Overview of RENEWABLE PURCHASE OBLIGATION (RPO) & RENEWABLE ENERGY CERTIFICATE (REC) Framework & status in INDIA Presentation by Sanjeevjain Additional Director CREDA ,RAIPUR E mail- email@example.com
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 .
Concept of REC Mechanism in India 3 At Tariff Determined by Regulatory Commission Electricity Renewable Energy Distribution Company Existing Mechanism REC Bilateral agreement (de-regulated) OA / Trader Distribution Company Electricity Avg. PP Cost of Host Utility (regulated) REC Mechanism Renewable Energy Obligated Entity (Buyer) Market Rate as per Power Exchange REC
Entities involved in REC Mechanism operation Institutional Framework
Forum of Regulators
Central Electricity Regulatory Commission
Central Agency (National Load Dispatch Centre)
State Electricity Regulatory Commission
State Load Dispatch Centre
State Entities 4
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
All renewable energy generators already NOT having PPA with the distribution licensees for contracted quantum.
RE generator selling electricity generated either :
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 to any other licensee or to an open access consumer at a mutually agreed price, or through power exchange at a market determined price; eligible CPP utilizes electricity for self consumption
All RE based captive power producer shall be eligible for their entire energy generation including self consumption.
Conceptual framework Distribution Utility at a price not more than average pool price Sale at Preferential tariff Obligated Entities Third party sale on mutually agreed price RE Generator Sale through power exchanges Electricity Component Sale in REC framework Obligated Entities (Sale through power exchanges ) Renewable Component (REC)
Accreditation & Registration Process Verify Accreditation Application Eligible Entity State Agency SLDC Intimation Confirmation Confirmation Central Agency Power Exchange Intimation Application
Issuance of REC Process State Agency Verification Pre Condition Regular Injection SLDC Power Exchange Central Agency Verify before Issuance Application Issuance Intimation For Meter Reading Apply for sale of REC Eligible Entity SLDC Joint Meter Reading
REC Trading RPS Obligated entities 1 RE Generators 1 Electricity to Grid Electricity from Grid 4 REC purchase agreement/ trading 5 Issuance of REC 1 Central Agency- NLDC Redemption of REC 6 2 Energy Accounting Application to issue REC Compliance reporting 3 Confirmation of Energy Accounting 7 SLDC Monitoring Committee of each State Quarterly Reporting
Redemption Process Eligible Entity Apply for Sale of REC RPO Purchase Obligated Entity SERC Power Exchange Intimation of Sale Intimation of Sale Central Agency State Agency
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.
Cont… CERC has given the following price range for Solar and non-solar certificates ( applicable up to march2012): 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) .
Revised REC Price Comparison (w.e.fApril 2012)
Solar policy Landscape Under JNNSM, targets set for Solar Penetration
Off-grid Solar system Cost estimate (with Battery Back-up)
Off-grid Solar system Benefits Renewable Energy Certificate 1 Tax Saving due to Accelerated Depreciation 2 Freedom from grid-based electricity 3
Combined Benefits for a 100 kW system
Combined Benefits for a 200 kW system
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)
Registered R.E Generator* (as on 30.09.2011)
SOURCE WISE RE GENERATOR
Total registered RE capacity 1074 MW
REC SUMMERY* (as on 30.09.2011)
States with highest RPO targets for FY12
Power Sector at a Glance "ALL INDIA" Total Installed Capacity as on 31.08.2011 ( source- CEA)
R. E Project installed all India (as on 31.08.2011) source : MNRE
Comparison RE Projects installed v/s Registered as R.E Generator under REC
Way Forward ........
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.