Post on 10-Jul-2015
1Sustainability. Value. Delivered. www.general-carbon.com
Satish Kashyap
Rameez Shaikh
info@general-carbon.com
REC – What lies ahead
Leader in energy & environmental commodities
2Sustainability. Value. Delivered. www.general-carbon.com
RPO & REC • Renewable Purchase Obligation is the
obligation mandated by SERC for
promotion of renewable energy
• RPO is the minimum percentage of
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
National Action Plan on Climate Change
(NAPCC)
RPO Target for India
5%
10%15%
2010 2015 2020
3Sustainability. Value. Delivered. www.general-carbon.com
REC status – Till April 4, 2012
• Key stats
– 455 projects (2668 MW) accredited
– 366 project (2318 MW) registered
• Focus on non-solar as only 4 solar projects accredited
• Apart from Bagasse projects other project types progressing smoothly
– UP & Maharashtra
Bio-fuel (Bagasse), 67
0 MW
Biomass, 547
Others, 2 MW
Small Hydro, 166
MW
Wind, 1,267 MW
Breakup of accredited capacity (MW)
UP, 683 MW
Maharashtra, 681 MW
Tamil Nadu, 561
MW
Gujarat, 290 MW CH, 103
MW
HP, 47 MW
Others, 164 MW
Accredited capacity (State MW)
4Sustainability. Value. Delivered. www.general-carbon.com
REC estimate - I
• Estimated REC supply based on PLF– Wind 25%
– Small Hydro 60%
– Biomass 70%
– Biofuel cogen 60%
• Biofuel cogen is primarily bagasse – Projects earlier accredited at peak
captive capacity (crushing season)
– Projects are now being accredited for off season captive consumption
– During season captive capacity is larger than off season
– Generation of REC may be in excess of 100% under new rules
– Old project capacity is under modification (UP)
Type RECs in 2013
Biofuel cogeneration 35,23,780
Biomass 33,53,959
Others 10,228
Small Hydro 8,72,496
Wind 27,73,821
Total 1,05,34,284
Avg per month 2013 8,77,857
Supply from existing accredited
capacity
General Carbon Estimate
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REC estimate - II
• Existing projects made up of
– Old Projects (2289 MW)
• Old third party sale/ Captive
consumption
– New capacity addition (378 MW)
New projects, 378
MW
Old projects, 2289
MW
Type
New project
addition (MW)
REC
Generation in
2013*
Biofuel
cogeneration 200 5,25,600
Biomass 100 3,06,600
Others 20 61,320
Small Hydro 50 1,31,400
Wind 500 5,47,500
Total 870 15,72,420
Avg per month
2013 1,31,035
New capacity addition
General Carbon Estimate. Six months of generation for all projects
6Sustainability. Value. Delivered. www.general-carbon.com
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
7Sustainability. Value. Delivered. www.general-carbon.com
Status of notification by StatesState RPO % Notification Pref. Tariff
(Wind)APPC
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
8Sustainability. Value. Delivered. www.general-carbon.com
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
9Sustainability. Value. Delivered. www.general-carbon.com
Demand for RECsFY 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
10Sustainability. Value. Delivered. www.general-carbon.com
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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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)
12Sustainability. Value. Delivered. www.general-carbon.com
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
13Sustainability. Value. Delivered. www.general-carbon.com
REC Prices – Exchange traded prices
1,000
1,500
2,000
2,500
3,000
3,500
4,000 M
ar-1
1
Apr
-11
May
-11
Jun-
11
Jul-1
1
Aug
-11
Sep-
11
Oct
-11
Nov
-11
Dec
-11
Jan-
12
Feb-
12
Mar
-12
Apr
-12
INR
/REC
PXIL
IEX
14Sustainability. Value. Delivered. www.general-carbon.com
Disclaimer: The views and opinions expressed herein are those of the authors and do not necessarily represent the views or opinion ofGeneral Carbon. This document is not meant to guide investment or any other action including investment into projects or emission reductionoffsets. Anybody relying on information or projections provided in this document for decisions or actions will do so at his/her own risk andthe authors and General Carbon accept no liability arising from impact of such decisions or actions.
REC – What lies ahead!
Leader in energy & environmental commodities
info@general-carbon.com
April - 2012