gc advisors - rpo

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1 Sustainability. Value. Delivered. www.general-carbon.com How can RPO & REC impact you? GC Advisors: Leaders in Energy & Environmental Commodities

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Page 1: GC Advisors - RPO

1Sustainability. Value. Delivered. www.general-carbon.com

How can RPO & REC impact you?

GC Advisors: Leaders in Energy & Environmental Commodities

Page 2: GC Advisors - RPO

2Sustainability. Value. Delivered. www.general-carbon.com

Agenda

• What is Renewable Purchase Obligation (RPO)?

• What is Renewable Energy Certificate (REC)?

• Case study

• How GC Advisors can help you with RPO?

Page 3: GC Advisors - RPO

3Sustainability. Value. Delivered. www.general-carbon.com

RPO and REC

Page 4: GC Advisors - RPO

4Sustainability. Value. Delivered. www.general-carbon.com

Renewable Purchase Obligation (RPO)• The Electricity Act & National Action

Plan on Climate Change (NAPCC)

provide roadmap for increasing

renewable energy in generation

• Renewable Purchase Obligation

(RPO) is an obligation mandated by

CERC for promotion of renewable

energy generation

• RPO fulfilled is under two categories:– Non-Solar

– Solar (0.25% in most states)5%

10%15%

The Electricity Act, 2003

Optimal utilization of resource incl. RE

Tariff regulation for RE power promotion

Specify purchase obligation from RE sources

National Action Plan on Climate Change (NAPCC) – RPO Goal

2010

20152020

Page 5: GC Advisors - RPO

5Sustainability. Value. Delivered. www.general-carbon.com

Status of notification by StatesState RPO %

(FY 12-13)Notification Pref. Tariff

(Wind)APPC

Maharashtra 8.00 Final 3.38 -5.07 2.57*

Madhya Pradesh 4.00 Final 4.35 2.47*

Tamil Nadu 9.00* Gazetted 3.51 2.54

Rajasthan 7.10 Amendment to gazette awaited 5.18- 5.44 2.75*

Haryana 2.00 Final 4.08 2.77

Gujarat 7.00 Gazetted except OA and CPP 4.23 2.64

Chhattisgarh 5.75* Gazetted ~3.13 2.11- 4.66

Karnataka 7.0-10.0* Final 3.70 2.60

Andhra Pradesh 5.00 Final 4.70 2.00*

Orissa 5.50 Gazetted 5.31

Page 6: GC Advisors - RPO

6Sustainability. Value. Delivered. www.general-carbon.com

Who Needs To Comply With RPOs

• Distribution companies or DISCOMs

• Open access consumers– Procuring power from power exchanges (IEX/PXIL), traders, bilateral

agreements etc.

• Captive consumers– Generating and consuming power from captive coal/ natural gas

power plants

– Primarily industrial users - cement, steel, chemical etc.

Page 7: GC Advisors - RPO

7Sustainability. Value. Delivered. www.general-carbon.com

Renewable Energy Certificates (REC)

• REC is a tradable certificate of proof that one MWh of electricity has been injected (or deemed to be injected) to grid by an RE generator.

• REC types & Price band:

REC Up to April 2012 April 2012 - April 2017

Non Solar Rs 1,500 - 3,900 Rs 1,500 - 3,300

Solar Rs 12,000 – 17,000 Rs 9,300 – 13,400

Page 8: GC Advisors - RPO

8Sustainability. Value. Delivered. www.general-carbon.com

Non Solar REC Prices – Exchange traded prices

Mar/

11

May

/11

Jul/1

1

Sep/1

1

Nov/11

Jan/1

2

Mar/

12

May

/12

Jul/1

2

Sep/1

2

Nov/12

Jan/1

30

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

PXILIEX

INR/

REC

Page 9: GC Advisors - RPO

9Sustainability. Value. Delivered. www.general-carbon.com

Solar REC Prices – Exchange traded prices

May

/12

Jun/1

2Ju

l/12

Aug/12

Sep/1

2

Oct/12

Nov/12

Dec/12

Jan/1

3

Feb/1

311600

11800

12000

12200

12400

12600

12800

13000

13200

PXILIEX

Page 10: GC Advisors - RPO

10Sustainability. Value. Delivered. www.general-carbon.com

Case Study

Page 11: GC Advisors - RPO

11Sustainability. Value. Delivered. www.general-carbon.com

Case study - Manufacturing Firm With 3 Units

• Maharashtra Unit (298 MU consumption)– 131 MU from captive coal

– 36 MU waste heat recovery

– 131 MU from DISCOM/Grid

• Tamil Nadu Unit (209 MU consumption)– 120 MU from captive wind site (pref. wheeling and banking)

– 50 MU from power exchange

– 39 MU from grid

• Karnataka unit (140 MU consumption)– 140 MU from captive coal

• Compliance thorough Non-Solar RECs will have an annual cost

– ~ INR 2.62 Cr (at floor price of 1,500)

– ~ INR 5.78 Cr (at cap price of 3,300)

• Compliance thorough Solar RECs will have an annual cost– ~INR 75.7 Lakhs (at floor price of 9,300)– ~INR 1.1 Cr (at cap price of 13,400)

Page 12: GC Advisors - RPO

12Sustainability. Value. Delivered. www.general-carbon.com

Solar RPO

Non-solar RPO Consumption

(MU)Obligated

consumption (MU)RPO (%) RECs

neededCost of RPO (INR

1500 /REC)Cost of RPO (INR

3300 /REC)

Maharashtra 298 131 7.75% 10153 1,52,28,750 3,35,03,250

Tamil Nadu 209 170 8.95% 15,215 2,28,22,500 5,02,09,500

Karnataka 140 140 5.00% 7000 1,05,00,000 2,31,00,000

4.85 Cr 10.7 Cr

Consumption (MU)

Obligated consumption (MU)

RPO (%) RECs needed

Cost of RPO (INR 9300 /REC)

Cost of RPO (INR 13400 /REC)

Maharashtra 298 131 0.25% 328 30,45,750 43,88,500

Tamil Nadu 219 39 0.05% 425 39,52,500 56,95,000

69.9 Lacs 1.01 Cr

Case Study - Cost Of RPO

Page 13: GC Advisors - RPO

13Sustainability. Value. Delivered. www.general-carbon.com

Is WHR a renewable technology?• Electricity Act 2003 mandates the State Commission "to promote co-generation and

generation of electricity from renewable sources of energy”

• Cogeneration has been defined in the Act under Sec. 2(12) as “a process which simultaneously produces two or more forms of useful energy (including electricity)”.

• Waste heat recovery projects are classified as cogeneration (under bottoming cycle category)

– Under bottoming cycle, co-generation is ‘any facility that uses waste industrial heat for power generation by supplementing heat by any fossil fuel’. [Ref: Ministry of Power resolution (No.A-40/95-IPC-I dated 6-11-1996) on promotion of co-generation power plants]

– Typical areas of application include cement, steel, ceramic, gas and petro chemical industries.

• Few states like Rajasthan’s Commission have clearly stated waste heat recovery/ cogeneration projects to be classified as renewable energy projects

• MNRE has not approved WHR as a renewable based technology

Page 14: GC Advisors - RPO

14Sustainability. Value. Delivered. www.general-carbon.com

WHR/ Cogeneration: RPO & REC• Various states view WHR & RPO is different manners:

– Obligation of RPO even on co-generation facility• Eg. Gujarat

– Exemption from RPO compliance for co-generation plants• Eg. Maharashtra

– Separation of obligation for RE as well as cogeneration.• Eg. Orissa

– Permission in fulfillment of RPO through cogeneration based power as well.• Eg. Rajasthan, MP

• Madhya Pradesh amended its RPO regulation in April 2012 to allow RPO to be fulfilled though fossil-fuel based cogeneration projects as well

• Since MNRE has not approved WHR as a renewable technology, a WHR project cannot be registered under REC Mechanism even in those states where RPO fulfillment is allowed through WHR/ co-generation projects

Page 15: GC Advisors - RPO

15Sustainability. Value. Delivered. www.general-carbon.com

Are you prepared to comply your RPO1. Are you aware of the RPO compliance regulations

2. Have you assessed RPO applicability for your various plants with reference to the state specific regulations – Captive & Open Access

• Source (RE, Fossil-fuel, WHR / co-generation, mix-fuel, etc)

• Capacity

• Grid connectivity

3. Have you quantified the RPO in terms of MWh of the renewable power required– Each plant specific

• Solar

• Non- Solar

Page 16: GC Advisors - RPO

16Sustainability. Value. Delivered. www.general-carbon.com

Are you prepared to comply your RPO

4. Have you assessed the financial implication in fulfilment of RPO– Compliance

• in terms of REC purchase (REC floor & forbearance price clarity available till 2017)

• in terms of developing captive RE project (wherever possible after doing the assessment)– Biomass, wind, etc

– Solar

• in terms of third party tie-up of RE power

• in terms of setting up REC based RE projects

• in terms of mix of the above possibilities

– Non-compliance• in terms of Penalty (in terms of REC forbearance price)

Page 17: GC Advisors - RPO

17Sustainability. Value. Delivered. www.general-carbon.com

Are you prepared to comply your RPO5. Have you developed an RPO compliance Strategy at the organization & plant level

– Short term• Previous back log

• Current financial year

– Long term• Next five years

• upto 2020 & beyond

6. What actions have you taken to implement the RPO compliance strategy & resolve the implementation hurdles

– Time lag & effort required in setting up RE project

– Open access status/ issues / challenges in various state

– View regarding WHR projects

– No clarity on REC prices post 2017

– Other state / technology / sector /organisation policy specific issues

Page 18: GC Advisors - RPO

18Sustainability. Value. Delivered. www.general-carbon.com

GC Advisors

Page 19: GC Advisors - RPO

19Sustainability. Value. Delivered. www.general-carbon.com

GC Advisors

• Leading player in energy & environmental commodities

• Developing bilateral power contracts and providing advisory services for power market participants

• Developing renewable energy, energy efficiency, carbon offsets and sustainable development projects

• Operating across India, South East Asia and Africa

Page 20: GC Advisors - RPO

20Sustainability. Value. Delivered. www.general-carbon.com

Energy Vertical

• Power sourcing/sales– Short, Medium & Long term contracts

– Power Exchange based advisory services

• Regulatory and strategic support to provide a single-window approach

• Energy strategy – Assessing renewable purchase obligation and cost

effective sourcing plan

– Energy consumption and developing a management plan

Page 21: GC Advisors - RPO

21Sustainability. Value. Delivered. www.general-carbon.com

Environmental Commodities

• Carbon offsets– 100 million CERs & 20 million VERs

– Carbon offset projects across - India, Indonesia, Thailand, Sri Lanka, Nigeria, Ethiopia & Kenya

– Fixed, floating, spot & exotic structures including upfront payment

– Equity, Debt and mezzanine financing based on carbon credits

• Renewable Energy Certificates (RECs)– 350 MW of REC projects across India

– Develop RECs through advisory and turnkey projects

• Energy efficiency certificates (EsCerts)– Engaging large clients to prepare for PAT

– Integrate PAT and REC obligations to develop holistic compliance toolkit

Page 22: GC Advisors - RPO

22Sustainability. Value. Delivered. www.general-carbon.com

GC Advisors: Knowledge base

• Wind energy portfolio of > 2000 MW– TN, Karnataka, AP, Maharashtra, Gujarat, MP and

Rajasthan

• Natural gas portfolio of > 2000 MW

• Hydro portfolio of > 600 MW

• Biomass portfolio of > 400 MW

• Supercritical based portfolio of > 10,000 MWs

Page 23: GC Advisors - RPO

23Sustainability. Value. Delivered. www.general-carbon.com

GC Advisors–

Develop your RPO compliance plan

Page 24: GC Advisors - RPO

24Sustainability. Value. Delivered. www.general-carbon.com

GC Advisors: Assesses how RPO impacts you

• Renewable Purchase Obligation (RPO) is the minimum percentage of renewable energy share in the area of a – Distribution licensee

– Open Access Consumer

– Captive consumer

• RPO will impact you – If you are buying power from the bilateral market or exchanges

– If you have captive generation capacity at your plants

• Existing wind capacity where you are availing preferential wheeling and banking benefits will not be eligible to help you fulfill your RPO.

Page 25: GC Advisors - RPO

25Sustainability. Value. Delivered. www.general-carbon.com

GC Advisors: Quantify the impact of RPO

• RPO regulations vary by state and distribution company; understand what applies to your units.

• Assess total power consumption and identify power sourced from:– Open access (bilateral or exchange)

– Captive generation

• Compute any renewable power in your mix.

• Compute your RPO obligation and therefore your shortfall.

Page 26: GC Advisors - RPO

26Sustainability. Value. Delivered. www.general-carbon.com

GC Advisors: Develop RPO compliance plan

• Assess the options available to you– Buy Vs Build

• Technology (Wind, Solar, Biomass, Small Hydro etc.)

• Suitability of technology

• Cost of power from shortlisted technology

• Regulatory support– Petitioning / facilitate in regulatory clarification (eg. inclusion of WHR /

cogeneration projects as renewable)

• RPO compliance cost– Likelihood of enforcement

– Cost of procurement of REC

• Finalize RPO plan

Page 27: GC Advisors - RPO

27Sustainability. Value. Delivered. www.general-carbon.com

Contact Us

MumbaiRameez Shaikh+91 9920 033 [email protected]

New Delhi

Arijit Banerjee

+91 9999 621 373

[email protected]

Vadodara

Sunny Gangar

+91 9322 456 789

[email protected]

To develop your RPO compliance plan, contact us:

Chennai

Priya Ranganayaki

+91 9962 526 876

[email protected]