General Carbon NewsletterENERGY & ENVIRONMENTAL COMMODITIES NEWSLETTER                                                  AP...
Perform – Achieve-Trade (PAT) launched!Bureau of Energy Efficiency (BEE) has launched its long awaited initiative to      ...
What can we learn from Australia’s REC experience                               interchange        (UI)                   ...
water heating RECs in 2008 & 2009.                                                 Electricity  Authority                 ...
Power Price Trend                 to the tune of Rs 10.7                                  lakh crore with the             ...
Market Updates                                                                       come up and supply                   ...
Upcoming SlideShare
Loading in …5

GC energy & environmental newsletter April 2012


Published on

Published in: Technology, Business
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

GC energy & environmental newsletter April 2012

  1. 1. General Carbon NewsletterENERGY & ENVIRONMENTAL COMMODITIES NEWSLETTER APRIL 2012, ISSUE:10The last few days have produced numerous events that will impact our view of REC PROJECT HIGHLIGHTSenergy and environmental commodity markets for the days to come. This (as on 1st April 2012)mountain of news flow will result in temporary indigestion due to the level ofimpact. Some key pieces to chew on Accredited Projects:451 (2630.148 MW)REC - While the volume of REC traded was heartening, prices were much lower Registered Projects: 366than the ceiling price of 3,900 which was expected given the shortfall in RPO (2318.628 MW)compliance. A reasonable attempt by DISCOMs or captive/open access REC Issuance:consumers should have resulted in significant demand i.e. price of 3,900. A REC Issued: 2,03,819price of 2,900 suggests that the fear of penalty does not seem to have caused REC Redeemed: 1,99,737the required "fear factor". Softer prices in coming months are now projected. Closing Balance: 38,545 (Source: Recregistry, India)PAT - On March 30, the Government of India notified the launch of the firstphase of the Perform-Achieve-Trade (PAT) scheme. A total of 478 Designated REC PRICE WATCHConsumers (DCs) are included in the scheme which is viewed as an "Indianenergy efficiency cap-and-trade scheme”. More on this in the article below. Mar 2012 Session IEX: Price (Volume)Accelerated Depreciation - Another era in incentive based development of Non solar -INR 2,900renewable energy comes to an end in 2012 as the Income Tax department (192,354)withdrew accelerated depreciation benefit for wind turbines. Accelerated Solar - (Not traded)depreciation had helped retail investment in the wind sector. While the removalof benefit will facilitate IPP led growth of the market it will also require revisit in PXIL: Price (Volume)the sales model of wind turbine suppliers. Non solar -INR 3,100 (7,383)Carbon - More negative news on the pricing front as EU emission data shows Solar - (Not traded)Carbon dioxide emissions from most of the plants under compliance fell by 2.4percent in 2011 from 2010. This drop in emissions reduces demand for EUAsand CERs. The fall is due to lower power generation and stagnating industrial CER PRICE WATCHproduction in the EU. Unless some kind of market intervention takes place 29 February 2012carbon prices could fall below current levels. BlueNext Daily Spot: Price (Volume)Best, € 3.48 (145, 000)Satish Kashyap
  2. 2. Perform – Achieve-Trade (PAT) launched!Bureau of Energy Efficiency (BEE) has launched its long awaited initiative to Energy Marketimprove energy efficiency across leading industrial establishments across India, Newscalled Perform-Achieve-Trade or PAT mechanism. With a view to encouragecost effectiveness in improving industrial energy efficiency, Ministry of Power Tamil Nadu’s newhas come up with a notification on March 30, 2012. The notification details the solar energy policyprocess for preparation and implementation of the PAT scheme and procedure to add 3,000 MWfor issue of Energy Savings Certificate (EsCerts). The notification includes Tamil Nadu will soontargets for specific energy consumption for the period from April 2012 to come out with a newMarch 2015 for each designated consumers. policy on solar power to generate 3,000The Perform, Achieve and Trade (PAT) mechanism, which is a market-based MW by 2015-16mechanism to make improvements in energy efficiency in energy-intensive which is more thanlarge industries and facilities more cost-effective by certification of energy 33 percent of thesavings into a tradable commodity. The identified sectors for which the norms Indian target.have been specified are aluminium, chlor alkali, textile, pulp and paper, iron andsteel, fertilizer, cement and thermal power plants. Gujarat cuts solar PV tariff by 17.3 %,A total of 478 Designated Consumers (DCs) will be included under the PAT raises solar thermalscheme. The largest number of DCs are from power sector (144) followed by tariff by 39%the textile sector (90) and the cement sector (85). Some prominent Designated The GERC hasConsumers include NTPC, Raymond, Ambuja Cement, Essar Steel, Tata announced the solarChemicals Limited, Hindalco etc. An indication of the level of savings targeted power tariffs foris listed below: projects commissioned after Sector & Entity Baseline Target Savings % January 2012. (MTOE) (MTOE) (MTOE) reduction …levelised tariff for Power - NTPC 5,03,74,800 4,99,35,020 4,39,780 1% ground-mounted solar PV projects has Textile - Raymond 27,365 25,802 1,562 6% been reduced by 17.3 % ….. Cement - Ambuja 2,72,029 2,61,331 10,697 4% Cement CERC moots harsh Iron and Steel- 20,22,914 19,13,196 1,09,717 5% penalties for failure Essar Steel to adhere to grid Fertilizers - Tata 2,96,739 2,93,418 3,321 1% discipline. Chemicals A move by the Central Electricity Aluminium - 90,792 87,025 3,767 4% Regulatory Hindalco Commission (CERC) to notify amendments in Indian Electricity GridKshitija Rangnekar Code and unscheduled
  3. 3. What can we learn from Australia’s REC experience interchange (UI) regulations withAustralias renewable energy target aims to ramp up renewable energy effect from April 2 willpurchase towards a target of 20% renewable by 2020 based on an REC push electricityscheme launched in 2001. RECs are awarded to generators for every MWh of supply companiesrenewable power produced in excess of a regulatory baseline established by (Escoms)the Office of Renewable Energy Regulator. REC value is determined by supplyand demand and no floor or forbearance price has been fixed. Prices of A$45 -A$50 are seen as necessary to support the development of new wind projects in WB, MP rejects newAustralia. The development of the market since 2001 can be clubbed into three interpretation ofphases open access. The Centre’s newPhase I – From 2001 to 2006 interpretation of open access in thePhase II - From 2006 to 2010 Electricity Act, 2003 that distributionPhase III - From 2011 onwards companies need notPhase I – From 2001 to 2006 provide power at regulated tariffs toDuring Phase I prices of REC were expected to rise above A$45/REC, as most industrial consumers,RECs were expected to be generated from sugarcane residue. However, the has led to a chaoticactual supply of RECs came from solar water heater, wind mills and hydro situation with certainpower which generated two times the annual demand of RECs in 2005. REC states such asprices crashed in 2005 to around half of initial forecasts. Rajasthan asking such consumers to make their own arrangements. . Govt explains logic behind climate diplomacy For the first time, the government has set down the framework and reasoning behind its stance on future climate talks in a(Source: Green Energy Markets (2009); policy document - the Economic Survey.Phase II - From 2006 to 2011 No new gas – basedAfter prices crashed in 2005, the REC market was revived in 2006-2007 when power plant to beState Governments announced their own renewable energy targets and overall set up till 2015-16 :target was increased from 9500 GWh to 45,000 GWh. Accordingly, REC prices CEAjumped to around A$50 by April 2008. However, by October 2009, prices had The Centralagain dipped to A$30. This dip was due to the oversupply created by solar
  4. 4. water heating RECs in 2008 & 2009. Electricity Authority (CEA) has said noAlso, Solar PV had generated very few RECs in first few years but sales of solar new gas-basedPV jumped when the price of solar PV systems halved in 2009. It had an power plants will beamplified effect on the overall REC system because of the multiplier. From set up in the countryalmost nil in 2007, solar PV generated more than 50% of RECs in 2010. till 2015-16, as the natural gas output is expected to fall considerably… Indias natural gas production is likely to fall by 35 per cent to 27.64 million metric standard cubic metre per day (mmscmd) in the next fiscal and may further dip by another 12 per cent to 24.22 mmscmd in 2013-14.(Source: Redding Energy Management (1999); Coimbatore - Rs 900Wind power which was expected to increase capacity by 500 MW to 1000 MW cr loss due to oneper year did not even start. In December 2010, due to large volumes of RECs day power holidayflowing from solar PV, the government reduced the Solar REC Multiplier from About 40,000five times to four times and further phased down by one each year until the industries in andmultiplier is phased out by July 2013. around Coimbatore suffered Rs 900 croreCurrent: production loss today on the first day ofSince January 2011, the REC market was separated into two parts – the Large implementing thescale Renewable Energy Target (LRET) and the Small scale Renewable Energy power holidayScheme (SRES). Under SRES, Small-scale Technology Certificates (STCs) can announced by thebe sold through the STC Clearing House for a fixed price of A$40. The LRET Tamil Naducovers large-scale renewable energy projects and aims to deliver the 2020 government to tidetarget of 41,000 GWh of Australias energy through renewable resources. over the severe power crisis, industryThe experience from Australia shows the impact of inability to predict supply of bodies said.REC. Clearly, analysts and developers have been unable to predict REC pricingand supply due to a range of market variations. While many of these factors are Rs. 10.7 lakh Crorespecific to Australia, Indian renewable energy developers could do well by Coal Scam Rockslearning from them. ParliamentKrishna Kuya Parliament was rocked by reports of an alleged coal scam
  5. 5. Power Price Trend to the tune of Rs 10.7 lakh crore with the Opposition forcing adjournment of both the Houses till noon. As soon as the Lok Sabha met for the day, JD-U members were on their feet demanding immediate discussion on a report of the Comptroller and(Source: IEX website) Auditor General on allocation of 155 coal acreages between 2004 and 2009 toREC Price Trend some 100 companies. Renewable Energy RPO enforcement key to growth of solar energy in India Encouraging domestic manufacturing is one of the objectives of the National Solar Mission. It is there in the Mission document. The way we are looking at expanding solar power, we feel that solar is going to play a very vital role in the energy scenario in the country. No country of the size of India can afford to be dependent upon only imported equipment. We would like the(Source: PXIL and IEX websites) Indian industry to
  6. 6. Market Updates come up and supply the requirements ofEnvironmental Market News such a large programme.BLY – Work on Compact Fluoroscent Lamps distribution comes to astandstill. India now ranks fifth in wind energyIn a highly ambitious energy saving effort, the Bureau of Energy Efficiency (BEE),a statutory body under the Union Power Ministry, launched a project in February "India now ranks fifth2009 to replace 400 million incandescent lamps (ICLs) - the conventional light in wind power. Webulbs - with compact fluorescent lamps (CFLs) across the country. generate 17,000 MW power from windIndian airlines not submitting emission details to EU turbines. By 2013, we target 1300 MW ofIndias airlines are not submitting emission details to the European Union (EU) as solar power underit had directed, Civil Aviation Minister Ajit Singh. "Though the European Union Jawaharlal Nehruhas directed Indian carriers to submit emission details of their aircraft by March National Solar31, 2012, no Indian carrier is submitting them in view of the position of the Mission", said Farooqgovernment," the minister said in a written reply to the Rajya Sabha. Abdullah. EDITOR Rameez Shaikh rameez.shaikh@general- Kshitija Rangnekar kshitija.r@general- GENERAL CARBON