Renewable Energy Certificate

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Renewable Energy Certificates

Renewable Energy Certificates :

Mechanism of RE growth in India

Presented By:Jaspal Singh (Dy. Mgr. – NETRA)

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Installed generation capacity

66%

21%

3% 11%

ThermalHydroNuclearRenewable

Source: Ministry of Power

Total installed capacity as on 31-12-2011 : 1,86,654 MW

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RE Generation capacity

Total renewable Generation capacity (31-03-2011): 19,974 MW

70.0%

15.0%

5.0%

8.0%

0.5% 0.2%

Wind powerSmall HydroBimass PowerBagasse cogenerationWaste to energySolar Power

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The Electricity Act, 2003, the policies framed under the Act, as also the National Action Plan on Climate Change (NAPCC) provide for a roadmap for increasing the share of renewable in the total generation capacity in the country.

NAPCC envisages Renewable purchase obligation target of 5% at national level for 2010 with 1 % annual increase so as to reach around 15 % RPO ( Renewable Purchase Obligation) by 2020.

RPO : Distribution companies need to purchase certain percentage of their total power requirement from renewable energy sources.

RPO targets are set by SERC

Policies to Enhance Renewable Energy

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States 2011-12 2012-13 2013-14 2014-15

TAMIL NADU 14%KARNATKA 10% 10%MAHARASTRA 7% 8 %

KERALA 3.3% 3.6 % 3.9 % 4.2 %

GUJARAT 6% 7 %

RAJSTHAN 9.5%

AP 5%

UP 5 %

HP 11.10 % 6 %

CHHATISGARH 5.25 % 12.10 %

PUNJAB 2.31 % 2.49 % 2.68 % 2.85 %

RPO Trajectory

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State FY11-12 @MW FY12-13 @MW

Gujarat 0.5 % 186 1.00 % 372

Uttar Pradesh 0.5 % 173 1.0 % 345

Rajasthan 0.5 % 112 0.75 % 168

Tamil Nadu 0.15 % 65 0.25 % 110

Orissa 0.10 % 13 0.15 % 20

Haryana 0.0047 % 0.77 0.0063 % 1

HP 0.10 % 4 0.10 % 4

Solar RPO

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RE selling options• RE generators can following options to sell the electricity

RE Generators

Sale at preferential

tariff

Obligated entities

Electricity Component

Distribution company /

Third party sale

REC Component

Obligated entitiesSelf Consumption

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What are RECRenewable Energy Certificates (RECs) represent the attributes of electricity generated from renewable energy sources. These attributes are unbundled from the physical electricity and the two products—the attributes embodied in the certificates and the commodity electricity—may be sold or traded separately

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Renewable Energy CertificatesEligibility conditions for REC

REC Eligibility

Self consumption Captive use

No concessional transmission

No Banking Facility Benefit

No Electricity Duty Waiver

Sale to Distribution licensee, open

access, power Xchg

Sale at Market determined price

PPA with Distribution

Licensee

PPA at preferential tariff

PPA with discom at <= APPC

Eligible if all Three conditions met Eligible EligibleNot Eligible

Source: Water & Energy International

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Salient features of REC

• Categories of Certificates Solar certificates and Non-solar certificates

• Issuing agency The Central Agency (designated by the Central Commission for registration of RE

generators participating in the scheme) will issue the REC to RE generators• Denomination

1 REC = 1 MWh• Validity of Certificates

Apply for REC within 3 months of generation Validity : 1 year from the date of issuance of such certificate

• Minimum capacity of Plant to claim REC 250 Kwp

• REC trading only through power exchange(s) For price discovery and ensuring transparency

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REC mechanism Benefits

• Overcome geographical constraints REC’s are devised to address the above issue of un-even spread of

renewable energy sources• Reduce risk for local Discom by limiting liability to only electricity

purchase• Reduce Transaction cost• Provide flexibility for effective implementation of RPO purchase

States having less renewable energy potential can buy REC’s to fulfill there Renewable purchase obligation (RPO)

• Widening participation beyond Local discoms Captive consumers, Open access consumers & Voluntary market

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Registration of Eligible entities(Central level agency)

Accreditation of RE power plants

(State nodal agency: SNA)

Information related to accreditated RE plants for registered entities sent to REC registry

Sale of electricity at par with conventional power

Discom issuing RE injection certificate

State Load Despatch Centre

(SLDC)

RE Generator

Central REC Registry (NLDC)

REC exchange

Auditing Panel

SERC: Compliance based on SNA

Report

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2

3

5 6

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Information related to RE generation

electricity Energy

accounting

Issuance of REC

Information on REC

purchase/ redemption

State Nodal Agency SNA

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Various stakeholders for implementing REC • CERC – to regulate the entire set-up

• SERC - to implement and monitor the compliance levels

• MNRE – Definition of RE

• MoP – representing Central Government • Central Agency (NLDC)

– Registration, issuance of certificates, maintaining accounts, settlement, repository, Monitoring

• Power Xchange(s) – For Trading • State level agencies : verifiers : (SLDC/State Nodal Agencies)

• State Transmission Utilities (STU) : Reporting

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Renewable Energy CertificatesREC’s Price Band

• REC’s price shall be determined by the market however it shall trade in between the band set by Floor price and forbearance price.

• Floor price and forbearance price shall be determined by CERC

Non –Solar REC (Rs/ MWh

Upto Mar 2012)

Non –Solar REC (Rs/ MWh)

From Apr 2012 – Mar 2017

Solar REC (Rs/ MWh)

Upto Mar 2012

Solar REC (Rs/ MWh)

From Apr 2012 – Mar 2017

Forbearance price

3900 3300 17000 13400

Floor Price 1500 1500 12000 9300

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18 % reduction every year

Comparison of 1 MW Solar plant using PPA and REC market

Case study

25 % reduction every year

Plant Capacity 1 MW

Units generated / year 1664000

Years

INR

0 5 10 15 20 25 300.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

REC@18 % PPA REC @ 25%

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Challenges for REC

• Reducing floor Price• RPO levels are different for different states• APPC is dynamic• Solar Project financing is not possible if project feasibility is

based on REC• Periodicity of compliance for RPO - Annually

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Way Forward

• Vintage based Floor price for Solar REC– Multiplier linked to reduction in floor price

• Same RPO level across the country• Trading of REC

– Secondary Market– Multiple trading

• Periodicity of RPO compliance – Quarterly for stabilization in price

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Thank You

Contact: [email protected]

Renewable Energy Certificate

Economy & Finance

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