IEX REC Market: An Overview March 2019 1 For Public Use
In this presentation
Installed RE Capacity Total Installed Capacity Renewable Installed Capacity RES 75194 Solar, 24,021 Wind Power, 34,615 Hydro 45399.2 Biopower, W to P, 138 Thermal 8,730 222927.34 Nuclear 6780 Small Hydro Power , 4,506 350,162 MW Total Installed Capacity as of 75,055 MW Renewable Installed Capacity as Februaty’19 of February ’19 Source: CEA , MNRE
New REC Projects: Registration Trend 1200 Non Solar Capacity Solar Capacity 1052 1000 800 743 708 600 400 341 276 246 208 187 200 110 105 108 83 64 60 0 FY 11-12 FY 12-13 FY 13-14 FY 14-15 FY 15-16 FY 16-17 FY 17-18 FY 18-19 Data upto 31 st Mar 2019
5 REC Projects registered since inception Year Total Registered till Re-Validated(after Registration Registered as on 31.03.2018 end of Five years) Revoked/Expired 31.03.2018 No. of Capacity No. of Capacity No. of Capacity No. of Capacity Projects Projects Projects Projects 2010-11 18 166 0 0 0 0 10 70 2011-12 346 2,087 0 0 0 0 177 1,018 2012-13 330 1,271 0 0 10 97 158 711 2013-14 239 811 0 0 13 70 220 669 2014-15 163 642 0 0 3 27 136 486 2015-16 86 311 8 67 35 334 80 263 2016-17 87 555 98 671 199 1,103 86 553 2017-18 38 179 184 752 142 443 38 179 Total 1,307 6,022 290 1,490 402 2,073 905 3,948 DISCOMS 2016-17 2 NA 0 NA 0 NA 2 NA
Schemes to promote RE Accelerated Generation Based Renewable Purchase Depreciation Scheme Incentive Scheme obligation 2009 Electricity Act, 2003, National Tariff Mid 1990s Shifted focus Policy, 2006 and National Action Focused on from capacity Plan on Climate Change, 2008 capacity addition addition to provided impetus to further RE generation growth
REC Genesis: Separating green attribute from electricity Bundled Green Power Issues • Schedulability Seller (RE power) Buyer (RPO Compliance) • Uncertainty • Transmission Loss & Charge Un-bundled Green Power Electricity Solution • No geographic Seller (RE power) barriers REC(Green Attributes) • Reduced transaction cost Buyer (RPO Compliance) • Flexibility in REC(Green Attributes) meeting the RPO Discoms, Power exchanges , Bilateral Electricity Contracts
Compliance Market: Overview of Legal Framework 2008 : National Action Plan on Climate Change (NAPCC) • RPO at 5% in year 2010, increasing 1% every year for 10 years. • Authorities may issue tradable certificates and penalties for shortfall Jan’10 : CERC issued REC Regulation • CERC designated National Load Despatch Centre (NLDC) as Central Agency: Notification dated 29.01.2010 June’10 : CERC approved Procedures for Accreditation, Registration & Issuance Sep’10: First amendment of REC Regulation July’13: Second amendment to REC Regulation • Amendment in eligibility, Self consumption and Validity period Dec’14 : Third Amendment to REC Regulations • A distribution licensee shall be eligible for issuance of RECs • Vintage Multiplier ,Validity of RECs for 1095 Days , Revision in price band of Solar RECs Mar’16 : Fourth Amendment to REC Regulations • Terms and Conditions for recognition & issuance of Renewable Energy Certificate for Renewable Energy Generation 9
REC Participants: Sellers/Eligible Entity Identified Sources
REC Market Participants: Sellers/Eligible Entity ELIGIBILITY CRITERIA PPAs with Self Sale through: Open distribution consumption Access/Bilateral licensee No promotional Sale at Mutually PPA at state Banking/ PPA at APPC agreed price regulated tariff Wheeling ELIGIBLE ELIGIBLE ELIGIBLE NOT ELIGIBLE
REC Market Participants : Buyers Obligated Entities • Distribution Companies • Open Access Consumers • Industries consuming Captive Power Voluntary Entities • Corporates under CSR • Individuals
Mechanisms to fulfill compliance REC (Renewable Purchase of RE Energy Feed in Tariff at market price Certificates) at PXs Buy from third Regulated tariff Non Solar REC party Purchase of electricity from RE Solar REC Generator at Regulated tariff Penalty for non compliance in the provisions • If an obligated entity fails to comply with the RPO, it shall also be liable for penalty as may be decided by the commission under section 142 of Electricity Act, 2003 : • The Commission may direct the entity to deposit penal charges equivalent to the forbearance price of REC multiplied by shortfall in units of RPO
Salient Features of REC Mechanism Participation Voluntary REC Denomination 1 REC = 1 MWh Validity 1095 Days after issuance* Categories 1. Solar REC 2. Non-Solar REC Trading Platform Power Exchanges only Banking/Borrowing Not Allowed Single transfer only , repeated trade of the same certificate is not Transfer Type possible Floor Price: Rs 1000/MWh Solar RECs Forbearance Price: Rs 2400/MWh Floor Price: Rs 1,000/MWh Non Solar RECs(After 01.04.2017) Forbearance Price: Rs 3,000/MWh Non Solar RECs(before 01.04.2017) Floor Price: Rs 1500/MWh Forbearance Price: Rs 3,300/MWh Penalty for Non-compliance ‘Forbearance’ Price (Maximum Price) Price Guarantee ‘Floor’ Price (Minimum Price) As per CERC order dated 30 Mar’17
REC Mechanism Procedure for ACCREDITION ( Through State nodal Agency) Procedure for REGISTRATION (Through Central Agency NLDC) Procedure for ISSUANCE (Through Central Agency NLDC) Procedure for TRADING & REDEMPTION (Through Power Exchanges )
Trading at IEX Trading Day Last Wednesday of every Month Market Clearing Closed Double sided auction 1300-1500 Hrs Trading Time Verification by Central agency for Valid REC by By 1530 Hrs cleared seller at IEX By 1600 Hrs Central agency confirms REC By 1630 Hrs IEX finalizes trade By 1700 Hrs Buyer & Sellers informed to Central Agency By 1800 Hrs Invoice raised (proof of REC trade)
Cleared volume : 600 RECs MCP: Rs 2200/REC BUY SELL A 100 REC A 100 REC @ Rs 3300 @ Rs 1500 Price in Rs/REC B 600 REC B 200 REC 3300 @ Rs 2200 @ Rs 1700 C 200 REC C 300 REC 100 REC Buy @ Rs 3300 @ Rs 1700 @ Rs 2000 200 REC sell @ 100 REC Sell @ Rs 1500 Rs 1700 300 REC sell @ Rs 2000 2200 600 REC buy @ Rs2200 200 REC buy @ 1700 600 No of REC
REC: Fee & Charges State Nodal Agency Central Agency Registration Fee & Charges Accreditation Fee & Charges Application Rs. 1000 Application Rs. 5000 Processing Fee Processing Fee Registration Rs. 5000 Accreditation Rs. 30,000 Charges (One Time – Charges (One Time – for 5 Years) for 5 Years) Annual Charges Rs. 1000 Annual Charges Rs. 10,000 Re-Validation Rs. 5000 Re-Validation Fees Rs. 15000 Fees (After 5 Years (After 5 Years Central Agency IEX Issuance Fee & Charges Redemption Fee & Charges Fees Per REC Rs. 4.0 Fees Per REC Rs. 20 issued traded
Fees & Charges: Impact Cost Impact of Fee and charges in First Year Cost Head REC @ 1500 REC @ 2600 REC @ 3300 Assumptions: Accreditation 45,000 45,000 45,000 • Project of Capacity = 1 MW Registration 7,000 7,000 7,000 • Capacity Utilisation Factor = 22% Issuance 7,708 7,708 7,708 • No. of Units Generated = 1.927 MU • TOTAL COST 59,708 59,708 59,708 No. of REC Issued = 1927 Revenue from 28,90,800 50,10,720 63,59,760 REC % Cost 2.07% 1.19% 0.94% Incurred Paise Impact Per Unit 3.09 3.09 3.09 (kWh) Similarly the cost impact (in Paise / Unit) for: TWO Year THREE Year FOUR Year 2.03 Paise 1.68 Paise 1.5 Paise
Market Snapshot
REC: An Update No of RECs (in Cr) Accredited Registered No. of Capacity Capacity Projects Self Issued Traded Retained Inventory (MW) (MW) Registered 3910 3248 562 4.24 4.07 0.19 0.20 Non -Solar Solar 759 753 371 0.85 0.88 0.01 0.3 Total 4669 4001 933 5.41 4.96 0.20 0.24 As of 15 th April 2019 Source: REC Registry India
Projects under REC Mechanism As on 10 th Dec’14 As on 12 th Feb’15 Accredited Capacity : 5,056 MW As on As on 9 th jan’15 As on 4 th Sept’14 As on 11 th Aug’14 State-wise RE As on : 4 th January,2014 Registered Capacity : 4,785 MW As on 2 nd July 2014 Capacity (MW) As 189 30 159 25 200 As on 1153 15 122 142 205 25 176 12 th 124 1149 Feb Registration Capacity: 4,773 MW RP : 3975 MW ,2014 Accreditation Capacity : 4,989 MW 637 632 AP : 4336 MW 127 127 260 875 963 266 Registered Projects 327 Accreditated Projects 745 Tamil Nadu Maharashtra Uttar Pradesh Gujarat Karnataka Rajasthan Andhra Pradesh Madhya Pradesh Chhattisgarh Punjab Himanchal Pradesh Others Data as on 18 th April,2019 Source: REC registry India As on 18-04-19
Projects under REC Mechanism As on 12 th Feb 2014 As on 10 th Dec’14 As on 12 th Feb’15 Accredited Capacity : 5,112 MW As on 11 th Aug’14 As on 7 th Nov’14 As on : 14-10-14 As on 6 th March ,2014 As on 4 th Sept’14 As on 2 nd July 2014 As on 31 st October’2013 Registered Capacity : 4,838 MW Source wise RE capacity (MW) 2 746 As on 7 th May 2014 0 743 242 179 525 2210 423 2254 429 Registered Projects Registered Projects 883 Accreditated Projects Accreditated Projects Wind Bio-fuel cogeneration Biomass Small Hydro Solar Others Data as on 18 th April,2019 As on 18-04-19 Source: REC registry India
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