Renewable Energy - Recent Initiatives


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The ppt gives an overview on recent policy initiatives on Renwable Energy, like cerc\'s new regulation, national solar mission and renewable energy certificate

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Renewable Energy - Recent Initiatives

  1. 1. Sep 09<br />Renewable Energy – New Tariff Guidelines & REC Framework<br />Saurabh Mehta<br />Asst. Manager (BD – Projects)<br />Reliance Power<br />
  2. 2. Flow of presentation<br /><ul><li>CERC’s new regulation
  3. 3. Background
  4. 4. Salient Features
  5. 5. Wind Energy
  6. 6. Solar Energy
  7. 7. National Solar Mission
  8. 8. Renewable Energy Certificate (REC)
  9. 9. Background
  10. 10. REC Concept
  11. 11. Operational Framework</li></li></ul><li>CERC’s new Regulation<br />Background – Pre regulation scenario<br />Wind Energy<br />Different Tariff regimes for different states<br />Large variations – Rajasthan Rs 4.28 / Unit v/s Tamilnadu Rs. 3.39 / Unit<br />Similar tariff for different wind zones in a state<br />No clarity for CDM Benefits sharing<br />Fixed project cost without any indexing<br />Fixed ROE throughout the project life<br />Solar Energy<br />Different Tariff regimes for different states<br />No clarity of tariff determination methodology<br />Large portions of tariff (Rs. 10 to 12) to come from GOI as Generation Based Incentive (GBI)<br />CERC’s new regulation addresses the issues of Renewable Energy Tariff Determination<br />
  12. 12. CERC’s new Regulation<br />Salient Features<br />Eligibility criteria<br />
  13. 13. CERC’s new regulation<br />Salient Features contd.<br />Review Period –3 years <br />Tariff Period – <br />Small Hydro Projects : 35 years <br />Solar PV & Solar Thermal : 25 years <br />Other RE Projects : 13 years<br />Useful life –<br />Wind Projects : 25 years<br />Biomass Projects : 20 years<br />Small Hydro Projects : 35 years<br />Solar PV / Solar Thermal Projects : 25 years<br />Project Specific Tariff – <br />May be determined by commission on case to case basis for the following;<br />Hybrid Solar Thermal Power Plants<br />Municipal solid waste projects<br />Any other new renewable technology<br />
  14. 14. CERC’s new regulation<br />Salient Features contd.<br />Tariff Structure<br />Single part tariff with following fixed cost components (except for biomass and non – fossil fuel based cogen plants)<br />Return on Equity (ROE)<br />Interest on loan capital<br />Depreciation<br />Interest on working capital<br />Operation and maintenance expenses<br />Levellised Tariff – <br />Discount factor equivalent to weighted average cost of capital (WACC)<br />Dispatch Principles –<br />“MUST RUN” status for all RE projects except biomass project of 10 MW and non-fossil fuel based cogen plants.<br />
  15. 15. CERC’s new regulation<br />Financial Principles for Tariff Determination<br />
  16. 16. CERC’s new regulation<br />Financial Principles for Tariff Determination<br /># - Varying for different states <br />
  17. 17. CERC’s new regulation<br />Levellised Tariff State-wise Comparison<br /># - Wind zone not present in the state<br />
  18. 18. Wind Energy<br />Project IRRs w/o depreciation benefit – comparison<br />Capex @ Rs. 6.0 Crs / MW<br />
  19. 19. Wind Energy<br />Equity IRRs w/o depreciation benefit – comparison<br />Capex @ Rs. 6.0 Crs / MW<br />
  20. 20. Solar Energy<br />Levellised Tariff State-wise Comparison<br />* - Projects are under GBI policy with cap of 50 MW<br />
  21. 21. Objectives<br />National Solar Mission<br />To make India Global leader in solar energy through -<br />20,000 MW Generation Capacity by 2020<br />100,000 MW Generation Capacity by 2030<br />200,000 MW Generation Capacity by 2050<br />Cost reduction for solar power to grid parity (Rs 4-5 / kWh) by 2020 <br />To achieve parity with coal based Thermal Power by 2030<br />Mandatory setting of solar plants equivalent to 5% of thermal power plant capacity to be set by the generation utilities.<br />4 – 5 GW of solar manufacturing capacity by 2017<br />
  22. 22. NATIONAL SOLAR MISSION<br />mission – 20 gw by 2020<br />Phase 1 (2009 – 12)<br /><ul><li>Consolidating ongoing efforts on off grid applications
  23. 23. Demo utility scale projects (CSP – Solar Thermal)
  24. 24. To achieve 1 – 1.5 GW during this phase</li></ul>Phase 2 (2012 – 17)<br /><ul><li>Scaling up across applications & Rapid cost reduction
  25. 25. Deployment of new technologies – Concentrating PV, storage technologies
  26. 26. To achieve 6 – 7 GW during this phase </li></ul>Phase 3 (2017 – 20)<br /><ul><li>Rapid scale up across all applications
  27. 27. Reduction in capital subsidies
  28. 28. To achieve the target of 20 GW of installed capacity</li></li></ul><li>NATIONAL SOLAR MISSION<br />Road map for 20 GW by 2020<br />Resource Mobilization<br /><ul><li> Funds of Rs. 80,000 – Rs. 100,000 Crs required over 30 years for incentives like GBI
  29. 29. Proposed to be supplemented through cess on fossil fuel and thermal projects
  30. 30. May not be required after the recent regulation of CERC.</li></li></ul><li>Background<br />RENEWABLE ENERGY CERTIFICATE<br />National Action Plan for Climate Change (NAPCC) announced by the Hon. PM of India on June 30, 2008 <br />Principles <br />Protecting the poor and vulnerable sections through sustainable growth<br />Achieving national growth through ecological sustainability<br />Demand side management <br />Deploying appropriate technology for adaptation and mitigation of GHG<br />Engineering new and innovative forms of markets<br />Envisages several measures to address global warming<br />Increases the share of renewable energy in total electricity consumption<br />
  31. 31. RENEWABLE ENERGY CERTIFICATE<br />NAPCC Promoting Renewable Energy<br />Target of mandatory 5% Renewable Energy Purchase (RPO) for FY 2009-10 against current level of around 3.5% by Discoms, Open Access consumers and captive consumers.<br />Target will increase by 1% for next 10 years<br />Constitute approx. 15% of the energy mix of India<br />Need for innovative financing instruments<br />Policy instrument prescribed in NAPCC is Renewable Energy Certificate (REC) Mechanism to enable RPO implementation.<br />Report on Development of Conceptual Framework for REC Mechanism for India - ABPS Infrastructure Advisory Private Limitedsubmitted to MNRE, June 09 <br />
  32. 32. RENEWABLE ENERGY CERTIFICATE<br />REC Concept<br />Electricity generated from RE sources can be divided into two components:<br />Electricity component <br />Environmental component<br />The environmental component associated with renewable energy can be carved out as a separate component and used for the purpose of REC mechanism<br />SCHEMATIC OF REC CONCEPT<br />
  33. 33. RENEWABLE ENERGY CERTIFICATE<br />Salient Features of REC Framework<br /><ul><li>NOT an incentive scheme. Enable sale and purchase of renewable component across the State boundaries
  34. 34. Scheme to come into force on April 1, 2010
  35. 35. Coexist with all current incentive based schemes
  36. 36. 1 MWhr 1 REC
  37. 37. Purchase of REC would be considered as purchase of RE
  38. 38. Not related to carbon credits
  39. 39. RE generators with capacity untied in PPA will have an option to sell electricity and REC separately
  40. 40. REC will be issued to RE Generators only
  41. 41. Validity of 25 years for REC Framework
  42. 42. Carry forward allowed for maximum of 25% of REC issued .</li></li></ul><li>RENEWABLE ENERGY CERTIFICATE<br />Eligibility Criteria<br />Eligible<br />RE technologies recognized by MNRE<br />Grid connected RE generators of at least 250 KW capacity <br />Not eligible<br />RE project with existing PPA <br />If RE sale at preferential Tariff<br />
  43. 43. RENEWABLE ENERGY CERTIFICATE<br />Proposed Process of REC Mechanism<br />Step 1: Electricity Generation and Feeding to the Grid<br />Step 2: Request for issuance of REC<br />Step 3: Confirmation of Electricity Generation<br />Step 4: Creation and Issuance of RECs<br />Step 5: REC Sale by RE Generator<br />Step 6: Surrender/Redeeming of RECs<br />Step 7: Compliance Reporting<br />
  44. 44. Accreditation of RE power plants<br />(State nodal agency: SNA)<br />1<br />Information related to accreditated RE plants for registered entities sent to REC registry<br />Registration of Eligible entities<br />(Central level agency)<br />2<br />5<br />4<br />Issuance of REC<br />REC exchange<br />Central REC Registry (NLDC)<br />RE Generator<br />Information related to RE generation<br />3<br />Sale of electricity at par with conventional power<br />Auditing Panel<br />6<br />Discom issuing RE injection certificate<br />State Load Despatch Centre (SLDC) <br />Information on REC purchase/redemption<br />Electricity Energy accounting<br />SERC: Compliance based on SNA Report<br />State Nodal Agency SNA<br />RENEWABLE ENERGY CERTIFICATE<br />Operational framework of REC mechanism - Comprehensive<br />
  45. 45. RENEWABLE ENERGY CERTIFICATE<br />Recommended Methodology<br /><ul><li>Link the electricity component with normative RE tariff
  46. 46. REC component with notional fixed price</li></ul> ISSUES <br /><ul><li>Additional benefit to the RE developer …..?
  47. 47. Whether registration with national registry is mandatory for RE developer ….?
  48. 48. Price for REC component - Market driven or notional fixed ....?</li></li></ul><li>Sale and Purchase for REC<br />RENEWABLE ENERGY CERTIFICATE<br />Not only obligated entities (Discoms, Open Access Consumers, Captive consumers) but also other persons shall be allowed to buy RECs<br />Redemption of RECs by obligated entities shall be reported to monitoring committee<br />Redemption by voluntary buyers will be reported to only Central Regulator <br />REC Exchange Platform is expected to provide the services for sale and purchase of RECs<br />The Task Force has agreed with the proposal that ‘one single market’ shall be created in the country for exchange/transfer of REC<br />FOR should undertake the assessment of market, liquidity requirements, costs involved in setting up of the market and necessary fee structure<br />
  49. 49. Thank You<br />