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.

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Odisha to float tenders soon for 48 Mw solar power...

 

In its efforts to maximize solar power generation and also to fulfill the renewable purchase obligation (RPO) of its bulk power purchaser Gridco, the state government would soon float tenders for new soar power capacity of 48 Mw.

Presently, on-grid solar power projects with a total capacity of 13 Mw are operational in the state. According to RPO fixed for 2013-14, Gridco has to buy six per cent of its energy from renewable sources out of which 0.20% has to be from solar power.

Gridco has signed power purchase agreements (PPAs) for eight solar photo voltaic (PV) projects of 1 Mw under Roof Top PV and Small Solar Power Generation Programme (RPSSGP) scheme.

Gridco has also entered into power sale agreement with NTPC Vidyut Vyapar Nigam Ltd, a 100% subsidiary of NTPC Ltd, to avail solar power bundled with equivalent capacity of thermal power from unallocated share of upcoming NTPC stations under 'New Solar Projects' scheme of Union ministry of new and renewable energy (MNRE). Under the said scheme, 20 Mw of solar power has been allocated to Gridco.

NTPC would be supplying solar power to Gridco in bundled form along with thermal power and the tariff for solar power will be in the range of Rs 4.74-5 per unit.

The Green Energy Development Corporation of Odisha Ltd (GEDCOL) has planned to go for solar PV generation to the tune of 20-40 Mw immediately for which it has already held two rounds of discussions with Gridco. GEDCOL is also setting up 50 Mw solar power project at Manmunda in Boudh district. Around 250 acres of land will be needed to set up the project. The project will cost Rs 400 crore.

Source: Business Standard

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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.

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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.

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Tata Power gets approval to postpone solar target until 2016...

 

Tata Power Co. Ltd won approval from an Indian state electricity regulator to postpone fulfilment of annual solar-power procurement targets by as many as five years to 2016.

The utility unit of India’s biggest industrial group has been unable since 2010 to source enough solar power to meet government renewable mandates because of a shortage of sun-based generation in the country, the Maharashtra Electricity Regulatory Commission said in a 20 December order.

“It faced a genuine difficulty,” the commission said, waiving fines and ordering the company to fulfil five years of targets by 31 March 2016.

The government requires electricity distributors and large industrial companies to get as much as 10% of their power each year from renewables. In Maharashtra state, where Tata Power generates and distributes electricity, the company faced a solar procurement target of 0.25% that rises to 0.5% in the fiscal year starting April.

India doesn’t have the 3,500 megawatts of installed solar capacity required to allow all companies to comply with their obligations, according to the order. As of October, the nation had 2,080 megawatts, less than 60% of the capacity needed, according to data from the ministry of new and renewable energy.

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MERC against competitive bidding in wind power purchase by state Discoms...

 

Even as MSEDCL is facing allegations of irregularities in power purchase, Maharashtra Electricity Regulatory Commission (MERC) has turned down a plea in which MSEDCL was seeking transparency.

MSEDCL wanted to purchase wind power through competitive bidding, but the Commission wants MSEDCL to buy it at rates fixed by it. MSEDCL filed a petition in MERC seeking a review. The Commission agreed that it was a valid point, but referred the matter to a committee headed by principal secretary (energy), with representatives of wind power companies, Maharashtra Energy Development Agency (MEDA) and consumers representatives. Incidentally, principal secretary (energy) Ajoy Mehta is also managing director of MSEDCL.

The committee was constituted on October 1 to study wind energy situation in the state and was asked to submit its report in three months. The Commission has refused to grant interim relief to MSEDCL in the meantime.

Mahagenco and MSEDCL had accused the Commission of favouring wind power producers. They charged that the rates of wind power approved by it are the highest in the country, but the rates of solar power, whose sole generator is Mahagenco, are one of the lowest. However, the Indian Wind Power Association (IWPA) submitted data to MERC proving MSEDCL wrong.

MERC's rate for wind power ranges from Rs 4.93 to Rs 5.67 per unit, which is far higher than thermal power rates (except new units of Mahagenco). MSEDCL has resolutely opposed purchase of wind power on the grounds that it will burden consumers, but MERC has not refused to buy this agreement. Now, MSEDCL wants competition to lower the rates.

During the hearing, MSEDCL submitted that the rates of solar power have come down due to competition, and the same would happen in wind also. It pointed out that Section 63 of the Electricity Act, 2003, did not make any segregation in purchase of renewable energy and non-renewable energy.

While agreeing that wind power was costly, MERC told MSEDCL that it had to meet renewable energy purchase obligation (RPO) target set by central government. The company had failed to meet its target in 2012-13 even though the entire contracted capacity of 2,350MW had been commissioned.

MERC has also turned down MSEDCL's plea for a uniform wind power tariff in the state. The Commission has divided the state into two zones for calculating the rates. It is Rs 4.93 per unit in one zone and Rs 5.67 per unit in the other. The Commission said in the order that zoning was done after taking views of all concerned parties and as per norms of renewable energy tariff regulations. Therefore, any revision was not desirable, it said.

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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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