Renewable Energy Certificate Mechanism in India


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Renewable Energy Certificate Mechanism in India

  1. 1. Overview<br />of<br />RENEWABLE PURCHASE OBLIGATION (RPO) <br />& <br />RENEWABLE ENERGY CERTIFICATE (REC)<br />Framework & status<br />in <br />INDIA <br />Presentation by<br />Sanjeevjain<br />Additional Director<br />CREDA ,RAIPUR <br />E mail-<br />
  2. 2. Key Objectives for Introduction of REC Mechanism<br />2<br /><ul><li>Effective implementation of RPO .
  3. 3. Increased flexibility for participants .
  4. 4. Overcome geographical constraints .
  5. 5. Reduce transaction costs for RE transactions .
  6. 6. Enforcement of penalty mechanism .
  7. 7. Create competition among different RE technologies .
  8. 8. Development of all encompassing incentive mechanism .
  9. 9. Reduce risks for local distributor by limiting its liability to energy purchase .</li></li></ul><li>Concept of REC Mechanism in India<br />3<br />At Tariff <br />Determined by <br />Regulatory <br />Commission<br />Electricity<br />Renewable <br />Energy<br />Distribution<br />Company<br />Existing <br />Mechanism<br />REC<br />Bilateral <br />agreement<br />(de-regulated)<br />OA / Trader<br />Distribution<br />Company<br />Electricity<br />Avg. PP Cost<br />of Host Utility<br />(regulated)<br />REC<br />Mechanism<br />Renewable <br />Energy<br />Obligated <br />Entity<br />(Buyer)<br />Market Rate <br />as per <br />Power Exchange<br />REC<br />
  10. 10. Entities involved in REC Mechanism operation <br />Institutional Framework<br /><ul><li>Forum of Regulators
  11. 11. Central Electricity Regulatory Commission
  12. 12. Central Agency (National Load Dispatch Centre)
  13. 13. Power Exchanges
  14. 14. Compliance Auditors</li></ul>Central Entities<br /><ul><li>State Electricity Regulatory Commission
  15. 15. State Load Dispatch Centre
  16. 16. State Agencies
  17. 17. Eligible Entities
  18. 18. Obligated Entities</li></ul>State Entities<br />4<br />
  19. 19. Renewable Energy Certificates (REC)<br /><ul><li>REC is deemed as certificate of power generated from Renewable Energy sources.
  20. 20. 1 REC = 1 Mega Watt hour of renewable energy generated.
  21. 21. Can be sold or traded to meet mandatory RPO targets set by State Electricity .
  22. 22. Regulatory Commissions for renewable energy purchases by utilities/distribution companies/ Obligated entities.
  23. 23. Exchanges identified for REC trading- Indian Energy Exchange & Power Exchange of India.
  24. 24. REC would be divided into two categories:</li></ul>Solar Certificates<br /> Non-Solar Certificates<br />
  25. 25. Eligibility Criteria<br /><ul><li>All renewable energy generators already NOT having PPA with the distribution licensees for contracted quantum.
  26. 26. RE generator selling electricity generated either :</li></ul>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 <br />to any other licensee or to an open access consumer at a mutually agreed price, or through power exchange at a market determined price;<br />eligible CPP utilizes electricity for self consumption <br /><ul><li>All RE based captive power producer shall be eligible for their entire energy generation including self consumption.</li></li></ul><li>Conceptual framework<br />Distribution Utility at a price not more than average pool price<br />Sale at Preferential tariff<br />Obligated Entities<br />Third party sale on mutually agreed price<br />RE Generator<br />Sale through power exchanges<br />Electricity Component<br />Sale in REC framework<br />Obligated Entities (Sale through power exchanges )<br />Renewable Component (REC)<br />
  27. 27. Operational framework <br />
  28. 28. Accreditation & Registration Process<br />Verify Accreditation<br />Application<br />Eligible Entity<br />State Agency<br />SLDC<br />Intimation<br />Confirmation<br />Confirmation<br />Central Agency<br />Power Exchange<br />Intimation<br />Application<br />
  29. 29. Issuance of REC Process<br />State Agency<br />Verification<br />Pre Condition<br />Regular <br />Injection<br />SLDC<br />Power Exchange<br />Central Agency<br />Verify before <br />Issuance<br />Application<br />Issuance<br />Intimation <br />For Meter Reading<br />Apply for sale <br />of REC<br />Eligible Entity<br />SLDC<br />Joint Meter Reading<br />
  30. 30. REC Trading<br />RPS Obligated entities<br />1<br />RE Generators<br />1<br />Electricity to Grid<br />Electricity from Grid<br />4<br />REC purchase agreement/ trading<br />5<br />Issuance of REC<br />1<br />Central Agency- NLDC<br />Redemption of REC<br />6<br />2<br />Energy Accounting<br />Application to issue REC<br />Compliance reporting<br />3<br />Confirmation of Energy Accounting<br />7<br />SLDC<br />Monitoring Committee of each State<br />Quarterly Reporting<br />
  31. 31. Redemption Process<br />Eligible Entity<br />Apply for<br />Sale of REC<br />RPO<br />Purchase<br />Obligated Entity<br />SERC<br />Power Exchange<br />Intimation of Sale<br />Intimation of<br />Sale<br />Central Agency<br />State Agency<br />
  32. 32. REC- Timelines, Fees & Charges<br />
  33. 33. REC Fees & Charges<br />Accreditation Charges<br />
  34. 34. REC Fees & Charges<br />Registration Charges<br />Issuance Charges<br />
  35. 35. REC Pricing Framework<br />01/10/2011<br />16<br />Renewable Energy<br />Electricity Component<br />REC Component<br />(Environmental Attribute)<br />Market Discovered Price<br />(Obligated Entity/Voluntary Buyer)<br />Average<br />Power Purchase Cost<br />(Distribution Utility)<br />Bilateral Agreement <br />(de-regulated)<br />(OA User/Trader)<br />CHHATTISGARH - Rs. 1.67/kwh<br />Andhra Pradesh - Rs 1.78/kWh<br />Maharashtra - Rs 2.43/kWh<br />Karnataka - Rs 1.85/kWh<br />Kerala - Rs 1.46/kWh<br />Tamil Nadu - Rs 2.62/kWh<br />Himachal Pradesh - Rs 1.48/kWh<br />Rajasthan - Rs 2.48/kWh<br />
  36. 36. Pricing of REC<br />CERC has finalized the floor and forbearance price of REC based on:-<br /><ul><li> Variation in cost of generation of different renewable energy technologies ,falling under solar and non-solar category, across States in the country.
  37. 37. Variation in the Pooled Cost of Purchase across States .
  38. 38. Expected electricity generation from renewable energy sources including:-</li></ul>i. expected renewable energy capacity under preferential tariff<br />ii. expected renewable energy capacity under mechanism of certificates;<br /><ul><li>Renewable Purchase obligation targets set by State Commissions. </li></li></ul><li>Cont…<br />CERC has given the following price range for Solar and non-solar certificates ( applicable up to march2012):<br />These prices are calculated as under:<br />Forbearance Price = Maximum (Preferential Tariff- Average Power Pool Cost)<br />Floor Price = Market Equilibrium Price (Minimum requirement for project viability of RE technologies - Average Power Pool Cost)<br />.<br />
  39. 39.
  40. 40.
  41. 41.
  42. 42. Revised REC Price Comparison (w.e.fApril 2012) <br />
  43. 43. Solar policy Landscape<br />Under JNNSM, targets set for Solar Penetration<br />
  44. 44. Off-grid Solar system Cost estimate <br />(with Battery Back-up)<br />
  45. 45. Off-grid Solar system Benefits<br />Renewable Energy Certificate<br />1<br />Tax Saving due to Accelerated Depreciation<br />2<br />Freedom from grid-based electricity<br />3<br />
  46. 46. Combined Benefits for a 100 kW system<br />
  47. 47. Combined Benefits for a 200 kW system<br />
  48. 48. REC Status* till Date (as on 30.09.11) <br />Accreditated RE Generators -- 241(1418MW)<br />Registered RE Generators ------176(1079MW)<br />RECs Issued-------------------------- 197044<br />RECs Redeemed-------------------- 125507<br />(* source – NLDC)<br />
  49. 49. Registered R.E Generator* (as on 30.09.2011) <br />
  51. 51. Total registered RE capacity 1074 MW <br />
  52. 52. REC SUMMERY* (as on 30.09.2011) <br />
  53. 53.
  54. 54. States with highest RPO targets for FY12<br />
  55. 55.
  56. 56. Power Sector at a Glance "ALL INDIA" Total Installed Capacity as on 31.08.2011 ( source- CEA)<br />
  57. 57. R. E Project installed all India (as on 31.08.2011) source : MNRE <br />
  58. 58. Comparison RE Projects installed v/s Registered as R.E Generator under REC <br />
  59. 59. Way Forward ........<br /><ul><li>REC mechanism offers alternative to fulfill RPO targets by Entities.
  60. 60. Obligated Entities can plan to meet RPO targets in efficient manner.
  61. 61. Long term visibility of Floor and Forbearance price is necessary to ensure regulatory certainty for Utility as well as RE project developers.
  62. 62. Impact on Avg. power purchase cost of Utility is not very significant.
  63. 63. Utility /SERCs may develop Model Power Purchase Agreement for procurement of electricity from RE projects at APPC.
  64. 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. 65. Stimulate competition amongst renewable energy sources.
  66. 66. Help in bringing early grid parity for renewable energy sources.</li></li></ul><li>Thank you!!!<br />40<br />