rec & rpo update april 2012 - general carbon

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

Satish Kashyap

Rameez Shaikh

[email protected]

REC – What lies ahead

Leader in energy & environmental commodities

mailto:[email protected]




RPO & REC • Renewable Purchase Obligation is the

obligation mandated by SERC for

promotion of renewable energy

• RPO is the minimum percentage of

renewable energy share in consumption

– Distribution licensee

– Open Access Consumer

– Captive consumer

• 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

– Solar

– Non-solar

National Action Plan on Climate Change

(NAPCC)

RPO Target for India

5%

10%15%

2010 2015 2020


REC status – Till April 4, 2012

• Key stats

– 455 projects (2668 MW) accredited

– 366 project (2318 MW) registered

• Focus on non-solar as only 4 solar projects accredited

• Apart from Bagasse projects other project types progressing smoothly

– UP & Maharashtra

Bio-fuel (Bagasse), 67

0 MW

Biomass, 547

Others, 2 MW

Small Hydro, 166

MW

Wind, 1,267 MW

Breakup of accredited capacity (MW)

UP, 683 MW

Maharashtra, 681 MW

Tamil Nadu, 561

MW

Gujarat, 290 MW CH, 103

MW

HP, 47 MW

Others, 164 MW

Accredited capacity (State MW)


REC estimate - I

• Estimated REC supply based on PLF– Wind 25%

– Small Hydro 60%

– Biomass 70%

– Biofuel cogen 60%

• Biofuel cogen is primarily bagasse – Projects earlier accredited at peak

captive capacity (crushing season)

– Projects are now being accredited for off season captive consumption

– During season captive capacity is larger than off season

– Generation of REC may be in excess of 100% under new rules

– Old project capacity is under modification (UP)

Type RECs in 2013

Biofuel cogeneration 35,23,780

Biomass 33,53,959

Others 10,228

Small Hydro 8,72,496

Wind 27,73,821

Total 1,05,34,284

Avg per month 2013 8,77,857

Supply from existing accredited

capacity

General Carbon Estimate


REC estimate - II

• Existing projects made up of

– Old Projects (2289 MW)

• Old third party sale/ Captive

consumption

– New capacity addition (378 MW)

New projects, 378

MW

Old projects, 2289

MW

Type

New project

addition (MW)

REC

Generation in

2013*

Biofuel

cogeneration 200 5,25,600

Biomass 100 3,06,600

Others 20 61,320

Small Hydro 50 1,31,400

Wind 500 5,47,500

Total 870 15,72,420

Avg per month

2013 1,31,035

New capacity addition

General Carbon Estimate. Six months of generation for all projects


REC estimate

• General Carbon’s estimate of REC issuance 2013

– Annual issuance 2013 1,21,06,704

– Avg. monthly issuance 2013 10,08,892

– Avg. monthly in 2012 87,809

• Estimated value of REC market in 2013

– @1,500 = 1,816 Crores

– @2,000 = 2,421 Crores


Status of notification by StatesState RPO % Notification Pref. Tariff

(Wind)APPC

Maharashtra 6.75 Final 3.58 – 5.37 2.57

Madhya Pradesh 2.10 Final 4.35

Tamil Nadu 9.00 Gazetted 3.39 2.37

Rajasthan 6.00 Amendment to gazette awaited 3.87- 4.08 2.57

Haryana 1.50 Final 4.08 2.77

Gujarat 5.50 Gazetted except OA and CPP 3.56 2.64

Chhattisgarh 5.00 Gazetted ~3.13 1.67- 3.26

Karnataka 7.0-10.0 Final 3.70 2.73

Andhra Pradesh 5.00 Draft 3.50

Orissa 4.90 Gazetted 5.31


REC Buyers registered till March 2012

• DISCOMs– Metropolitan discom

– Union Territory discom

• Private DISCOMS– 3 Major Private Discoms

• Open Access consumers– TN & Punjab – Exchange based and & Bilateral market buyers

• Private captive power producers– Few large MNCs and Indian corporates

• PSUs (Captive power producers)– Large business houses producing Aluminum (PSU), Steel, Oil, Cement (MNC)

– POSCO

• Missing in the market– Most State DISCOMs


Demand for RECsFY 2012 FY 2013 Unit

Gross power requirement (NAPCC) 968.7 1065.5 BUs

RPO Target (%) 7% 8% %

RE Generation 2010 38.7 BUs

RE Generation projected (~) 59.5 68.4 BUs

RE power required 67.8 85.2 BUs

RE power shortfall 8.3 16.8 BUs

REC issuance (FY12 actual, FY 13 GC est.) 1.1 12.1 BUs

Total shortfall in RE 7.3 4.7 BUs

% Shortfall in RPO Target 0.8% 0.4% %

• Data source – NAPCC, CEA, GC estimate

1000 MW of wind power equals 2.19 BUs


CERC’s enforcement options

• Push SERCs to enforce penalty

• Tap funds dispersed to states to fund the

procurement of REC

• Define tolerance level for RPO violation

– Allow carry forward for certain % of RPO for 1 to 3

years

– Allow up to 20% REC non compliance for one year


Forbearance price may not be achieved

• Data reveals a shortfall in 2012 & 2013 RPO

– This has not translated to forbearance price of RECs

• RPO enforcement is key

– Circulars to CPPs and OAs in three states till March 2012

– Agencies still trying to obtain data on capacity of CPPs and

generation data

– Largest obligations will be on state run DISCOMs

• REC price view is a view on enforcement or rather fear

of enforcement (fear factor)


REC pricing

• Most Industry observers see little likelihood of state DISCOMs buying RECs

• DISCOMs will require major push for compliance from Regulators

• Progress on enforcing RPO needs to be actively monitored and will impact REC prices in a big way

• CERC and SERC pressure will ensure clearing of RECs at floor price

• Short term price view – INR 2,000 per REC

• Medium term price view – INR 1,800 per REC


REC Prices – Exchange traded prices

1,000

1,500

2,000

2,500

3,000

3,500

4,000 M

ar-1

1

Apr

-11

May

-11

Jun-

11

Jul-1

1

Aug

-11

Sep-

11

Oct

-11

Nov

-11

Dec

-11

Jan-

12

Feb-

12

Mar

-12

Apr

-12

INR

/REC

PXIL

IEX


Disclaimer: The views and opinions expressed herein are those of the authors and do not necessarily represent the views or opinion ofGeneral Carbon. This document is not meant to guide investment or any other action including investment into projects or emission reductionoffsets. Anybody relying on information or projections provided in this document for decisions or actions will do so at his/her own risk andthe authors and General Carbon accept no liability arising from impact of such decisions or actions.

REC – What lies ahead!

Leader in energy & environmental commodities

[email protected]

April - 2012




rec & rpo update april 2012 - general carbon

Technology

solar projects

bagasse projects

mw wind

existing projects

season captive capacity

mw old

mwnew projects

mwold projects