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Renewable Energy Certificates
By:
Gensol Consultants Pvt. Ltd.
Contents
Renewable Energy Certificates (REC)
Conceptual framework of REC
Operational framework of REC
REC Pricing
Case Study
Important features of REC mechanism
Services offered
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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;
Exchanges identified for REC trading
-
Indian Energy Exchange & Power
Exchange of India;
REC would be divided into two categories:
•
Solar Certificates
•
Non
-
Solar Certificates
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All 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 REC based captive power produces shall be eligible for their entire energy
generation including self consumption.
Eligibility Criteria
Conceptual framework
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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
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Accreditation
by State
Agency
Registration
by Central
Agency
Issuance of
RECs by
Central
Agency
Redemption
of RECs
Accreditation & Registration
Process
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Eligible Entity
State Agency
SLDC
Central
Agency
Power
Exchange
Verify Accreditation
Application
Confirmation
Intimation
Application
Confirmation
Intimation
Issuance of REC Process
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SLDC
Central
Agency
Power
Exchange
Eligible
Entity
Verification
Pre Condition
Regular
Injection
Verify before
Issuance
Application
Joint Meter Reading
Apply for sale
of REC
State Agency
Issuance
Intimation
For Meter Reading
SLDC
1
1
1
2
3
4
6
7
5
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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
Discom
s
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
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Eligible Entity
Obligated
Entity
SERC
Central
Agency
Power
Exchange
Apply for
Sale of REC
Purchase
RPO
State Agency
Intimation of
Sale
Intimation
of Sale
REC
-
Timelines, Fees & Charges
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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
Pricing of REC
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CERC 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 in the country;
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…
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CERC has given the following price range for Solar and non
-
solar certificates:
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)
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Case Study
-
Solar
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Under JNNSM, targets set for Solar Penetration
Phase 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 kW
Applications open from
center.
State notification
awaited. Haryana has released
policy
500 MW Grid Connected
Solar Photovoltaic technology
5MW +
-
5%
FY 2010
-
11 50MW
FY 2011
-
15 350MW
500 MW Grid connected Solar
Thermal Projects
5MW +
-
5%
FY 2010
-
11 500MW
Solar policy Landscape
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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 and 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 with Battery Back
-
up
Renewable Energy Certificate
1
Tax Saving due to Accelerated Depreciation
2
Freedom from grid
-
based electricity
3
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Off
-
grid Solar system with Battery Back
-
up
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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 1
st
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
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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 1
st
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
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Important features of REC
mechanism
REC mechanism is
NOT
an incentive scheme. Rather it’s main aim is to enable
sale and purchase of renewable component across the State boundaries;
REC mechanism will coexist with all current incentive based schemes, since most
of these schemes are based on certification of generation;
In surplus scenario max
25%
of REC, generated in a year, can be carried over only
for next year;
Though REC represent environmental attribute, it will not be related to carbon
credits. These two mechanisms will operate independent of each other.
Services Provided
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Gensol
Consultants
Pvt. Ltd.
Accreditation
&
Registration
support
Data
compilation
& application
Obtaining
Issuance
Trading
strategies &
brokerage
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14
-
15, Camps Corner
-
2,
Opp. AUDA
Gardern
,
Prahladnagar
,
Ahmedabad
,
Gujarat, India
Ph: +91
-
079
-
39122200
Fax: +91
-
079
-
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Office:
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-
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, India
Bangalore Office:
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-
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Bangalore, India
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