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
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
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)
23. 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
24. 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)
25. Renewable Energy Certificate1
Tax Saving due to Accelerated Depreciation2
Freedom from grid-based electricity3
Off-grid Solar system Benefits
26. 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
27. 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
28. 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)
29. 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
30. SOURCE WISE RE GENERATOR
569
224
229
51
TOTAL CAPACITY REGISTERED 1074 MW
WIND
BIO MASS
CO-GEN
HYDRO
34. 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
35.
36. 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
37. 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
38. 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
39. 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 ........
