- All valid RECs?excluding the RECs applied for Self-retention shall be traded on the second and last Wednesday of every month.
- The eligible entity shall exclude the RECs applied for self-retention in the particular month, if applicable,?for dealing on Power Exchange.
It’s a much needed step by NLDC as it enhances the platform for a better market price discovery. This change would be beneficial for the generators and to the obligated entities, since if the RECs are not traded in the current month, they would not have to wait for an entire month to clear the REC’s.
Also it would promote the developers to meet their RPO as we have seen many regulatory actions coming up in the form of compliance orders and proceedings in several states like Orissa, Kerala, MP and Maharashtra recently.
We also feel that the bi-monthly REC trading could be intensified if quarterly or at least half yearly compliance of RPO is made compulsory instead of yearly. This would push the obligated entities more to gear up and fulfill their obligation and thus benefit the REC market.
- Solar RECs – Overall market clearance remained low at PXIL in Solar whereas IEX reflected a good clearance ratio in Solar Market. Steep hike in demand for Solar at IEX can be attributed to reduced price of Solar RECs.
- Non Solar REC market showed some signs of improvement with total?537,009?Non-Solar RECs getting cleared in today’s trade session.
- While the demand looks improving owing to compliance year end approaching, hon’ble GERC(Gujarat Electricity Regulatory Commission) showed leniency on DISCOMs in Gujarat to adjust surplus solar RECs with non-solar RECs and also allowed reduction in total RPO targets for FY13-14. Detailed analysis can be read?here.
Detailed trade results are tabled below for your kind reference.
Non-Solar RECs
Solar RECs
REConnect Energy is the market leader in the REC Market in India, with 36% market share and a portfolio of over 3 GW RE. We have been recently acknowledged with the REC Trader of the Year 2014.
Team REConnect
]]>As per the recent CERC amendment dated 10.07.2013 to REC Regulation, which specifies that the renewable generating plant would be eligible for issuance of RECs from COD or from the date of registration whichever is later. The said amendment is as follows:
“10 (1) After registration, the renewable energy generation plant shall be eligible for issuance of Certificates under these Regulations from the date of commercial operation or from the date of registration of such plant by the Central Agency whichever is later.”
However, the main regulation also quotes:
“7 (1) The eligible entities shall apply to the Central Agency for Certificates within three months after corresponding generation from eligible renewable energy projects.”
The language used is ‘eligible entities’ and not ‘registered entities’. Irrespective of the date of registration, an eligible entity is entitled to apply for RECs within three months from the date of commissioning and generation of electricity as Regulation 7 (1) has not been made subject to Regulation 5 (1) of the REC Regulations which describes only the eligibility and registration for certificates.
A perusal of the above regulation does not show that there is limit to RECs being issued against generation only after the date of registration since the registration process is merely procedural with a view to verify and confirm that the substantive conditions under the REC Regulations have been fulfilled. But, fulfillment is not from the date of registration, but from when the generation of electricity commences.
The APTEL has held that the regulations has to be interpreted and applied in the light of the object to promote the renewable generators and not in a restrictive manner to deprive the generators of any benefit that may be available to them.
As a result, the APTEL has said that Appellants would be entitled to the REC for the electricity generated from COD and the same ought not to be postponed to the generation after completion of the procedural formalities of registration.
The order may only have a small positive impact in number of RECs issued, and issuance of RECs will not be affected by delays in registration process by SNAs.
The order can be accessed here.
Contributed by Venkataramana Mutharasu
]]>1. REC registration applications
a. Recommendation by SA for Registration of Project under REC Mechanism in the format prescribed to be furnished along with the application.
b.Claim for refund to be made within 15 days from the day of payment. Claim made later will not be entertained.
c. Format of the declaration has been modified (Refer to the Order).
2. REC Issuance applications :
This procedure shall be applicable to all Eligible Entities, who have received Certificate of Registration? from the Central Agency, and shall be eligible to avail Renewable Energy Certificates from the date of commercial operation or from the 00:00 hrs of next day of Registration date of such plant by the Central Agency whichever is later.
This deviates with the 2nd amendment of the REC regulations which says
“After registration, the renewable energy generation plant shall be eligible for issuance of Certificates under these Regulations from the date of commercial operation or from the date of registration of such plant by the Central Agency whichever is later”
a. Central Agency shall not issue RECs during the trading session at the Power Exchange.
b. The Eligible Entity shall apply for issuance of RECs within six (6) months from the month in which RE was generated and injected into the electricity grid. At least 6 clear working days are available to Central Agency for considering the application.
c. ?The application for issuance of Renewable Energy Certificates may be made on 10th, 20th and last day of the month.
3. Retention of RECs:
a. SA to accept application for retention of RECs and shall issue ‘certificate of purchase’ of RECs to the buyer.
b. Eligible entity to apply it online from 1st to 5th of every month.
c. Hard copy of the application has to be submitted by 9th of every month to SA.
d. SA to check the proposed volume and application by 15th of every month.
e. SA to inform CA of list of RECs which will be by 22nd of every month.
4. REC Accreditation application:
The RE generator shall obtain a certificate from the concerned distribution Licensee for the connected load in case of co-generation plants. The Distribution Licensee shall issue such certificate within 15 days from the date of application by the RE Generator and the RE Generator shall submit it to State Agency along with application for accreditation.
]]>
| Particulars | Amount in Rs. |
| Processing Fees (One Time) | 1000 |
| Registration Charges (One time upon registration) | 5000 |
| Annual Charges | 1000 |
| Revalidation charges at the end of 5 years | 5000 |
Table 1 : Fees & Charges for Registration
While there was no change in registration charges, the issuance fee for RECs charged by NLDC was reduced to Rs. 4 per certificate. This is going to continue for a period of one year with effect from 01.04.2014.
Summary of changes –
Fees & Charges for Registration – Same as in Table 1 (Till further orders).
Issuance fee – Rs. 10 per certificate ( till 31.03.2014).
Issuance fee – Rs. 4 per certificate (from 01.04.2014 to 31.03.2015).
The order can be read by clicking here.
An article in Economic Times can be read here.
- RRF to be implemented effectively from 15.07.2013.
- Role of Coordinating Agency (CA) has been defined as follow:
- Each pooling sub-station need to appoint CA and declare it to SLDC/RLDC
- CA to provide schedules and revised schedules to SLDC/RLDC as per the Grid Code
- CA to coordinate metering, data collection & trans-mission, communication to SLDC/RLDC/RPC/DISCOMs and other agencies
- CA to undertake commercial settlement of all the charges on behalf of generators & settlement of re-gional/state UI pool account through concerned SLDC
- CA to manage de-pooling of settlement amount among the Generators
- RRF guidelines also to be made applicable on CA
- CA to provide data acquisition system to transfer data at SLDC
- RRF mechanism shall not be made applicable to COLLECTIVE Transactions to be made at Power Ex-changes as PX transactions can’t accommodate revi-sions in schedules.
- Operational Timelines – Hon’ble commission has also specified operational timelines for effective imple-mentation of RRF.
- Weekly Reconciliation of account: for a week (W) starting from Monday 00.00 Hrs (Day 1) and ending on Sunday 24.00 Hrs, RLDC by following Tues-day (Day 9) noon shall provide pooling sub-station wise implications due to RRF. CA to validate the data and con-firm the acceptance and coordinate with RLDC if any cor-rections required.
- Day 16: Regional Power committee to provide state-ment of energy account by Tuesday
- Day 17-Day 24: Constituents to settle statement of accounts as per the obligation arising out of RRF mecha-nism.
- Delay in settlement beyond 12 days to attract 0.04% simple interest per day.
What is RRF?
The Renewable Regulatory Fund (RRF) regulations require wind and solar projects that meet certain criteria to forecast and schedule their power on a day-ahead basis. This requirement will have significant operational and financial implications for the projects – the task of forecasting wind and solar power which are essentially variable in nature and dependent on many site-specific weather factors is complex in nature. At the same time, the scheduling, reconciliation and financial settlement requirements will also require on-ground coordination and liaisoning.
For basics on RRF mechanism, see our past newsletter –?Newsletter Vol. XIV October 2011
What are the challenges faced by projects in implementing forecasting and scheduling?
As per order from CERC of Jan 2013, projects were required to start forecasting and scheduling their power from July 1, 2013. However, certain challenges remain that need to be ironed out (see last section).
There are several approaches and models for forecasting generation. It will be very important for projects to choose the appropriate one keeping in mind the accuracy required and operational costs (that can go up significantly depending on the level of real-time data needed). Solar projects in general should opt for correlation based models with basic weather data inputs considering the relative stability in day-to-day generation and no financial implications for deviations. Wind projects must choose carefully between very sophisticated real-time forecasts (which are expensive to run) and models that balance past data with periodic generation inputs.
Once fully functional, projects will need to ensure that they forecast and schedule their power, and also have a ‘Coordinating Agency’ appointed to manage the logistical requirements for scheduling, reporting and settlement.
The scheduling and forecasting has to be done on a pooling substation basis, which will often have turbines with multiple owners. The task of ‘de-pooling’ so that the settlement of charges can be done appropriately amongst all the owners within the wind farm will also be a challenging one.? The data flow diagram for a typical forecasting mechanism can be explained below:
?
What is the status of implementing RRF???
The most recent pronouncement from CERC required RRF to be operational from July 1, 2013. However, based on our on-ground experience several challenges remain:
Project level – the level of accuracy achieved by various projects that have done trials leaves a lot to be desired. In such a scenario, projects may immediately face financial obligations
Infrastructure level – challenges remain in preparedness at all levels – at the coordinating agency and at some SLDCs in terms of preparedness. Various wind farms also have multiple owners, and de-pooling and the relevant reporting and contractual requirements are not yet in place in the majority of cases.
Clarity in regulations – CERC order of Jan 2013 stated as follows:“
We direct the staff of thee Commission to initiate the process for necessary amendments to the Grid Code in the light our decisions given in this Order. We direct NLDC to align the “Procedures for implementation of the mechanism of Renewable Regulatory Fund”” in accordance with our above directions and put up thee revised Procedures for approval of the Commission expeditiously. All concerned agencies are directed to gear up for implementation of the RRF mechanism w.e.f. 1.7.2013.
Pooling stations are to be regarded as “building blocks” as per recent order. Applicability of RRF is on pooling stations commissioned after May 3rd 2010. In case a pooling station was commissioned (say) 20 years back and two new feeders have been connected to the same after May 3rd 2010. Will the new feeders be eligible for participating in RRF mechanism?
At present, there is nothing strongly mentioned to address his particular issue as per current orders and same needs clarity as far as the operationability is concerned.
For full details of requirements under RRF and services offered in RRF management by REConnect, please contact us at?[email protected].
]]>The decision to restructure the power sector liabilities was taken at a meeting at the Prime Minister’s Office.The state governments will issue bonds of about Rs 1.5 lakh crore along with the discoms.
The package was approved after the finance ministry agreed to a staggered restructuring under which state governments, which will bear 50% of the burden, will issue bonds to banks in line with the dues. These bonds will fetch banks interest of 9-10% and will have a maximum 10-year term, said sources. In the process, short-term loans extended to the discoms will become longer tenure loans.
The restructuring was necessary as the discoms were under financial crunch and they are finding it difficult to pay their dues to the lenders. The state governments are not allowing to increase the electricity prices whereas the cost on the other side has gone up resulting in stagnant revenues and losses. ]]>
With an extra one-and-a-half paise added into accounts of people who put up renewable energy capacities such as windmills, biomass and solar plants is an attractive return, justifying their investments.
However, for this to work, a key parallel activity is the development of a robust market for renewable energy certificates and here is where action is needed urgently now.
Strengthening market
In last month’s trading — trading takes place on the last Wednesday of each month — as many as 46,362 RECs changed hands, which was more than twice as much as in the previous month. (RECs are traded on Indian Energy Exchange Limited and Power Exchange of India Limited. The former accounted for 89 per cent of the RECs traded last month.)
The prices firmed up too. The average price worked out to Rs 2,300, against Rs 1,800 in the previous month. Now that the market for Renewable Energy Certificates is getting better by each passing trading session, the time has come for bringing measures to deepen it.
Urgent action is imperative if only because more and more RE power capacities are coming into the REC regime. Income from RECs can be substantial.
The stock market does not as yet have either a sufficient understanding or awareness of the RECs, as is reflected in the low prices of renewable energy company stocks; but when the awareness builds up, valuations will rise, enabling companies to raise more funds for further investments in renewables. But fundamental to all these are measures to deepen the REC market.
In a recent chat with Business Line , Dr Pramod Deo, underlined the importance of enforcement of obligations, a factor that may be the primary motive force behind the development of the REC regime.
Purchase obligation
Enforcement is largely in the hands of State electricity regulators and a lot depends on how strict they are in making the obligated entities discharge their Renewable Purchase Obligation (RPO).
Industry watchers such as Mr Vineeth Vijayaraghavan, Editor of the online newsletter, Panchabhuta, have noted that obligated entities in some States still question the application of the RPO to them, in the hope of wriggling out of — or at least putting off — the burden by a few years.
Obviously, the first step is to tell them that there is no wriggling out. An effective way of sending this signal is to ask for a ‘compliance undertaking’ at the beginning of each financial year, stating that the OE must meet its obligations.
Compliance issues
A corollary of this is making compliance quarterly, against annual. Otherwise, the market will tend to get skewed, with most of the activity happening at the year-end.
The supply side of the market has been fairly well taken care of. But the demand side is still a niggling issue and the question ‘what if there are no takers for the RECs’ is still weighing on the minds of many.
Mr Vishal Pandya, REConnect Energy Solutions, a renewable energy consultancy, says that some sort of a ‘renewable regulatory fund’ should be created to take care of the off-take of the RECs, perhaps at the mandatory minimum price, in case there are unsold RECs in the market.
Mr T. Shivaraman, Vice Chairman of the renewable energy IPP, Orient Green Power, has a similar view. He wants the government to devise a mechanism for buying the unsold RECs, rather than wait for the defaulting OEs to pay a fine and then pay the REC sellers out of it. ]]>
However, our analysis found that very little of that is seeing issuance as of now. Approximately 30,000 RECs were issued this month translating to only 42 MW equivalent capacity (using standard PLFs). This represents only 10% of the total registered capacity, or 30% of the effective capacity (after factoring in PLFs).
*Calculated from standard PLFs applied to registered capacity ]]>
Key Stakeholders :
REC Process Overview:
Process Steps:
- Apply for Accreditation with the State Level Agency. Application to be made in duplicate – in Electronic and Paper form. Application requires data on 8 different categories.
- State Agency provides a unique ID for the application, and also seeks clarifications and additional information, if any
- The application will be assessed on 8 different criterion, including type of plant and equipment, compliance with MNRE’s fossil fuel norms, etc.
- Accreditation certificate is granted. The State Agency also intimates the Central Agency, SLDC and the local DisCom
- Apply for Registration with the Central Agency. Application to be made in duplicate – in Electronic and Paper form. The Accreditation certificate will also need to be submitted. Application requires data on 4 different categories.
- Central Agency provides a unique ID for the application, and also seeks clarifications and additional information, if any
- The application will be assessed on 4 different criterion.
- Registration certificate is granted. The Central Agency also intimates the State Nodal Agency, SLDC and the Power Exchanges
- Obtain Certificate of Energy Injection from SLDC on a monthly basis or as per the normal billing cycle of concerned distribution licensee
- Obtain report from Compliance Auditor, if applicable
- Apply for issuance of REC. Application to be made made in duplicate – in Electronic and Paper form.
- Central Agency provides a unique acknowledge number for the application and also seeks clarifications and additional information, if any
- The application will be assessed on 4 different criterion.
- RECs are issued. The Central Agency also intimates the State Agency of the issuances.
- Based on the trading calendar, place REC for dealing on the chosen Power Exchange
- The PXs determine Market Clearing Price and Volume
- Provide details of the Market Clearing Price and details of the REC trades matched
- Central Agency share information on validity of RECs, and extinguish RECs based on information provided by PXs
Fee and Charges for REC Process :
| Process | Payable to | Fee |
|---|---|---|
| Application fees for Accreditation | State Nodal Agency | Rs. 5,000 |
| AccreditationCharge | State Nodal Agency | Rs. 30,000 |
| Annual Charge | State Nodal Agency | Rs. 10,000 |
| Application fees for Registration | Central Agency | Rs. 1,000 |
| RegistrationCharge | Central Agency | Rs. 5,000 |
| Annual Charge | Central Agency | Rs. 1,000 |
| REC Issuance Charge | Central Agency | Rs.10/ Certificate |