Uttarakhand declares its APPC for FY 2013-14

Uttarakhand on 26th September 2013 unveiled the “average power purchase cost” for FY14. UERC has considered the power purchase data of FY13 to arrive at APPC for current fiscal. The following is the definition of APPC being followed in Uttarakhand -

“weighted average pooled price at which the distribution licensee has purchased the  electricity including the cost of self generation, if any, in the previous year from all the energy suppliers long-term and short-term, but excluding those based on renewable energy sources, as the case may be.”

Based on power purchase expenses of FY13 furnished by UPCL to UERC, an APPC rate of Rs.2.72 per unit has been finalized.  With the deceleration of this rate, the effective realization for RE generators of the state under the APPC + REC model accounts to be Rs. 4.22 per unit.

For copy of the order and details of power purchase expenses considered, click here.

REC Trading Report – September 2013

Renewable energy credit trading in September’13 seemed to keep the investors in the mechanism, interested. Demand of both type of RECs i.e. solar as well as non-solar,  was observed to be better than last month. Total RECs available in the inventory before the trade session was marginally over 37.5 Lac and the two-hour session managed to clear up-to 9.6 % only. As compared to August’13, there was a significant jump by 30.73% in “REC redeemed” figures of the inventory.  It is pertinent to note that Sept’13 marked the end of Q2 FY14 and markets can be said to perform poorly, if compared to clearing volumes of first month of the quarter (July’13).

The coming quarter is expected to be no less than a “decider” for the fate of REC markets, as more states order stricter compliance of RPO. The most recent and significantly encouraging push is that from Uttarakhand (Refer), where its DISCOM UPCL has been ordered to meet RPO shortfall of FY12 no later than 15th Nov’13. Demand of 50,000 RECs is thus expected from Uttarakhand alone in the next trade session.

Non-Solar RECs

Demand for non-solar RECs increased by 21%, whereas supply increased by 16%. The total RECs that participated in September’13 trade session was close to 34.5 Lacs. Clearing ratios at IEX was around 1.65 % and that in PXIL was recorded as 1.03%.

Fig 1 : Non-Solar REC Trade Stats – September 2013

Fig 2: Non-Solar REC Market Clearing Price – September 2013

As is manifested by the graph below, the prices remained at floor (Rs. 1500 per REC).

 Solar RECs

Demand of solar RECs increased by a humongous 184 % whereas supply recorded a jump by 64%. This sharp rise in demand for solar RECs is a positive sign for solar generators.  Clearing ratio at IEX was around 15 % and that recorded at PXIL was around 6.56%. As the slope of “Supply” curve (in graph below) was greater than that of “Demand” curve, there was no upside in prices and the solar REC market continued to trade at floor price.

 Fig 3 : Solar REC Trade Stats – September 2013

 

Fig 4 : Solar REC Market Clearing Price – September 2013

For trade results of August 2013, please click here.

For relevant media article click  - Economic Times.

Uttarakhand orders UPCL to meet RPO* shortfall within 2 months

Uttarakhand Electricity Regulatory Commission (UERC), in an order dated 11th September 2013 has ordered Uttarakhand Power Corporation Limited (UPCL) to meet its non-solar RPO shortfall of FY12 no later than 15th Nov 2013 through the purchase of RECs (i.e. within 2 months). This seems to be a super-strict order but in a positive direction.

UPCL in a letter dated 10.07.2012, had requested the commission to carry forward the shortfall of FY12 and had revised the estimates to 0.06% (Solar) and 4.10% (Non-Solar). In the subsequent order on 19.12.2012, the commission had mentioned that “financial condition of the company cannot be the ground for not meeting the obligations cast upon it under the Act & Regulations”. The commission had also said that any financial burden would be allowed to pass through the ARR, despite this it was observed that UPCL still did not comply with the stipulated regulations.

The total quantum as shortfall of FY12 is about 59.12 MUs, (as per data furnished by UREDA) which is going to generate a demand of 59000 non solar RECs in the next two months, which as per commissions is going to cost around Rs. 8.87 crore. Also, the shortfall in RPO for FY13 has to be mandatorily met by end of current fiscal cumulatively with RPO target of FY14. On the Solar RPO front, the commission has allowed to carry forward the solar RPO shortfall of FY12 and FY13 to FY14, acknowledging the fact UPCL has taken adequate steps to meet solar RPO.

In the same order, UERC has also observed that UPCL’s submissions regarding RPO data are not in sync with that furnished by UREDA.

For the copy of order click here.

Similar orders by other states can be read on the following page : REConnect blogposts on RPO

Load shedding; better option than buying power: DISCOMs

The country where power consumers are made to face long hours of power shortage (sometimes up-to 6 hours in some parts), seems to be having this shortage “artificially” created. Cash strapped distribution companies are resorting to power outages than buying additional power from newly commissioned power plants. It is pertinent to note that for DISCOMs “profitability” issue is deterring them to buy additional power. Cost of procuring power for these companies is costlier than their usual selling business.

According to an article in ET (click here), about 18000 MW of new power capacity is  idle as there are no buyers. This capacity if utilized completely is expected to serve around 2 crore households. Only Rajasthan, UP and Tamil Nadu are the states who have invited bids to buy long term power in over 2 years.

For these idle power projects, its getting harder to sign Fuel Supply Agreements (FSAs) as it is a mandate, under the agreement, that only those projects can draw more coal which have signed power purchase agreements(PPAs). In this condition, the projects have no other option but to aggravate inadvertent contribution to NPAs (Non performing assets) in power loans from banks.

MPERC issues fresh directives on RPO compliance

Electricity regulatory commission of Madhya Pradesh,  in a fresh directive has ordered all DISCOMs of the state to comply with RPO. Owing to unavailability of information on power purchase from renewable sources by DISCOMs, the commission clarified that it was not in a position to include its effect in recent orders. However, in this fresh directive, MPERC has come up explicitly mentioning that any variation in power purchase costs will be considered and correspondingly accounted for in the true-up exercise.

This directive reads as -

“RPO compliance:
Directive: The Commission has notified regulation for Renewable Purchase Obligation
(RPO), effect of which on power purchase has not been considered by the Commission
in the present order as the petitioner has not filed any availability of power from
renewable sources. However, the petitioner is directed to ensure RPO compliance for
FY 2013-14 as per RPO Regulations and any variation in power purchase costs will be
considered during true-up exercise.”

MP plans to meet its RPO obligation completely by the end of FY15 by purchasing 2500 MW as per an article in a Hindi Daily. For compliance of RPO by the end of FY14, MP will need 14 Lakh non-solar RECs and 2,55,000 solar RECs.

For a copy of the relevant order click here.

Center takes a stricter route on RPO compliance

As per an article in Economic Times, the center has asked the appellate tribunal to allow MNRE to be a party in a petition jointly filed by wind associations IWEA and IWTMA. This petition filed by the wind associations in January submits that all state commissions have failed to enforce RPO regulations in their respective states. The center while filing the request to APTEL, has highlighted that despite writing repeatedly to all SERCs and distribution companies, none have complied with their envisioned RPO targets. Owing to these delinquencies on the part of SERCs, the ministry is forced to take a stricter route.

The move comes in the backdrop of poorly performing REC markets which are struggling with lower demand. The REC inventory is already flooded with more than 30 lac RECs. Off late, both solar and non-solar RECs have remained at floor. Already majority SERCs have started coming up with stricter compliance regime which mostly, mandate all obligated entities of the state to comply with all backlogs by the end of FY14.  Nevertheless, the demand of RECs in subsequent trading sessions left in FY14 is expected to rise.

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