Post on 13-Mar-2018
REC vs ESCerts Trading
Bangalore | New Delhi | Mumbai | Chennai | Hyderabad | Indore
India’s Largest REC Trading Company
Anuj Hemant Xess
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Designated Consumers- Aditya Birla Group Salient features of REC
1 REC= 1 MWH
Price defined by CERC ( upto March 2017)
Steps for obtain REC
Accreditation of the project with SNA
Registration with NLDC
NLDC issues RECs for energy injected to the grid which is approved by local SLDC ( monthly cycle)
Monthly trading at the power exchanges
Every last Wednesday of the month
Market clearing price is the outcome of demand and supply
Validity - 3 years from date of issuance
Floor Price (Rs./REC) Forbearance Price (Rs./REC)
Non Solar 1,500 3,300
Solar 3,500 5,800
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Designated Consumers- Aditya Birla Group Comparison – REC vs ESCert mechanism REC ESCert
Price of the certificate
• Floor and forbearance price • No concept of floor and forbearance price • Price to be capped as a penalty price which is determined by market price of coal, gas and crude oil
Enforcement of the regulation
• State RPO regulations are the key drivers of the market • Currently it lacks strict action by SERCs
• BEE/SDAs are the drivers • Strict compliance monitoring is must • Adequate capacity building required
Role of stakeholders in trading
• Compliance auditors cannot participate in providing any kind of services to REC beneficiary- CERC
• PAT regulations safeguards involvement of auditors role in the auditing and verification activities • Auditing firms should be kept away from trading ESCerts
Retention of certificates
• Retention of RECs is allowed within same company/legal entity (not allowed within group companies)
• No such provision defined • BEE may allow offset within same legal entities.
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ESCerts Issued- Next Step ?
• ESCerts account will be maintained at the depository
• The unit will have to be registered
Registration with the depository
• Traders are basically members at the power exchange
• Trading will take place through a registered member
Choose a trader
• Register with one or both exchanges
• Required for trading transaction
• To be opened with major banks like HDFC, SBI etc
Register with Exchange/
Settlement account with the bank
The above steps are in line with current REC trading procedure at the power exchange
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Designated Consumers- Aditya Birla Group How power exchange trading works Example - Double Sided, Closed Bid, Uniform
Priced Auction ( practised in power and REC ) BUY Bids
B1 5 MW @ Rs. 3000
B2 2 MW @ Rs. 4000
B3 8 MW @ Rs. 3500
B4 3 MW @ Rs. 2500
SELL Bids
S1 4 MW @ Rs. 2500
S2 5 MW @ Rs. 3000
S3 2 MW @ Rs. 3500
S4 6 MW @ Rs. 4000
Pri
ce (
Rs.
/MW
h)
Volume (MWh)
5 10 15 20
2500
3000
3500
4000
MCV
MCP
B2
B3 S3
B1
B4 S1
S2
S4
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ESCerts- Bank or Sell ?
Deciding factors
• Current cost of reduction
• Cost of next year target
• Likely cost of future reductions (A)
Savings target exceeded
ESCerts
Penalty/purchase ESCerts
If A> cost of
ESCerts
Bank (only 25-30 % will be
allowed)*
Sell
Target is expected to exceed next cycle
Yes
No
Yes
Yes
No
No
Other factors
• Expansion/reduction plan
• New efficient technology to be used
• Demand and supply situation
* Response to frequently asked questions by BEE
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Designated Consumers- Aditya Birla Group Market propositions
OTC transactions
Not defined in REC mechanism as well
Risks- liquidity concerns, irrational price exchange, chances of foul play
Will be beneficial for the stakeholders when the market size grows
Fungibility
Possibilities has been discussed in the past
Issue is units ( REC is in MWH whereas ESCert is in Tonnes of oil Equivalent)
Will require a regulatory change
Voluntary purchase
To promote EE
In REC – Organisations have come forward and purchased RECs voluntarily (POSOCO purchased RECs in the past; BEE, MOP may allocate fund to purchase ESCert)
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Current situation
Based on a press release by BEE dtd 24.11.12 * Annual (unverified) reporting by the designated consumers at the end of the year 2013-14
478
217
60
201
0
100
200
300
400
500
600
Total number of DCs
Target met Will meet the target
Balance
• Demand of ESCerts is likely to be robust • Price of ESCerts will play a key role in the market
• * Issuance and trading of ESCerts to take place between Aug and Nov 2015
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Services Offered by REConnect
ESCerts Trading Services
• Option to trade ESCerts either at IEX or PXIL, or at both the exchange
• Issuance support - follow up, liasioning with the depository/MOP
Strategy for monetization
• Market trading strategies and analytics to maximise the value of DCs
• Market intelligence report and notes
Compliance procedure support
• Support during compliance audits/ other information requirement
• Support on an ‘as needed' basis
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Management & Team
Education Key Positions / Experience Current Engagement
Prof. S A Khaparde PhD – IIT Kharagpur
• Member (Advisory Committee): MERC, IEX,
• Member – Indian Smart Grid Forum
Professor, Dept. of EE, IIT Bombay
Bruce M Usher MBA – Harvard Business School
• CEO – EcoSecurities (World’s largest Carbon trading firm)
• CEO – Treasury Connect LLC • Chairman – Persistent Energy
Partners
Executive in Residence – Social Enterprise Program Columbia B-School
Vibhav Nuwal (New Delhi)
MBA – Columbia Business School
• Carbon Finance – Managing Emissions
• Worked with J P Morgan, Arthur Andersen, LEK Energy (UK)
Director (Head – RPO Market)
Vishal Pandya (Bangalore)
M.Tech – IIT Bombay
• Power Trading & REC - IEX • Sub-station Designing – L&T
Director (Head – Electricity and Market Analytics)
Ramkumar (Mumbai)
MBA - Symbiosis • Carbon Advisory – GENSOL • Marketing – Chequered Flag
Director (Head – REC Market)
Madhusudan C (Bangalore)
MBA – RSM, The Netherlands
• Tech Director – Erasmus Medical Center, Netherlands
Chief Technology Officer (Head – IT Systems)
Ad
vis
ory
B
oard
C
ore
Team
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Equity Partner – INFUSE (IIM Ahmedabad)
India’s first CLEAN-TECH Venture Fund
• An MNRE + IIM Ahmedabad initiative
• Core Focus – To promote innovation in Indian
Clean-Tech space with focus on Energy &
Renewables
Key Venture Partners supporting INFUSE
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Renewable
Generation
CPPs / Industrial
Consumers
Access to Market
Market Position
• 3,000 MW of RE capacity under management • Projects present across 16 States • Key Clients: OGPL, ReNew, GAIL, NALCO, GreenInfra,
Mytrah, ILFS, Vish Wind, Tadas, TNPL, SPB, ITC, iPaper, TVS, GFL, TVH, Renuka, Polyplex Hydro, Karma Energy
• Working with
• ACC, Aditya Birla, JK
Cement, Maihar
Cement, IFFCO, SRF
Limited etc.
• ~1,000 MW of RPO
portfolio
• Member at IEX & PXIL • India’s largest REC Trading Company
• 46% Market share in Non-Solar RECs • 95% Market Share in Solar RECs
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Our presence in Indian Renewable Market
REConnect Office
CPP/Open Access Client [~1,000 MW]
RE Generation [~3,000 MW, all size, all types]
Wind/Solar Forecasting & Scheduling [~1,000MW]
Bilateral Power Transactions [~40 MW]
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Other Services Offered by REConnect
REC/RPO Services
• End to end services under REC scheme ( Accreditation and
Registration of the Project , Issuance and Trading of RECs)
• Complete RPO assessment and strategy for compliance
• Detailed evaluation of each unit including state regulations
and likelihood of enforcement of RPO
Forecast / Scheduling (
Wind and Solar)
• Provide close to real time day ahead forecasts and schedule
to SLDC
• Daily/weekly/monthly MIS reports
• Provide schedules to SLDC and coordinate the
communication
Electricity Portfolio
Management
• Single window to cheaper and green power ( PX and Intra
state/bilateral)
• Short /Medium/Long term strategy for power procurement
• Liasioning/Regulatory assistance
CONTACT US
Bangalore #2,Victor Mansion, 2nd Floor Kodihalli, Old Airport Road , HAL 2nd Stage (PO) Bangalore – 560008 INDIA (O): 080-6547 3383/84 (F): 080 – 3072 3571
Our other presentations • Renewable Energy Certificates • Renewable Purchase Obligation • Renewable Regulatory Fund • Electricity Portfolio Management
New Delhi C-503, Nirvana courtyard, Nirvana Country, Sector 50 Gurgaon 122018, Haryana (O): 0124-4103 216 (F): 080 – 3072 3571
Mumbai F-159, Haware Fantasia Business Park, Plot No 47, Sector 30 A, Vashi, Navi Mumbai-400703 (M): 9930359992 (F): 080 – 3072 3571
Chennai #18/1 (88), Aarya Gowda Road, 2nd Floor, West Mambalam, Chennai - 600 033, India (M) +91-99404 78306 (F): 080 – 3072 3571
THANK YOU!!