of Regulators  Central Electricity Regulatory Commission  Central Agency (National Load Dispatch Centre)  Power Exchanges  Compliance Auditors  State Electricity Regulatory Commission  State Load Dispatch Centre  State Agencies  Eligible Entities  Obligated Entities
  • 5. Renewable Energy Certificates (REC) REC is deemed as certificate of power generated from Renewable Energy sources.  1 REC = 1 Mega Watt hour of renewable energy generated.  Can be sold or traded to meet mandatory RPO targets set by State Electricity .  Regulatory Commissions for renewable energy purchases by utilities/distribution companies/ Obligated entities.  Exchanges identified for REC trading- Indian Energy Exchange & Power Exchange of India.  REC would be divided into two categories: • Solar Certificates • Non-Solar Certificates
  • 6. Eligibility Criteria All renewable energy generators already NOT having PPA with the distribution licensees for contracted quantum.  RE generator selling electricity generated either : i. to the distribution licensee of the area in which the eligible entity is located, at a price not exceeding the pooled cost of power purchase of such distribution licensee; or ii.to any other licensee or to an open access consumer at a mutually agreed price, or through power exchange at a market determined price; iii.eligible CPP utilizes electricity for self consumption All RE based captive power producer shall be eligible for their entire energy generation including self consumption.
  • 7. Conceptual framework RE Generator Sale in REC framework Sale at Preferential tariff Obligated Entities Renewable Component (REC) Electricity Component Obligated Entities (Sale through power exchanges ) Sale through power exchanges Third party sale on mutually agreed price Distribution Utility at a price not more than average pool price
  • 8. Operational framework Accreditation by State Agency Registration by Central Agency Issuance of RECs by Central Agency Redemption of RECs
  • 9. Accreditation & Registration Process Eligible Entity State Agency SLDC Central Agency Power Exchange Verify Accreditation Application Confirmation Intimation Application Confirmation Intimation
  • 10. Issuance of REC Process SLDC Central Agency Power Exchange Eligible Entity Verification Pre Condition Regular Injection Verify before Issuance Application Joint Meter Reading Apply for sale of REC State Agency IssuanceIntimation For Meter Reading SLDC
  • 11. 1 1 1 2 3 4 6 7 5 REC Trading Central Agency- NLDC Electricity to Grid Electricity from Grid RE Generators RPS Obligated entities Energy Accounting Trading Platform Open access users Other obligated entities Captive generators Discoms REC purchase agreement/ trading Redemption of REC Application to issue REC Issuance of REC SLDC Compliance reporting Monitoring Committee of each State Quarterly Reporting
  • 12. Redemption Process Eligible Entity Obligated Entity SERC Central Agency Power Exchange Apply for Sale of REC Purchase RPO State Agency Intimation of Sale Intimation of Sale
  • 13. REC- Timelines, Fees & Charges Application • Three months from the date of generation Issuance • Fifteen days from the date of application Validity • 365 days from the date of issue or exchange by way of sale whichever is earlier Fees • Registration, Annual & Transaction Fees Charges at Exchange • Membership Charges • Transaction Charges
  • 14. REC Fees & Charges S.N. Fee and Charges towards Accreditation Amount in 1 Application Processing Fees (One Time) 5,000 2 Accreditation Charges (One Time) 30,000 3 Annual Charges 10,000 4 Revalidation Charge at the end of five (5) years 15,000 Accreditation Charges
  • 15. REC Fees & Charges S.N. Fee and Charges towards Registration Amount in 1 Application Processing Fees (One Time) 1,000 2 Registration Charges (One Time) 5,000 3 Annual Charges 1,000 4 Revalidation Charge at the end of five (5) years 5,000 Registration Charges S.N. Fee and Charges towards Issuance of REC Amount in 1 Fees per Certificate 10 Issuance Charges
  • 16. REC Pricing Framework 09/07/2013 16 Renewable Energy Electricity Component REC Component (Environmental Attribute) Market Discovered Price (Obligated Entity/Voluntary Buyer) Average Power Purchase Cost (Distribution Utility) CHHATTISGARH - Rs. 1.67/kwh Andhra Pradesh - Rs 1.78/kWh Maharashtra - Rs 2.43/kWh Karnataka - Rs 1.85/kWh Kerala - Rs 1.46/kWh Tamil Nadu - Rs 2.62/kWh Himachal Pradesh - Rs 1.48/kWh Rajasthan - Rs 2.48/kWh Parameters Non Solar REC Solar REC Forbearance Price (Rs/MWh) 3900 17000 Floor Price (Rs/MWh) 1500 12000 Bilateral Agreement (de-regulated) (OA User/Trader)
  • 17. Pricing of REC CERC has finalized the floor and forbearance price of REC based on:-  Variation in cost of generation of different renewable energy technologies , falling under solar and non-solar category, across States in the country.  Variation in the Pooled Cost of Purchase across States . Expected electricity generation from renewable energy sources including:- i. expected renewable energy capacity under preferential tariff ii. expected renewable energy capacity under mechanism of certificates; Renewable Purchase obligation targets set by State Commissions.
  • 18. Cont… . CERC has given the following price range for Solar and non- solar certificates ( applicable up to march2012): Non-Solar REC (Rs/MWh) Solar REC (Rs/MWh) Forbearance Price 3,900 17,000 Floor Price 1,500 12,000 These prices are calculated as under: Forbearance Price = Maximum (Preferential Tariff- Average Power Pool Cost) Floor Price = Market Equilibrium Price (Minimum requirement for project viability of RE technologies - Average Power Pool Cost)
  • 19. Revised REC Price Comparison (w.e.f April 2012)
  • 20. Under JNNSM, targets set for Solar Penetration Phase 1 (2010 –2013) Phase 2 (2013 –2017) Phase 3 (2017 –2022) 1,100 MW 4,000 MW 20,000 MW Phase -1 Category Size of Project Status of Allocation 1100 MW 90 MW , Small scale Projects 0.1 to 2 MW grid connected Projects have already been shortlisted 10 MW Off-grid and decentralized applications Up to 100 kW Applications open from center. 500 MW Grid Connected Solar Photovoltaic technology 5MW +- 5% FY 2010-11 50MW FY 2011-13 350MW 500 MW Grid connected Solar Thermal Projects 5MW +- 5% FY 2010-11 500MW Solar policy Landscape
  • 21. PARAMETERS 100 kW 200 kW Solar Modules 120 Lacs 240 Lacs Electric Equipments 60 Lacs 120 Lacs Civil Work 30 Lacs 60 Lacs EPC 30 Lacs 60 Lacs Preoperative & Consultancy 10 Lacs 20 Lacs TOTAL 250Lacs 500 Lacs Area Requirement 1200 sq. Km. 2400 sq. Km. Power Generation 1.5 Lac units 3.0 Lac units Off-grid Solar system Cost estimate (with Battery Back-up)
  • 22. Renewable Energy Certificate1 Tax Saving due to Accelerated Depreciation2 Freedom from grid-based electricity3 Off-grid Solar system Benefits
  • 23. Combined Benefits for a 100 kW system Incentive Equity (75 Lacs) Debt (175 Lacs) Revenue from sale of REC 18.1 Lacs -NA- Revenue against tax saving 48 Lacs -NA- Revenue against saving from grid based electricity 7.2 Lacs -NA- Returns in 1st year 73.3 Lacs Loan repayment of Rs 175 Lacs at rate of 5% Total Project Cost Equity Debt 250 Lacs 75 Lacs 175 Lacs
  • 24. Combined Benefits for a 200 kW system Incentive Equity (150 Lacs) Debt (350 Lacs) Revenue from sale of REC 36.2 Lacs -NA- Revenue against tax saving 96 Lacs -NA- Revenue against saving from grid based electricity 14.4 Lacs -NA- Returns in 1st year 146.6 Lacs Loan repayment of Rs 350 Lacs at rate of 10-12% Total Project Cost Equity Debt 500 Lacs 150 Lacs 350 Lacs
  • 25. REC Status* till Date (as on 30.09.11) • Accreditated RE Generators -- 241(1418MW) • Registered RE Generators ------176(1079MW) • RECs Issued-------------------------- 197044 • RECs Redeemed-------------------- 125507 (* source – NLDC)
  • 26. Registered R.E Generator* (as on 30.09.2011) Energy Source No. of Projects Capacity in MW 1. Wind 125 574 2. Small Hydro 10 52 3. Bio Mass 20 224 4. Bio fuel Co gen 21 229 5. Solar Thermal - - 6. Solar PV - - 7. Geothermal - - 8. Urban /Municipal Waste - - TOTAL 176 1079
  • 27. SOURCE WISE RE GENERATOR 569 224 229 51 TOTAL CAPACITY REGISTERED 1074 MW WIND BIO MASS CO-GEN HYDRO
  • 28. Total registered RE capacity 1074 MW
  • 29. REC SUMMERY* (as on 30.09.2011) Month & Year Opening Balance REC Issued REC Redeemed Closing Balance March, 2011 0 532 424 108 April, 2011 108 4503 260 4351 May, 2011 4031 28270 18502 14119 June, 2011 14119 27090 16385 24824 July, 2011 24824 30224 18568 36480 August, 2011 36840 31813 25096 43197 Sept 2011 43197 74612 46362 711447 TOTAL 197044 125597
  • 30. States with highest RPO targets for FY12 State Total RPO % (FY12) Himachal Pradesh 11.1 Rajasthan 9.5 Tamil Nadu 9 Maharashtra 7 Gujarat 6 Chhattisgarh 5.25 Andhra Pradesh 5 Uttar Pradesh 5
  • 31. Power Sector at a Glance "ALL INDIA" Total Installed Capacity as on 31.08.2011 ( source- CEA) Fuel MW %age Thermal 118409.48 65.21 Hydro (Renewable) 38,206.40 21.04 Nuclear 4,780.00 2.63 RES** (MNRE) 20,162.24 11.10 Total 1,81,558.12 100.00 Sector MW %age State Sector 83,313.65 45.88 Central Sector 56,572.63 31.15 Private Sector 41,671.84 22.95 Total 1,81,558.12
  • 32. R. E Project installed all India (as on 31.08.2011) source : MNRE Renewable Energy Programme/ Systems Installed capacity MW WIND 14989 SMALL HYDRO 3153 BIO MASS 1083 BAGGASE CO- GEN 1779 WASTE TO POWER ( U&I) 73 SOLAR PV 46 TOTAL 21125
  • 33. Comparison RE Projects installed v/s Registered as R.E Generator under REC SOURCE INSTALLED CAPACITY (MW) REGISTERED CAPACITY (MW) % over Installed /Regd. WIND 14989 569 3.79 BIO MASS 1083 224 20.68 CO-GEN 1779 229 12.87 HYDRO 3153 51 1.61 SOLAR 46 - - Waste to Energy (U&I) 73 - - TOTAL 21125 1074 5.08
  • 34.  REC mechanism offers alternative to fulfill RPO targets by Entities.  Obligated Entities can plan to meet RPO targets in efficient manner.  Long term visibility of Floor and Forbearance price is necessary to ensure regulatory certainty for Utility as well as RE project developers.  Impact on Avg. power purchase cost of Utility is not very significant.  Utility /SERCs may develop Model Power Purchase Agreement for procurement of electricity from RE projects at APPC.  Bilateral transactions of RECs as & when enabled would provide larger flexibility and liquidity for REC market, which is the need of the hour.  Stimulate competition amongst renewable energy sources.  Help in bringing early grid parity for renewable energy sources. Way Forward ........
  • 35. 40 Thank you!!!