Renewable Energy Certificate Framework By Pankaj Batra Chief ( Engg .) CERC

1. Renewable Energy Certificate Framework By PankajBatra Chief (Engg.) CERC S.K. Chatterjee Dy. Chief (RA)

2. Structure of the presentation 2 • Overview of the Legal Framework • New Policy Initiatives • Renewable Energy Certificate Mechanism

3. Overview of the Legal Framework 3

4. Electricity Act, 2003 : Enabling Provisions • Promotion of renewable energy sources, one of the guiding principles for SERCs • Regulatory Commissions to specify Renewable Purchase Obligations and facilitate grid connectivity • Optimal utilisation of resources including RE sources – aim of NEP 4

5. Renewable Purchase Obligations • SERCs in all major States have specified RPOs • RPOs vary from 1% to 10% in different States • Presently the share of renewable energy is about 4% in total electricity generation • Share of solar energy presently is negligible 5

6. Present Regulatory Framework • CERC has issued comprehensive tariff guidelines for renewable energy • Tariff design to ensure assured return with full cost recovery during the debt repayment period. • As a special dispensation, this full cost tariff has been allowed for 25 years for solar energy 6

7. New Policy Initiatives 7

8. National Action Plan on Climate Change (NAPCC)-2008 • Suggests RPO at 5% in year 2010, increasing 1% every year for 10 years. • Appropriate authorities may issue certificates that procure RE power in excess of the national standard. • Such certificates may be tradable, to enable utilities falling short to meet their RPS. • Penalties may be levied, falling short in RPS 8

9. Renewable Energy Certificate Mechanism 9

10. The Issues • Present installed capacity based on renewable is about 17 GW require to be increased to 45 GW in next five years if RPO level is to go up to 10% nationally, as suggested in NAPCC • Large part of untapped potential is located in the states which have already achieved high levels of RPO • Reluctance to purchase from renewables beyond RPO because of Infirm nature of RE power and high cost generation • States having low RE potential do not specify higher RPO

11. Installed Generation Capacity in India (end Oct.’10) TOTAL GENERATION CAPACITY 1,67,278.36 MW (As on 31-10-10 )

12. RE Potential and Installed Capacity in India (MW)- (End June 2010) 50000 45000 15000 16881 12009 5000 12 2767 2700 901 1412 72 Source : MNRE as on June 2010

13. RPO Status :- FY 2009-10

14. Wind and SHP Potential Source : MNRE Annual Report 2009-10 SHP- 1411 MW SHP- 2268 MW SHP- 393 MW SHP- 1329MW SHP- 1577MW SHP-460MW SHP- 239MW Wind-4858MW SHP-63 MW SHP- 213MW Wind- 1019MW SHP 804MW SHP- 208MW SHP- 993 MW SHP- 396MW Wind – 255 MW SHP – 295 MW Wind – 10645 MW SHP- 196 MW Wind -4,584MW SHP- 762MW SHP- 295 MW Wind- 8968 MW SHP – 560 MW Wind- 11,531MW SHP- 748 Mw Wind- 5530MW SHP – 660MW Wind - 1171MW SHP- 704 MW

15. Unevenly Distributed Renewable Resources WIND ENERGY MAP SOLAR ENERGY MAP

16. REC: Context… • REC mechanism is expected • To address the mismatch between availability of RE resources in state and the requirement of the obligated entities to meet the renewable purchase obligation (RPO) • reduce risks for local Discom by limiting its liability to only electricity purchase, reduce transaction costs and create competition among different RE technologies

17. RE Generation Sale at Preferential Tariff Conventional Electricity Component REC Component Obligated Entities Distribution Company / Third Party Sale/ Power Exchange Obligated Entities/ Voluntary Buyers Conceptual Framework

18. Salient features • RE generators with capacity untied in PPA will have an option to sell electricity and REC separately • REC will be issued to RE Generators only • 1 MWhr  1 REC • Purchase of REC would be considered as purchase of RE for purpose of RPO compliance

19. Salient features contd… • Grid Connected RE technology approved by MNRE would be eligible for REC mechanism. Captive Power Producer (CPP) based on renewable energy sources also eligible for the entire energy generated from such plant including self consumption for participating in the REC scheme, subject to certain conditions. • Separate category of Solar REC • Provision of regulatory charge to enforce compliance of RPO • RECs are intra-country tradable certificates and are distinct from carbon credits

20. Salient features contd… • The eligible entities shall apply to the Central Agency for Certificates within three months after corresponding generation from eligible renewable energy projects • The Certificates shall be issued by the Central Agency within fifteen days from the date of application by the eligible entities.

21. Salient features contd… • The Certificate once issued shall remain valid for three hundred and sixty five days from the date of issuance of such Certificate • Subject to this time limit, a Certificate shall be deemed to have been extinguished after it has been exchanged by way of sale and purchase in the Power Exchange.

22. Salient features contd… • Eligibility and Registration for Certificates: • A generating company shall be eligible to apply for registration for issuance of Certificates if it fulfills the following conditions: • a. it has obtained accreditation from the State Agency; • b. it does not have any PPA for the capacity related to such generation to sell electricity at a preferential tariff; and • c. it sells the 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 to any other licensee or to an open access consumer at a mutually agreed price, or through power exchange at market determined price.

23. Operational Framework • Accreditation would be done at State level by State Agency (SA) to be designated by SERC • Registration by Central Agency • Issuance of REC by Central Agency based on injection certificate

24. Operational Framework • Functions of the Central Agency will be to undertake: • (i) registration of eligible entities, • (ii) issuance of certificates, • (iii) maintaining and settling accounts in respect of certificates, • (iv) repository of transactions in certificates, and • (v) such other functions incidental to the implementation of renewable energy certificate mechanism as may be assigned by the Commission from time to time.

25. Operational Framework contd.. • REC exchange through power exchanges approved by CERC • Certificates will be exchanged within floor (minimum) price and forbearance (ceiling) price decided by CERC time to time • Monitoring Mechanisms : Appointment of Compliance Auditors by CERC for post monitoring of the REC Transactions

26. Steps Taken So Far • The framework of REC settled by Forum of Regulators (FOR) • Model SERC Regulations finalized • CERC Regulations notified

27. Steps Taken So Far…… • CERC designated National Load Despatch Centre (NLDC) as Central Agency: Notification dated 29.01.2010 • CERC Order on determination of forbearance price and floor price: Petition No. 99/2010, dated 1.06.2010 •  REC floor and forbearance price will remain valid upto FY2012

28. Steps Taken So Far…… • CERC Order on detailed procedures under REC mechanism submitted by the Central Agency : Dated 1st June 2010 • Model Procedure/Guidelines for accreditation for RE Project • Procedure for Registration of eligible entities • Procedure for Issuance of RECs • Procedure for redemption of REC

29. Steps Taken So Far… • Fees and Charges under REC framework determined and will remain valid upto FY 2012-2013 • Power exchanges bye-laws for REC are approved

30. Steps Taken So Far… • SERC Regulations finalized • 21 States came out with draft REC Regulation • 9 States have notified REC Regulations • 11 States designated State Agency

31. Status of REC Regulations of SERCs (as on 15/11/2010)

32. Thank You Thank You