Presentation on Global REC Market by Shri Stephen R.  Fernands, President, Customized Energy Solutions

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  • 7/31/2019 Presentation on Global REC Market by Shri Stephen R. Fernands, President, Customized Energy Solutions

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    Customized Energy Solutions Ltd.Customized Energy Solutions Ltd.

    1528 Walnut Street, 221528 Walnut Street, 22ndnd FloorFloor

    Philadelphia, PA 19102 USAPhiladelphia, PA 19102 USA

    Phone: +1Phone: +1--215215--875875--94409440

    Fax: +1Fax: +1--215215--875875--94909490

    info@cesinfo@ces--ltd.comltd.com

    Customized Energy Solutions India Pvt. Ltd.

    A-501 G-O Square Aundh-Hinjewadi Link Road

    Wakad, Pune 411057

    Phone +91-20-30226106

    Fax: +91-20-30201408

    info@ces-ltd.com

    GlobalGlobal Renewable Energy CreditRenewable Energy Credit

    Markets:Markets:

    AA SnapshotSnapshotRenewable Energy CertificatesRenewable Energy Certificates WorkshopWorkshop

    2424thth June 2011June 2011

  • 7/31/2019 Presentation on Global REC Market by Shri Stephen R. Fernands, President, Customized Energy Solutions

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    Customized Energy Solutions: ExperienceCustomized Energy Solutions: Experience

    2

    20Projects

    New Renewable

    Projects

    Analyzed in 2010

    21,000MWh

    Daily Scheduled

    over 1500 MW of

    Generation

    Capacity and

    Load Purchases

    1500MW

    Generation and

    load curtailment

    dynamicallyscheduled into

    SCADA system

    from 2MW to

    150MW

    600,000MWh

    RECs sold in2010

    Including

    10,000MWh

    of Solar RECs

    230

    ClientsServed in 2010

    Clients include Mittal

    Steel, GE, AES,

    Iberdrola, Gamesa,

    Pepsico, BP and

    others.

    Consulting: Maximizing generation revenues andminimizing costs of procurement

    Trading: India Licensed Power Marketer

    Operations: Smart Grid Communication

    Technology and 24x7 Operations Center

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  • 7/31/2019 Presentation on Global REC Market by Shri Stephen R. Fernands, President, Customized Energy Solutions

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    Global Picture of Renewable PowerGlobal Picture of Renewable Power

    4Renewables 2010 status report

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    Where does India Fit Into Global Renewable MakeupWhere does India Fit Into Global Renewable Makeup

    5

    India is one of the leaders in renewable technology already and is poised to

    be one of the most significant participants in the rapidly growing global

    renewable market.

  • 7/31/2019 Presentation on Global REC Market by Shri Stephen R. Fernands, President, Customized Energy Solutions

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    4 Dominant Mechanisms for Renewable Development4 Dominant Mechanisms for Renewable Development

    6

    Strength: LargeMarkets

    Weakness: Oftenviewed as extra

    Strength: Allows marketsto drive prices

    Weakness: Rules can beeasily changed

    Strength: Easy toImplement

    Weakness:Transaction Costs

    Strength: RevenueCertainty

    Weakness: Doesnt

    adjust to Market

    Feed In

    Tariff

    FavorableTaxation

    CarbonFinancing

    RenewableEnergy

    Credits

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    Renewable Energy CertificatesRenewable Energy Certificates

    Tradable (typically) financial instrumentRepresents the green of one MWh of energy

    produced from a renewable resource

    Can be traded as a commodity bundled or unbundledfrom underlying energy localized spot markets, multi-

    year strips, long-term PPAs

    Satisfy individual state RPS compliance

    Meet voluntary or internal mandates

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  • 7/31/2019 Presentation on Global REC Market by Shri Stephen R. Fernands, President, Customized Energy Solutions

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    Essential Elements of a REC ProgramEssential Elements of a REC Program

    All Global REC markets have some similarities theseinclude;

    Defining Attributes that Qualify as Renewable

    Technology Carve Outs, tiers of different renewable sources

    Vintages- Length of time from energy being generated to expiry of REC Locational/Deliverability requirements

    Mandatory or goal compliance levels

    Alternative Compliance Payment/Penalty levels (essentially

    act as price cap on markets if supply shortage or can providefloor on market if there is an oversupply)

    Establishing tracking system for credits (integrity of system is

    essential)

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    Countries and States Implementing REC ProgramsCountries and States Implementing REC Programs

    9

    More than 56 States and

    Countries have instituted RPS

    Standards over past 26 years. REC

    programs one of ways to

    implement RPS system.

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    US Compliance REC MarketsUS Compliance REC Markets OverviewOverview

    State Specific, no national REC marketFederal policy, markets unlikely until at least 2012

    Compliance markets exist in States with Renewable

    Portfolio Standards (RPS)

    RPSs are similar in construct and makeup but each State

    has unique requirements and goals

    REC trading between states is typically allowed within

    an RTO, although exceptions are common

    Compliance REC markets are highly illiquid

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    US REC MarketsUS REC Markets RPS PoliciesRPS Policies

    11

    Renewable portfolio standard

    Renewable portfolio goal

    Solar water heating eligible

    *Extra credit for solar or customer-sited renewables

    Includes non-renewable alternative resources

    WA: 15% x 2020*

    CA: 33% x 2020

    NV: 25% x 2025*

    AZ: 15% x 2025

    NM: 20% x 2020 (IOUs)10% x 2020 (co-ops)

    HI: 40% x 2030

    Minimum solar or customer-sited requirement

    TX: 5,880 MW x 2015

    UT: 20% by 2025*

    CO: 30% by 2020 (IOUs)10% by 2020 (co-ops & large munis)*

    MT: 15% x 2015

    ND: 10% x 2015

    SD: 10% x 2015

    IA: 105 MW

    MN: 25% x 2025(Xcel: 30% x 2020)

    MO: 15% x 2021

    WI: Varies by utility;10% x 2015 statewide

    MI: 10% + 1,100 MWx 2015*

    OH: 25% x 2025

    ME: 30% x 2000New RE: 10% x 2017

    NH: 23.8% x 2025

    MA: 22.1% x 2020New RE: 15% x 2020

    (+1% annually thereafter)

    RI: 16% x 2020

    CT: 23% x 2020

    NY: 29% x 2015

    NJ: 22.5% x 2021PA: ~18% x 2021

    MD: 20% x 2022

    DE: 25% x 2026*

    DC: 20% x 2020

    VA: 15% x 2025*

    NC: 12.5% x 2021 (IOUs)10% x 2018 (co-ops & munis)

    VT: (1) RE meets any increasein retail sales x 2012;

    (2) 20% RE & CHP x 2017

    KS: 20% x 2020

    OR: 25% x 2025 (large utilities)*5% - 10% x 2025 (smaller utilities)

    IL: 25% x 2025 WV: 25% x 2025*

    29 states +DC and PR have

    an RPS(7 states have goals)

    DCOK: 15% x 2015

    PR: 20% x 2035

    l

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    Renewable Energy Credit TrackingRenewable Energy Credit Tracking

    12

    A l

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    REC Projected Demand by RegionREC Projected Demand by Region

    Projected gross demand by REC region (TWh)

    Source: Bloomberg New Energy Finance

    Note: Gross demand excludes voluntary RPS. NY demand is given explicitly by NYSERDA; values shown here are

    for Main Tier only. SREC demand includes distributed generation carve-outs, most of which are expected to be

    satisfied primarily through solar PV.

    13

    2010 2011 2012

    M-RETS 9.6 11 16.7

    NEPOOL 14.5 16.7 18.6

    PJM 27 35.8 44.8

    WREGIS 8.6 14.1 17.3

    CAISO 48.8 50.4 51.3

    NYISO 2.9 4.3 5.6

    SRECs 0.7 2.0 2.5

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    REC Projected Supply by RegionREC Projected Supply by Region

    Installed capacity by REC region Existing and projected capacity1 (GW)

    Source: Bloomberg New Energy Finance

    Projected capacity consists of both identified and unidentified projected capacity. Identified projected capacity

    consists of bottom-up, project-specific capacity expected to come online; the further out the projections, the

    higher the percentage of projected capacity that comes from unidentified portion.

    14

    2010 2011 2012

    M-RETS 9.1 9.3 11

    NEPOOL 3 3.1 3.3PJM 6.2 7.4 8.2