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Renewable Energy Certificate Mechanism in India

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  • 1. Overview
    of
    RENEWABLE PURCHASE OBLIGATION (RPO)
    &
    RENEWABLE ENERGY CERTIFICATE (REC)
    Framework & status
    in
    INDIA
    Presentation by
    Sanjeevjain
    Additional Director
    CREDA ,RAIPUR
    E mail- sjain218@yahoo.co.in
  • 2. Key Objectives for Introduction of REC Mechanism
    2
    • Effective implementation of RPO .
    • 3. Increased flexibility for participants .
    • 4. Overcome geographical constraints .
    • 5. Reduce transaction costs for RE transactions .
    • 6. Enforcement of penalty mechanism .
    • 7. Create competition among different RE technologies .
    • 8. Development of all encompassing incentive mechanism .
    • 9. 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
  • 10. Entities involved in REC Mechanism operation
    Institutional Framework
    • Forum of Regulators
    • 11. Central Electricity Regulatory Commission
    • 12. Central Agency (National Load Dispatch Centre)
    • 13. Power Exchanges
    • 14. Compliance Auditors
    Central Entities
    • State Electricity Regulatory Commission
    • 15. State Load Dispatch Centre
    • 16. State Agencies
    • 17. Eligible Entities
    • 18. Obligated Entities
    State Entities
    4
  • 19. Renewable Energy Certificates (REC)
    • REC is deemed as certificate of power generated from Renewable Energy sources.
    • 20. 1 REC = 1 Mega Watt hour of renewable energy generated.
    • 21. Can be sold or traded to meet mandatory RPO targets set by State Electricity .
    • 22. Regulatory Commissions for renewable energy purchases by utilities/distribution companies/ Obligated entities.
    • 23. Exchanges identified for REC trading- Indian Energy Exchange & Power Exchange of India.
    • 24. REC would be divided into two categories:
    Solar Certificates
    Non-Solar Certificates
  • 25. Eligibility Criteria
    • All renewable energy generators already NOT having PPA with the distribution licensees for contracted quantum.
    • 26. 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)
  • 27. Operational framework
  • 28. Accreditation & Registration Process
    Verify Accreditation
    Application
    Eligible Entity
    State Agency
    SLDC
    Intimation
    Confirmation
    Confirmation
    Central Agency
    Power Exchange
    Intimation
    Application
  • 29. 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
  • 30. 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
  • 31. 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
  • 32. REC- Timelines, Fees & Charges
  • 33. REC Fees & Charges
    Accreditation Charges
  • 34. REC Fees & Charges
    Registration Charges
    Issuance Charges
  • 35. REC Pricing Framework
    01/10/2011
    16
    Renewable Energy
    Electricity Component
    REC Component
    (Environmental Attribute)
    Market Discovered Price
    (Obligated Entity/Voluntary Buyer)
    Average
    Power Purchase Cost
    (Distribution Utility)
    Bilateral Agreement
    (de-regulated)
    (OA User/Trader)
    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
  • 36. 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.
    • 37. Variation in the Pooled Cost of Purchase across States .
    • 38. 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)
    .
  • 39.
  • 40.
  • 41.
  • 42. Revised REC Price Comparison (w.e.fApril 2012)
  • 43. Solar policy Landscape
    Under JNNSM, targets set for Solar Penetration
  • 44. Off-grid Solar system Cost estimate
    (with Battery Back-up)
  • 45. Off-grid Solar system Benefits
    Renewable Energy Certificate
    1
    Tax Saving due to Accelerated Depreciation
    2
    Freedom from grid-based electricity
    3
  • 46. Combined Benefits for a 100 kW system
  • 47. Combined Benefits for a 200 kW system
  • 48. 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)
  • 49. Registered R.E Generator* (as on 30.09.2011)
  • 50. SOURCE WISE RE GENERATOR
  • 51. Total registered RE capacity 1074 MW
  • 52. REC SUMMERY* (as on 30.09.2011)
  • 53.
  • 54. States with highest RPO targets for FY12
  • 55.
  • 56. Power Sector at a Glance "ALL INDIA" Total Installed Capacity as on 31.08.2011 ( source- CEA)
  • 57. R. E Project installed all India (as on 31.08.2011) source : MNRE
  • 58. Comparison RE Projects installed v/s Registered as R.E Generator under REC
  • 59. Way Forward ........
    • REC mechanism offers alternative to fulfill RPO targets by Entities.
    • 60. Obligated Entities can plan to meet RPO targets in efficient manner.
    • 61. Long term visibility of Floor and Forbearance price is necessary to ensure regulatory certainty for Utility as well as RE project developers.
    • 62. Impact on Avg. power purchase cost of Utility is not very significant.
    • 63. Utility /SERCs may develop Model Power Purchase Agreement for procurement of electricity from RE projects at APPC.
    • 64. Bilateral transactions of RECs as & when enabled would provide larger flexibility and liquidity for REC market, which is the need of the hour.
    • 65. Stimulate competition amongst renewable energy sources.
    • 66. Help in bringing early grid parity for renewable energy sources.
  • Thank you!!!
    40

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