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REC & RPO Update - April 2012 - General Carbon
REC & RPO Update - April 2012 - General Carbon
REC & RPO Update - April 2012 - General Carbon
REC & RPO Update - April 2012 - General Carbon
REC & RPO Update - April 2012 - General Carbon
REC & RPO Update - April 2012 - General Carbon
REC & RPO Update - April 2012 - General Carbon
REC & RPO Update - April 2012 - General Carbon
REC & RPO Update - April 2012 - General Carbon
REC & RPO Update - April 2012 - General Carbon
REC & RPO Update - April 2012 - General Carbon
REC & RPO Update - April 2012 - General Carbon
REC & RPO Update - April 2012 - General Carbon
REC & RPO Update - April 2012 - General Carbon
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REC & RPO Update - April 2012 - General Carbon

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  • 1. REC – What lies ahead Satish Kashyap Rameez Shaikh info@general-carbon.com Leader in energy & environmental commoditiesSustainability. Value. Delivered. www.general-carbon.com 1
  • 2. National Action Plan on Climate ChangeRPO & REC (NAPCC) RPO Target for India• Renewable Purchase Obligation is the 15% obligation mandated by SERC for 10% promotion of renewable energy 5%• RPO is the minimum percentage of 2010 2015 2020 renewable energy share in consumption – Distribution licensee – Open Access Consumer – Captive consumer• REC is a tradable certificate of proof that one MWh of electricity has been injected (or deemed to be injected) to grid by an RE generator – Solar – Non-solarSustainability. Value. Delivered. www.general-carbon.com 2
  • 3. REC status – Till April 4, 2012 Breakup of accredited capacity (MW) Bio-fuel• Key stats (Bagasse), 67 0 MW Wind, 1,267 – 455 projects (2668 MW) MW Biomass, 547 accredited – 366 project (2318 MW) Small Hydro, 166 Others, 2 registered MW MW• Focus on non-solar as only Accredited capacity (State MW) 4 solar projects accredited Tamil Nadu, 561 MW• Apart from Bagasse Gujarat, 29 0 MW CH, 103 Maharashtr projects other project types a, 681 MW MW HP, 47 progressing smoothly MW Others, 16 UP, 683 – UP & Maharashtra MW 4 MWSustainability. Value. Delivered. www.general-carbon.com 3
  • 4. REC estimate - I Supply from existing accredited• Estimated REC supply based on PLF capacity – Wind 25% – Small Hydro 60% Type RECs in 2013 – Biomass 70% – Biofuel cogen 60% Biofuel cogeneration 35,23,780• Biofuel cogen is primarily bagasse Biomass 33,53,959 – Projects earlier accredited at peak Others 10,228 captive capacity (crushing season) – Projects are now being accredited for off Small Hydro 8,72,496 season captive consumption Wind 27,73,821 – During season captive capacity is larger than off season Total 1,05,34,284 – Generation of REC may be in excess of Avg per month 2013 8,77,857 100% under new rules General Carbon Estimate – Old project capacity is under modification (UP)Sustainability. Value. Delivered. www.general-carbon.com 4
  • 5. REC estimate - II New capacity addition REC• Existing projects made up of New project Generation in – Old Projects (2289 MW) Type addition (MW) 2013* • Old third party sale/ Captive Biofuel consumption cogeneration 200 5,25,600 – New capacity addition (378 MW) Biomass 100 3,06,600 New projects, 378 MW Others 20 61,320 Small Hydro 50 1,31,400 Wind 500 5,47,500 Total 870 15,72,420 Old Avg per month projects, 2289 MW 2013 1,31,035 General Carbon Estimate. Six months of generation for all projectsSustainability. Value. Delivered. www.general-carbon.com 5
  • 6. REC estimate• General Carbon’s estimate of REC issuance 2013 – Annual issuance 2013 1,21,06,704 – Avg. monthly issuance 2013 10,08,892 – Avg. monthly in 2012 87,809• Estimated value of REC market in 2013 – @1,500 = 1,816 Crores – @2,000 = 2,421 CroresSustainability. Value. Delivered. www.general-carbon.com 6
  • 7. Status of notification by StatesState RPO % Notification Pref. Tariff APPC (Wind)Maharashtra 6.75 Final 3.58 – 5.37 2.57Madhya Pradesh 2.10 Final 4.35Tamil Nadu 9.00 Gazetted 3.39 2.37Rajasthan 6.00 Amendment to gazette awaited 3.87- 4.08 2.57Haryana 1.50 Final 4.08 2.77Gujarat 5.50 Gazetted except OA and CPP 3.56 2.64Chhattisgarh 5.00 Gazetted ~3.13 1.67- 3.26Karnataka 7.0-10.0 Final 3.70 2.73Andhra Pradesh 5.00 Draft 3.50Orissa 4.90 Gazetted 5.31Sustainability. Value. Delivered. www.general-carbon.com 7
  • 8. REC Buyers registered till March 2012• DISCOMs – Metropolitan discom – Union Territory discom• Private DISCOMS – 3 Major Private Discoms• Open Access consumers – TN & Punjab – Exchange based and & Bilateral market buyers• Private captive power producers – Few large MNCs and Indian corporates• PSUs (Captive power producers) – Large business houses producing Aluminum (PSU), Steel, Oil, Cement (MNC) – POSCO• Missing in the market – Most State DISCOMsSustainability. Value. Delivered. www.general-carbon.com 8
  • 9. Demand for RECs FY 2012 FY 2013 UnitGross power requirement (NAPCC) 968.7 1065.5 BUsRPO Target (%) 7% 8% %RE Generation 2010 38.7 BUsRE Generation projected (~) 59.5 68.4 BUsRE power required 67.8 85.2 BUsRE power shortfall 8.3 16.8 BUsREC issuance (FY12 actual, FY 13 GC est.) 1.1 12.1 BUs Total shortfall in RE 7.3 4.7 BUs % Shortfall in RPO Target 0.8% 0.4% % • Data source – NAPCC, CEA, GC estimate 1000 MW of wind power equals 2.19 BUs Sustainability. Value. Delivered. www.general-carbon.com 9
  • 10. CERC’s enforcement options• Push SERCs to enforce penalty• Tap funds dispersed to states to fund the procurement of REC• Define tolerance level for RPO violation – Allow carry forward for certain % of RPO for 1 to 3 years – Allow up to 20% REC non compliance for one yearSustainability. Value. Delivered. www.general-carbon.com 10
  • 11. Forbearance price may not be achieved• Data reveals a shortfall in 2012 & 2013 RPO – This has not translated to forbearance price of RECs• RPO enforcement is key – Circulars to CPPs and OAs in three states till March 2012 – Agencies still trying to obtain data on capacity of CPPs and generation data – Largest obligations will be on state run DISCOMs• REC price view is a view on enforcement or rather fear of enforcement (fear factor)Sustainability. Value. Delivered. www.general-carbon.com 11
  • 12. REC pricing• Most Industry observers see little likelihood of state DISCOMs buying RECs• DISCOMs will require major push for compliance from Regulators• Progress on enforcing RPO needs to be actively monitored and will impact REC prices in a big way• CERC and SERC pressure will ensure clearing of RECs at floor price• Short term price view – INR 2,000 per REC• Medium term price view – INR 1,800 per RECSustainability. Value. Delivered. www.general-carbon.com 12
  • 13. REC Prices – Exchange traded prices 4,000 3,500 3,000 INR/REC 2,500 PXIL 2,000 IEX 1,500 1,000 Jul-11 Jan-12 Mar-11 Mar-12 May-11 Jun-11 Apr-12 Apr-11 Nov-11 Dec-11 Feb-12 Sep-11 Aug-11 Oct-11Sustainability. Value. Delivered. www.general-carbon.com 13
  • 14. REC – What lies ahead! info@general-carbon.com April - 2012Disclaimer: The views and opinions expressed herein are those of the authors and do not necessarily represent the views or opinion ofGeneral Carbon. This document is not meant to guide investment or any other action including investment into projects or emission reductionoffsets. Anybody relying on information or projections provided in this document for decisions or actions will do so at his/her own risk andthe authors and General Carbon accept no liability arising from impact of such decisions or actions. Leader in energy & environmental commodities Sustainability. Value. Delivered. www.general-carbon.com 14

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