Renewable Energy Certificates

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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
-
3912220

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-
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, India




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-

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