REC Trade Result April 2016

April, being the first month of the Financial Year to, saw good demand in both segments, as compared to the April-2015. The total transaction value stood at 113 Crores as compared to 213 Crores last month.

 

Analysis of Trading:

 

Non Solar – Clearing ratio in exchange stood at 2.66% and 1.38% in IEX and PXIL respectively for Non Solar REC’s. A total of 290,457 RECs were traded as compared to 11, 14,319 RECs traded in March.

 

Solar – Clearing ratio stood good at 0.98% and 0.26% in IEX and PXIL respectively, with total clearing volume of 25,653, as compared to 152,006 last month.

 

The detailed result is given below:

The graph below is a Y-o-Y graph which depicts the comparison of REC Traded from April 2014 to April 2015 and April 2015 to April 2016.

 

This month also saw significant fall in REC issuance to almost one-third to what it was in March. This can be primarily attributed to the recent amendment to principal REC Regulation, which has caused reduction in supply of RECs to the market from Captive/Self-consuming RE entities. For more details refer our blog.

We are hopeful that the FY 2016-17 will bring good fortune to the REC market, considering the proposed regulatory changes and more stricter enforcement by states, which will bring back stakeholders confidence.

RERC Approves APPC for FY 14-15 and 15-16

Rajasthan Electricity Regulatory Commission (RERC) in its orders dated 1st April, 2016 has approved the Average Power Purchase Cost (APPC) for its DISCOM’s. Honorable commission approved APPC of FY 14-15 & 15-16 for Jodhpur, Jaipur & Ajmer Discoms.

The Order came in response of petitions filed by the Discoms for the approval of the APPC. The details of the approved APPC are highlighted below:

The graph below gives a comparison of the APPC approved by the commission over the past five years:

The APPC rates have decreased for the FY 15-16 on an average by 3.94% for all the three Discoms. The average pooled cost of power purchase for FY 2015-16, shall be the provisional pooled cost of power purchase for FY 2016-17 till the same is determined by the Commission.

The order for Ajmer Discom APPC can be accessed here.

The order for Jaipur Discom APPC can be accessed here.

The order for Jodhpur Discom APPC can be accessed here.

 

 

KERC Tariff Revision 2017

Karnataka Electricity Regulatory Commission in its order dated 30th March 2016, approved the retail supply tariff for 2016-17. The tariff hike proposed by KERC for domestic category and industrial consumers and a comparison of the existing and new tariff approved by the commission can be seen in the table below:

The table below is the cross subsidy charges worked out as per the different the consumer category.

The order can be accessed here.

MPERC Retail Tariff for FY 16-17

Madhya Pradesh Electricity Regulatory Commission (MPERC) through an order dated 5th April 2016 has finalized the retail tariff for the state for FY 16-17.

The tariff defined by the commission is given below:

The tariff given by the commission for industrial consumer did not see any change between the tariff of FY 13-14 & FY 14-15. But has increased from FY 15-16 to FY 16-17. The graphs below shows the change in the tariff category wise and the % change in tariff year on year respectively.

 

 

 

Wheeling Charges: The wheeling charges have increased for voltage level up to 33kV from Rs. 0.23 per unit to 0.27.

Cross Subsidy Surcharge: The cross subsidy surcharge for FY 16-17 has reduced

Transmission losses: The EHT transmission loss is set at 5.32% and for 33 kV (only 33 kV systems) @ 5.83%.

Industrial Tariff: The industrial tariff has increased from 5.25 Rs/kWh to 5.70 Rs/kWh (132kV)

Transmission Charges: The transmission charges for FY 16-17 will be Rs. 0.60 per unit.

The commission has also mentioned that the wheeling and cross subsidy surcharge will not be applicable for consumer availing open access from all RE sources.

The commission order can be accessed here.

 

 

MERC Distribution Open Access 2016

MERC (Maharashtra Electricity Regulatory Commission) has come up with the new distribution open access regulation 2016 on 30th March 2016 in the state of Maharashtra.

The key changes in the regulation are:

  1. Allowing sourcing of power from multiple sources.
  2. Allowing sourcing of power from power exchange.
  3. Day ahead open access- The application for grant of day ahead shall be made only 1 day prior to the date of scheduling (Before it was 2 day)
  4. Consumer shall install Special Energy Meter (SEM).
  5. The draft OA regulation had proposed that a consumer having Contract Demand of 500 kW and above will be eligible for OA. However, in the final regulation the existing limit of 1MW has been retained. Had MERC lowered the limit, it would have potentially resulted in a much larger OA market in Maharashtra.
  6. Banking of Renewable Energy is introduced-

6.1.             Credit of banked energy is not permitted during the months of   April, May, October & November.

6.2.           Credit of energy banked during other months is as per the energy injected in the respective TOD (Time of Day) slots.

6.3.           Energy Banked during peak TOD slots can be credited during off-peak TOD   slots whereas energy banked during off- peak TOD slots cannot be credited during peak TOD slots.

 

Illustration: Energy banked during:

 

  • Night off-peak TOD slot (2200 hrs. – 0600 hrs.) may only be drawn in the same TOD slot.
  • Off-peak TOD slot (0600 hrs. – 0900 hrs. & 1200 hrs. – 1800 hrs.) may be drawn in the same TOD slot and also during Night off-peak TOD slot.

(The energy banked during night off peak and off-peak shall not be drawn during morning peak and evening peak)

  • Morning peak TOD slot (0900hrs – 1200hrs) may be drawn in the same TOD slot and also during off-peak and Night off-peak TOD slots.
  • Evening peak TOD slot (1800hrs- 2200hrs) may be drawn in the same TOD slot and also during Off-peak and Night off-peak TOD slots.

 

Impact of the Regulation

MERC has proposed a progressive open access regulation. Consumers in Maharashtra has faced various problems in the past to avail the power through open access such as power from one source only, revision of contract demand and banking of renewable power.

Multiple sources will increase the competitiveness in the market and it will promote the open access. It will also help the renewable sector to boom in Maharashtra as the rate will become more competitive.

Banking of non-firm power will be a boon for the renewable sector mainly solar. As per the credit table depicted above, the generated units in the off-peak and morning peak time can be adjusted in the peak hours.

The regulation can be accessed here.

Maharashtra Published RPO Regulations for FY 2016-17 to FY 2019-20

Maharashtra published RPO regulations covering the period FY 2016-17 to FY 2019-20. The highlights of the regulation are:

 

  • RPO % in FY 2016-17 is 11% in total (10% non-solar and 1% solar). This will increase to 15% by FY 2019-20 (11.5% non-solar and 3.5% solar)

 

  • The regulations are broadly in line with the standard regulations of RPO across various states, except the following clauses:

 

  • RPO is no longer exempt on co-generation power. The Statement of Reasons (SOR) accompanying the regulations refers to the National Tariff Policy as a reason for removing exemption from RPO on co-gen power.

 

  • RPO is applicable only on consumption of conventional power. This is a significant deviation as the Electricity Act/ CERC/ other states require calculation of RPO on “total consumption”. By leaving out RE power from RPO calculation, Maharashtra risks providing double benefit to RE generators – it is possible that a consumer that consumes power from RE sources does not attract RPO provisions and at the same time claims offset of such RE power towards meeting RPO on conventional power.

 

  • RPO is applicable on CPPs with installed capacity of 5MW or more and open access consumers with a contract demand of 5 MVA or more. This will leave out significant open access and captive capacity form the ambit of RPO applicability.

The regulation can be accessed here.

Analysis of CERC’s 4th Amendment to REC Regulations

CERC published the 4th Amendment to REC regulations in end-March. These regulations will have a significant impact on the RECs markets going forward, as a large portion of the existing capacity under the mechanism will become in-eligible for RECs.

In summary, the following projects will no longer be eligible for RECs:

  • Open access projects that avail concessional wheeling or banking benefit
  • Captive or self-consumption projects commissioned before 29 Sept 2010 or after 31 March 2016 (ie, before the RECs regulations first amendment when captive projects were made eligible and after this amendment)
  • Captive or self-consumption projects commissioned between 29 Sept 2010 or after 31 March 2016 but avail concessional wheeling or banking benefit

Our analysis suggests that several projects will become ineligible for RECs. The largest impact will on bio-fuel co-gen projects and biomass projects, as a large portion of these projects are captive or self-consumption projects commissioned prior to 29 Sept 2010. Older wind projects under group-captive mechanism (predominantly in TN and Maharashtra), and captive small hydro projects will also be impacted.

Solar projects are likely to have minimal impact as most projects are commissioned after 2010.

Source: REC Registry website; REConnect Analysis

 

This will lead to significant reduction in RECs issued. Our estimate suggests that the reduction could be as high as 40-50% of existing RECs issuance (in FY 15-16, total non-solar RECs issued were 73.6 lakh).

As a result, it is likely that demand for RECs will outstrip supply on an annualized basis during FY 16-17. However, large existing inventory of RECs will ensure that for FY 16-17 trading prices remain at floor-price and clearance remains low.

Note: The above issuance and demand are cumulative for the year (it does not include existing inventory of RECs)

Source: REC Registry website; REConnect Analysis

 

The regulation can be accessed here.

 

 

 

Jharkhand notifies draft open access regulations

Jharkhand State Electricity Regulatory Commission (JSERC) notified the draft open access regulations on 1st March, 2016. The prominent features of the regulation are as follows:

  • Validity: Till 31st March, 2020
  • Eligibility to avail Open Access: 1 MW and above (not applicable in case of captive generating plants that is availing Open Access for its own use).
  • Provisions for existing consumers and generating plants availing Open Access: The entities other than the DISCOM that have already been availing open access under some agreement or government policy shall submit details such as capacity utilized, point of injection, point of drawal, duration of availing open access, peak load, average load and other such information to the STU as well as SLDC within a period of 30 days of notification of these regulations.
  • Application procedure for Open Access:

  • Day-ahead Open Access: Application to be received 3 days prior to date of scheduling of power but not later than 1300 hours of the day preceding the scheduling of power.
  • Open Access charges: The entities availing open access have to pay the transmission and wheeling charges, cross-subsidy surcharge, additional surcharge, standby charge, reactive charges and imbalance charges as determined by Jharkhand State Electricity Regulatory Commission (JSERC) from time to time.
  • Formation of Coordination Committee: Within a month of the notification of the regulations and comprising a nominee each from the DISCOM, State Transmission Utility (STU), and SLDC. The State Transmission Utility (STU). The coordination committee shall facilitate timely approvals of connectivity and open access applications.
  • Connectivity level: For consumers or generating stations or captive generators, the connectivity level shall be as follows:

  • Procedure for connectivity to intra-state transmission system:

Tamil Nadu Comprehensive Tariff Order on Wind Energy

The Tamil Nadu Electricity Regulatory Commission issued its fourth Comprehensive Tariff Order on Wind Energy on 30th March, 2016. The Commission’s last comprehensive tariff order was issued in 2012 for a control period for two years which was later extended up to the issuance of next comprehensive tariff order. This order would be applicable on purchase of wind energy by the Distribution Licensee from wind energy generators (WEGs).

Some of the key points of the order are as follows:

 

  • Wind Tariff: This year’s levelized wind tariff has been finalized out to be Rs 4.16/ unit which has increased from the previous tariff of Rs 3.59/ unit.
  • CDM Benefits: The order offers CDM benefits, which will be shared between the distribution licensee and the consumer on gross basis starting from 100% to developers in the first year and thereafter reducing by 10% every year till the sharing becomes equal.
  • Wheeling & Transmission Charges: The WEGs shall have to bear 40% in each of the transmission, wheeling and scheduling and system operation charges as applicable to the conventional power to the wind power.
  • CSS: The WEG will be levied 50% of cross subsidy charges.
  • Banking Charges: This order provides the banking of Energy for a period of 12 month commencing from April 1st, 2016 to 31st March.
    • The Unutilized energy as on 31st March every year would be encashed at the rate of 75% of the respective applicable wind energy tariff rate fixed by the Commission.
    • The WEGs have requested to consider purchase of unutilized energy for the generators under REC scheme at APPC rates and to permit banking of energy and encash the unutilized energy at 75% of the applicable rates notified by the Commission.
  • The order can be accessed here.
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