Significance of RECs for Investment in Wind Power

Report
REC Mechanism: Opportunity
for Investment in Wind Power
Dr. Govind Bhagwatikar
Siemens Limited: Wind Power
Renewable Energy 2012 Wind Conference
Pune, India
29 May 2012
Disclaimer: The views and opinions are of the
presentator only.
REC


The CERC issued REC regulations in January 2010. The key
objective of the REC mechanism is to promote the
development of renewable energy and facilitate its inter-state
flow.
This would enable the obligated entities (distribution utilities
and open access customers) across states to meet their
RPO targets as recommended by the NAPCC.
REC Mechanism
Renewable Energy
Generation
Sale
at
Preferential / Feed-in
Tariff
Conventional
Electricity
Component (APPC)
REC
Component
Obligated
Entities: DISCOMs,
Open Access & Captive
Consumers
Local / Host
Distribution
Company
Obligated
Entities: DISCOMs,
Open Access & Captive
Consumers
The Obligated entities will have to replace
approximately 5-7% of their total quantity of power
consumed with power generated from renewable
energy, or buy it on paper.
*APPC – Av. Power Pooled/Procurement Cost
RPO in Various States
REC Accreditation
The Process of getting the RECs:

1.
2.
3.
4.
Accreditation
Registration
Issuance
Trading & redemption
State Nodal Agency (SNA)
Central Agency (NLDC)
Central Agency (NLDC)
Power Exchange
Features of REC






RE GENERATORs: Wind, Solar, Small Hydro, Bio-mass, Bio-fuel, Cogeneration, Municipal Waste, Any GENERATOR approved by MNRE
REC denomination: 1 MWh
Categories: Solar & Non-solar
Validity: 365 days after issuance
Trading platform: Power Exchanges only
Trading Calendar: Last Wednesday of the month

Valid up to 2016-17
Eligibility Criteria for getting REC
RE Generator not having any PPA at preferential tariff.
 RE Generator selling electricity to local/host distribution licensee
at a price not exceeding the pooled cost of power purchase of
such distribution licensee.
OR
 RE Generator selling electricity to any other licensee or to an
open access consumer at mutually agreed price or through
power exchange at market determined price.
 RE Captive power producer (CPP) is eligible for the entire energy
generated from such plant including self-consumption subject to
condition that CPP has not availed any benefit in the form of
concessional / promotional transmission or wheeling charges,
banking facility benefit or waiver of electricity duty etc.

Existing projects for which long-term PPAs are already in place
will be allowed to participate in the REC scheme after the expiry
of their existing PPAs.

REC Traded Price in FY 2011-12
•REC Traded Price - INR 1.50 to
Rs. 3.06 per unit
•Av. REC price was Rs. 2.30
•During the year end – JanMarch, REC traded at higher
price and volumes were
increased.
•This was the first year of REC
trading in power exchanges.
Case Study of 6 States
State
Wind
Tariff
APCC
2011-12
3 Cases of REC Price
APCC + REC
CERC
order
at 1.5
at 2.25
at 3
at 1.5
at 2.25
at 3
Gujarat
3.56
2.98
1.50
2.25
3.00
4.48
5.23
5.98
Maharashtra
5.37,
4.67,
3.97,
3.58
2.62
1.50
2.25
3.00
4.12
4.87
5.62
Andhra
Pradesh
3.50
2.50
1.50
2.25
3.00
4.00
4.75
5.50
Tamil Nadu
3.39
2.69
1.50
2.25
3.00
4.19
4.94
5.69
Karanataka
3.70
2.66
1.50
2.25
3.00
4.16
4.91
5.66
Rajastan
4.46,
4.69
Note: GBI not considered
2.60
1.50
2.25
3.00
4.10
REC Floor Price – 1.50
REC Forbearance Price – 3.30
4.85
5.60
Rs/kWh
Trend of APPC
State
Wind
Tariff
Ref:-------
APPC
2009-10
APCC
2010-11
APCC
2011-12
CERC
CERC
CERC
Andhra
Pradesh
3.50
1.78
2.52
2.50
(2.00)
Gujarat
3.56
2.21
2.53
2.98
Karnataka
3.70
1.85
2.61
2.66
5.37, 4.7, 3.97,
3.58
2.43
2.51
2.62
Rajasthan
4.46, 4.69
2.48
2.60
2.60
Tamil Nadu
3.39
2.62
2.37
2.69
Maharashtra
APCC
2012-13
2.73
Dependability on Thermal Power
India
65.34%
In June
2011
Total Thermal Power
116 GW
Coal Based
97
Gas Based
18
Oil Based
1
Coal Demand rising vis-à-vis its Price YoY. So the conventional electricity
would be costly, as 60% power in India is generated by Coal-fired stations.
Until 2005, the coal prices were upto Rs. 600 only.
Coal India Limited fetched the price of
Rs. 1800-2200 per ton in FY 2010-11 through auctions
against the notified price of Rs. 800-1200
Cost of Generation
APPC

APPC will vary with the prices of






Coal : Domestic / Imported
Gas
Diesel / Transportation
Water
Metal
Maintenance charges
Conclusion


Due to dependability on coal, APPC will
increase.
This is in turn an opportunity for RE producers.

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