1.

RENEWABLE E NERGY SCENARIO IN INDIA:

In India, the existing share of renewable in total electricity generation is around 3.9% as of 2009-10. The available Renewable Energy (RE) potential is estimated to be approximately 85,000 MW from non-solar sources and more than 100,000 MW from solar. Out of the total available RE potential, only around 17,220 MW has been installed so far. The Electricity Act (2003) and the National Action Plant of Climate Change (NAPCC) provide the framework for bridging this gap (between actual and potential) and increasing the share of Renewable Energy (RE) sources in the total generation capacity of the nation. The NAPCC has recommended that the share of renewable in total energy should increase to 10% by 2015 and 15% by 2020.
2. RENEWABLE P URCHASE OBLIGATIONS (RPOS):

Under Section 86(1)(e) of the Electricity Act (2003), the State Electricity Regulatory Commissions (SERCs) in India have been empowered to specify the minimum percentage of electricity that must be procured by obligated entities (namely Distribution Licensees, Open Access Consumers and Captive Consumers) from RE sources. This percentage is referred to as Renewable Purchase Obligation (RPO) or Renewable Portfolio Standard (RPS) or Renewable Purchase Specification (RPS). As on date, around 16 States have laid significant emphasis on this provision, thereby issuing Draft/Final Regulations specifying such RPO percentages. They have also notified regulations pertaining to determination of tariff for power generation from various RE sources like Solar, Wind, Biomass/Bagasse, Cogeneration, etc.
3. RENEWABLE E NERGY CERTIFICATES (RECS):

RPO levels vary significantly across States since RE sources are unevenly distributed across different parts of the country. For instance, Delhi has the lowest RPO level of 1% since it is a state with very low RE potential. On the other hand, States like Rajasthan, Haryana & Tamil Nadu have RPO levels ranging from 5% to 10% for different types of RE sources since they have significant RE potential. This uneven distribution of RE sources across the country and the high cost of generation mean that local Distribution Licensees, especially in States with high RE potential, are discouraged from purchasing RE generation beyond the RPO level mandated by the SERCs. It is to address this mismatch of RE potential and state-wise RPOs that the mechanism of Renewable Energy Certificates (RECs) was introduced by the Central Electricity Regulatory Commission (CERC) on 14th January, 2010. REC is a tradeable commodity/instrument. One REC represents proof that 1MWh (Mega-Watt Hour) of electricity was generated from an eligible renewable energy resource. Even in international markets, purchase of REC is deemed as Aditya Birla Money Page 1 of 5

purchase of power generated from RE source. Trade in RECs is expected to pick up in a few years. MNRE has agreed to provide financial assistance of the order of Rs. 9 Crore in the next 3 years towards implementation of the REC trading mechanism. This financial support would be for software, hardware and manpower additionalities in central agency and the state agencies. CERC has designated the National Load Despatch Centre (NLDC) and the Forum of Regulators (FOR) as the central agencies to work out the detailed procedure for implementation of REC trading regulations within the country. These procedures were approved by the CERC on 1st June, 2010. Under the REC Regulations, the RE generators can either: a. Sell the renewable energy at preferential tariff fixed by the concerned SERC, or b. Sell the electricity component and environmental attributes associated with RE generation separately If option (b) is chosen, the environmental attributes can be exchanged in the form of REC issued by CERC. RECs will be exchanged only in the Power Exchanges approved by CERC within the band of a floor price and forbearance (ceiling) price to be determined by CERC from time to time. Distribution Licensees and Captive Power Plants (CPPs) across states can purchase these RECs to fulfill their RPO requirements. Tariff for purchasing RE-generated power varies with the type of RE technology and is non-uniform across different states. In order to minimize this divergence, CERC has recently announced specific guidelines to determine tariff for different RE sources, and expects SERCs to align their respective States RE tariff accordingly.
4. IMPACT OF RPO & REC ON M ANUFACTURING UNITS ACROSS INDIA:

The RPO & REC regulations will have considerable impact on manufacturing units in India that have Captive Power Plants (CPPs) since they would be obligated to purchase/produce the required percentage of their total power from RE sources or face monetary penalties as specified by the SERCs of the States they operate in. The units that are most likely to be impacted first (Category: First-Impact) are those that are located in States where Final RPO Regulations have been released by the respective SERCs. Next in line will be units located in States where Draft RPO Regulations have already been issued and are expected to be finalised soon (Category: Second-Impact). There are also some States that have issued Regulations which are applicable for Distribution Licensees (DLs) only (Category: DL-Impact).

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5. STATE-WISE RPO SCENARIO:

TABLE 1: First-Impact States RPO Scenario

RE Source/ Eligible Entity GUJARAT Wind Solar Biomass, Bagasse & Others Total MAHARASHTRA Solar Non-Solar Total RAJASTHAN Total

RPO Levels (%)

2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

Remarks

4.50 0.25 0.25 5 0.25 5.75 6 8.5

5.00 0.50 0.50 6 0.25 6.75 7 9.5

5.50 1.00 0.50 7 0.25 7.75 8

5.50 1.00 0.50 7 0.50 8.50 9

5.50 1.00 0.50 7 0.50 8.50 9

5.50 1.00 Final Regulations issued on 17th Apr 2010. Valid for CPPs of 5 MW 0.50 & above. RECs can be purchased 7 0.50 Final Regulations issued on 7th 8.50 Jun 2010. Valid for CPPs of 1 MW 9 & above. RECs can be purchased.

Final Notification issued on 23rd Mar 2007. Valid for CPPs of 1 MW & above.

KARNATAKA Dist. Licensees Wind Mini & SHP Biomass/Biogas Waste to Energy Solar Min 5% and Max 10% (Period not specified) 680 MW 100 MW 60 MW 10 MW 30 MW 530 MW 150 MW 60 MW 10 MW 30 MW 530 MW 150 MW 60 MW 10 MW 30 MW 599 MW 100 MW 60 MW 10 MW 30 MW 680 MW 100 MW 60 MW 10 MW 30 MW 530 MW 150 MW 60 MW 10 MW 30 MW Issued on 27th Sep 2004 KREDL Renewable Energy Policy released on 19 th Jan 2010. Aims to achieve 6600 MW from 200914. Capacity addition for each RE source given. Industries with >2000 KVA Conn. Load to produce atleast 5% of their requirements thru CPPs using RE sources

WEST BENGAL WBSEDCL CESC DPL DPSC DVC 8.3% 8% 7% 7% 7% 10% 10% 10% 10% 10% Final Regulations released on 25th Mar 2008. Valid mainly for Distribution Licensees but Clause for CPPs also present.

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TABLE 2: Second-Impact States RPO Scenario

RE Source/ Eligible Entity TAMIL NADU Total

RPO Levels (%)

2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

Remarks

14

Draft Regulations issued on 28th May 2010. Valid for CPPs. RECs can be purchased. Tariff Orders for each RE source. 5 1.5

JHARKAND Solar Total KERALA Solar Total Dist. Licensees (a) Wind (b) SHP (c) Others ORISSA Total 5 5.5 6 6.5 7 Draft Regulations issued on 16 th Mar 2010. Valid for CPPs. RECs can be purchased. 0.25 3 0.25 3 0.25 3 0.25 3 0.25 3 0.25 3 Draft Regulations issued in 2010. Valid for CPPs. RECs can be purchased. Power Procurement Regulations released on 24th Jun 2006, but valid for Dist. Licensees only. 5 1.5 Draft Regulations issued on 30th Apr 2010. Valid for CPPs. RECs can be purchased.

5 (Period not specified) 2 (Period not specified) 2 (Period not specified) 1 (Period not specified)

UTTAR PRADESH Solar Non-Solar Total 0.25 3.75 4 0.5 4.5 5 1 5 6 Draft Regulations issued in early 2010. Public Hearing on 10th June 2010. Valid for CPPs. RECs can be purchased.

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TABLE 3: DL-Impact States RPO Scenario

RE Source/ Eligible Entity MADHYA PRADESH Wind Biomass Cogen, Others CHATTISGARH Biomass SHP Others ANDHRA PRADESH Total Solar

RPO Levels (%)

2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

Remarks

6 2 2

6 2 2 Final Regulations issued on 7th Nov 2008

5 (Period not specified) 3 (Period not specified) 2 (Period not specified) 5 0.25 5 0.25 5 0.25 5 0.25 Final Regulations issued on 31st Mar 2009 Final Regulations issued on 14th Jul 2008

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