REC (Renewable Energy Certificate) framework for India; Opportunity and Market

1. Understanding RECs
Presentation by
Agneya Carbon Ventures
http://www.agneya.in

2. Concept of REC
o India’s response to climate change negotiations has 8 national missions and 2 other
missions
National Missions
Other Missions
▫ National Solar Mission
▫ NM for Enhanced Energy Efficiency
▫ NM on Sustainable Habitat
▫ Retirement of inefficient coal-fired power
▫ National Water Mission
plants and R&D on IGCC and supercritical
▫ NM for Sustaining the Himalayan Ecosystem
▫ NM for a “Green India”
▫ Renewable Purchase Obligation – to increase
▫ NM for Sustainable Agriculture: the % component of RE in Grid
▫ NM on Strategic Knowledge for Climate
Change
REC is a tool in the implementation of Renewable Purchase Obligation

3. Concept of REC
Monetization of Electricity in different cases
Mode of Generation (and Electricity revenue Environmental benefit Total
monetization)
Conventional Yes Not present Conventional Tariff
Renewable without REC Yes Not captured separately Preferential Tariff
Renewable with REC Yes Captured as REC Tariff + REC Sale
o Renewable Energy Certificates is therefore an environmental commodity
o Captures the environmental benefits of renewable electricity generation
o Provides a market mechanism to incentivize Renewable Energy producers
o Market is created through requirement on the various companies to have % RE in portfolio
o One REC is created when one megawatt hour of electricity is generated from an eligible renewable
energy resource

4. Eligible Renewable Energy Sources
Wind, Solar, Small Hydro (below 25 MW of capacity), Biomass based power
generation (including co-generation), Bio-fuels and Municipal solid waste based
power generation projects are eligible to apply for REC.

5. Why RECs
• Renewable energy resources are unevenly spread unevenly across the country,
concentrated only in a few states.
Location of RE generation is irrelevant. Fulfilling RPO for each state can happen through generating or
buying share of it’s energy from RE resources (as RECs)
States lacking in resouces can buy REC attributed to RE generated by different RE generators to fulfil RPO.

6. Market for RECs
There will be market for RECs since
• Renewable energy purchase target for FY09-10 = 5% against Previous year level = 3.5%
• Renewable purchase obligation to increase by 1% per annum for next 10 years – 15% by
2020
• 4000 MW of incremental RE power to be installed per year for next 10 years
• Legally mandated for the distribution companies across the states under the Electricity
Act 2003 – enforcement through the State Electricity Regulatory Commissions (SERCs)

7. How will the RECs market work

8. Registration Process Timeline
Furnishing the
Central Agency
Application requested details by
accompanied with the applicant Grant of
fees and charges Registration
3 Months
2 days
7 days
15 days 15 days
Process of
Registration
Intimation regarding Payment of
Incompleteness of applicable
application
registration
Charges

9. Who can sell RECs
Accreditation Registration Issuance Redemption
RE Generators that have undergone the process as shown above can earn and
monetize the RECs

10. Who must buy RECs
• State electricity distribution companies
• Open access users
• Captive generators (from conventional sources)
• Others obligated entities

11. Prices for RECs
• Prices will become stable after a few rounds of trading.
• Till then minimum and maximum prices are set by CERC
for solar and non-solar RE sources as under
Parameters Non Solar REC Solar REC
Forbearance Price (Rs/MWh) 3900 17000
Floor Price (Rs/MWh) 1500 12000

12. Players in the REC market (1/2)
 MNRE : It is a facilitating agency for REC mechanism in India
 Forum of Regulators: It is a common platform for all electricity regulators in India. It
coordination and implementation body for REC mechanism in various states of India.
 CERC: It is responsible for regulatory framework for inter-sate transactions.
 SERC : It is responsible for regulating intra-state transactions.
 State agency: It is an agency designated by SERC within the regulated state. State
agency is responsible for accreditation of RE generators, certification of RE in
consultation with Sate Load Dispatch Centre (SLDC) for the purpose of issue of REC.
 State Load Dispatch Centre: It is engage with metering, energy accounting of the energy
being generated and consumed within a state. Hence, providing accurate data on RE
generation and consumption in a state.

13. Players in the REC market (2/2)
 National Load Despatch Centre– It is designated as central agency. Main work includes;
Registration of eligible RE generators for issuing REC, Issuance of REC to RE generators,
Accounting of RECs, Tracking of REC in its lifetime, Extinction of REC after its sale, Provide
information to compliance auditor.
 Power Exchange – REC can only be traded in power exchange. Hence to provide trading
and to facilitate trading of REC.
 REC consumers (Obligated Entities/Voluntary buyers) – These are the entities who buy
REC as per RPO (or Voluntarily )as mandated by concerned SERC. Obligated entities are
generally distribution companies in states.
 RE Generators - They are the generating plant whose inputs to the energy generation
are from renewable sources.
 Compliance Auditors : It is a third party appointed by CERC for accessing the compliance
of REC regulations.

14. Agneya Can
We are
• A focused renewables, carbon and sustainability management consulting firm.
• Established by alumni of IIM-A and IIM-B with background in engineering from
NIT-Trichy and experience across production, pharma, banking and sales
• Young, dynamic team which has in a short span of time has undertaken and
delivered projects across private and government sectors
• With clientele in process industry, sugar industry, real estate, infrastructure,
waste treatment, electronics and auto/auto ancillaries.
We Offer
• Offer a unbiased view of the investment opportunities across sectors,
technologies and opportunities
• Assistance in achieving financial closure
• Handholding right from initiating project with strong technical advisors right upto
commissioning stage
• Registration of projects under Clean Development Mechanism (CDM) and
Renewable Energy Certificates (RECs) – Trading of CERs/RECs

15. We look forward to hearing back from you.
Reach us at
Kedar - +91-9665407848 – kedar@agneya.in
Indrajeet - +91-9028788430 – indrajeet@agneya.in
http://www.agneya.in
http://blog.agneya.in