This document summarizes REC (Renewable Energy Certificate) supply and demand in India. It estimates that REC issuance in 2013 will be around 121 million, with average monthly issuance of 10.08 million. It also estimates REC demand based on India's renewable energy targets and generation, finding a shortfall of around 4.7 billion kilowatt-hours in 2013 that will need to be met with RECs. The document discusses factors that will impact REC pricing, such as enforcement of renewable purchase obligations, and provides short and medium-term price forecasts of INR 2,000 and INR 1,800 per REC respectively. It also charts historical REC prices on Indian exchanges.

1. REC – What lies ahead
Satish Kashyap
Rameez Shaikh
info@general-carbon.com
Leader in energy & environmental commodities
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2. National Action Plan on Climate Change
RPO & 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-solar
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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 MW
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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)
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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 projects
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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 Crores
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7. Status of notification by States
State RPO % Notification Pref. Tariff APPC
(Wind)
Maharashtra 6.75 Final 3.58 – 5.37 2.57
Madhya Pradesh 2.10 Final 4.35
Tamil Nadu 9.00 Gazetted 3.39 2.37
Rajasthan 6.00 Amendment to gazette awaited 3.87- 4.08 2.57
Haryana 1.50 Final 4.08 2.77
Gujarat 5.50 Gazetted except OA and CPP 3.56 2.64
Chhattisgarh 5.00 Gazetted ~3.13 1.67- 3.26
Karnataka 7.0-10.0 Final 3.70 2.73
Andhra Pradesh 5.00 Draft 3.50
Orissa 4.90 Gazetted 5.31
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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 DISCOMs
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9. Demand for RECs
FY 2012 FY 2013 Unit
Gross power requirement (NAPCC) 968.7 1065.5 BUs
RPO Target (%) 7% 8% %
RE Generation 2010 38.7 BUs
RE Generation projected (~) 59.5 68.4 BUs
RE power required 67.8 85.2 BUs
RE power shortfall 8.3 16.8 BUs
REC 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
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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 year
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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)
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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 REC
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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-11
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14. REC – What lies ahead!
info@general-carbon.com
April - 2012
Disclaimer: The views and opinions expressed herein are those of the authors and do not necessarily represent the views or opinion of
General Carbon. This document is not meant to guide investment or any other action including investment into projects or emission reduction
offsets. Anybody relying on information or projections provided in this document for decisions or actions will do so at his/her own risk and
the authors and General Carbon accept no liability arising from impact of such decisions or actions.
Leader in energy & environmental commodities
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