You are on page 1of 42

Feed-in Tariff and Renewable Purchase Obligation

Rakesh Shah
29th April 2010-Chennai

|1
Legal Framework : Policy & Regulatory Set-up

• Indian Electricity Act, 1910


 Legalised sale of electricity in parts of urban areas/cities/cantonment, distributed
generation, etc.

• Electricity (Supply) Act, 1948


 Creation of electricity boards (merging of generation, transmission, distribution &
trading), nationalisation

 Created a centralised nature of the electricity business, with a fair amount of control
given to state governments

• Electricity Regulatory Commissions Act, 1998


 Creation of independent electricity regulatory commissions

 Modeled around the US / UK system

 Re-regulated set-up (movement of control from state government to ERCs)

 Pushed for unbundling of electricity markets into generation, transmission, distribution to push
efficiency in operations and onward private sector participation

|2
Regulatory Impacts : Renewable Energy

• 1994 : Announcement of tariff guidelines by MNES (now MNRE)


 Sell to SEB
 Rs 2.25 per kWh (5% escalation) : feed-in tariff

 Captive & Third party Sales


 Wheeling & Banking provision at 2%

• Various states adopted the guidelines (not uniform) through an executive


order (by energy department)
 Viz. Gujarat gave Rs 1.75 per kWh (fixed) along with sales tax benefits

 TN adopted MNES guidelines

|3
EA 2003 : The New Avtaar..
• Electricity Act, 2003 (EA 2003) : Highlights
 Abolished all earlier acts
 De-licensing of generation of electricity
 Erstwhile Sec 44 of the E(S) Act, 1948
 Allowance of OA transaction
 Sec 28 of 1910 Act, replaced with Sec 42(2)
 Transmission activity to be separated (unbundling)
 Only transmit electricity and cannot trade (OA principles without any conflicts)
 Various states have different model for unbundling
– Only Transmission separated (viz. TNEB)
– All functions separated, i.e. genco, transco, disco, trading (viz. Gujarat)
– Hybrid models (viz. Karnataka, Maharashtra, Rajasthan etc.)
 Special mentioning of RE
 Sec 86(i)e of EA 2003
– RPS mechanism & fixed tariff regime

|4
RE & the Electricity Act 2003
• Section 3 of EA 2003:
 National Electricity Policy, Tariff policy and National Electricity Plan including optimal
utilization resources including renewable sources of energy

• Section 4 of EA 2003:
 National policy permitting stand alone system (including those based on RE sources of
energy ) for rural area.

• Section 61 of EA 2003:
 The appropriate commission while determination of tariff shall be guided by promotion
of co-generation and generation of electricity from RE

• Section 86(1) The State Commission shall discharge the following


functions, namely:
 (e) promote cogeneration and generation of electricity from renewable sources of
energy by providing suitable measures for connectivity with the grid and sale of
electricity to any person, and also specify, for purchase of electricity from such sources,
a percentage of the total consumption of electricity in the area of a distribution
licence;
|5
National Electricity Policy (12/2/2005)
Section 5.12:
• Urgent need of promotion renewable sources of energy

• Efforts need to be made to reduce the capital cost of such projects

• Cost of energy can be reduced by promoting competition within such projects

• Adequate promotional measures would have to be taken for development of


technologies and sustained growth of these sources

• SERCs to provide suitable measures for connectivity with grid

• SERCs to fix percentage of purchase from RE sources

• Progressively such share need to be increased

• Till NC technologies compete, in terms of cost, with conventional sources, the


Commission may determine an appropriate differential in prices to promote these
technologies

|6
Tariff Policy (2/1/2006)
Section 6.4:
• Appropriate Commission shall fix RPO and SERCs shall fix its tariff latest by
1/4/2006

• Initially Appropriate Commission to fix preferential tariffs

• In future Discoms to procure RE through competitive bidding within suppliers


offering same type of RE

• In long-term, RE technologies need to compete with all other sources in terms of


full costs

• CERC to provide guidelines for pricing non-firm power if RE procurement is not


through competitive bidding

|7
Implementation of EA 2003
STATES MINIMUM PERCENTAGE OF RENEWABLE POWER IN FOLLOWING YEARS
ORDER 04-05 05-06 06-07 07-08 08-09 09-10 10-11
ANDHRA 27/9/05 5% 5% 5% 5% - - -
CHHATISGARH REG. BIOMASS - - 5% 5% 5% -
14/7/08 SHP 3% 3% 3%
OTHERS 2% 2% 2%
DELHI 23/2/08 NDPL - - 1% 1% 1% 1%
23/2/05 BYPL - - 1% 1% 1% 1%
25/2/06 BRPL - - 1% 1% 1% 1%
7/3/09 NDMC - - 1% 1% 1% 1%
ASSAM DRAFT 5% in FY09-10, 10% in FY12-13 and 15% IN FY15-16
ORISSA DRAFT 5% for FY11-12 and 0.5% increase every year upto FY 15-16
GUJARAT 29/10/05 17/4/10 - - 1% 1% 2% 2% 09-10, 5% 10-11,
6% 11-12, 7% 12-13
HARYANA 31/01/07 - 2% 2% 3% 10% 10% 10%
KARNATAKA 25/1/08 BESCOM CESC MESCOM 10% 10% 10%
Max. 20% HESCOM GESCOM 7% 7% 7%
Hukeri Soc - - 7% 7% 7%

|8
Implementation of EA 2003
STATES MINIMUM PERCENTAGE OF RENEWABLE POWER IN FOLLOWING YEARS
DATE OF RPO 05-06 06-07 07-08 08-09 09-10 10-11
ORDER
KERALA REG 24/06/06 2% Wind, 2% SHP, 5% 5% 5% - -
MADHYA REG. 7/11/08 6% Wind , 2% Biomass , 2% Cogen and 10% 10% 10%
PRADESH other Total 10%, FY 11-12: 12%
MAHARSHTRA 30/08/06 3% 4% 5% 5% - -
Draft Regulation From FY 10-11 to FY 15-16: 6% to 10%, separate for solar/ non solar
PUNJAB 13/12/07 - 1% 1% 2% 3% 4%

RAJASTHAN 31/03/06 WIND 2% 4% 5% 5% 6.75% 7.5%

29/09/06 BIOMASS 0.5% 0.88% 1.25% 1.45% 1.75% 2%

07/03/07 CPP & OA - 4.88% 6.25% 7.45% 8.5% 9.5%

TAMILNADU 15/05/06 and 10% 10% 10% - 13% 14%


1,2,3/2009
JHARKHAND DRAFT 5% for FY 10-11, FY11-12, and FY12-13

UTTARAKHAND REG - 5% 5% 5% 9% 10%

WEST BENGAL NOTIFICATION WBSEB 1.0% 3.8% 4.8% 6.8% 8.8% 10%
25/03/05 CESC 1.02% 2.03% 4% 6% 8% 10%
DVL 0.72% 1.2% 2.5% 4% 7% 10%
DPSC 0.45% 0.95% 2% 4% | 97% 10%
RPOs already established – Key features

• 19 states have specified the Quota for power purchase from renewable
energy sources.
 large variation from 1% to 20% among different states
 RPO fixed based on RE Potential available in States and its impacts on retail tariff
 Renewable sources unevenly spread
 TN & Gujarat can meet more than 20% through renewable alone
 Some states like Delhi does not have any renewable power generation potential
• Single target for overall renewable energy purchase and usually close to
existing purchase levels
• In some cases Y-o-Y targets
• Few states have technology specific targets
• Period is upto five years
• Purchase of RE from outside the State has not been permitted
• Weak on enforcement methodology
 Implementation mechanisms need further refinement

| 10
Preferential Wind Energy Tariff
States Wind Energy Tariff Rs. Per Unit
Rs 4.03 in first year, gradually reduced to 3.36 in 5th
Madhya Pradesh (Order dtd. 21/11/07)
years and thereafter upto 20 years (to be revised)
AndhraPradesh (Order dtd. 1/5/2009) Rs 3.50 for 10 years
Gujarat (Order dated 30/1/2010) Rs.3.56 fixed for 25 years
Karnataka (Order dated 11/12/2009) Rs. 3.70 fixed for 10 year
Rs. 3.83 : Jaisalmer, Jodhpur, Barmer Distric
Rajasthan (Order dated 16/7/2009)
Rs. 4.03 : Rest of 3 Districts : fixed for 20 years
Rs. 3.50 for the first year and thereafter 15 paise
Maharashtra (Order dated 24/11/2003)
escalation every year: for 13 years (to be revised)
Kerala (Order dated 27/02/2008) Rs 3.14 for 20 years
Tamil Nadu (Order dated 20/03/2009) Rs 3.39 for 20 years
Rs 4.08 applicable for 5 years
Haryana (Order dated 15/05/2007)
with annual escalation of 1.5% from 2008-09
Rs. 3.49 (Base Year 2006-07) with annual escalations
Punjab (Order dated 13/12/2007)
@ 5% upto 2011-2012
West Bengal (Notification dtd. 25/3/08) Rs. 4.00 fixed for 5 years and as cap

| 11
Tariff parameters comparison
Tamilnadu Karnataka Gujarat Madhya Rajasthan Andhra Maha Kerala CERC
Pradesh Pradesh
Capital cost 5.35 * 4.70 5.0 4.60 5.25 4.70 4.00 4.40 5.15* 09/10
Rs. Cr/MW 4.67 10/11
CUF 27.15% 26.5% 23% 22.5% 21% 24.5% 20% 22%
Interest Rate 12% 11.75% 10.75% 11% SBI PLR 12% 12.5% 9% SBI PLR +150
+100 BP BP
Depreciation 4.5% 7% 6% for 7% for 5.28% for 4.5% 4.5% 6% for 12 years
10 years 10 years 12 years
ROE 19.85% pre 16% 14% 16% Pre 18% :10 Y 15.5% 16% 14% 19%: 10Y
tax tax 24%: Rest 24%: Rest
O &M Cost 1.10% of 1.25% of 6.5 1% of CC 1.25% of 1.25% of 1.5%/ 1% of CC 6.5 Lacs/ MW
0.85CC 5% CC 5% esc Lacs/MW CC 5.28% CC 5% 2% of 4% esc 09-10 , 5% esc
5% esc
esc YoY YoY 5% Esc esc YoY esc YoY CC 5% YoY YoY
after 5
YoY esc YoY
years

Insurence Tamilnadu: 0.75% of 85% of capital cost with reduction of 0.50% after 1 year

Interest on working 13.25% on 11.75%1 Short term 7% 1 Month O&M,


Capital 2 months Month SBI PLR 1.5 Month Rec.
O&M, 15% of O&M
bills (same as main. Spares
1.Month
Rec.
CERC) SBI PLR +100 BP

Project Life/tariff 20 years 20 years 25 year 20 years 20 years 20 years 13year 20 Years 25 years
period: yerars

* Exclusive of evacuation cost | 12


CERC Tariff regulations for RE
• Applicability to inter-state schemes & central generating stations

• Acts as a guidelines for tariff determination at state level


 CERC tariff regulations, is not mandatory for state commissions to adopt
 However, deviating from the CERC Tariff Regulations would require a “distinctive
reason” for any commission to do so
• Defines interconnectivity point
 Line isolator on outgoing feeder on HV side of the pooling sub-station/generator
• High lights and design philosophy behind CERC tariff regulations
 Generic tariff (option available for project specific tariff)
 Provides benchmarks (viz. RoE of 19% and 24% : pre-tax levels)
 Levelised Tariff
 Normative assumption for Capex
 Indexing/benchmarking
 Steel index, cement index, interest cost
 Procurement tariff based on 4 – different wind zones
• Three states have followed and in a way adopted CERC regulations for their new
tariff structure
 Rajasthan had already adopted
 Madhya Pradesh, Maharashtra, Jharkhand and Orissa to follow

| 13
…CERC Tariff Regulations
Parameter FY 2009-10 FY 2010-11
WPD Levelised tariff Levelised tariff Depreciation benefits Net levelised tariff
(Watts/ m2) Rs/kWh [1] Rs./kWh Rs./kWh Rs./kWh

WIND
200-250 5.63 5.07 0.78 4.29
250-300 4.90 4.41 0.68 3.73
300-400 4.17 3.75 0.58 3.18
>400 3.75 3.38 0.52 2.86
SHP Himachal/ Uttranchal/ North eastern States

< 5 MW 3.90 3.59 0.48 3.11

5 <MW< 25 3.35 3.06 0.43 2.63


SHP Others States
< 5 MW 4.62 4.26 0.57 3.70
5 <MW< 25 4.00 3.65 0.51 3.14
SOLAR
Solar PV 18.44 17.91 2.96 14.95
Solar Thermal 13.45 15.31 2.46 12.85
Biomass 3.93 to 5.52 3.35 to 4.62 0.19 3.16 to 4.43
Bagasse 4.80 to 5.78 3.68 to 4.86 0.24 to 0.32 3.41 to 4.59

| 14
Rising procurement tariffs : Different states
State Procurement Tariff : %tage Remarks
Rs/kWh increase
FY 2009-10 FY 2010-11
Rajasthan 4.28 3.83 -10% Indexing would lead to reduction of tariff for one-year
Gujarat 3.37 3.56 6% Increased the procurement tariff
M.P. 4.00 Adopting CERC regulations
Maharashtra 3.50 + 0.15 Adopting CERC regulations
(escalation)
Karnataka 3.40 3.70 9% Increased the procurement tariff
AP 3.00 3.50 17% Increased the procurement tariff
Tamil Nadu 2.90 3.39 17% Increased the procurement tariff
Kerala 3.14

• It is expected in the next one year all states would have adopted CERC RE
Tariff Regulations

| 15
Feed-in Tariff: Key program elements
• Priority access to the grid for all

• Priority purchase

• Long contracts (20-25 years typical)

• Prices determined by cost plus profit


 Fair but not excessive profit
 Tariff Differentiated by technology, size, application
• Front loading/levellised Tariff

• Periodic Review (every 2-4 years)


 To track technological change
 Over all cost reduction

| 16
Fiscal and other support incentives

• Direct production incentives: Generation Based Incentive

• Investment subsidies

• Low-interest loans

• Loan guarantees

• Accelerated depreciation schemes

• Investment or production tax exemptions

| 17
Other Central Government measures

• Direct tax benefits


 Accelerated Depreciation: The Central Government presently allows for
accelerated depreciation at the rate of 80% on a Written Down Value
basis for various renewable energy items under section 32 Rule 5 of the
Income Tax Act.

 Tax Holiday: Under section 80 IA of the Income Tax Act, the Central
Government offers a 10 year tax holiday for all infrastructure projects.

• Indirect tax benefits


 Specified renewable energy devices and equipment can obtain excise
duty exemptions or concessions.
 Equipment for wind power, solar photovoltaic and solar thermal,
renewable energy systems and power generation plant and machinery
enjoy a reduction in customs duty.

| 18
Central Government Initiatives

• Announcement of Generation Based Incentives (GBI) : Dec, 2009


 4,000 MW till end of the current FYP
 50 paise/kWh with a cap of Rs 62 lacs per MW against the accelerated
depreciation

• Announcement of Jawaharlal Nehru National Solar Mission (JNNSM) : Nov,


2009
 20 GW by 2020 : Broken into three phases
 Phase I : 1,000 MW : 2012-13
 Announcement of NTPC Vidyut Vyapar Nigam (NVVN) scheme for bundling of
un-allocated supply with solar to reduce costs for grid connected solar options

| 19
Cumulative achievements:
Grid-interactive RE power as on 31.12.2009
Achievements during Cumulative
2009-10 (upto Achievements
Sources Potential 31.12.2009) (upto 31.12.2009)
MW MW MW
Biomass Power 16881 131.50 834.50
Wind Power 45195 683.00 10925.00
Small Hydro Power (up to
25 MW) 15000 129.15 2558.92
Cogeneration-bagasse 5000 253.00 1302.00
Waste to Energy 2700 4.72 65.01
Solar Power 3.10 6.00
Total (in MW) 1204.47 15691.43

Source: MNRE

Source : MNRE
| 20
Wind Energy Development in India

Consolidation of wind energy


19 0 0 Stakeholders
18 0 0 Restructuring of power sector
and emergence of ERCs
17 0 0
16 0 0 Policy framework to push
15 0 0 indegenisation Operationalisation
Annual Addition, MW

14 0 0 of
Kyoto Protocol
13 0 0
National guidelines for tariff and
12 0 0 Interconnection for captive &
110 0 third party sales
% fixation and fixed
10 0 0
tariff regime
900 National wind resource monitoring
Mandated by ERCs
& demonstration programme
800
700
Emergence of EA 2003, *
600
500
400
300
200
10 0
0
90

91

92

93

94

95

96

97

98

99

00

01

02

03

04

05

06

07

08
19

19

19

19

19

19

19

19

19

19

20

20

20

20

20

20

20

20

20
| 21
Is the growth slowing down

• Sections 61(h) and 86(1)(e) of the EA 2003 are the only real renewable
electricity-related developmental provisions
• Growth is limited to states with wind resource and capacity of these states to
absorb wind power without affecting the consumer tariffs
• Particular issues with renewable energy
 Relatively high start-up costs

 Difficulty in obtaining financing due to perceived higher risk of renewable


energy projects
 Intermittent nature of some forms of renewable energy
• Large variation in regulations across all States.
• Sec. 86(i) (e) provision has been interpreted differently by different
SERCs
• Minimum percentages for renewable energy vary from 1% to 20% across
various States.
• RE potential and achievements vary widely in different States

| 22
Ambiguity in application of S 86(1)(e)

• What is meant by a percentage of the total consumption of electricity in


the area of a distribution licensee?

• Whether total consumption includes technical and commercial losses in


the area?

• Whether total consumption include captive and open access consumption


in the area?

• Currently regulators have used either total energy input or energy sales as
criteria while determining the percentage.

• This has necessarily resulted in exempting captive and open access


consumption from renewable obligation.

| 23
RPOs – what further is required?

• Specific targets for RE sources which are not commercial

• Application of RPO to OA/Captive/trading transactions

• Efficient mechanism for purchase of RE by OA consumers

• OA consumers be allowed to procure RE from other States

• RE sources not spread evenly across various states making


implementation of single RPO target difficult
• Higher RPO for RE-rich regions may result in distorted tariffs
• Enabling mechanism for inter-state sale is required

• Stronger enforcement and penalty mechanism

| 24
National Action Plan for Climate Change
(June 2008)

• At National level for FY 2010, target for RE Purchase may be set at 5% of


total grid purchase, to be increased by 1% each year for 10 years: 15% by
2020

• SERCs may set higher target than this minimum at any point in time.

• Central & State Govts may set up a verification mechanism to ensure that
renewable power is actually procured.

• Appropriate authorities may issue certificates that procure renewable


power in excess of the national standard. Such certificates may be
tradable, to enable utilities falling short to meet their RPS.

• Penalties as may be allowed under EA 2003 may be levied, if utilities are


still falling short in RPS

| 25
Target/Market size under NAPCC

MU Needed RE MU Derived
(as per CEA (15% as per RE Capacity
Year Survey) NAPCC Target) (@33% PLF)
2011-12 969659 145449 50314
2016-17 1392066 208810 72233
2021-22 1914508 287176 99341

Wind@50% 50000

• 17th Power Survey by CEA estimates demand of 1.91 trillion units.

• To meet NAPCC target of 15%, installed capacity of renewables will need to reach
100,000MW (at 33% PLF)

• Even if contribution from Wind is considered @50%, the year wise capacity addition in the
Wind sector ranges from 2500 to 4500 MW for next 10 years. Huge opportunity.

| 26
FOR Working Group : Recommendations

• Need for Inter-State exchange of RE power


 Inter-State exchange of RE power is desirable from national perspective and the
same should be promoted.

 Mechanism for appropriate treatment for inter-State RE exchange through Regional


Energy Account needs to be developed.

• Feasibility of REC mechanism


 Concept of REC as a tool for promotion of RE sources

 REC mechanism can be introduced within existing framework of EA 2003

 Co-operation amongst States is essential and SERCs should recognize procurement


of RE generated in other States for purpose of compliance as RPO by regulated
entity in their respective jurisdiction

| 27
What is a REC?

Renewable Renewable Energy Attributes


Energy
Generation Commodity Electricity

• What is a REC?
 A REC represents the attributes of renewable energy generation
that can have value separate from commodity electricity

• RECs are also known as:


 Green tags, green tickets, renewable energy credits, tradable
renewable energy certificates (TRCs)

| 28
Concept of Renewable Energy Certificate

Commodity
Electricity
Renewable
Distribution Company
Energy REC

• Existing Regime for sale of Renewable Energy

 Sale at Preferential Tariff to Obligated Entities

| 29
Concept of Renewable Energy Certificate

Local
Commodity Distribution Company
Electricity
Renewable
Energy
REC DISCOM
OA /Captive
Consumers

• Sale of Renewable Energy under REC Regime


 Sale of Conventional Electricity Component to local Distribution Licensees

 REC Component to Obligated entities

| 30
Important Features of REC
• Effective implementation of RPS

• Increased flexibility for participants

• Overcome geographical constraints

• Reduce risks for local distribution company by limiting its liability to only energy
purchase

• Reduce transaction costs for RE transmissions

• Create competition among different RE technologies

• REC scheme is NOT an incentive mechanism. Rather it enables sale of purchase


of renewable component across the State boundaries.
• REC mechanism could be implemented with any ‘Generation Based Incentive’
scheme as both mechanisms are based on the certification of generation.
• REC does not represent any fiscal attribute such as ‘Accelerated Depreciation’.
• Though REC represent environmental attribute, it is not related to carbon
credits as two mechanisms are independent of each other.
| 31
CERC Regulation dated 14/01/10

The Central Electricity Regulatory Commission


(Terms and Conditions for recognition and issuance of Renewable
Energy Certificate
For
Renewable Energy Generation)
Regulations, 2010

| 32
REC regulation : Highlights
• Generator would have an option to opt for
 Fixed tariff (as per the tariff order prevalent in the state)
 REC mechanism
 Existing projects having firm PPA would not be eligible till the end of the contract
period
 Two revenue stream
 Average procurement tariff (windy states) : Basket price : Rs 2.90 – Rs 3.50 per
kWh
 RE certificates : Floor price & Forbearance price (ceiling price)
• Categories of Certificates
 Solar certificates and Non-solar cerificates
• Denomination
 1 REC = 1 MWh
• REC trading only through power exchange(s)
 For price discovery and ensuring transparency
• Validity of Certificates
 Apply for REC within 3 months of generation
 Validity : 1 year from the date of issuance of such certificate

| 33
Various stakeholders for implementing REC

• CERC – to regulate the entire set-up


• SERC - to implement and monitor the compliance levels
• MNRE – Definition of RE
• MoP – representing Central Government

• Central Agency (NLDC)


 Registration, issuance of certificates, maintaining accounts, settlement, repository,
Monitoring

• Power Xchange(s)

• State level agencies : verifiers : (SLDC/State Nodal Agencies)


• State Transmission Utilities (STU) : Reporting

• Reconcilation agencies

| 34
1
Accreditation of RE power plants
(State nodal agency: SNA)

Registration of Eligible entities


2 (Central level agency)

Information related to accreditated RE


plants for registered entities sent to REC
registry
6
5
Issuance of REC REC exchange
Central REC
RE Generator
Registry (NLDC)

3
Information
related to
RE
Sale of electricity at par Auditing Panel
generation
with conventional power
4
Discom issuing
RE injection State Load
certificate Despatch Centre
(SLDC) Information on REC
electricity purchase/redemption
Energy
accounting SERC: Compliance State Nodal
based on SNA Report Agency SNA

| 35
FOR Draft RPO Regulation
for consideration of SERCs
The Commission to designate an agency as State Agency:
• For accreditation renewable energy projects
• Recommend renewable energy projects for registration
• To function in accordance with the directions issued by the Commission
• To act in consistent with the procedures rules laid by Central Agency for
discharge of its functions under the CERC Regulations
• Submit quarterly status to the Commission in respect of compliance of RPO by
the obligated entities
• Suggest appropriate action to the Commission if required for compliance of the
renewable purchase obligation
• Commission fix the remuneration and charges payable to the State Agency for
discharge of its functions

| 36
FOR Draft RPO Regulation for consideration
of SERCs:
• Effect of default
 Obligated entities have to deposit amount at the forbearance price
decided by the Central Commission into a separate fund on the basis of
the shortfall in units of RPO
 Separate fund to be created and maintained by such obligated entity
 Such fund to be utilized for purchase of the certificates
 If distribution licensee fails to deposit the amount directed by the
Commission within 15 days shall be considered breach of its license
condition
 Where any obligated entity fails to comply shall also be liable for penalty
as may be decided by the Commission under section 142 of the Act
 In case of genuine difficulty in complying with the RPO because of non-
availability of certificates, the obligated entity can approach the
Commission for carry forward to the next year

| 37
CERC Notification Dated 29.1.2010

Central Commission designated the National Load Despatch Centre (NLDC)


as the Central Agency for the purposes of the REC Regulations

• CERC Order on Determination of Forbearance and Floor Price for the REC
framework: 99/2010 dated 23.3.2010

Non solar REC Solar REC


(Rs/ MWh) (Rs/ MWh)
Forbearance Price 3,780 17,230

Floor Price 1,450 12,280

| 38
• Scenario I : APPC +REC floor price + GBI. In the short run, at a minimum
REC price (Rs 1.45 per kWh), Gujarat, Maharashtra, Rajasthan, Tamil
Nadu & AP would make a great sense

Total
Existing Preferred Mode (base-
State APPC REC min GBI Under
Preferential Tariff case)
REC
Rajasthan 2.48 1.45 0.5 4.43 3.83 Both at par
Gujarat 2.21 1.45 0.5 4.16 3.56 REC

3.50
Maharashtra 2.43 1.45 0.5 4.38 Both at par
to be revised

4.0
Madhya Pradesh 2.04 1.45 0.5 3.99 Preferential tariff
to be revised
Karnataka 1.85 1.45 0.5 3.8 3.70 Both at par

3.14
Kerala 1.46 1.45 0.5 3.41 Preferential tariff
to be revised

Tamilnadu 2.62 1.45 0.5 4.57 3.39 REC

Andhra Pradesh 1.78 1.45 0.5 3.73 3.50 REC

| 39
SCENARIO : II APPC + REC mean price + GBI
(since in the coming period, the market would built up, and REC pricing would be
market linked) In the long run, when the REC market price would stabilise
(assumed at a mean of the trading range @ Rs 2.60 per kWh), all states would
make a sense against the preferential tariff
Preferred
REC Total under Existing/Proposed
State APPC GBI Mode (median-
mean REC Preferential tariff
case)
Rajasthan 2.48 2.6 0.5 5.58 3.83 REC
Gujarat 2.21 2.6 0.5 5.31 3.56 REC
Maharashtra 2.43 2.6 0.5 5.53 3.50 REC
Madhya
2.04 2.6 0.5 5.14 4.0 REC
Pradesh
Karnataka 1.85 2.6 0.5 4.95 3.7 REC
Kerala 1.46 2.6 0.5 4.56 3.14 REC
TN 2.62 2.6 0.5 5.72 3.39 REC
Andhra
1.78 2.6 0.5 4.88 3.5 REC
Pradesh

| 40
Current status
• CERC
 Notified the REC regulations & registry (viz. NLDC)

• SERC
 GERC on 17th April 2010 came out with REC Regulation
 States floated the draft REC regulation based on FOR model regulations
 Maharashtra, Orissa, Uttar Pradesh, Jharkhand, Tamilnadu & Madhya Pradesh have invited
comments
 RPO obligation imposed on Captive and OA consumers
 Other States to follow

• FoR/CERC has floated : 19th March 2010


 Draft Procedure/Model Guidelines for REC Implementation
 Model Procedure/Guidelines for accreditation for RE Project
 Draft procedure for registration of eligible entities
 Draft Procedure for Issuance of RECs
 Draft Procedure for redemption

• Full fledged creation of REC market from FY 2011-12 onwards

IMPLEMENTATION BEFORE SEPTEMBER 2010

| 41
Thank you

| 42