Overview

of

RENEWABLE PURCHASE OBLIGATION (RPO) &

RENEWABLE ENERGY CERTIFICATE (REC)Framework & status

in

INDIA Presentation by

Sanjeev jainAdditional DirectorCREDA ,RAIPUR

E mail- sjain218@yahoo.co.in

Key Objectives for Introduction of REC Mechanism

2

Effective implementation of RPO .

Increased flexibility for participants .

Overcome geographical constraints .

Reduce transaction costs for RE transactions .

Enforcement of penalty mechanism .

Create competition among different RE technologies .

Development of all encompassing incentive mechanism .

Reduce risks for local distributor by limiting its liability to

energy purchase .

Concept of REC Mechanism in India

3

Avg. PP Costof Host Utility

(regulated)

Market Rate as per

Power Exchange

At Tariff Determined by

Regulatory Commission

Renewable Energy

Electricity

REC

DistributionCompany

Renewable Energy

Electricity

REC

DistributionCompany

Obligated Entity

(Buyer)

Existing Mechanism

RECMechanism

OA / Trader

Bilateral agreement

(de-regulated)

Entities involved in REC Mechanism operation

4

Institutional Framework

Central Entities

State Entities

Forum of Regulators

Central Electricity Regulatory Commission

Central Agency (National Load Dispatch Centre)

Power Exchanges

Compliance Auditors

State Electricity Regulatory Commission

State Load Dispatch Centre

State Agencies

Eligible Entities

Obligated Entities

Renewable Energy Certificates (REC)REC is deemed as certificate of power generated from

Renewable Energy sources.

1 REC = 1 Mega Watt hour of renewable energy generated.

Can be sold or traded to meet mandatory RPO targets set by State Electricity .

Regulatory Commissions for renewable energy purchases by utilities/distribution companies/ Obligated entities.

Exchanges identified for REC trading- Indian Energy Exchange & Power Exchange of India.

REC would be divided into two categories:• Solar Certificates• Non-Solar Certificates

Eligibility CriteriaAll renewable energy generators already NOT having PPA

with the distribution licensees for contracted quantum.

RE generator selling electricity generated either :i. 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

ii. to any other licensee or to an open access consumer at a mutually agreed price, or through power exchange at a market determined price;

iii.eligible CPP utilizes electricity for self consumption

All RE based captive power producer shall be eligible for their entire energy generation including self consumption.

Conceptual framework

RE Generator

Sale in REC framework

Sale at Preferential

tariff

Obligated Entities

Renewable Component

(REC)

Electricity Component

Obligated Entities (Sale through power

exchanges )

Sale through power exchanges

Third party sale on mutually agreed

price

Distribution Utility at a price not more

than average pool price

Operational framework

Accreditation by State Agency

Registration by Central Agency

Issuance of RECs by Central Agency

Redemption of RECs

Accreditation & Registration Process

Eligible Entity State Agency SLDC

Central Agency

Power Exchange

Verify Accreditation

Application

ConfirmationIntimation

Application

Confirmation

Intimation

Issuance of REC Process

SLDC Central Agency

Power Exchange

Eligible Entity

VerificationPre Condition

Regular Injection

Verify before Issuance

Application

Joint Meter Reading

Apply for sale of REC

State Agency

IssuanceIntimation For Meter Reading

SLDC

1 1

1

2

3

4

6

7

5

REC Trading

Central Agency- NLDC

Electricity to Grid

Electricity from Grid

RE Generators

RPS Obligated entities

Energy Accounting

Trading Platform

Open access users

Other obligated entities

Captive generators

Discoms

REC purchase agreement/ trading

Redemption of REC

Application to issue REC

Issuance of REC

SLDC

Compliance reporting

Monitoring Committee of each State

Quarterly Reporting

Redemption Process

Eligible Entity

Obligated Entity SERC

Central Agency

Power Exchange

Apply forSale of REC

Purchase RPO

State Agency

Intimation ofSale

Intimation of Sale

REC- Timelines, Fees & Charges

Application• Three months from the date of generation

Issuance• Fifteen days from the date of application

Validity • 365 days from the date of issue or exchange by way of sale whichever is earlier

Fees• Registration, Annual & Transaction Fees

Charges at Exchange

• Membership Charges

• Transaction Charges

REC Fees & Charges

S.N. Fee and Charges towards

Accreditation

Amount in

1 Application Processing Fees (One

Time)

5,000

2 Accreditation Charges

(One Time)

30,000

3 Annual Charges 10,000

4 Revalidation Charge at the end of

five (5) years

15,000

Accreditation Charges

REC Fees & Charges

S.N. Fee and Charges towards Registration Amount in

1 Application Processing Fees (One Time) 1,000

2 Registration Charges (One Time) 5,000

3 Annual Charges 1,000

4 Revalidation Charge at the end of five (5) years 5,000

Registration Charges

S.N. Fee and Charges towards Issuance of REC Amount in

1 Fees per Certificate 10

Issuance Charges

REC Pricing Framework

01/10/2011 16

Renewable Energy

Electricity ComponentREC Component(Environmental

Attribute)

Market Discovered Price

(Obligated Entity/Voluntary Buyer)

AveragePower Purchase Cost

(Distribution Utility)

CHHATTISGARH - Rs. 1.67/kwh

Andhra Pradesh - Rs 1.78/kWh

Maharashtra - Rs 2.43/kWh

Karnataka - Rs 1.85/kWh

Kerala - Rs 1.46/kWh

Tamil Nadu - Rs 2.62/kWh

Himachal Pradesh - Rs 1.48/kWh

Rajasthan - Rs 2.48/kWh

ParametersNon Solar

REC

Solar

REC

Forbearance

Price (Rs/MWh)3900 17000

Floor Price

(Rs/MWh)1500 12000

Bilateral Agreement

(de-regulated)

(OA User/Trader)

Pricing of RECCERC has finalized the floor and forbearance price of REC based on:- Variation in cost of generation of different renewable energy technologies , falling under solar and non-solar category, across States in the country. Variation in the Pooled Cost of Purchase across States .Expected electricity generation from renewable energy sources including:-

i. expected renewable energy capacity under preferential tariff

ii. expected renewable energy capacity under mechanism of certificates;Renewable Purchase obligation targets set by State Commissions.

Cont…

.

CERC has given the following price range for Solar and non-solar certificates ( applicable up to march2012):

Non-Solar REC (Rs/MWh)

Solar REC (Rs/MWh)

Forbearance Price 3,900 17,000

Floor Price 1,500 12,000

These prices are calculated as under:Forbearance Price = Maximum (Preferential Tariff- Average Power Pool Cost)Floor Price = Market Equilibrium Price (Minimum requirement for project viability of RE technologies - Average Power Pool Cost)

Revised REC Price Comparison (w.e.f April 2012)

Under JNNSM, targets set for Solar PenetrationPhase 1 (2010 –2013) Phase 2 (2013 –2017) Phase 3 (2017 –2022)

1,100 MW 4,000 MW 20,000 MW

Phase -1 Category Size of Project Status of Allocation

1100 MW

90 MW , Small scale Projects

0.1 to 2 MW grid connected

Projects have already been shortlisted

10 MW Off-grid and decentralized applications

Up to 100 kWApplications open from

center.

500 MW Grid Connected Solar Photovoltaic technology

5MW +- 5%FY 2010-11 50MW

FY 2011-13 350MW

500 MW Grid connected Solar Thermal Projects

5MW +- 5%FY 2010-11 500MW

Solar policy Landscape

PARAMETERS 100 kW 200 kW

Solar Modules 120 Lacs 240 Lacs

Electric Equipments 60 Lacs 120 Lacs

Civil Work 30 Lacs 60 Lacs

EPC 30 Lacs 60 Lacs

Preoperative & Consultancy 10 Lacs 20 Lacs

TOTAL 250Lacs 500 Lacs

Area Requirement 1200 sq. Km. 2400 sq. Km.

Power Generation 1.5 Lac units 3.0 Lac units

Off-grid Solar system Cost estimate (with Battery Back-up)

Renewable Energy Certificate1

Tax Saving due to Accelerated Depreciation2

Freedom from grid-based electricity3

Off-grid Solar system Benefits

Combined Benefits for a 100 kW system

Incentive Equity (75 Lacs) Debt (175 Lacs)

Revenue from sale of REC 18.1 Lacs -NA-

Revenue against tax saving 48 Lacs -NA-

Revenue against saving from

grid based electricity

7.2 Lacs -NA-

Returns in 1st year 73.3 Lacs Loan repayment of Rs

175 Lacs at rate of 5%

Total Project Cost Equity Debt

250 Lacs 75 Lacs 175 Lacs

Combined Benefits for a 200 kW system

Incentive Equity (150 Lacs) Debt (350 Lacs)

Revenue from sale of REC 36.2 Lacs -NA-

Revenue against tax saving 96 Lacs -NA-

Revenue against saving from

grid based electricity

14.4 Lacs -NA-

Returns in 1st year 146.6 Lacs Loan repayment of Rs

350 Lacs at rate of

10-12%

Total Project Cost Equity Debt

500 Lacs 150 Lacs 350 Lacs

REC Status* till Date (as on 30.09.11)

• Accreditated RE Generators -- 241(1418MW)

• Registered RE Generators ------176(1079MW)

• RECs Issued-------------------------- 197044

• RECs Redeemed-------------------- 125507

(* source – NLDC)

Registered R.E Generator* (as on 30.09.2011)

Energy Source No. of Projects Capacity in MW

1. Wind 125 574

2. Small Hydro 10 52

3. Bio Mass 20 224

4. Bio fuel Co gen 21 229

5. Solar Thermal - -

6. Solar PV - -

7. Geothermal - -

8. Urban /Municipal Waste - -

TOTAL 176 1079

SOURCE WISE RE GENERATOR

569

224

229

51

TOTAL CAPACITY REGISTERED 1074 MW

WIND

BIO MASS

CO-GEN

HYDRO

Total registered RE capacity 1074 MW

REC SUMMERY* (as on 30.09.2011)

Month & Year

OpeningBalance

REC Issued RECRedeemed

Closing Balance

March, 2011 0 532 424 108

April, 2011 108 4503 260 4351

May, 2011 4031 28270 18502 14119

June, 2011 14119 27090 16385 24824

July, 2011 24824 30224 18568 36480

August, 2011 36840 31813 25096 43197

Sept 2011 43197 74612 46362 711447

TOTAL 197044 125597

States with highest RPO targets for FY12State Total RPO % (FY12)

Himachal Pradesh 11.1

Rajasthan 9.5

Tamil Nadu 9

Maharashtra 7

Gujarat 6

Chhattisgarh 5.25

Andhra Pradesh 5

Uttar Pradesh 5

Power Sector at a Glance "ALL INDIA"

Total Installed Capacity as on 31.08.2011 ( source- CEA)

Fuel MW %age

Thermal 118409.48 65.21

Hydro (Renewable) 38,206.40 21.04

Nuclear 4,780.00 2.63

RES** (MNRE) 20,162.24 11.10

Total 1,81,558.12 100.00

Sector MW %age

State Sector 83,313.65 45.88

Central Sector 56,572.63 31.15

Private Sector 41,671.84 22.95

Total 1,81,558.12

R. E Project installed all India (as on 31.08.2011) source : MNRE

Renewable Energy Programme/ Systems

Installed capacity MW

WIND 14989

SMALL HYDRO 3153

BIO MASS 1083

BAGGASE CO- GEN 1779

WASTE TO POWER ( U&I) 73

SOLAR PV 46

TOTAL 21125

Comparison RE Projects installed v/s Registered as R.E Generator under REC

SOURCE INSTALLED CAPACITY (MW)

REGISTERED CAPACITY(MW)

% over Installed /Regd.

WIND 14989 569 3.79

BIO MASS 1083 224 20.68

CO-GEN 1779 229 12.87

HYDRO 3153 51 1.61

SOLAR 46 - -

Waste to Energy (U&I) 73 - -

TOTAL 21125 1074 5.08

REC mechanism offers alternative to fulfill RPO targets by Entities.

Obligated Entities can plan to meet RPO targets in efficient manner.

Long term visibility of Floor and Forbearance price is necessary to

ensure regulatory certainty for Utility as well as RE project

developers.

Impact on Avg. power purchase cost of Utility is not very significant.

Utility /SERCs may develop Model Power Purchase Agreement for

procurement of electricity from RE projects at APPC.

Bilateral transactions of RECs as & when enabled would providelarger flexibility and liquidity for REC market, which is the need ofthe hour.

Stimulate competition amongst renewable energy sources.

Help in bringing early grid parity for renewable energy sources.

Way Forward ........

40

Thank you!!!