ET: Startups take to providing forecasting and energy management solutions

With energy management assuming a vital role across sectors, startups such as Ecolibrium Energy, LoudCell and REConnect are providing forecasting and energy management solutions to large and medium-scale manufacturing and retail companies in India. These startups are able to improve fuel and power efficiency through real-time data analytics, forecasting, sourcing of power and switching to green energy where it’s possible.

“Our technology has a hardware device along with software support on the cloud, which helps them (clients) get real-time data of energy consumption on their premises, and we also help them take steps to optimise energy utilisation, plug leakages as well as help them access the cheapest source of power,” said Chintan Soni, co-founder and chief executive of Ecolibrium Energy, based in Ahmedabad. The company has 500 clients including companies such as Delhi Metro, Fiat, Arora Steels and Gobain. Companies investing in the technology saw energy costs go down 10-25%, Soni claimed.

The company, started three years ago, has been incubated by IIM-Ahmedabad and has received funding of Rs 7.5 crore from International Finance Corporation and Infuse Capital. It is targeting revenue of Rs 12 crore in the next two years.

“Since using their technology, my utility costs have come down 20%, and machine running costs have gone down 12%. I have been able to reduce transmission losses by 6%,” said Prakash Rawal, internal and project manager of Harsha Engineering, an Ecolibrium client which manufactures automotive parts. “With the device, we can replace manual reading with software reports.

REConnect, which provides forecasting and power sourcing services to energy companies, helps them reduce carbon footprint, besides trading in renewable energy certificates.

“We also help renewable energy clients in wind and solar energy with close to real-time forecasts as per requirement of the Central electricity Regulatory Commission. Our revenue comes on closing certain units of energy transaction and we charge per unit of transaction. We are looking at revenue of “We also help renewable energy clients in wind and solar energy with close to real-time forecasts as per requirement of the Central electricity Regulatory Commission. Our revenue comes on closing certain units of energy transaction and we charge per unit of transaction. We are looking at revenue of Rs 75 lakh in 2014-15 and target around Rs 3.5 crore in 2015-16,” said CEO Vishal Pandya.

The Media Article in Economics Times

REC Trade Report – November 2013

Non-solar RECs:
November 2013 REC trading witnessed an increase in volumes. The spike in demand is a sign that RPO enforcement is taking its gradual effect and some states are ensuring buyers participation, thereby keeping the market upbeat. For non-solar RECs, the demand increased by 105% w.r.t last month. This indicates, there is increased momentum towards complying with RPO by end of FY 2013-14. With stricter RPO compliance regimes mandated in states like Punjab, Uttarakhand, Maharashtra and Union Territories (recently), clearing ratios can be expected to go up in forthcoming trading session. More insights can be drawn from fig.1.
Fig1: Non-Solar trade stats – November 2013 
Non-solar RECs – The supply this month had a flip side. It was reduced to 6.5 % (almost half) as compared last trading session. The inventory at the registry was at 45 Lac RECs owing to reduced issuance (less by 1 lac RECs as compared to last month).
Fig 2: Non-Solar Market Clearing Price – November 2013
Solar RECs:
33rd trading session offered an alarming signal to the solar REC market space. As compared to previous trading sessions, all the parameters namely demand, supply and cleared volumes plummeted. Demand for solar RECs fell by 20.56 % and at the same time, supply was down by 9.71 %. As per a recent report by CEA, as on 31.07.2013, solar generation capacity (above 1 MW) was only 6.79%  (1650 MW) in RE rich states of Rajasthan, Gujarat, Maharashtra, Karnataka, and Tamil Nadu out of total RE capacity of 24265 MW in these states. This shows the lacklustre performance of solar industry in the country which in-turn has resulted into poor supply REC market. Only 2936 solar RECs were issued between 31.10.2013 and 28.11.2013 (Source: REC Registry).
Fig 3: Solar market trade stats – November 2013
Needless to say, the price remained at floor yet again with meagre expectations of an upside.
Fig 4: Solar Market clearing price  – November 2013
More data can be found in the table below:
 Link to October 2013 trade report – Click Here.

Changes to Electricity Act Proposed

The Ministry of Power (MOP) recently made public a document that proposes various changes to the Electricity Act, 2003 (EA). The below article provides a quick summary of the proposed changes:

  • The current role of the Distribution Licensee has been broken up into system business (Distribution) and supply (supply licensee).
    • In the new system, the Distribution Licensee will be responsible for “operate and maintain a distribution system to enable supply of electricity”
    • The role of supplying electricity will be that of a the “supply licensee”
    • This segregation of system operation and supply is a major step, and down the road will allow multiple licensees to operate in a single area.
    • The state government will devise a scheme to effect such a segregation

  • The supply licensee will have to take “Universal Service Obligation”. The proposed draft requires the licensee to be “supplier of last resort” and also that they will not resort to load shedding or power cuts.

  • Efforts for development of forward markets have been emphasized

  • The State Commission has been made responsible to specify a road-map for time bound reduction of cross-subsidies

  • Proceedings before a Commission will be disposed of within 120 days. In the event of delay, the Commission will record the reason for such a delay

  • Penalty under section 142 has been increased from Rs 1 lakh to Rs 50 lakh. Additional penalty for each continuing day of default increased from Rs 6,000/ day to Rs 50,000/ day

  • Definition of Renewable Energy has been introduced.

“”renewable energy sources” means renewable sources such as small hydro, wind, solar including its integration with combined cycle, biomass, bio fuel co-generation, urban or municipal waste and other such sources as approved by the Central Government in consultation with MNRE from time to time prescribed.”

The proposed amendment leaves out some very important changes from the renewable energy perspective.

  • The state RPO regulations have a weak penalty clause – penalty at the forbearance price of RECs needs to be set aside by the company and used for specified purposes and on the directions of the commission. However, incorporating this in Section 142 would have made it much stronger
  • There has been ongoing confusion (and various petitions) on the issue of jointly promoting cogeneration and renewable energy. The issue stems from the reading and interpretation of the EA. However, the current draft does not attempt to clarify this issue.
  • CERC, in Statutory Advise given to the Ministry of Power (dated 28 Dec 2011) had said that “we build in the Act itself the requirement for a long-term RPO trajectory and deterrent against non-compliance of RPO”. It further mentioned that a penalty for non-compliance of RPO can be in addition to that already under section 142.
  • The Statutory Advise also incorporated points on specific market instruments like REC,  on definition of co-generation and specific provision on RPO applicability on open access consumers and captive power producers
  • However, the draft does include a clause that makes the National Electricity Policy and Tariff Policy “binding on all including Appropriate Commissions, Appropriate Government, authorities, licensees, generating companies (and) consumers.”

At present RPO trajectory is defined in the National Action Plan for Climate Change. Solar RPO trajectory was also included in the National Tariff Policy by way of an amendment. If these policies indeed become ‘binding’ then it will pave the way for easier changes and implementation of RPO and development of REC markets. Nevertheless, in our opinion, a direct reference in the EA would have been stronger. And the need for the

REC Trading Report – October 2013

Non-Solar RECs

Overall, Non-solar demand increased more than three-fold compared to last month (150,640 vs 49,831 in September 2013). As a result, clearing ratios on both exchanges improved. The uptick in demand is likely a factor of timing (most compliance takes places in the second half of the year), and ongoing enforcement efforts at ApTel and at state ERCs. Due to both these factors, demand is expected to improve in the coming months.

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

Fig 2 : Non-Solar Market Clearing Plant – October 2013

Close to 42 lakh RECs were available in the market. Of this, approx.. 39 lakh RECs were bid for trading. Clearing rations at IEX and PXIL were 4.2% and 3.64% respectively (previous month – 1.65% and 1.03%)

Clearing price remained at floor price (Rs 1,500/ REC)

Solar RECs

Solar REC demand improved marginally from 6,712 in Sept to 9,275 this month (38% increase). Solar RECs demand has been steadily rising over the last several months, and is expected to continue to do so.

Total available RECs were in excess of 67,000 RECs. This is also expected to increase in the coming months as several projects were commissioned towards the end of September.

Fig 3 : Solar REC Trade Stats – October 2013

Fig 4 : Solar Market Clearing Price – October 2013

Clearing price remained at floor price (Rs 9,300/ REC)

 

IEX

PXIL

Total

Buy – Non Solar

98,921

51,719

150,640

Sell – Non Solar

24,47,648

14,38,712

38,86,360

Cleared volume – Non solar

98,921

51,719

150,640

Clearing Ratio – Non Solar

4.2%

3.64%

 
Buy – Solar

6,548

2,709

9,257

Sell – Solar

48,515

19,439

67,954

Cleared volume –  Solar

6,548

2,709

9,257

Clearing Ratio – Solar

13.5%

14%

Market Clearing Price

Rs 9,300 – Solar

Rs 1,500 – Non Solar

Rs 9,300 – Solar

Rs 1,500 – Non Solar

Coverage of the trading session – Bloomberg

REC Trading Report – April 2013

Non Solar RECs

As April is the first month of the compliance year FY 13-14 a low demand situation was expected in this month’s trading session. Out of 18.9 lakh RECs which were put for sale only 44,459 RECs were purchased by the obligated entities.The about 93% of the total available RECs participated in the trade session.

The market clearing price was Rs.1500/REC at both IEX and PXIL which will remain the same in the coming months also as long as the oversupply situation will continue to prevail.

Solar RECs

The demand of solar RECs was higher than the supply. Buy bid was 3,522 and the sell bid was 3,077 out of which 2,217 got redeemed. The number of solar projects is continuously increasing under the REC scheme which provide a good amount solar RECs in the coming months.

The price at IEX was Rs.12, 206/REC and at PXIL it was Rs.12, 000/REC.

For information on previous months trading, please visit –March 2013 Trading Report

 

 

 

First amendment to Chhattisgarh’s REC RPO regulations

Chhattisgarh State Electricity Regulatory Commission (CSERC) recently brought an amendment to their RPO –REC regulations . The amendment mainly highlights the issue raised by obligated entities where there is an excess purchase of renewable energy/renewable energy certificates. They have requested the commission as there is an uncertainty in consumption pattern of captive users as there has been lower consumption than the anticipated consumption. The commission has agreed to the varying nature of captive consumption. Keeping this in mind, the commission has asked that in case of excess purchase/ shortfall of renewable energy or renewable energy certificates the obligated entities can meet their RPO in the succeeding year. The last proviso of Regulation 9.1 is proposed as :

“Provided any excess purchase/ shortfall of renewable energy or the REC procured by obligated entities for meeting the RPO in the obligation period shall be considered for meeting the RPO for the succeeding year.”

The commission has also proposed that the amended regulations will be called as “Chhattisgarh State Electricity Regulatory Commission (Renewable Purchase Obligation and REC framework Implementation) (First Amendment) Regulations, 2013” and shall be in force for the period of applicability of the principal regulations (CSERC RPO-REC Regulations 2011).

REConnect also participated in providing comments to the commission on the proposed amendment. In our opinion the ‘excess purchase/shortfall’ term will allow the obligated entity to carry forward its shortfall to the next year. We have requested the commission to allow carry forward the obligation to some extent only else the obligated entities will enjoy a longer compliance period which will which will affect the REC market and the revenue of renewable energy generators in the state. The carry forward should be allowed to obligated entities only if they show genuine interest in purchasing RECs and there is non availability of RECs in the market.

The REC market itself is in a bad situation from the past few months where RE generators could sell only a few fraction of their RECs. This situation was also highlighted by the Honourable CERC in its recent suo-moto petition for extending the validity of RECs. In the petition, CERC noted:

“Needless to say, the main reason for lapsing of RECs is the reluctance and / or apathy on part of distribution licensees to come forward to buy the RECs to meet their RPO”

We feel that the proposed amendment by CSERC is will affect the RPO compliance status of captive users in the state as it will allow them to easily carry forward their shortfall of RE power/ RECs.

The order can be found here.

 

Punjab releases NRSE Policy 2012

Punjab released their renewable energy policy ‘New and Renewable Sources of Energy (NRSE) Policy – 2012’ on 26th December, 2012 with an objective to develop and promote new and renewable sources of energy based technologies and energy conservation measures as well as providing financial & fiscal assistance.

Punjab Energy Development Agency (PEDA) has been appointed as the nodal agency which will act as a single window facility for implementation of NRSE Policy.

Major focus :

  • To attract private sector investment
  • To provide decentralized RE energy particularly in rural areas and to improve quality of power and reduce T&D Losses.
  • To give specific support to NSRE projects and conserve energy through energy efficiency.
  • To support R&D, demonstration and commercialization of new technologies in RE sector.

The policy says that projects under REC mechanism may be allocated through competitive bidding based on percentage share of REC price. The power generated by projects under REC mechanism will be purchased by Punjab State Power Corporation Limited (PSPCL) / Licensee at APPC ( not yet announced in Punjab ). If PSPCL/Licensee refuse on purchasing power at APPC the bidding will be envisaged sale of power in the open access. This will be very interesting if implemented. It will encourage investors to set up RE plant as the options to sell RE power will be wide.

The policy also announced incentives like:

  • Exemption of stamp duty and registration fee
  • Exemption of Change of Land Use (CLU) fee
  • External development charges (EDC)
  • Other charges for NRSE projects.

Overall the policy looks attractive. The Government of Punjab has to wait and watch how many private players they can pull from their policy.

 

REC Trading Report – February 2013

Non-solar RECs

Demand decreased to 153,000 RECs (down 21% from Jan 2013) this trading session. The compliance period for this financial year will end in March 2013, leaving only one more trading session to go. Given that, the overall demand remains very disappointing. As we have mentioned earlier, till stronger enforcement kicks-in, demand is likely to remain lackluster.

Over 17,42,000 RECs were bid for sale (no change from last month). The significant oversupply situation continues to persist, despite the increase in demand.

3.5 lakh RECs were not bid for sale in the trading session. This represented 17% of the total available RECs.

Prices remain at the floor price (Rs 1,500/ REC) for the seventh consecutive month. Clearing ratio on IEX was 3.3% and on PXIL was 48.7%.

Solar RECs

The situation is more cheerful in the solar REC market.

Demand reduced to 6,777 from the high of 42,000+ last month. Last month saw a significant rise in demand as the compliance year comes to a close. However, given the small capacity in the solar REC market at present, demand remains significantly higher than supply.

Supply of solar RECs was at 2,700 (down 23% from January; possibly due to lower issuances in February – in January 3,300 RECs were issued while only 1,900 were issued in February).

Price remained constant at IEX at Rs 12,500 while it increased to Rs 13,000 on PXIL.

 

See these results in our dynamic market tracker (Beta version)

 

REC Trading Report – December 2012

Non-solar RECs

Volume increased significantly from the lows of November. Total traded volume was 273,644 in December (up from 132,352 in November; 108% increase).

Supply continued to increase. Total sell bids exceeded 14.5 lakh RECs (up 18% from last month). The demand-supply gap remains a significant worry, despite increase in demand this month.

Prices remained at the floor level for the fifth month. However, higher demand meant that clearing ratios improved slightly. Clearing ratios were 22% in IEX and 17.5% on PXIL (last month was 8% and 25% respectively).

 

 

Solar RECs

Demand and supply reduced from last month and prices varied slightly.

Clearing price at IEX was Rs 12,620 and on PXIL was Rs 12,100. There appears to be significant latent demand for Solar RECs (as seen in June and July), but the actual demand tracks available RECs closely.

Gloomy weather over REC market

Last month’s REC trading session has brought the REC market on the verge of vanishing soon. With no sign of strict enforcement happening and a drop of 40% demand shows that the obligated entities have the least interest to participate in the REC market. Those who were purchasing RECs have taken a step behind and are hesitating to purchase RECs to meet rest of their obligation. This has shattered the confidence of all the investors on the REC scheme and has put forward a very big question on the Indian regulation and policy makers.

Few media coverages on the falling REC market:

 

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