REC mechanism not being honoured by most States; Rays Power taps APTEL...

 

Most States are still not honouring the renewable energy certification (REC) mechanism available for solar photovoltaic power plants subjecting them to financial strain, according to Rays Power Experts.

A turnkey solutions provider for solar PV projects having set up three solar parks in Rajasthan, the company has knocked at APTEL (Appellate Tribunal for Electricity) seeking justice making various regulatory commissions respondents.

“If the REC mechanism is extended as per the National policy, the per unit purchase price works out to about Rs 9. In fact, we are now getting only Rs 2.75 per unit through third party sales as there is no power purchase agreement obligation,” Rahul Gupta, Director of Rays Power, told Business Line.

“Even though this is a policy announcement whose facility is available till 2017, it is not being currently honoured. This is making projects which have come up based on REC mechanism financially unviable. Therefore, we have approached APTEL seeking justice. The Central Electricity Regulatory Commission is also looking into the matter,” he said.

The company has set up three solar parks in Rajasthan near Bikaner with a total installed capacity of 60 mw and expects to take the capacity to up to 100 mw by March 31, 2014.

“Our clients include Rajasthan Patrika and food & beverage (namkeen) makers Haldiram and Bikaji among others for whom we have set up units,” he said.

A perfect business model of projects based on REC mechanism, which the Government had promised has been put to test as most State regulators are yet to implement the mechanism. The company has mentioned that a similar petition filed by the Indian wind power association.

Gupta said that there is immense potential in harnessing the potential of the solar power provided all the regulatory commissions meet and enforce renewable purchase obligation. This would provide much needed boost to the new and renewable energy sector in the country making it cost effective.

Source

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Update on REC Trading for the month of December 2013: Non-Solar RECs Up by 31%, Solar RECs by 7%...

 

The 10th REC Trading Session of the Financial Year 2013-14 was conducted on 26th December 2013 marking the end of Q3 on both the Power Exchanges, IEX and PXI.

This REC trading session shall bring some comfort and shall develop faith over REC Mechanism, as the market has shown a substantial positive growth and there are good indicators to grow even more.

Overall the results have sustained optimism as compared to the preceding trading month.

The increment in the overall Buy bid of both Solar and Non Solar has re-infused the faith in the future of REC market. Though, the Solar REC market has grown by a thin margin in this trading session, but the increasing participation from the buyers will ensure a promising future for solar market.

In comparison to last trading session of November 2013, the buyer’s participation has substantially increased by 30.73% for Non-solar and by 7.18% for Solar REC Market. The effect of RPO enforcement over the obligated entities has started showing the effect and it is expected to create more demand of certificates in the near future.

As per REC Registry, the market crossed 0.4 million marks in terms of REC redeemed. This volume (4,11,744 RECs) traded in a single session is the highest redeemed volume of this fiscal and more importantly marginally matches the volume of March 2013 (last month of FY13).

With last three months still remaining in this year and chances of higher buyer-side participation in the subsequent sessions REC markets may revers the earlier trends.

A more detailed analysis for each kind of RECs can be found as under:

Non-Solar RECs :

Buy bids for non-solar credits increased by 30.73 percent in comparison to last month’s stats. The most encouraging fact, considering a holistic view of FY14, was the cleared volume crossing the 0.4 million mark. Clearing percentages at both exchanges (IEX and PXIL) were recorded at parity (over 9%). With a total transactional value of non-solar RECs was 605.8 million INR, with price of each non-solar REC remaining at Rs. 1500 per REC.

Solar RECs:

The change in demand and supply as compared to previous month was up this month by 7.18 percent and 47.37 percent respectively. Although, the prices here also remained at floor we can still expect a jump in demand as we slip in the last quarter.

Analysis of Non-Solar REC Segment

Non-Solar REC Segment
Parameter	IEX	PXI	Total	Trend
Buy Bids	2,50,722	1,53,140	4,03,862	31%
Sell Bids	27,12,444	16,03,154	43,15,598	4%
Cleared Volume	2,50,722	1,53,140	4,03,862	31%
Cleared Price	1,500	1,500	1,500	0%
Cleared Volume as % of Total Sell Bids				9.36%
Transaction Amount (Rs. Crs)				60.58

 

• The Cleared Volume of Non-Solar RECs have been increased by more than 31%
• However, the above was mainly on account of the observed increased of more than 157% on IEX; on PXI a decline of 27% was observed.
• The Clearance Ratio in terms of Perc over Sell Bids has been increased to 9.36% from 7.45% in the previous month.
• The Market Clearing Price observed was the Floor Price i.e Rs. 1500 per RECs.
• Below charts shall give more clarity this.

Analysis of Solar REC Segment

Solar REC Segment
Parameter	IEX	PXI	Total	Trend
Buy Bids	6,983	989	7,972	7%
Sell Bids	77,180	13,240	90,420	47%
Cleared Volume	6,983	989	7,972	7%
Cleared Price	9,300	9,300	9,300	0%
Cleared Volume as % of Total Sell Bids				8.82%
Transaction Amount (Rs. Crs)				7.41

• The Cleared Volume of Solar RECs have been decreased by around 7%.

• However, the above was mainly on account of the observed decrease of more than 167% on PXI; on IEX,  marginal decrease of of 1.3% was observed.

• The Clearance Ratio in terms of Perc over Sell Bids has been decreased to 8.8% from 12.0% in the previous month.

• The Market Clearing Price observed was the Floor Price i.e Rs. 9300 per RECs.

• Below charts shall give more clarity this.

Source: IEX and PXI

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Realities of renewable energy in India...

 

Recently the Union ministry of new and renewable energy (MNRE) asked the ministry of power (MoP) to make the Renewable Purchase Obligation (RPO) compliance mandatory for states if they want to avail funds for financial restructuring of their utilities.

RPOs, put simply, are the minimum percentages of the total power that electricity distribution companies and some large power consumers need to purchase from renewable energy (RE) sources. RPO creates a minimum market for renewables in the absence of pricing externalities of conventional power generation.

While the National Action Plan on Climate Change (NAPCC) has set an ambitious RPO target of 15% by 2020, it is the state electricity regulatory commissions (SERC) that set year-wise targets in their respective states. While 28 out of 29 states have such targets in place for solar and non-solar sources separately, there is an increasing concern over actual compliance. Data for a few major states for the last two-three years reveals that barring utilities in states such as Karnataka, most others have failed to meet their RPO targets.

Reduction of RPO targets to accommodate the concerns of utilities has been a common measure taken by SERCs. After achieving an RPO compliance of 5.78% in Rajasthan in 2011-12, the Rajasthan ERC reduced its earlier RPO target from 8.5% to 6%. Similarly Tamil Nadu ERC reduced its RPO target from 14% to 9% despite the state utility achieving a compliance of 9.59%. Gujarat ERC allowed its distribution licensees to carry forward the shortfall for FY 2011-12 to be met in FY 2012-13. Considering the excess solar generation in Gujarat in 2012-13 (over its mandated RPO), it allowed the state utility to count this towards compliance of the non-solar RPO to remove the burden on the distribution licensee.

For FY 2010-11 and 2011-12, Maharashtra appeared to have achieved its RPO targets of 6% and 7%, respectively. However, the RPO compliance data collated by the designated state nodal agency, Maharashtra Energy Development Agency, seems to have included renewable energy units wheeled under the network under open access (OA) and credited them to the utility’s account. For 2011-12, if one does not consider units wheeled under OA, then the RPO compliance drops sharply to 4.49%. While the regulator did seek the explanation for this counting of wheeled RE towards RPO compliance from Maharashtra State Electricity Distribution Co. Ltd, it did not take any further action in this matter. This issue is bound to come back when the OA consumers’ RPO compliance will be taken up.

Fortunately, there are encouraging signs with some state ERCs (Maharashtra, MP, UTs, Uttarakhand, Punjab, etc.) beginning to flex their muscles against RPO defaulters. For example, besides setting a deadline to cumulatively fulfil RPOs, Maharashtra ERC has explicitly directed that any future non-compliance would result in the ERC invoking the penal clause from their regulations. However, there are many other steps which state ERCs can proactively take to facilitate this process. An effective web-based automated monitoring and verification system for RE generation/procurement is essential to operationalize compliance reporting. While most state ERCs’ RPO regulations indicate quarterly compliance reporting, this is hardly followed up.

While India’s progress in the renewable energy sector has been impressive in the last few years and needs to be sustained in the years to come, effective implementation of the RPO framework is crucial to meet these goals.

Source

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TERI speaks about the need of long-term policies in the renewable energy sector...

 

Shirish Garud, Senior Fellow, Energy Environment Technology Applications, TERI, speaks about the work his organization is doing in the renewable energy space and what currently ails India's power sector

Q: TERI  has been working in the renewable energy and solar thermal power plants sector for a while now. Tell us a bit about how your projects in this space will benefit people and is the common man actually aware of the benefits of alternative energy?

A: TERI is working in renewable energy sector for couple of decades now. Further, it has established village level solar minigrids and biomass gasifier and solar PV technology based power plants in villages. These projects not only provide basic lighting but also power internet enabled computers and printers used for knowledge gain, provide power for  running small business or income generation activities such as bamboo splitting, turmeric grinding and so on. These projects provide the beneficiaries with the opportunities for economic activities and avenues for income generation. Our experience is that the common man is getting aware of the benefits of these activities and renewable energy power plants.

Q: With pressure on coal and natural gas increasing, will renewable's be able to meet India's energy needs?

A: Our demand for energy, both for power generation and for other applications such as industrial processes, heating and cooling, agriculture etc., is very high compared to the potential of renewable energy resources except solar energy, which has huge potential provided we can have access to the land for solar installations. However, in practice, the renewable energy applications will be limited and currently I don't foresee renewables will be able to meet India's all energy needs. However, in future we have potential to achieve about 15-30 % of India's energy needs in power sector through renewables.     

Q:What according to you is the single biggest factor ailing India's power sector today? A: I think inefficient distribution network, infrastructure and uneconomical and inefficient operations of the distribution companies are the biggest factors ailing India's power sector. Q: Most of our power is thermally generated. Why do we still lag when it comes to harnessing renewable energy sources?

A: We need huge investments in renewable sector and more progressive policies for integration with conventional grid network for renewable sector to grow rapidly. The policy environment is reasonably positive, however, long term policies are needed which can help to take it forward. 

Q: What are the challenges the renewable energy sector in India faces?

A: Renewable energy sector is rapidly evolving and major challenges faced by the sector can be summarized as under

• Lack of stable long term policies for promotion.
• Difficulties in getting latest technologies and efficient process knowhow
• Inadequate support for research and development and commercialization of home grown technologies
• Resistance from conventional power sector players to adopt and integrate the renewables.
• For higher percentage of RE integration we need to have latest technologies in energy storage and control to improve dispatchability of the renewable power plants. I think this area will be of great interest in coming years.
• Hurdles in land acquisition and spiraling land costs

Having said this, I must mention that in recent years both the central and state governments have been promoting large scale integration of renewables especially for power generation and National Action Plan for Climate Change (NAPCC) and National Solar Mission, one of the eight missions identified under NAPCC, along with Electricity Act 2003 are major drivers for renewable power sector. Progressive regulatory measures such as Renewable Purchase Obligations (RPO), Renewable Energy certificate (REC) scheme, tax incentives, preferential tariffs are also providing required impetus to the sector.

Source

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Government sanctions 14 projects under RGGVY in J&K...

 

In the state of Jammu & Kashmir 14 projects (3 projects in 10th Plan and 11 projects in 11th Plan) have been sanctioned under Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY), said Jyotiraditya Scindia, minister of state (independent charge) for power.

These cover electrification of 234 UE villages, intensive electrification of 3,247 Partially Electrified (PE) villages and release of free electricity connections to 79,991 BPL households. Cumulatively, as on Nov.15, 2013, the electrification works in 192 UE villages and 3,018 PE villages have been completed and free electricity connections to 64,255 BPL households have been released.

It is the duty of a distribution licensee to develop and maintain an efficient, coordinated and economical distribution system in his area of supply to provide reliable power supply in its area of operation. Supply of power to villages in Jammu & Kashmir is given by Power Development Department of Government of Jammu & Kashmir.

Rural Electrification Corporation (REC) has been designated as Nodal Agency for Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) which was launched by Government of India in April 2005. The schemes sanctioned so far cover 1,12,225 un/de-electrified villages (UEV) and release of free electricity connections to 2,76,11,469 Below Poverty Line(BPL) households in the country. Cumulatively, the electrification works in 1,07,752 UE villages have been completed and free electricity connections to 2,13,57,370 BPL households have been released under the scheme, as on Nov.15,.2013, the power minister said.

Source

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GUVNL, Gujarat Discoms want to avail RECs For Solar Power Purchased by them from the Gujarat Solar Park Developers...

 

The Gujarat Discoms have filed an petition with CERC to grant Renewable Energy Certificates for the amount of solar power purchased by them from the Gujarat Solar Park Developers in excess of the Renewable Purchase Obligations; however the CERC has disposed off the petition stating that petition requires the amendment of the REC Regulations which can be persuaded only after a detailed consultation on the same.

GUVNL and the Gujarat Discoms have filed a petition to CERC stating the below arguments:

• Subsequent to the notification of the Solar Power Policy by Government of Gujarat, GERC has determined the tariff for purchase of power from Solar Power Projects for the control period from 29.1.2012 to 31.3.2015. Pursuant to the GERC order the Discoms have entered into Power Purchase Agreements for an aggregate capacity of 971.5 MW (946.5 MW of solar PV projects and 25 MW solar thermal projects) with total 88 project developers. As on the date of filing the application, aggregate solar capacity of 857 MW has been commissioned and has commenced injection of power into the grid.

• As against the solar capacity tied up by the Discoms, the RPO for solar power on the part of the distribution licensees as per the regulation notified by GERC is 1% for the year 2012-13 which works out to 380 MW. The Discoms have tied up significant excess solar capacity for procurement of solar power at the promotional tariff as against the requirement of 380 MW to meet 1% RPO.

• As per the Central Electricity Regulatory Commission (Terms and Conditions for recognition and issuance of Renewable Energy Certificate for Renewable energy Generation) Regulations, 2010 (REC Regulations), the eligibility for REC does not extend to the distribution licensees procuring solar power from the solar power developers at the promotional tariff for the quantum in excess of the Renewable Purchase Obligations of such distribution licensees specified by the State Commission.

• While the Discoms have been paying promotional tariff in respect of solar power purchases including in excess of the quantum of the RPO, they are not getting any benefit of solar power purchased in excess of the quantum specified as RPO. Such quantum of power purchased in the State of Gujarat gets completely excluded from the scheme of Renewal Energy Certificate (REC) or for any other benefit. On the other hand, the solar power developers, who have generated electricity and are consuming the same as CPP or selling through open access, are entitled to the benefit of REC and trading the same in the Power Exchange.

• As per the scheme envisaged in the REC Regulations, the distribution licensees shall purchase solar power from the Solar Developers to the extent of the Renewable Purchase Obligations and thereafter, Solar Power Developers may sell further solar power quantum to the distribution licensees at the pooled power purchase cost of the licensee and become entitled to the Renewable Energy Certificates to be issued by the appropriate agency under the REC Regulations. If such solar power developer sells solar power to the distribution licensees at the same promotional tariff as applicable to the quantum of solar power sold to the distribution licensees towards fulfillment of the Renewable Purchase Obligations, the solar power developers will not get the Renewable Energy Certificates and at the same time the distribution licensees venturing to purchase excess solar power at the promotion tariff as in the case of the State of Gujarat are also not getting any benefit either in the form of the Renewable Energy Certificate or otherwise. The Discoms have submitted that this scheme creates a disincentive for the distribution licensees in the State of Gujarat who have taken initiative to promote solar power without restricting the purchase by the distribution licensees to the extent of the RPO only and also causes a financial impact on the consumers of the State who are required to pay higher tariff in regard to such purchase from solar power projects.

• The local distribution licensees of the area where the Non-Conventional Power Projects including Solar Power Projects are established are best suited to purchase solar power generated from the solar project as compared with any other person including any obligated entities other than the local distribution licensees. In that event, all complications relating to open access, transmission, wheeling, system constraints, evacuation issues as well as dealing with various authorities get avoided. It would be in the interest of all concerned if the power is sold by the Solar Power Developers to the local distribution licensees of the area after fulfilling the RPO, provided such distribution licensees are issued with RECs.

• The CERC may evolve a mechanism where under the distribution licensees in the State are recognized as eligible entities under Regulation 5 of the REC Regulations in regard to any quantum of renewable power purchased by them in excess of the RPO, allowing them to exchange the REC with the distribution licensees who are in deficit in the fulfillment of the RPO in regard to solar power.

Thus the Discoms have prayed as below:

"(a) Initiate a proceeding in pursuance to the above petition for inquiring into and deciding on varies matters concerning the solar power development as detailed herein above;

(b) Declare that the distribution licensees shall also be made as 'Eligible Entities' for the Renewable Energy certificate under the REC Regulations in respect of the purchase of solar power by them on promotional tariff in excess of the stipulated Renewable Purchase Obligation;

(c) Advise the Central Government on the issue of fixing uniform Renewable

Purchase Obligation of solar power across all the States;

(d) Other matters concerning the solar power development as mentioned herein above so as to implement an uniform policy across all the States; and

(e) Pass any such further order or order as this Hon'ble CERC may deem just and proper in the circumstances of the case."

However as said by the CERC:

After going through the contents of the petition, it appears that the Discoms are seeking amendments to certain provisions of the REC Regulations in order to make the distribution licensees eligible for grant of REC for the power purchased by them in excess of their RPO.

According to the Discoms, this would enable the distribution licensees to meet their RPO and also encourage them to buy solar power in excess of the RPO. The Commission is of the view that the existing provisions of eligibility in the REC Regulations which is limited to generating companies is adequate at this stage of development of REC market. Without going into the merit of the issues raised, we intend to clarify that filing of the petition is not the proper process for initiating the amendment to the existing regulations.

The Commission under Section 178 of the Act has been vested with the power to make, amend and repeal the regulations on the subjects which have been authorized under various provisions of the Act. Action to make or amend the regulations is initiated when the Commission is satisfied that there is need for such regulations or amendment to the existing regulations. However, the Commission has taken note of the submissions and concerns of the Discoms regarding issuance of solar RECs to the distribution licensees in excess of their RPO. We direct the staff to examine the issues and submit a proposal to address the problems, if any, for consideration of the Commission.

With regard to Discoms' prayer for rendering advice to the Central Government on the issue of fixing uniform RPO of solar power across all the States, it is clarified that the Commission vide its letter dated 28.12.2011 has already given its statutory advice to the Ministry of power in terms of Section 79 (2) of the Electricity Act, 2003.

The complete order can be downloaded from here.

Source: CERC

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Update on REC Trading for the month of November 2013: Non-Solar RECs Up by 105%, Solar RECs down by 20%...

The 9th REC Trading Session of the Financial Year 2013-14 was conducted on 27th November 2013 on both the Power Exchanges, IEX and PXI.

In this session, substantial growth in demand for Non-Solar RECs was observed; the increase in Buy bids has re-infused the faith in the future of REC markets.

However, the Solar REC market has not shown any growth in this trading session, but the increasing participation from the buyers will ensure a promising future for solar market.

In comparison to last trading session of October 2013, the buyer’s participation has substantially increased by 105.08% for Non-solar and decreased by 20.56% for Solar.

This seems to be on account of the RPO enforcements by various State & Central Regulators and expected to create more demand of certificates in the near future.

Analysis of Non-Solar REC Segment

Non-Solar REC Segment
Parameter	IEX	PXI	Total	Trend
Buy Bids	97,743	2,11,185	3,08,928	105%
Sell Bids	27,60,452	13,79,113	41,39,565	7%
Cleared Volume	97,743	2,11,185	3,08,928	105%
Cleared Price	1,500	1,500	1,500	0%
Cleared Volume as % of Total Sell Bids				7.46%
Transaction Amount (Rs. Crs)				46.34

• The Cleared Volume of Non-Solar RECs have been increased by more than 105%
• However, the above was mainly on account of the observed increased of more than 308% on PXI; on IEX a marginal decrease of 1% was observed.
• The Clearance Ratio in terms of Perc over Sell Bids has been increased to 7.45% from 3.88% in the previous month.
• The Market Clearing Price observed was the Floor Price i.e Rs. 1500 per RECs.
• Below charts shall give more clarity this.

Analysis of Solar REC Segment

Solar REC Segment
Parameter	IEX	PXI	Total	Trend
Buy Bids	6,983	371	7,354	-21%
Sell Bids	45,819	15,538	61,357	-10%
Cleared Volume	6,983	371	7,354	-21%
Cleared Price	9,300	9,300	9,300	0%
Cleared Volume as % of Total Sell Bids				11.99%
Transaction Amount (Rs. Crs)				6.84

• The Cleared Volume of Solar RECs have been decreased by around 21%.
• However, the above was mainly on account of the observed decrease of more than 86% on PXI; on IEX,  increase of 6.6% was observed.
• The Clearance Ratio in terms of Perc over Sell Bids has been decreased to 12% from 13.6% in the previous month.
• The Market Clearing Price observed was the Floor Price i.e Rs. 9300 per RECs.
• Below charts shall give more clarity this.

Excel (xls) file for the complete data on RECs (Both Solar & Non Solar) for the current financial year can be downloaded from this link.
Source: IEX and PXI

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