REConnect Newsletter XXII

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1lume: XXIInth: June 12ents of this newsletter are for informational purposes only

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www.reconnectenergy.com

Dear Readers,

Junes trading session was another one withrecord volumes total cleared volume ex-

ceeded 236,000 RECs. However, we see signs

of weakness ahead there has been no clear

action on enforcement even after 3 months

of the end of FY 2011-12. As a result, in June

supply of RECs exceeded demand for the very

first time. Solar REC however, registered a

significant jump in demand.

The main article this month focuses on waste-

to-energy project. Waste-to-energy is a broad

term, and there is a lot of detail one needs togo through to understand its implications on

RPO and REC. We provide some research that

sheds light on this topic.

Prices were steady on IEX to Rs 2402, while

they increased on PXIL to Rs 2,460 (up 14%).

Detailed trading statistics, analysis and regu-

latory updates are available in this newslet-

ter.

As always, happy reading and we look for-ward to hearing feedback from you.

-Team REConnect

REConnect Energy SolutionsREC, Energy Efficiency, Electricity Portfolio Management

REC Eligibility of Waste-to-Energy Projects

From Managements Desk

Regulatory Updates REC Trade Report REC Project Statistics Green News About REConnectIndex Waste to Energy

Waste-to-energy is an important and growing source of power. Some waste-to-energy plants

lso stand to benefit under the REC mechanism. However, the term waste-to-energy is a

road one, and not all types of projects are covered under the REC mechanism. Further, states

reat different type of waste-to-energy projects differently. In this note we have attempted to

hed light on the eligibility and ineligibility of different types of waste-to-energy projects forECs, and the differences in their treatment by states for RPO purposes.

We have considered two questions under this topic:

1. What type of waste-to-energy plants are considered renewable power?

2. What type of waste-to-energy plants are eligible to get RECs?

s we explain below, the answers to these two questions have significant implications.

n important aspect to keep in mind while looking at waste-to-energy plants is that Renew-

ble Purchase Obligation regulations are state level regulations (jurisdiction of State Electricity

egulators), while REC regulations are central level (jurisdiction of Central Electricity Regula-ory Commission, of CERC).

s per the CERC REC regulations, a project is considered renewable energy project if it is cov-

red under Ministry of New and Renewable Energys (MNRE) definition of renewable sources.

or waste-to-energy projects, this covers

Power from urban/industrial waste projects

Power from Black Liquor based projects (this category was recently added).

ccording to IREDA, the first category includes municipal solid waste projects, bio-waste from

ndustrial sector (excluding Rice husk, bagasse, straw, stalks). Given that these projects are

onsidered renewable as per MNRE, they are clearly eligible for RECs.

owever, waste-to-energy is a broad category. It can include waste heat recovery in cement,

teel and various other manufacturing plants, off-gas and lean-gas based projects, and various

ther industrial wastes (Eg: Dola Char is a waste generated from sponge iron units and has a

igh calorific value)

s per CERC REC regulations, these projects are not considered renewable, and therefore are

ot eligible to get RECs (this will change if MNRE recognizes these as renewable). . However,

he definition of RE power in the state RPO regulations differs in some instances from CERCs

egulations.

or example, the RPO regulations of UP and TN include sources identified as per state poli-ies as renewable power, besides those in the MNRE list. This has resulted in the identifica-

on of Waste Heat Recovery (WHR) and some other waste processes as RE in those states.

As per clarification II of Statement of Reason of CERC REC regulations First Amendment, dated 29 September 2010


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Rajasthan also recently recognized WHR as renewable power by

way of a circular.

An important implication is that WHR and such other waste re-

lated sources can be used to meet the RPO in such states. How-

ever, since REC eligibility is determined by CERC regulations, they

will not be entitled to get and trade RECs.

We have observed that the argument that all waste-to-energy

(and particularly WHR) projects should be considered RE hinged

on two factors: These projects utilize heat or gases which would otherwise

have been released in the atmosphere, and that power so

generated displaces conventional power.

Carbon credits are given to these projects

The first argument is an important one there is no doubt about

the need and importance to tap heat and gases that would other-

wise have been wasted. However, a significant benefit from these

efforts will now be available under the Energy Efficiency scheme

(PAT; see our newsletter no 20), as such power will have zero net

calorie value of input.


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lume: XXIInth: June 12ents of this newsletter are for informational purposes only

As far as carbon credit benefit is considered, it should be kept in

mind that this benefit is on the basis of reduced emission, while REC

benefit is on RE power generated. These benefits sometime overlap,

but not always.

In our interactions with various people in the industry, we have often

heard that in trying to determine the status of a waste-to-energy

project as RE or not, the key test is to look at the base fuel. If the

WHR plants ultimate source is fossil fuel, then it should not be con-

sidered RE. As we understand, this is the guiding principal used by

MNRE in determining which waste-to-energy technology to classifyas renewable.

This was also put to test recently by a petition by SAIL in Maharash-

tra. In the petition, SAIL argued that since it uses furnace off-gas for

running a 4.2 MW power plant, it should be exempt from RPO. The

commission rejected the petition on the grounds that such a waste

heat recovery system is not covered under the definition of MNRE.

Regulatory Updates

Co Generators exempted from RPO in Tamil Nadu:

In a recent hearing of a petition filed by a Co Generator in Tamil

Nadu for exemption from procuring power from Non Conven-

tional sources to meet their RPO, it was declared that cogenera-

tion plant, would be treated similar to a renewable energy gen-

erator. Consequently, the consumer who consumes the energygenerated by this co-generation plant would be eligible for ac-

counting the same for RPO subject to all other provisions of the

RPO Regulations, 2010.

The overall result will be reduction in demand of RECs/RE power.

Punjab electricity duty :

Captive Power Plants that want to avail benefit under the REC mecha-

nism have to start paying electricity duty at the rate of 13% .

Steel Authority of India (SAIL) filedpetition seeking exemption fromRPO :

SAIL recently filed a petition seeking exemption from purchase of Re-

newable Energy Certificates (REC) in respect of 6 percent of its con-

sumption from power generating towards its fulfillment of RPO. (see

main article)

-End of Article-


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REC trading for June was conducted today (June 27, 2012). Compared to last month, there were a few surprises:

Supply exceeded demand for Non-Solar RECs for the first time since start of trading

Demand for Solar RECs grew significantly

Detailed analysis of Non-solar REC trading:

Price on IEX remained the same as in May (Rs 2,402), while on PXIL it increased from Rs 2,150 to Rs 2,460 (increase of 14%). Aggregate

demand reduced to 349,000 RECs from 365,000 last month (-4%). At the same time, supply of RECs increased from 275,000 to 361,000

(increase of 31%). Of these, 236,000 RECs were sold .

Detailed analysis of Solar REC trading:

June was the second month when solar RECs were traded. Demand has grown significantly since last month (from 1,642 to 9,619; ap-

proximately a 6X growth). Available RECs increased to 563 from 249 last month (2.2X). Pricing fell marginally from the high of Rs 13,000

last month to Rs 12,750 on IEX and Rs 12, 506 on PXIL. 342 Solar RECs were sold, up from 10 RECs last month.

Total market value exceeded Rs 57 crore, of which Rs 44 lakhs were from Solar RECs.


Review of REC Trading-June 2012



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Status of projects in REC Mechanism


Accredited Capacity : 3157.313 MW



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Status of projects in REC Mechanism


Registered Capacity : 2741.213 MW



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Green Infra May Get $50 Million Solar Loan From IFC

The World Banks private-sector financing arm may provide a $50 million loan to Green Infra Ltd. to build two solar power

plants in India.The International Finance Corp. is considering offering the funding over the next two years for a 20-megawatt

project and a five-megawatt plant in Rajasthan state, according to a proposal dated June 29 on the lenders website.

http://www.bloomberg.com/news/2012-07-02/green-infra-may-get-50-million-solar-loan-from-ifc.html

Jharkhand to set up 300MW power plants from renewable sources .

ecretary, department of power, Vimal Kirty Singh said under present rules out of the net generation 5% of power must come

rom renewable sources. He said given the existing and upcoming power plants in the state, Jharkhand would roughly have a

net installed capacity of 4000MWs shortly.http://timesofindia.indiatimes.com/city/ranchi/Jharkhand-to-set-up-300MW-power-plants-from-renewable-sources/

articleshow/14436537.cms?

Commercial establishments tap renewable energy for power

t is not just industries here that are going in for renewable sources, such as wind power, to meet their energy needs. Some of

he retail outlets have also started exploring the green energy options. Recently, Chennai Silks installed a stand-alone, rooftop

wind and solar power plant to generate electricity to operate one division of their showroom.

http://www.thehindu.com/news/cities/Coimbatore/article3572017.ece

Wind energy sector opposes Tangedcos plan to do away with energy banking

The wind energy sector in Tamil Nadu has objected to the State power utility blaming the system of banking of energy for itsinancial loss and planning to scrap the system. The utility, Tamil Nadu Generation and Distribution Company (Tangedco), has

blamed the system which provides for wind energy producers to bank the energy during the windy season and utilise it later.

http://www.thehindubusinessline.com/companies/article3489694.ece

Rs 13,000 cr booster for electric , hybrid vehicles on the anvil

The government plans to invest around Rs 13,000 crore over a period of eight years to promote electric and hybrid vehicles in

he country and the Department of Heavy Industries is expected to seek Cabinet approval for the same within the next three

months.

http://zeenews.india.com/business/news/technology/rs-13-000-cr-booster-for-electric-hybrid-vehicles-on-the-

anvil_54833.html

India setting up investment cell for new energy: Abdullah

ndia is setting up an Investment Promotion Cell for the energy sector to provide a single point of contact for investors, Minis-

er of New and Renewable Energy, Mr Farooq Abdullah, has said. In the next five years, he said that the the country plans to

nvest $50 billion in renewable energy, including $19 billion in wind, $25 billion in solar and $3 billion each in the hydro and

biomass segments.

http://www.thehindubusinessline.com/industry-and-economy/article3523106.ece

State distribution utilities to be rated: Power Ministry

The Ministry of Power said that an integrated rating methodology to cover the state power distribution utilities have been put

n place. Marks would be assigned for both current levels of performance and relative improvement over the baseline pa-

ameters. It would also rank the utilities on the basis of performance.http://www.thehindubusinessline.com/industry-and-economy/article3455768.ece

Green News



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Status of RPOs across various states in India - As on April 24 , 2012


State Status of Regulation 201213 RPOObligation RPO on CPP? RPO on OAUsers? Penalty ?

Andhra Pradesh Final 4.75 % + 0.25 % Yes Yes Not Specified

Assam Final 4.05 % + 0.15 % Yes Yes Yes (RECmax)

Bihar Final 3.25 % + 0..75 % Yes Yes Yes (RECmax)

Chhattisgarh Final 5.25 % + 0.50 % Yes Yes Yes (RECmax)

Delhi Draft 3.25 %+ 0.15 % Yes Yes Yes (RECmax)

Gujarat Final 6.00 % + 1.00 % Yet to be notified Yes Yes (RECmax)

Haryana Final 1.50 % + 0.50 % Yes Yes Yes (RECmax)

Himachal Pradesh Final 10.00 % + 0.25 % Yes Yes Yes (RECmax)

J&K Final 4.75 %+0.25 % Yes Yes Yes (RECmax)

Jharkhand Final 3.00 % + 1.00 % Yes (>5MW) Yes Yes (RECmax)

Karnataka Final 10 % + 0.25 %(BESCOM,MESCOM,CHESCO

M), 7 % + 0.25 % for othersYes (>5MW)

5% RPOYes (>5MW)

5% RPO

Yes (RECmax)

Kerala Final 3.35 %+0.25 % Yes Yes Yes (RECmax)

Madhya Pradesh Final 3.40 % + 0.60 % Yes Yes Yes (RECmax)

Arunachal Pradesh Final 4.1 % +0.1 % Yes Yes Yes (RECmax)

Maharashtra Final 7.75 % + 0.25 % Yes Yes Yes (RECmax)

Meghalaya Final 0.60 % + 0.40 % Yes Yes Yes (RECmax)

Orissa Final 5.35 % + 0.15 % Yes(>5MW) Yes Yes (RECmax)

Punjab Final 2.83 %+0.07 % Yes Yes Yes (RECmax)

Rajasthan Final 7.10 % + JNNSM Yes Yes Yes (RECmax)

Tamil Nadu Final 8.95 % + 0.05 % Yes Yes Yes (RECmax)

Tripura Final 0.90 % + 0.10 % Yes (>5MW) Yes Yes (RECmax)

Uttrakhand Final 4.5 % + 0.025 % Yes Yes Yes (RECmax)

Uttar Pradesh Final 5.00 %+ 1.00 % Yes Yes Yes (RECmax)

West Bengal Final 4 % + NA NA NA REC not recognized

JERC for Goa and

UTs

Final 2.60 % + 0.40 % Yes Yes Yes (RECmax)

JERC for Manipurand Mizoram

Final 4.75 % + 0.25% (Man)6.75% + 0.25% (Miz)

Yes Yes Yes (RECmax)

Nagaland Final 7.75 % + 0.25% Yes Yes Yes (RECmax)


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Dear Readers,

Our previous newsletters are available at our website www.reconnectenergy.com and can be downloaded from :ttp://www.reconnectenergy.com/rec/index.php/newsletters-on-rec-mechanism.htmlhe summary of our previous newsletters we have published is available below.

Volume XI: July 2011Applicability of REC/RPO on Co-Generation Power Plants

Volume XII: August 2011

REC & RPO: The Dilemma of Double Accounting of Green Tags

Volume XIII: September 2011Metering Issues in CPPs and Co-Gen: From REC Perspective

Volume XIV: October 2011Introduction to Renewable Regulatory Fund

Volume XV: November 2011Renewable Purchase Obligation A Demand - Supply Analysis

Volume XVI: December 2011Analysis of Draft RPO of Andhra Pradesh + REC Market Update

Volume XVII: January 2012Voluntary Market for RECs

Volume XVIII: February 2012Off Grid Projects and REC: A new socio-development tool?

Volume XIX: March 2012Applicability of RPO on Co-Generation Projects (An Update)

Volume XX: April 2012Analysis of the Energy Savings Certificate Markets

Volume XXI: May 2012Trading of First Solar RECs - Interview with Mr Vikalp Mundra of M&B Switchgear Ltd

Past Newsletters

Feedback:

We wholeheartedly thank you for providing your valuable feed-back on our last newsletter. Your feedback on the

newsletter keeps us motivated and would certainly help us to improve the quality of it. Kindly keep writing to us.

We are eager hear your views.

Best Regards, Team - REConnect


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Services Provided by REConnect


Detailed Services in REC Space

Services for RE Generators

Services for Obligated Entities (Distribution Companies / Open Access Consumers / Captive Consumers)



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REConnect is a venture focused on the Renewable Energy Certificates,

Energy Efficiency and Electricity Portfolio Management.

REConnects team has extensive experience in the environmental markets

both in India and internationally:

Worked in the international carbon markets for several years and has

expertise in the consulting and trading of emissions reductions

Extensive knowledge about various Renewable Energy Certificate and

Energy Efficiency Certificate markets in USA, Europe and Australia etc.

Worked with Indian Energy Exchange (IEX), Indias leading power ex-

change, and have extensive knowledge and experience of power

markets

Alumnus of Columbia University, an Ivy League University in USA, and

IIT Bombay

Highly experienced core team worked with organizations like

J P Morgan, Indian Energy Exchange, Asia Carbonand Gensol.

Contact REConnect

New DelhiVibhav Nuwal

[email protected]

+91 88006 79988

Bangalore

Vishal [email protected]

+91 96202 21101

Suresh Kumar (for RPO)

[email protected]

+91 99727 24727

MumbaiRamkumar K

[email protected]

+91 99303 59992

ChennaiRajesh Vaidyula

[email protected]

+91 99404 78306

Pune

Mohit [email protected]

+91 96650 42397

About REConnect



lume: XXIInth: June 12

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REConnect Newsletter XXII

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Transcript of REConnect Newsletter XXII