This document discusses developing a solar power project under India's Renewable Energy Certificate (REC) mechanism. It provides an overview of REC including eligibility requirements, the process of accreditation, registration, generation, issuance of RECs, REC trading on power exchanges. It also outlines fees and charges for REC activities. The role of regulatory commissions in promoting renewable energy is discussed. Parameters like forbearance price, floor price for REC trading are explained. An evaluation of expected revenue realization from a solar project selling to captive users, third parties and at average power purchase cost is presented.
2. Renewable Energy Sources : Optimization
» In June 2008 Hon’ble Prime Minister of India announced National
Action Plan for Climate Change (NAPCC) to outline its strategy
to meet the challenge of Climate Change. NAPCC envisages several
measures to address global warming. One of the measure is
increasing the share of renewable energy in total electricity
consumption in the country.
» The National Action Plan of Climate Change (NAPCC) has set the
target of 5% renewable energy purchase for FY 2009-10 which
will increase by 1% for next 10 years. The NAPCC further
recommends strong regulatory measures to fulfill these targets.
3. REC : The Concept
» The concept of Renewable Energy Certificate (REC) assumes
significance to address the mismatch between availability of
RE sources and the requirement of the obligated entities to
meet their renewable purchase obligation.
» Additional revenue from sale of environmental attributes
» REC is treated as equivalent to 1000 Unit (KWh).
» Its validity is 2 years from the date of issuance
» REC mechanism is a market based instrument
4. REC : The Eligibility
A company generating electricity from renewable energy
sources is eligible
» if it does not have any power purchase agreement at a
preferential tariff
» If it sells the electricity generated either
– To the distribution licensee at the pooled cost of power
purchase
– to an open access consumer at a mutually agreed price,
– or through power exchange at market determined price.
5. REC : The Eligibility
» A Captive Generating Plant (CGP) based on renewable
energy sources is eligible for self-consumption subject to the
condition that such CGP has not availed or does not propose
to avail any benefit in the form of concessional/promotional
transmission or wheeling charges and/or banking facility
benefit.
6. REC : The Procedure
ACCREDITATION
REGISTRATION
GENERATION
REC TRADING IN
EXCHANGE
ISSUANCE OF
REC
RE
ACCOUNTING &
VERIFICATION
7. REC : The Procedure
» Accreditation:
• State Nodal Agency – GEDA grants Accreditation certificate
and intimates the Central Agency, SLDC and the local
DISCOM but not before 6 months prior to the date of
commissioning.
» Registration:
• The Central Agency – NLDC grants Registration certificate
and intimates to the State Nodal Agency, SLDC and the
Power Exchanges but not before 3 months prior to the
proposed date of commissioning.
8. REC : The Procedure
» Issuance of REC:
• The metering of Renewable Energy injected into the grid is
approved by or recorded through energy accounting by
SLDC.
• Eligible RE Generator to apply to NLDC to issue the RE
certificates as certified by the SLDC.
• Application can be made on a fortnightly basis, i.e., on the
1st day of the month or on 15th day of the month.
• NLDC to issue RECs to Eligible RE Generator within 15 days as
per SLDC and State Agency’s generation report.
• RECs to be sold within 730 days of issuance or else they will
lapse.
9. REC : The Procedure
» Sale of REC: Only through Power Exchanges (PXs)
• Trading through Closed double-sided auction on the last
Wednesday of every month.
• Call of bids from 13:00 Hrs to 15:00 Hrs on the auction day .
• PXs to intimates details of maximum sale bids placed by
each Eligible RE Generator to NLDC by 15:30 Hrs .
• NLDC to check availability of RECs with the eligible entity by
16:00 Hrs.
• Post-confirmation from NLDC, PXs to determine Market
Clearing Price and Market Clearing Volume and send the
details final cleared trades to NLDC for extinguishing of RECs
sold in the records of NLDC by 17:00 Hrs
10. REC : Fees & Charges
» Accreditation
Amount Rs
•
•
•
•
5,000
30,000
10,000
15,000
Processing Fees (One Time)
Accreditation Charges (One Time)
Annual Charges
Revalidation Charge at the end of five (5) years
» Registration
Amount Rs
•
•
•
•
1,000
5,000
1,000
5,000
Processing Fees (One Time)
Registration Charges (One Time)
Annual Charges
Revalidation Charge at the end of five (5) years
11. REC : Fees & Charges
» Issuance of REC
Amount Rs
• Issuance Fees per Certificate
• Exchange Registration Charges (One Time)
• Trading Fees per Certificate
10
20,000
20
» Issuance of REC: To apply to the Central Agency for
Certificates
within
Six
months
after
corresponding
generation from eligible renewable energy projects provided
that the online application for issuance of certificates may
be made on 10th /20th or last day of the month.
12. Regulatory Commission : Role
» The Electricity Act, 2003 entrusts on the appropriate
commission the responsibility of promotion of co-generation
and generation based on renewable energy sources.
“86. (1) The State Commission shall discharge the following
functions, namely: » (a) …….
» (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 licensee;
» (f) ………”
13. REC : Forbearance and Floor Price
» Under section 66 and 178 of the Electricity Act, 2003 the
CERC has notified the Terms and Conditions for recognition
and issuance of Renewable Energy Certificate (REC) for
Renewable Energy Generation Regulations, 2010
Period :
1st June 2010 – 31st March 2012
Forbearance Price
Floor Price
1st 2012 – 31st March 2017
Forbearance Price
Floor Price
Non Solar REC
Rs/MWh
3900
1500
Solar REC
Rs/MWh
17000
12000
3300
1500
13400
9300
15. Evaluating Expected Revenue Realization
Assumptions:
» Project Cost
: Rs 7.00 Crs/ MW
» Generation in First Year
: 16.00 MUs
» Deration in generation every year
: 1%
» Tax Benefit (Accelerated Depreciation) : 1.85 Crs/ MW
» Floor Price of REC Up to March 2017
: Rs 9.30/ Kwh
» Floor Price of REC Up to March 2022
: Rs 4.65/ Kwh
» Realization from Electricity Sale: (Yearly Escalation – 5%)
• For Captive Consumer
: Rs 6.00/ Kwh
• For Third Party Sale
: Rs 4.00/ Kwh
• APPC (DISCOM)
: Rs 3.00/ Kwh
16. Evaluating Expected Revenue Realization
Year wise Net Cash Flow in Rs Crs
Year
REC Period
Captive
Third Party
1
2014 - 15
1.38
1.04
2
2015 - 16
1.41
1.06
3
2016 - 17
1.45
1.09
4
2017 - 18
0.77
0.39
5
2018 - 19
0.82
0.42
6
2019 - 20
0.87
0.46
7
2020- 21
0.92
0.49
8
2021- 22
0.97
0.53
9
10
11
Pay back Period
4th Year
8th Year
APPC
0.87
0.89
0.91
0.20
0.23
0.25
0.28
0.31
0.34
0.37
0.40
11th Year
