Blog by 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 -

For latest news and updates, please visit our blog at –

 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.

Delhi discoms request to waive RPO of FY13

Delhi discoms have requested to DERC, to waive RPO targets of FY13. This request was put forward by discoms in their respective ARR petitions for FY15. The discoms contend that RPO regulations were introduced in Delhi only in October 2012 and as such there was little time in that year to meet the targets. The request can be read as (Petitioner – Delhi discom)-

“In this regard the Petitioner would like to submit that since the Regulations were issued in the mid of FY 2012-13 and the Renewable Energy Generation in Delhi was not fully developed, it was not possible to meet the RPO Targets during FY 2012-13. The Petitioner appreciates the fact that the energy generation through Renewable Energy Sources is required to be promoted by achieving the RPO Targets but at the same time the Renewable Energy Sector is also required to be developed in Delhi for fulfilment of RPO. The Petitioner has invited competitive bids for procurement of Renewable Power for both Solar and Non-Solar plants. The details about the bidding process and shortlisted bidders have already been submitted to the Hon’ble Commission. The Hon’ble Commission would appreciate the fact that RE Generation in Delhi is at nascent stage and will gradually develop in the coming years. The Petitioner in the meeting with the Hon’ble Commission held on October 9, 2012 also highlighted the difficulty in mobilising resources to meet the RPO announced by the Hon’ble Commission.”

Delhi discoms BYPL and BRPL mde reference to MERC’s order dated 7th August 2009, where the RPO targets from FY08 to FY10 were exempted due to shortfall in projected RE capacity addition.

While it is left on DERC to decide on this matter, any decision in favour of the request would further dent the ongoing positive enforcement efforts in other states.

The ARR petitions are available on DERC’s website.

Our recent blog-post highlighting projections by discoms for meeting RPO of Fy15 can be read here.

Relevant media article – Times of India.

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.

UERC order on RPO compliance for co-gen based CPPs

Uttarakhand Electricity Regulatory Commission (UERC) on April 10th 2014, released a joint order in case of 9 captive power producers, having co-generation units. The petitioners (CPPs with co-gen plants) in reply to show-case notice issued by commission (UERC) on 12th March 2013, had prayed to relax the RPO regulations since they had co-gen units and in support, referred to ApTel’s judgement (2010) in case of Century Rayon vs. MERC, where it was pronounced that co-generation unit cannot be fastened with RPOs.

UERC had recently (28th Dec 2013) made amendment to prevalent RPO regulations of 2010. In this amendment, the definition of obligated entity was modified from -

““Obligated Entity” means the distribution licensee, captive user and open access consumer in the State, which is mandated to fulfill renewable purchase obligation under these regulations;” (2010)


““Obligated Entity” means the distribution licensee, captive user (excluding co-generation based  captive power plants) and open access consumer in the State, mandated to fulfill renewable purchase obligation under these regulations.” (2013)

UERC is of the view, that all CPPs having co-gen units will necessarily have tocomply with RPO targets of FY12, FY13 and FY14 (upto 27th Dec 2013) i.e. till the time the amendment was introduced. However, from 28th Dec 2013 onwards, there will be no obligation on CPPs with cogen units. All such CPP with co-gens are asked to meet with RPOs by 31st May 2014 and submit compliance report by 10th June 2014.

UERC also clarified that all other captive users will continue to be regarded as “obligated entity” and such CPPs have to fulfill shortfalls by 30th April 2014 and submit compliance report by 10th May 2014.

The petitioners prayer to quash such show-cause notice letters was also dismissed.

The order can be read in detail by clicking here.

Our previous blog-post on UERC’s landmark order on penalization on UPCL’s MD can be accessed here.


Karnataka APPC for FY 2014-15

Karnataka electricity regulatory commission (KERC) has finalized the average pooled purchase cost (APPC) for FY 2013-14. The finalized APPC of FY14 is Rs. 3.14 per unit, on the basis of audited accounts data furnished by ESCOMs, which is up by 7 paise. Our previous blog-post on APPC of FY14 can be read here.

In the interim, since ESCOMs will take some time in finalizing power purchase quantum and cost of FY15, the commission has set up Rs. 3.14 per unit as an interim APPC rate to be effective from 1st April 2014 to 30th June 2014. It is expected that by end of June, a new and final APPC rate for FY15 will be declared.

Karnataka, therefore becomes the first state in current FY to declare APPC for FY15. The APPC rates in Karnataka have had an increasing trend, which is good specifically for RE generators wanting to explore REC markets in the state.

A gazetted copy can be accessed here.

KERC had also invited comments and suggestions for finalization of APR Fy13 and ARR of FY15 filed by discoms and KPTCL. The public hearing was scheduled to be conducted during end of April 2014 as per notice.


MNRE favors REC markets for Solar Power

India’s ministry of new and renewable energy (MNRE) is favoring REC markets for development of solar power. Eminent members of the ministry are of the view that solar REC markets will revive soon as they expect buyers jumping in. This optimism is when physical solar power comes at a lower cost as compared to buying solar RECs (floor price – Rs. 9.3 per REC). That means, obligated entities have less motivation paying for higher solar REC cost than physically procuring it.

Also solar floor and ceiling prices have been fixed upto FY2017. The steep declining trend in cost of solar power makes it more difficult for solar REC markets and demands quick revision of these prices.

Recently Shri Upendra Tripathy who has assumed charge as Secretary of MNRE, spoke at a gathering that process is ongoing for a policy review with the FOR (forum of regulators) and CERC (Central electricity regulatory commission). Mr. Tarun Kapoor, Joint secretary MNRE has alaso asked all states to strictly meet the stipulated targets. It is being anticipated that a new policy for solar REC markets will be put in place as soon as a new government is formed at the center.

FOR has also called for engagement of consultants to review the REC mechanism completely.

Media article can be read here.