Feed-in Tariff and Renewable Purchase Obligation

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1. Feed-in Tariff and Renewable Purchase Obligation Rakesh Shah 29th April 2010-Chennai

2. Legal Framework : Policy & Regulatory Set-up Indian Electricity Act, 1910 Legalised sale of electricity in parts of urban areas/cities/cantonment, distributed generation, etc. Electricity (Supply) Act, 1948 Creation of electricity boards (merging of generation, transmission, distribution & trading), nationalisation Created a centralised nature of the electricity business, with a fair amount of control given to state governments Electricity Regulatory Commissions Act, 1998 Creation of independent electricity regulatory commissions Modeled around the US / UK system Re-regulated set-up (movement of control from state government to ERCs) Pushed for unbundling of electricity markets into generation, transmission, distribution to push efficiency in operations and onward private sector participation

3. Regulatory Impacts : Renewable Energy 1994 : Announcement of tariff guidelines by MNES (now MNRE) Sell to SEB Rs 2.25 per kWh (5% escalation) : feed-in tariff Captive & Third party Sales Wheeling & Banking provision at 2% Various states adopted the guidelines (not uniform) through an executive order (by energy department) Viz. Gujarat gave Rs 1.75 per kWh (fixed) along with sales tax benefits TN adopted MNES guidelines

4. EA 2003 : The New Avtaar.. Electricity Act, 2003 (EA 2003) : Highlights Abolished all earlier acts De-licensing of generation of electricity Erstwhile Sec 44 of the E(S) Act, 1948 Allowance of OA transaction Sec 28 of 1910 Act, replaced with Sec 42(2) Transmission activity to be separated (unbundling) Only transmit electricity and cannot trade (OA principles without any conflicts) Various states have different model for unbundling Only Transmission separated (viz. TNEB) All functions separated, i.e. genco, transco, disco, trading (viz. Gujarat) Hybrid models (viz. Karnataka, Maharashtra, Rajasthan etc.) Special mentioning of RE Sec 86(i)e of EA 2003 RPS mechanism & fixed tariff regime

5. RE & the Electricity Act 2003 Section 3 of EA 2003: National Electricity Policy, Tariff policy and National Electricity Plan including optimal utilization resources including renewable sources of energy Section 4 of EA 2003: National policy permitting stand alone system (including those based on RE sources of energy ) for rural area. Section 61 of EA 2003: The appropriate commission while determination of tariff shall be guided by promotion of co-generation and generation of electricity from RE Section 86(1) The State Commission shall discharge the following functions, namely: (e) promote cogeneration and generation of electricity from renewable sources of energy by providing suitable measures for connectivity with the grid and sale of electricity to any person, and also specify, for purchase of electricity from such sources, a percentage of the total consumption of electricity in the area of a distribution licence;

6. National Electricity Policy (12/2/2005) Section 5.12: Urgent need of promotion renewable sources of energy Efforts need to be made to reduce the capital cost of such projects Cost of energy can be reduced by promoting competition within such projects Adequate promotional measures would have to be taken for development of technologies and sustained growth of these sources SERCs to provide suitable measures for connectivity with grid SERCs to fix percentage of purchase from RE sources Progressively such share need to be increased Till NC technologies compete, in terms of cost, with conventional sources, the Commission may determine an appropriate differential in prices to promote these technologies

7. Tariff Policy (2/1/2006) Section 6.4: Appropriate Commission shall fix RPO and SERCs shall fix its tariff latest by 1/4/2006 Initially Appropriate Commission to fix preferential tariffs In future Discoms to procure RE through competitive bidding within suppliers offering same type of RE In long-term, RE technologies need to compete with all other sources in terms of full costs CERC to provide guidelines for pricing non-firm power if RE procurement is not through competitive bidding

8.

10. RPOs already established – Key features 19 states have specified the Quota for power purchase from renewable energy sources. large variation from 1% to 20% among different states RPO fixed based on RE Potential available in States and its impacts on retail tariff Renewable sources unevenly spread TN & Gujarat can meet more than 20% through renewable alone Some states like Delhi does not have any renewable power generation potential Single target for overall renewable energy purchase and usually close to existing purchase levels In some cases Y-o-Y targets Few states have technology specific targets Period is upto five years Purchase of RE from outside the State has not been permitted Weak on enforcement methodology Implementation mechanisms need further refinement

11. Preferential Wind Energy Tariff

12. Tariff parameters comparison

13. CERC Tariff regulations for RE Applicability to inter-state schemes & central generating stations Acts as a guidelines for tariff determination at state level CERC tariff regulations, is not mandatory for state commissions to adopt However, deviating from the CERC Tariff Regulations would require a “distinctive reason” for any commission to do so Defines interconnectivity point Line isolator on outgoing feeder on HV side of the pooling sub-station/generator High lights and design philosophy behind CERC tariff regulations Generic tariff (option available for project specific tariff) Provides benchmarks (viz. RoE of 19% and 24% : pre-tax levels) Levelised Tariff Normative assumption for Capex Indexing/benchmarking Steel index, cement index, interest cost Procurement tariff based on 4 – different wind zones Three states have followed and in a way adopted CERC regulations for their new tariff structure Rajasthan had already adopted Madhya Pradesh, Maharashtra, Jharkhand and Orissa to follow

14. …CERC Tariff Regulations

15. Rising procurement tariffs : Different states It is expected in the next one year all states would have adopted CERC RE Tariff Regulations

16. Feed-in Tariff: Key program elements Priority access to the grid for all Priority purchase Long contracts (20-25 years typical) Prices determined by cost plus profit Fair but not excessive profit Tariff Differentiated by technology, size, application Front loading/levellised Tariff Periodic Review (every 2-4 years) To track technological change Over all cost reduction

17. Fiscal and other support incentives Direct production incentives: Generation Based Incentive Investment subsidies Low-interest loans Loan guarantees Accelerated depreciation schemes Investment or production tax exemptions

18. Other Central Government measures Direct tax benefits Accelerated Depreciation: The Central Government presently allows for accelerated depreciation at the rate of 80% on a Written Down Value basis for various renewable energy items under section 32 Rule 5 of the Income Tax Act. Tax Holiday: Under section 80 IA of the Income Tax Act, the Central Government offers a 10 year tax holiday for all infrastructure projects. Indirect tax benefits Specified renewable energy devices and equipment can obtain excise duty exemptions or concessions. Equipment for wind power, solar photovoltaic and solar thermal, renewable energy systems and power generation plant and machinery enjoy a reduction in customs duty.

19. Central Government Initiatives Announcement of Generation Based Incentives (GBI) : Dec, 2009 4,000 MW till end of the current FYP 50 paise/kWh with a cap of Rs 62 lacs per MW against the accelerated depreciation Announcement of Jawaharlal Nehru National Solar Mission (JNNSM) : Nov, 2009 20 GW by 2020 : Broken into three phases Phase I : 1,000 MW : 2012-13 Announcement of NTPC Vidyut Vyapar Nigam (NVVN) scheme for bundling of un-allocated supply with solar to reduce costs for grid connected solar options

20. Cumulative achievements: Grid-interactive RE power as on 31.12.2009

21. Wind Energy Development in India

22. Is the growth slowing down Sections 61(h) and 86(1)(e) of the EA 2003 are the only real renewable electricity-related developmental provisions Growth is limited to states with wind resource and capacity of these states to absorb wind power without affecting the consumer tariffs Particular issues with renewable energy Relatively high start-up costs Difficulty in obtaining financing due to perceived higher risk of renewable energy projects Intermittent nature of some forms of renewable energy Large variation in regulations across all States. Sec. 86(i) (e) provision has been interpreted differently by different SERCs Minimum percentages for renewable energy vary from 1% to 20% across various States. RE potential and achievements vary widely in different States

23. Ambiguity in application of S 86(1)(e) What is meant by a percentage of the total consumption of electricity in the area of a distribution licensee? Whether total consumption includes technical and commercial losses in the area? Whether total consumption include captive and open access consumption in the area? Currently regulators have used either total energy input or energy sales as criteria while determining the percentage. This has necessarily resulted in exempting captive and open access consumption from renewable obligation.

24. RPOs – what further is required? Specific targets for RE sources which are not commercial Application of RPO to OA/Captive/trading transactions Efficient mechanism for purchase of RE by OA consumers OA consumers be allowed to procure RE from other States RE sources not spread evenly across various states making implementation of single RPO target difficult Higher RPO for RE-rich regions may result in distorted tariffs Enabling mechanism for inter-state sale is required Stronger enforcement and penalty mechanism

25. National Action Plan for Climate Change (June 2008) At National level for FY 2010, target for RE Purchase may be set at 5% of total grid purchase, to be increased by 1% each year for 10 years: 15% by 2020 SERCs may set higher target than this minimum at any point in time. Central & State Govts may set up a verification mechanism to ensure that renewable power is actually procured. Appropriate authorities may issue certificates that procure renewable power in excess of the national standard. Such certificates may be tradable, to enable utilities falling short to meet their RPS. Penalties as may be allowed under EA 2003 may be levied, if utilities are still falling short in RPS

26. Target/Market size under NAPCC 17th Power Survey by CEA estimates demand of 1.91 trillion units. To meet NAPCC target of 15%, installed capacity of renewables will need to reach 100,000MW (at 33% PLF) Even if contribution from Wind is considered @50%, the year wise capacity addition in the Wind sector ranges from 2500 to 4500 MW for next 10 years. Huge opportunity.

27. FOR Working Group : Recommendations Need for Inter-State exchange of RE power Inter-State exchange of RE power is desirable from national perspective and the same should be promoted. Mechanism for appropriate treatment for inter-State RE exchange through Regional Energy Account needs to be developed. Feasibility of REC mechanism Concept of REC as a tool for promotion of RE sources REC mechanism can be introduced within existing framework of EA 2003 Co-operation amongst States is essential and SERCs should recognize procurement of RE generated in other States for purpose of compliance as RPO by regulated entity in their respective jurisdiction

28. What is a REC? What is a REC? A REC represents the attributes of renewable energy generation that can have value separate from commodity electricity RECs are also known as: Green tags, green tickets, renewable energy credits, tradable renewable energy certificates (TRCs)

29. Concept of Renewable Energy Certificate Existing Regime for sale of Renewable Energy Sale at Preferential Tariff to Obligated Entities

30. Concept of Renewable Energy Certificate Sale of Renewable Energy under REC Regime Sale of Conventional Electricity Component to local Distribution Licensees REC Component to Obligated entities

31. Important Features of REC Effective implementation of RPS Increased flexibility for participants Overcome geographical constraints Reduce risks for local distribution company by limiting its liability to only energy purchase Reduce transaction costs for RE transmissions Create competition among different RE technologies REC scheme is NOT an incentive mechanism. Rather it enables sale of purchase of renewable component across the State boundaries. REC mechanism could be implemented with any ‘Generation Based Incentive’ scheme as both mechanisms are based on the certification of generation. REC does not represent any fiscal attribute such as ‘Accelerated Depreciation’. Though REC represent environmental attribute, it is not related to carbon credits as two mechanisms are independent of each other. Renewable Energy Certificates (RECs) The ‘renewable’ attribute is separated from ‘electricity’ Power can be sold to local utility at average procurement price Tariff determined based on cost recovery (i.e. not cost plus) The REC is issued to generator and sold / traded independent of power Only RECS are used for RPS compliance Commercial framework Settlement between distribution licensees in the same / different states for RPS compliance Compliance easy for captive and OA consumers No need of scheduling/ OA charges for inter state transfers In the openly traded REC – market discovery of price…. Renewable Energy Certificates (RECs) The ‘renewable’ attribute is separated from ‘electricity’ Power can be sold to local utility at average procurement price Tariff determined based on cost recovery (i.e. not cost plus) The REC is issued to generator and sold / traded independent of power Only RECS are used for RPS compliance Commercial framework Settlement between distribution licensees in the same / different states for RPS compliance Compliance easy for captive and OA consumers No need of scheduling/ OA charges for inter state transfers In the openly traded REC – market discovery of price…. Renewable Energy Certificates (RECs) The ‘renewable’ attribute is separated from ‘electricity’ Power can be sold to local utility at average procurement price Tariff determined based on cost recovery (i.e. not cost plus) The REC is issued to generator and sold / traded independent of power Only RECS are used for RPS compliance Commercial framework Settlement between distribution licensees in the same / different states for RPS compliance Compliance easy for captive and OA consumers No need of scheduling/ OA charges for inter state transfers In the openly traded REC – market discovery of price…. Renewable Energy Certificates (RECs) The ‘renewable’ attribute is separated from ‘electricity’ Power can be sold to local utility at average procurement price Tariff determined based on cost recovery (i.e. not cost plus) The REC is issued to generator and sold / traded independent of power Only RECS are used for RPS compliance Commercial framework Settlement between distribution licensees in the same / different states for RPS compliance Compliance easy for captive and OA consumers No need of scheduling/ OA charges for inter state transfers In the openly traded REC – market discovery of price…. Renewable Energy Certificates (RECs) The ‘renewable’ attribute is separated from ‘electricity’ Power can be sold to local utility at average procurement price Tariff determined based on cost recovery (i.e. not cost plus) The REC is issued to generator and sold / traded independent of power Only RECS are used for RPS compliance Commercial framework Settlement between distribution licensees in the same / different states for RPS compliance Compliance easy for captive and OA consumers No need of scheduling/ OA charges for inter state transfers In the openly traded REC – market discovery of price…. Renewable Energy Certificates (RECs) The ‘renewable’ attribute is separated from ‘electricity’ Power can be sold to local utility at average procurement price Tariff determined based on cost recovery (i.e. not cost plus) The REC is issued to generator and sold / traded independent of power Only RECS are used for RPS compliance Commercial framework Settlement between distribution licensees in the same / different states for RPS compliance Compliance easy for captive and OA consumers No need of scheduling/ OA charges for inter state transfers In the openly traded REC – market discovery of price…. Renewable Energy Certificates (RECs) The ‘renewable’ attribute is separated from ‘electricity’ Power can be sold to local utility at average procurement price Tariff determined based on cost recovery (i.e. not cost plus) The REC is issued to generator and sold / traded independent of power Only RECS are used for RPS compliance Commercial framework Settlement between distribution licensees in the same / different states for RPS compliance Compliance easy for captive and OA consumers No need of scheduling/ OA charges for inter state transfers In the openly traded REC – market discovery of price…. Renewable Energy Certificates (RECs) The ‘renewable’ attribute is separated from ‘electricity’ Power can be sold to local utility at average procurement price Tariff determined based on cost recovery (i.e. not cost plus) The REC is issued to generator and sold / traded independent of power Only RECS are used for RPS compliance Commercial framework Settlement between distribution licensees in the same / different states for RPS compliance Compliance easy for captive and OA consumers No need of scheduling/ OA charges for inter state transfers In the openly traded REC – market discovery of price…. Renewable Energy Certificates (RECs) The ‘renewable’ attribute is separated from ‘electricity’ Power can be sold to local utility at average procurement price Tariff determined based on cost recovery (i.e. not cost plus) The REC is issued to generator and sold / traded independent of power Only RECS are used for RPS compliance Commercial framework Settlement between distribution licensees in the same / different states for RPS compliance Compliance easy for captive and OA consumers No need of scheduling/ OA charges for inter state transfers In the openly traded REC – market discovery of price…. Renewable Energy Certificates (RECs) The ‘renewable’ attribute is separated from ‘electricity’ Power can be sold to local utility at average procurement price Tariff determined based on cost recovery (i.e. not cost plus) The REC is issued to generator and sold / traded independent of power Only RECS are used for RPS compliance Commercial framework Settlement between distribution licensees in the same / different states for RPS compliance Compliance easy for captive and OA consumers No need of scheduling/ OA charges for inter state transfers In the openly traded REC – market discovery of price…. Renewable Energy Certificates (RECs) The ‘renewable’ attribute is separated from ‘electricity’ Power can be sold to local utility at average procurement price Tariff determined based on cost recovery (i.e. not cost plus) The REC is issued to generator and sold / traded independent of power Only RECS are used for RPS compliance Commercial framework Settlement between distribution licensees in the same / different states for RPS compliance Compliance easy for captive and OA consumers No need of scheduling/ OA charges for inter state transfers In the openly traded REC – market discovery of price…. Renewable Energy Certificates (RECs) The ‘renewable’ attribute is separated from ‘electricity’ Power can be sold to local utility at average procurement price Tariff determined based on cost recovery (i.e. not cost plus) The REC is issued to generator and sold / traded independent of power Only RECS are used for RPS compliance Commercial framework Settlement between distribution licensees in the same / different states for RPS compliance Compliance easy for captive and OA consumers No need of scheduling/ OA charges for inter state transfers In the openly traded REC – market discovery of price…. Renewable Energy Certificates (RECs) The ‘renewable’ attribute is separated from ‘electricity’ Power can be sold to local utility at average procurement price Tariff determined based on cost recovery (i.e. not cost plus) The REC is issued to generator and sold / traded independent of power Only RECS are used for RPS compliance Commercial framework Settlement between distribution licensees in the same / different states for RPS compliance Compliance easy for captive and OA consumers No need of scheduling/ OA charges for inter state transfers In the openly traded REC – market discovery of price…. Renewable Energy Certificates (RECs) The ‘renewable’ attribute is separated from ‘electricity’ Power can be sold to local utility at average procurement price Tariff determined based on cost recovery (i.e. not cost plus) The REC is issued to generator and sold / traded independent of power Only RECS are used for RPS compliance Commercial framework Settlement between distribution licensees in the same / different states for RPS compliance Compliance easy for captive and OA consumers No need of scheduling/ OA charges for inter state transfers In the openly traded REC – market discovery of price…. Renewable Energy Certificates (RECs) The ‘renewable’ attribute is separated from ‘electricity’ Power can be sold to local utility at average procurement price Tariff determined based on cost recovery (i.e. not cost plus) The REC is issued to generator and sold / traded independent of power Only RECS are used for RPS compliance Commercial framework Settlement between distribution licensees in the same / different states for RPS compliance Compliance easy for captive and OA consumers No need of scheduling/ OA charges for inter state transfers In the openly traded REC – market discovery of price…. Renewable Energy Certificates (RECs) The ‘renewable’ attribute is separated from ‘electricity’ Power can be sold to local utility at average procurement price Tariff determined based on cost recovery (i.e. not cost plus) The REC is issued to generator and sold / traded independent of power Only RECS are used for RPS compliance Commercial framework Settlement between distribution licensees in the same / different states for RPS compliance Compliance easy for captive and OA consumers No need of scheduling/ OA charges for inter state transfers In the openly traded REC – market discovery of price…. Renewable Energy Certificates (RECs) The ‘renewable’ attribute is separated from ‘electricity’ Power can be sold to local utility at average procurement price Tariff determined based on cost recovery (i.e. not cost plus) The REC is issued to generator and sold / traded independent of power Only RECS are used for RPS compliance Commercial framework Settlement between distribution licensees in the same / different states for RPS compliance Compliance easy for captive and OA consumers No need of scheduling/ OA charges for inter state transfers In the openly traded REC – market discovery of price…. Renewable Energy Certificates (RECs) The ‘renewable’ attribute is separated from ‘electricity’ Power can be sold to local utility at average procurement price Tariff determined based on cost recovery (i.e. not cost plus) The REC is issued to generator and sold / traded independent of power Only RECS are used for RPS compliance Commercial framework Settlement between distribution licensees in the same / different states for RPS compliance Compliance easy for captive and OA consumers No need of scheduling/ OA charges for inter state transfers In the openly traded REC – market discovery of price…. Renewable Energy Certificates (RECs) The ‘renewable’ attribute is separated from ‘electricity’ Power can be sold to local utility at average procurement price Tariff determined based on cost recovery (i.e. not cost plus) The REC is issued to generator and sold / traded independent of power Only RECS are used for RPS compliance Commercial framework Settlement between distribution licensees in the same / different states for RPS compliance Compliance easy for captive and OA consumers No need of scheduling/ OA charges for inter state transfers In the openly traded REC – market discovery of price…. Renewable Energy Certificates (RECs) The ‘renewable’ attribute is separated from ‘electricity’ Power can be sold to local utility at average procurement price Tariff determined based on cost recovery (i.e. not cost plus) The REC is issued to generator and sold / traded independent of power Only RECS are used for RPS compliance Commercial framework Settlement between distribution licensees in the same / different states for RPS compliance Compliance easy for captive and OA consumers No need of scheduling/ OA charges for inter state transfers In the openly traded REC – market discovery of price…. Renewable Energy Certificates (RECs) The ‘renewable’ attribute is separated from ‘electricity’ Power can be sold to local utility at average procurement price Tariff determined based on cost recovery (i.e. not cost plus) The REC is issued to generator and sold / traded independent of power Only RECS are used for RPS compliance Commercial framework Settlement between distribution licensees in the same / different states for RPS compliance Compliance easy for captive and OA consumers No need of scheduling/ OA charges for inter state transfers In the openly traded REC – market discovery of price…. Renewable Energy Certificates (RECs) The ‘renewable’ attribute is separated from ‘electricity’ Power can be sold to local utility at average procurement price Tariff determined based on cost recovery (i.e. not cost plus) The REC is issued to generator and sold / traded independent of power Only RECS are used for RPS compliance Commercial framework Settlement between distribution licensees in the same / different states for RPS compliance Compliance easy for captive and OA consumers No need of scheduling/ OA charges for inter state transfers In the openly traded REC – market discovery of price…. Renewable Energy Certificates (RECs) The ‘renewable’ attribute is separated from ‘electricity’ Power can be sold to local utility at average procurement price Tariff determined based on cost recovery (i.e. not cost plus) The REC is issued to generator and sold / traded independent of power Only RECS are used for RPS compliance Commercial framework Settlement between distribution licensees in the same / different states for RPS compliance Compliance easy for captive and OA consumers No need of scheduling/ OA charges for inter state transfers In the openly traded REC – market discovery of price…. Renewable Energy Certificates (RECs) The ‘renewable’ attribute is separated from ‘electricity’ Power can be sold to local utility at average procurement price Tariff determined based on cost recovery (i.e. not cost plus) The REC is issued to generator and sold / traded independent of power Only RECS are used for RPS compliance Commercial framework Settlement between distribution licensees in the same / different states for RPS compliance Compliance easy for captive and OA consumers No need of scheduling/ OA charges for inter state transfers In the openly traded REC – market discovery of price…. Renewable Energy Certificates (RECs) The ‘renewable’ attribute is separated from ‘electricity’ Power can be sold to local utility at average procurement price Tariff determined based on cost recovery (i.e. not cost plus) The REC is issued to generator and sold / traded independent of power Only RECS are used for RPS compliance Commercial framework Settlement between distribution licensees in the same / different states for RPS compliance Compliance easy for captive and OA consumers No need of scheduling/ OA charges for inter state transfers In the openly traded REC – market discovery of price…. Renewable Energy Certificates (RECs) The ‘renewable’ attribute is separated from ‘electricity’ Power can be sold to local utility at average procurement price Tariff determined based on cost recovery (i.e. not cost plus) The REC is issued to generator and sold / traded independent of power Only RECS are used for RPS compliance Commercial framework Settlement between distribution licensees in the same / different states for RPS compliance Compliance easy for captive and OA consumers No need of scheduling/ OA charges for inter state transfers In the openly traded REC – market discovery of price…. Renewable Energy Certificates (RECs) The ‘renewable’ attribute is separated from ‘electricity’ Power can be sold to local utility at average procurement price Tariff determined based on cost recovery (i.e. not cost plus) The REC is issued to generator and sold / traded independent of power Only RECS are used for RPS compliance Commercial framework Settlement between distribution licensees in the same / different states for RPS compliance Compliance easy for captive and OA consumers No need of scheduling/ OA charges for inter state transfers In the openly traded REC – market discovery of price…. Renewable Energy Certificates (RECs) The ‘renewable’ attribute is separated from ‘electricity’ Power can be sold to local utility at average procurement price Tariff determined based on cost recovery (i.e. not cost plus) The REC is issued to generator and sold / traded independent of power Only RECS are used for RPS compliance Commercial framework Settlement between distribution licensees in the same / different states for RPS compliance Compliance easy for captive and OA consumers No need of scheduling/ OA charges for inter state transfers In the openly traded REC – market discovery of price….

32. CERC Regulation dated 14/01/10 The Central Electricity Regulatory Commission (Terms and Conditions for recognition and issuance of Renewable Energy Certificate For Renewable Energy Generation) Regulations, 2010

33. REC regulation : Highlights Generator would have an option to opt for Fixed tariff (as per the tariff order prevalent in the state) REC mechanism Existing projects having firm PPA would not be eligible till the end of the contract period Two revenue stream Average procurement tariff (windy states) : Basket price : Rs 2.90 – Rs 3.50 per kWh RE certificates : Floor price & Forbearance price (ceiling price) Categories of Certificates Solar certificates and Non-solar cerificates Denomination 1 REC = 1 MWh REC trading only through power exchange(s) For price discovery and ensuring transparency Validity of Certificates Apply for REC within 3 months of generation Validity : 1 year from the date of issuance of such certificate

34. 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) State level agencies : verifiers : (SLDC/State Nodal Agencies) State Transmission Utilities (STU) : Reporting Reconcilation agencies

36. FOR Draft RPO Regulation for consideration of SERCs The Commission to designate an agency as State Agency: For accreditation renewable energy projects Recommend renewable energy projects for registration To function in accordance with the directions issued by the Commission To act in consistent with the procedures rules laid by Central Agency for discharge of its functions under the CERC Regulations Submit quarterly status to the Commission in respect of compliance of RPO by the obligated entities Suggest appropriate action to the Commission if required for compliance of the renewable purchase obligation Commission fix the remuneration and charges payable to the State Agency for discharge of its functions

37. FOR Draft RPO Regulation for consideration of SERCs: Effect of default Obligated entities have to deposit amount at the forbearance price decided by the Central Commission into a separate fund on the basis of the shortfall in units of RPO Separate fund to be created and maintained by such obligated entity Such fund to be utilized for purchase of the certificates If distribution licensee fails to deposit the amount directed by the Commission within 15 days shall be considered breach of its license condition Where any obligated entity fails to comply shall also be liable for penalty as may be decided by the Commission under section 142 of the Act In case of genuine difficulty in complying with the RPO because of non-availability of certificates, the obligated entity can approach the Commission for carry forward to the next year

38. CERC Notification Dated 29.1.2010 Central Commission designated the National Load Despatch Centre (NLDC) as the Central Agency for the purposes of the REC Regulations CERC Order on Determination of Forbearance and Floor Price for the REC framework: 99/2010 dated 23.3.2010

41. Current status CERC Notified the REC regulations & registry (viz. NLDC) SERC GERC on 17th April 2010 came out with REC Regulation States floated the draft REC regulation based on FOR model regulations Maharashtra, Orissa, Uttar Pradesh, Jharkhand, Tamilnadu & Madhya Pradesh have invited comments RPO obligation imposed on Captive and OA consumers Other States to follow FoR/CERC has floated : 19th March 2010 Draft Procedure/Model Guidelines for REC Implementation Model Procedure/Guidelines for accreditation for RE Project Draft procedure for registration of eligible entities Draft Procedure for Issuance of RECs Draft Procedure for redemption Full fledged creation of REC market from FY 2011-12 onwards IMPLEMENTATION BEFORE SEPTEMBER 2010

42. Thank you

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