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Terms and Conditions for recognition and issuance of Renewable Energy Certificate for Renewable Energy Generation Regulation, 2010 Rakesh Shah Central Electricity Regulatory Commission. Renewable contributes only @ 5-6% of total Electricity Generation. Installed Generation Capacity.
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Terms and Conditions for recognition and issuance of Renewable Energy Certificate for Renewable Energy Generation Regulation, 2010Rakesh ShahCentral Electricity Regulatory Commission
Renewable contributes only @ 5-6% of total Electricity Generation Installed Generation Capacity Source: Central Electricity Authority 11/10/2014
RE Development in India Policy and regulatory intervention is essential to promote renewable energy
India’s Energy Requirement Production & Imports Source: Integrated Energy Policy Report Notes: 1. Growth Rate 8% 2. Year 2031-32 India will continue to import significant amount of its energy requirement Energy security is an area of prime concern for India. Hence the need for promotion of Renewable Energy
RE Potential v/s Installed Capacity MW • Wind and Solar are the predominant sources : Actual potential is much higher, A study conducted by the Lawrence Berkley National Laboratories (LBNL, USA indicates a higher wind potential of nearly 6-8 Lakh MW in India • Huge RE potential need to be harnessed
The Electricity Act, 2003 : Enabling provisions • Section 86(1)(e): Specify Renewable Purchase Obligation (RPO), grid connectivity • Section 61(h): Tariff regulations to be guided by promotion of renewable energy sources • Section 3: National Electricity Policy, Tariff Policy and Plan • Section 4: National Policy permitting stand alone systems including renewable sources of energy for rural areas
The Electricity Act, 2003: Section 86(1) (e) • The State Commission shall discharge the following functions, namely: “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;”
The Electricity Act, 2003: Section 61(h) • The Appropriate Commission shall, subject to the provisions of this Act, specify the terms and conditions for the determination of tariff, and in doing so, shall be guided by the following, namely:- (h) the promotion of co-generation and generation of electricity from renewable sources of energy;
National Electricity Policy: 2005 • Urgent need of promotion non-conventional and 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 and fix percentage of purchase from Renewable sources • Progressively the such share of electricity need to be increased
Tariff Policy:2006 • Appropriate Commission shall fix RPO and SERCs shall fix tariff • 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
National Action Plan on Climate Change (NAPCC), 2008 • National level target for RE Purchase • 5% of total grid purchase in 2010, to be increased by 1% each year for 10 years: 15% by 2020 • SERCs may set higher target • Appropriate authorities may issue certificates that procure RE in excess of the national standard • Such certificates may be tradable, to enable utilities falling short to meet their RPO • RE generation capacity needed: From 25000 to 45000 MW by FY2015
National Solar Mission, 2009 MW • Mission aims to achieve grid tariff parity by 2022 through • Bundling of solar power with un-allocated quota of central stations by NVVNL for resale to utilities • To deploy 20 million solar lighting systems for rural areas by 2022 • Large scale utilization and rapid diffusion • R&D , Local manufacturing • In addition, 100 MW capacity distributed small grid connected power plants during Phase -1.
Tariff Policy Amendment : Para 6.4 (1) Dated 20/1/2011 • SERC shall fix a minimum percentage of the total consumption of electricity in the area of a distribution licensee • Such purchase should takes place more or less in the same proportion in different States • SERCs shall also reserve a minimum percentage for purchase of solar energy • Up to 0.25% by the end of 2012-2013 • Further up to 3% by 2022 • Renewable Energy Certificate (REC) would need to be evolved with separate solar specific REC
Regulatory Intervention • Renewable Purchase Obligation (RPO) • Preferential Tariff • Facilitative Framework for Grid Connectivity • Market Development (Tradable Renewable Energy Certificates)
RPO across States • Wide Divergence in RPO Specifications across States • Varying RPO Trajectories • RPO being fixed based on resources available in the States • Different RPO as per RE Technology • Differential RPO for Discoms • No long term visibility
REC – CONTEXT • Unevenly Distributed RE Resources SOLAR WIND • Resource rich states not willing to purchase high cost RE power beyond RPO • Variability : Inter-state transmission is also difficult
REC Conceptual Framework RE Generation Sale at Preferential Tariff Electricity Component REC Component Obligated Entities Local Discom/ Open Access /Power Exchange Obligated Entities Voluntary Buyers
REC Design PreferentialTariff [Regulated Tariff] REC Option Electricity Green Attributes Sale of electricity to Obligated Entities at regulated tariff REC [Solar & Non-Solar] Sale of Electricity at Market Price in open market Self Consumption Sell to local Discom at ≤ Pooled Cost of Power Purchase* Sale of RECs at Power Exchange * - Weighted Average Pooled Price at which distribution licensee has purchased electricity (including cost of self generation, long-term and short term purchase) in the previous year, but excluding the cost of RE power purchase 11/10/2014
Accreditation & Registration Process Verify Accreditation Application Eligible Entity State Agency SLDC Intimation Confirmation Confirmation Central Agency Power Exchange Intimation Application
Issuance of REC Process State Agency Verification Pre Condition Regular Injection SLDC Power Exchange Central Agency Verify before Issuance Application Issuance Intimation For Meter Reading Apply for sale of REC SLDC Eligible Entity Joint Meter Reading
REC Trading RE Generators 1 1 RPS Obligated entities Electricity to Grid Electricity from Grid 4 REC purchase agreement/ trading 5 Issuance of REC 1 Central Agency- NLDC Redemption of REC 6 2 Energy Accounting Application to issue REC Compliance reporting 3 Confirmation of Energy Accounting 7 SLDC Monitoring Committee of each State Quarterly Reporting
Redemption Process Eligible Entity Apply for Sale of REC RPO Purchase Power Exchange Obligated Entity SERC Intimation of Sale Intimation of Sale Central Agency State Agency
Pricing of REC • CERC has finalized the floor and forbearance price of REC based on: • Variation in cost of generation of different renewable energy technologies falling under solar and non-solar category, across States in the country; • Variation in the Pooled Cost of Purchase across States in the country; • Expected electricity generation from renewable energy sources including:- • i. expected renewable energy capacity under preferential tariff • ii. expected renewable energy capacity under mechanism of certificates; • Renewable Purchase obligation targets set by State Commissions.
Cont… CERC has given the following price range for Solar and non-solar certificates: These prices are calculated as under: Forbearance Price = Maximum (Preferential Tariff- Average Pooled Power Cost) Floor Price = Market Equilibrium Price (Minimum requirement for project viability of RE technologies – Average Pooled Power Cost)
State Wise Acreditated Generators MW (Nos.) 18 States RE Generated participated in REC mechanism
State Wise Registered Generators MW (Nos.) 18 States RE Generated participated in REC mechanism
What do REC statistics reflect • Non-Solar: Not adequate demand • Buyers : Largely CPPs and OA consumers; Very few Discoms (Torrent, Tata Power, REL, Chandigarh, DDN, JUSCO). • Solar: Inadequate supply and absence of large buyers • Buyers: Largely CPPs and OA consumers; Very few Discoms (Chandigarh, Tata Steel Power Distribution Licensee), OA consumers, CPP
RPO : Challenges • RPO being fixed keeping in mind availability of RE resources in State instead of availability of RE resources in the country as a whole • Need for National level RPO • Need for specifying RPO as a percentage of “total consumption” of electricity in the area of a distribution licensee • Need to recognise REC as valid instrument for compliance of RPO by the obligated entities • Applicability of RPO on Captive user, Open Access users and captive cogeneration : Regulations challenged in various High Courts • Lack of Long Term RPO Trajectory • Need for Long Term RPO Trajectory: At least for next 5 to 10 years • Lack of enforcement of RPO
RPO : Challenges!!! Causes • Financial conditions of distribution utilities • Higher RPO level leads to higher impact • Section 86(1) (e) of the Act mandates SERCs to promote RE in the State • Traditionally, RPO being fixed based on the resources available in the States
