REC Mechanism -A overview


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REC Mechanism -A overview

  1. 1. Renewable Energy Certificates Overview A Kartik Ashish Verma Ashim Khan © 2013 UPES
  2. 2. Outlines  Overview of RPO ,SPO  State wise RE Potential  Introduction to REC mechanisms  RPO obligated entities  REC generator  Categories of certificates  General procedure for issuance of REC  Salient features of RECs  Few statistics about REC Oct 2013 Nov 2013 © 2013 UPES
  3. 3. Overview of RPO & SPO  NAPCC that aims at 15% renewable energy mix in overall Energy mix in India ,by 2020  RPOs was initiated by CERC to mandate the State utilities procure the power from RE sources ,section 86(1) e under EA act 2003  RPO target are fixed by respective state electricity regulatory commission  RPO are enforced on three categories of power consumersDistribution licensee, Open access consumer and captive consumers  SPO is solar purchase obligation  Every states is having different potential of renewable energy Oct 2013 Nov 2013 © 2013 UPES
  4. 4. • Renewable Energy Certificates (RECs) represent the attributes of electricity generated from renewable energy sources • Two products-the attributes embodied in the certificates and the commodity electricity are sold or traded separately • ONE REC represents that 1MWh of energy is generated from renewable sources • Expected to become the currency of renewable energy markets because of their flexibility • RECs are not subjected to the geographic and physical limitations of commodity electricity • Traded in Indian Energy exchange and Power exchange of India ltd Oct 2013 Nov 2013 © 2013 UPES
  5. 5. • Entities mandated to purchase a defined quantum of renewable energy of their overall consumption are Obligated entities • Obligated entities may either purchase renewable energy or can purchase RECs to meet their Renewable purchase Obligation (RPO) set under Renewable Purchase Obligation of their respective States. • Following entities are obligated in the State:a. Distribution Licensees b. Captive Consumers c. Open Access users Oct 2013 Nov 2013 © 2013 UPES
  6. 6. • This concept seeks to address the mismatch between availability of RE sources and the requirement of the obligated entities to meet their RPO. • It is expected to encourage the RE capacity addition in the States where there is potential for RE generation as the REC framework seeks to create a national level market for such generators to recover their cost. • Central Electricity Regulatory Commission (CERC) has notified Regulation on Renewable Energy Certificate (REC) in fulfillment of its mandate to promote renewable sources of energy and development of market in electricity • The framework of REC is expected to give push to RE capacity addition in the country Oct 2013 Nov 2013 © 2013 UPES
  7. 7. Categories of Certificates  Solar Certificates issued to eligible entities for generation of electricity based on solar as renewable energy source  Non-solar certificates issued to eligible entities for generation of electricity based on renewable energy sources other than solar( Wind , biomass ,Small hydro, co-generation etc. ) Oct 2013 Nov 2013 © 2013 UPES
  8. 8. Trading price of RECs  The price of REC would be determined in power exchange.  REC would be traded in power exchange within the forbearance price and floor price determined by CERC from time to time  Floor Price : price has been determine in the basic min requirement for insuring the viability of RE project set up to meet the RE target  Forbearance price : Price has been derived based on the highest different between cost of generation of RE technology and average power purchase cost Oct 2013 Nov 2013 © 2013 UPES
  9. 9. Eligibility Criteria for Selling RECs • Renewable source is approved by MNRE and respective State Commission • Do Not have any Power Purchase Agreement (PPA) for the capacity related to such generation to sell electricity at a preferential tariff determined by the appropriate commission • Do Not have agreement to sell electricity to local distribution company at pooled cost of power purchase of that distribution company • Sells electricity to the i. Distribution licensee of the area at the pooled cost of power purchase of such distribution licensee ii. To any other licensee or to an open access consumer at a mutually agreed price, Oct 2013 Nov 2013 © 2013 UPES
  10. 10. Different business model under REC APPC +REC RESCO+REC Captive + REC Oct 2013 Nov 2013 © 2013 UPES
  11. 11. Issuance of REC Oct 2013 Nov 2013 © 2013 UPES
  12. 12. 1. State Nodal Agency (SNA) authorizes or endorses the RE Generator and recommends it for registration 2. NLDC (Central Agency) registers their Generator as ‘Eligible Entity’ for its RE Generation Project 3. The electricity generated from RE project is injected into the grid and sold to either a distribution licensee or open access consumer with whom it has contract or sold through the power exchange 4. Once the RECs are issued to the RE Generator (Eligible Entity), sale/purchase of RECs amongst Eligible RE Generators and Obligated entities to be undertaken only through Power Exchanges. 5. The Obligated Entities purchase RECs through PXs and to surrender to SERC or other agency as specified by SERCs as to meet their RPO. 6. NLDC (REC Registry) maintains record of RECs sold and purchased 7. Compliance Auditors to monitor and report the compliance of REC Regulations Oct 2013 Nov 2013 © 2013 UPES
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  15. 15. • RE generators with capacity untied in PPA will have an option to sell electricity and REC separately • REC will be issued to RE Generators only • Purchase of REC would be considered as purchase of RE for purpose of RPO compliance • Grid Connected RE technology approved by MNRE would be eligible for REC mechanism • Separate category of Solar REC • Provision of regulatory charge to enforce compliance of RPO • RECs are intra-country tradable certificates and are distinct from carbon credits • It is proposed to make RECs eligible for compliance with energy saving obligations Oct 2013 Nov 2013 © 2013 UPES
  16. 16. Few statistics about REC  REC trading day is last Wednesday of Month  First Solar REC project was 2 MW developed by M& B switchgear limited traded on may 2012  Non Solar REC market is active since may 2011  Total 903 project are developed under REC mechanism till date No of Project accreditated 16% 0% Wind 0% 9% Small Hydro Biomass 7% 3% Oct 2013 Nov 2013 Biofuel-cogen 65% Solar PV © 2013 UPES
  17. 17. THANK YOU Question ? Oct 2013 Nov 2013 © 2013 UPES