OBJECTIVE OF PRESENTATION

To Make You Understand .. What is REC Types of REC s and their prices Procedure to Obtain REC REC s policy of Australia & U.K Calculation of Floor & Forbearance Price PAT Scheme

Potential of Renewable Energy in India (MW)

What is a REC
REC is a market based instrument Provides evidence that a generator has produced a certain quantum of power from a RE resource which has been consumed Reflects the environmental attributes of the source of generation Can therefore be traded in the market to allow entities to meet their Renewable Purchase Obligations Why do we require REC ? Distribution of RE resources is not uniform across the country Location of plants may not be possible in various States States with higher Re potential may have difficulty in absorbing larges amounts from Resources issues of costlier electricity Increased flexibility for participants to carryout RE transactions Reduce transaction costs for RE transactions Create competition among different RE technologies

Initiatives for Development of the REC Mechanism

On June 30, 2008, the Hon ble Prime Minister of India announced the National Action Plan for Climate Change (NAPCC) which envisaged several measures to address climate change issues. The NAPCC has set the Dynamic Minimum Renewable Purchase Standard (DMRPS) at 5% for FY 2009-10. NAPCC envisages that such targets will increase by 1% over the next 10 years. To achieve this target strong policies were required to penetrate renewable energy in India One such policy instrument prescribed in the NAPCC is the Renewable Energy Certificate (REC) Mechanism In consideration of this recommendation Ministry of New and Renewable Energy (MNRE) had initiated a study to develop a Conceptual Framework for the Proposed REC Mechanism in India.

KEY DRIVERS

PRICING OF RENEWABLE ENERGY

RE Generation*

Sale at Preferential Tariff

Electricity Component

REC Component

Obligated Entities

Distribution Company / Third Party Sale/ Power Exchange

Obligated Entities / Voluntary Buyers

NLDC

REC Regulations Salient Features

Eligible Source All sources recognized by MNRE under Renewable Energy Category Two Categories of Certificates one for Solar and other for Non-Solar Eligible Entities defined in Regulations: Grid Connected RE Power Projects having PPA at preferential tariff and received accreditation certificate from State Agency Shall sell electricity at Pooled cost of Power Purchase to distribution utility or at mutually agreed price to any other licensee Obligated Entities As defined by SERC, distribution utility, OA User ,Captive Consumer States to amend existing RPO Regulations REC Issuing Authority National Load Despatch centre to issue REC to Generator based on the Energy Injection Report prepared by SLDC Sale/ Purchase of REC Transaction of REC shall take place at Power Exchanges

REC Regulations Salient Features

Denomination One (1) REC equivalent to 1MWh of renewable energy is generated and injected into the Grid Form of REC REC issued electronically to the Generator Pricing of REC Is covered only on Power Exchange through auction route Floor and Forbearance Price as determined by the CERC Redemption of REC Obligated entities to purchase REC from Exchange Platform and redeem it inlieu to their fulfillment of RPO with State Agency. Only single trade (once through) permissible. Multiple trades not allowed. Shelf Life RE Generators hall apply for issuance of certificate from 3months of energy injection in the grid Payment of Fee and Charges for Accreditation and Registration REC shall be valid for 365days from the date of issuance

TYPES OF RECs & PRICES

In India there are two types of RECs 1) Solar REC 2) Non Solar REC PRICE of REC

RENEWABLE PURCHASE OBLIGATION

Renewable Purchase Obligation (RPO) is being implemented throughout the country for compulsory use of minimum quantity of renewable energy. Under the Electricity Act 2003, the National Electricity Policy 2005 and the Tariff Policy 2006 It is obligatory upon State Electricity Regulatory Commissions to fix a certain percentage for purchase of power from renewable energy sources in the area of a distribution licensee. Regulators in several States have issued Orders for Renewable Purchase Obligation varying from 1 per cent to 10 per cent.

DETAILED PROCEDURE FOR ISSUE OF REC

1) 2) 3) 4) Accreditation Registration Issuance Redemption

Step Wise Schematic Description of Procedure for Accreditation

2 1 3b Verification Prior to Accreditation

Eligible Entity

Application for Accreditation Confirmation of Accreditation

State Agency

Intimation of Accreditation

SLDC

3a

Intimation of 3c Accreditation

Central Agency

Application for availing Accreditation by Generating Co. to the Host SA Application shall contain details of Owner/Operator, Generating Station , Metering, Connectivity , Statutory, General , fees & charges, Declaration Separate Application for each RE Generation Project

Schematic Description of Procedure for Registration

Eligible Entity State Agency SLDC

3b Application for Registration 1

Intimation of Registration

3c Intimation of Registration

Central Agency
Confirmation of 3a Registration Verification Prior to Registration 2 Intimation of Registration 3d

Power Exchange(s)

Information to be furnished by the applicant Owner Details, RE Generating Station details, Certificate of Accreditation Commissioning Schedule, Details of Fee & Charges, Declaration

Schematic Description of Procedure for Issuance

State Agency
Intimation of Issuance 5b 2 3 Verification Pre-Condition

SLDC

Regular Injection Report

Central Agency
Issuance of REC 1 Application for Issuance 5a

Intimation of Meter Reading 4c 4b

Distribution Licensee
4a

Eligible Entity
Joint Meter Reading

Schematic Description of Procedure for Redemption

Central Agency
Verification Conditions (By 15:30) Confirmation Of REC validity & quantity (by 16:00)

Eligible Entity

Offer for Sale 13:00 to 15:00 hrs 1a

Power Exchange(s)

Bid for Purchase 13:00 to 15:00 1b Market Clearance (Volume & Price)

Obligated Entity / Buyer

Intimation of Trade results For Extinguishing REC (By 17:00)

Central Agency

4 Reports

Glimpse of First REC Trading