OPEN-ACCESS

Blog by Team REConnect

CERC: 3rd Amendment (Draft) to REC Mechanism

We are pleased to convey that hon’ble CERC has issued 3rd amendment on REC Mechanism. Key highlights of the same are summarized below:

  1. Eligibility Criteria

A)      DISCOMs having met their previous year RPO can also claim RECs for surplus green power purchased.

  • IMPACT: We can expect additional non-solar RECs from TN, HP and possibly from Karnataka. Gujarat is expected to benefit by the way of getting Solar RECs as installed capacity in Solar exceeds solar RPO targets.
  • Open Access route for RE project may become tougher as DISCOMs now have an additional incentive to procure green power and claim certificates.

B)      OA and CGP route to get reduced number of RECs:

  • It’s proposed in the amendment that OA and CGP based RE generator to be given 0.5 REC for every 1 MWh of generation.
  • IMPACT: The analysis in the draft paper suggests that as much as 65% of installed RE capacity under REC represents OA/CGP route. The % share in net REC number would be even higher as biomass and bagasse based REC project would operate at higher PLF. Hence, this would reduce the REC inventory at least by 40% w.r.t current issuance mark.
  • A much awaited step to bring back buyers confidence in procuring Solar RECs. 
  • The new floor price that would be applicable to ALL SOLAR projects has been reduced to Rs.3500/REC and forbearance price to Rs.5800/REC.
  • The order suggests that solar projects commissioned during year 2013 would get 1.47 Solar RECs, 2014 would get 1.19 Solar RECs and 2015 onwards to get 1 REC for every 1 MWh of Generation.
  • Likewise, OA and CGP based REC projects to get 0.74, 0.6 and 0.5 Solar RECs (2013, 2014 and 2015 respectively) for every 1 Mwh.
  1. Vintage Multiplier for Solar Projects:

According to our understanding, there are three main issues in the current REC market.

  1. Over supply of RECs
  2. Skewed pricing of RECs especially in case of Solar
  3. Laid-back enforcement.

The summary of REC Floor and Forbearance price is shown in the graph below:

The current regulation seems to tackle first two issues as the third part is largely in the hands of state regulators. Overall it’s a welcome step and would reinstate faith of stakeholders in REC market. 

The comments are invited by hon’ble CERC not later than 30.10.2014 and hearing is scheduled on 04.11.2014. We request all the stakeholders to submit their comments and express their views to hon’ble Commission. 

The relevant document can be accessed here.

Press Coverage Link.

Contributed By: Vibhav Nuwal

REC Trading Report August-2014

REC trading session of August-14 was conducted on 27th August 2014.  Below is a summary of the result:-

Demand continues to be lack-lusture. Overall demand was 50681 for non-solar RECs, and 1163 solar RECs. Overall market clearing ratio for Non-solar RECs was 0.58%, and for Solar RECs was 0.35%. Summary is given below in the table below.

 

  • Non Solar REC:

Though the Total RECs redeemed this month increased over previous month, it was due to poor demand in July. The demand picked up by 60% from the month of July. The supply rose marginally by 5% w.r.t July. Non Solar price remained at 1500 INR (Floor Price).

Clearing ratios at IEX were 0.40% and PXIL were 0.73%.

 

 

  • Solar REC:

Demand fell significantly over previous month. However, demand was exceptional last month due to purchase by a Discom.. The Total supply grew by 15% with respect to July. Only 1163 RECs were traded this month which was next to lowest as of in this year.

Clearing ratios at IEX were 0.24% and PXIL were 0.43%.

 

Contributed By: Cigil & Vibhav Nuwal

 

REConnect Newsletter Volume 43 – OPEN ACCESS

Dear Reader,

We are pleased to present Open Access Vol 43 – our monthly newsletter covering RECs and regulatory and market developments in the renewable energy space.

The main article covers:

The government announced the re-introduction of Accelerated Deprecaition for wind projects. This was a major announcement for the Renewable energy industry. Our main article provides a detailed analysis of the impact of this change, and the relative merits and de-merits of investing in wind or solar projects.

This issue also covers:

- Details of the next batch of bidding for solar projects announced in JNNSM

- Details of the FOR meeting that took up the need for strong RPO enforcement

- Various other regulatory developments in Maharashtra, Rajasthan, Chattisgarh, Karnataka, and other states

Past newsletters can be accessed here - http://www.reconnectenergy.com/newsletter/past-newsletters/

For latest news and updates, please visit our blog at – http://reconnectenergy.com/blog/

 As always, we will love to hear your feedback on the newsletter.

- Team REConnect

Forum of Regulators discusses Issues of RPO

Forum of Regulators (FOR) held its 41st meeting on 27th June 2014, in Delhi. The Ministry of New and Renewable Energy (MNRE), through a presentation, raised several issues concerning Renewable Purchase Obligation (RPO).

The Key issues highlighted in the presentations are as below:

  • MNRE suggested that the validity REC’s should be extended by 6 months, arguing that a total of 50059 REC’s will expire in next six months.
  • It was suggested that MNRE could consider purchasing the unsold REC’s by using National Clean Energy Fund.
  • The Floor price of Solar REC’s can be reduced due to drastic change (reduction) in Solar PV tariffs over last three years.
  • Giving “MUST RUN” status to RE generation, so that total RE generation could be evacuated, and  have a provision of “Deemed Generation” in case SLDC asked RE generators to back down.
  • Due to poor RPO compliance in all states, the members agreed upon the need of strong RPO enforcement.
  • RPO compliance cost should be allowed in ARR (Average Revenue requirement).
  • The issue of allowing DISCOM’s to purchase REC’s for procuring Renewable Energy beyond their RPO targets was also discussed.
  • The forum suggested that a concept of Renewable Generation Obligation (RGO) for conventional Thermal power plants need to be introduced.
  • Suggestions were given on considering power generated from Large Hydro Projects as Renewable Energy.
  • The Forum also suggested that the concept of Hydro Power Obligation should be introduced.

 From the issues discussed in the meeting it can be deduced that the regulators may come up with strong steps towards RPO compliance. Also, the regulators are set to promote RE generation by making provision for providing proper transmission network for RE generation.

 More information can be accessed here.

 Contributed by Dheeraj Babariya.

 

REConnect Newsletter Volume 42 – OPEN ACCESS

Dear Reader,

We are pleased to present Open Access Vol 42 – our monthly newsletter covering RECs and regulatory and market developments in the renewable energy space.

 Key points covered in this newsletter are:

 1) Analysis of Karnataka’s solar policy

 2) Regulatory updates including important changes in RPO regualtions in Rajasthan, Order of JERC for enforecemnt of RPO including    imposition of penalty, and other regulatory updates

 3) Analysis of the most recent trading session of RECs and capacities in the REC mechanism

 Past newsletters can be accessd here - http://www.reconnectenergy.com/newsletter/past-newsletters/

For latest news and updates, please visit our blog at – http://reconnectenergy.com/blog/

 As always, we will love to hear your feedback on the newsletter.

- Team REConnect

REC Trading Report – June 2014

REC trade session for June 2014 was conducted on 25th June 2014. The following is a summary of results -

The total transactional value of non-solar RECs was INR 208.8 million and for solar RECs it was INR 15.4 million. The closing balance of REC inventory for non solar RECs breached the 7 million mark this  month whereas solar RECs crossed 0.23 million mark.

 

 

Non Solar RECs -

In case of non- solar RECs demand almost quadrupled (up by 376%) as compared to last trade session (refer  - May 2014 trade report) and Supply grew by 5.23 %. Non Solar price continued to remain at floor (INR 1,500 per REC). More insights provided in graphical charts below :

Solar RECs -

Total solar RECs issued this month was 27,787 and redeemed were 1654 only. In contrast to non-solar RECs, the demand for solar RECs took a beating as it went down by 22%. Supply rose by 11% w.r.t May 2014.  More details can be found in the graphs below -

Solar RECs finished trading at floor for consecutive 12 months.

Relevant media article can be read here.

REC Trading Report – May 2014

Demand and clearing ratios touched one of the lowest points in three years.

Non-solar RECs:

Demand in May was 29,255, compared to 79,354 in April (down 63% over April) and down 45% from May of last year. The last time demand was this low was in August 2011. Clearing ratios at both exchanges were approximately 0.45%. Closing inventory of RECs is in excess of 69.5 lakh.

Solar RECs: Demand improved marginally from 989 RECs last month to 2,120 RECs. As a result, clearing ratios improved as well – 0.26% in IEX and 4.8% on PXIL, albeit on very low demand compared to existing inventory. Inventory currently stands at over 2.1 lakh RECs.

The low demand is continuing despite penalty orders in Uttarakhand and Union Territories. It will be interesting to watch the approach that the regulators take in the next few months if the non-compliance continues despite orders from them.

To get details about previous months trading session – Click Here.

Our online market tracker tool can be accessed here.

REConnect Newsletter Volume 41 – OPEN ACCESS

Dear Reader,

We are pleased to present Open Access Vol. 41 – our monthly newsletter covering RECs and regulatory – market developments in the renewable energy space.

Key points covered in this newsletter are:

1) Our analysis on the likelihood of RPO enforcement in FY 2014-15.

2) Regulatory updates including KERC’s final APPC for FY14 & FY15 (interim) & JSERC order on declaration of Bokaro Steel Plant’s CPP as Cogeneration unit.

3) Analysis of the most recent trading session of RECs and capacities in the REC mechanism.

The newsletter is attached with this email and also can be found on our webpage - http://www.reconnectenergy.com/newsletter/past-newsletters/

We hope that you find the newsletter a useful read. Do provide us feedback.

Regards,

- Team REConnect

REC Trade Report – April 2014

We are pleased to bring the REC trade results and our analysis on REC trade session conducted on 30th April 2014.

Following is a brief of the analysis:

April 2014 was the first month of compliance year FY 2014-15. As expected, the volumes in non-solar and solar REC markets nosedived as compared to last months trading session (Refer - Blog – post on  March 2014 REC Trade).  The REC inventory’s closing balance stood at a mammoth 6.6 million RECs. The total RECs redeemed in April 14 were 80,343 RECs only. The RECs issued this month was again a 7digit number – about 1.1 million RECs. Cumulatively, March’14  and April’14 alone added over 3 million RECs, which is 23% of the total RECs issued till date.  This escalation in supply side and almost no demand side participation sums the state of current Indian REC market place.

Non-Solar RECs

Demand dropped by 88% and supply was up by 3.2% w.r.t March’ 14. Price of non-solar RECs remained at floor price – INR 1,500 per REC. Total non-solar redeemed were 79,354 (as per REC registry).

Solar RECs –

Price of solar REC continued to trade at floor (INR 9,300 per REC) for a consecutive 11th month. Demand fell to less than 1,000 and supply rose by 22%. Clearing ratios at both exchanges were close to half percent (0.5%) only. As per registry, solar RECs redeemed in April14 was 989.

For more details please refer table below – Our online market tracker tool can be accessed here.

 

UERC maintains its tough stand for non-compliance of RPO

Uttarakhand – the only state in the nation to have imposed penalty for non-compliance of RPO, has once again stood by its tough stand in the order dated – 22nd Jan 2014. In the order (refer) -

UERC has considered UPCL’s non-compliance as willful contravention of the direction of the Commission and has imposed penalty of Rs.20,000/- on the Managing Director of UPCL. The Commission has also directed UPCL to comply its pending RPO by March 2014, failure to which will attract additional penalty of Rs.2000/Day thereafter.

In continuation to this, UPCL’s MD had filed a review application for reconsideration of commissions directives. After a motion-hearing, UERC has held that review application does not qualify as UPCL failed to substantiate any ground for review or highlight any errors therein.

However, UERC taking note of this, has given UPCL another opportunity for paying the amount of Rs. 20,000 within one week i.e. by 30th April 2014.

UPCL in the hearing has clarified that it plans to meet the RPO of FY12 and FY13 in four monthly installments. The penalty of Rs 2000 per day applicable for non-payment will continue to be in force post 30th April 2014.

The order is available here.