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DISCUSSION ON REC & ESC

Sandeep Melana

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The Presentation Covers• Background • Conceptual framework of REC mechanism• Operational Framework• ESC

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India’s position on climate change

•India’s per capita CO2 emissions are 1.05 tonne as against world

average of 4.22 tonne

•There should be no adverse impact of GHG mitigation on GDP growth

and poverty alleviation in developing countries.

•GHG mitigation must be based on the principle of common but

differentiated responsibilities (including historical emissions levels) and

respective capabilities and result in actual global reduction in GHG

emissions.

•India’s per capita emissions will not exceed those of the developed

countries.

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Background• Section 86 (1) (e) of EA, 03,• NAPCC envisages several measures to address global warming• Share of RE should be increases in total electrical consumption• 5% for 2009-10 with an escalation of 1% each year till 2020 • Strong Policy Measures, proactive regulatory framework, innovative

financing instruments• NAPCC Launched in June 2008

Conceptualizes living in harmony with Nature

Aims at significantly increasing the share of solar energy in

the total energy mix

Aims at saving of 10,000 MW by the end of 11th Five Year Plan in 2012. ESC

REC

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Renewable Energy Certificates – General Features• 1 ”instrument” or “certificate” 1 MWh of renewable energy generated≃• Mechanism is used in many countries

– RPS (US & Japan),

– ROCs (UK),

– RECs (Australia),• Usually certificates are traded to meet the mandatory• targets for RE purchases by utilities/DISCOMs

– However, tradeability is not mandatory• Targets establish demand

– Market for RECs sets price

– At times regulators fixes the ceiling price ~ in form of penalty to

bring in certainty• REC Mechanism is compatible with competitive market

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Renewable Energy Certificate• Certificate of power generated from RE sources• It represents the environmental benefit apart from electricity generation• RE generator can sell 2 different products ---- Electricity & Environment Att.

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Drivers for RECs in India• Huge RE Potential but not evenly distributed• EA 2003 mandates SERC with the function of RE promotion within the state• Renewable Purchase Obligation • Each SERC is different • No mechanism to purchase RE from outside the State

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Objectives for REC Mechanism in India

• Effective implementation of RPO regulation in all States in India• Increased flexibility for participants to carry out RE transactions• Overcoming geographical constraints to harness available RE

sources• Reduce transaction costs for RE transactions• Create competition among different RE technologies• Development of all encompassing incentive mechanism• Reduce risks for local distribution licensee.

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Operational Framework for REC Mechanism

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Operational Framework

Issuance of REC Entity operating NLDC (Central Registry) to issue REC ,based on

information from SLDC about injection of RE into grid Eligible RE generator will receive a certificate for a specified quantity

of electricity generated

Exchange of REC On Power Exchanges approved by CERC

Carry Over of REC In surplus scenario max 25% of REC, generated in a year, can be

carried over only for next year

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Salient features of REC Framework

• RE generators with capacity untied in PPA will have an option to sell electricity and REC separately

• REC will be issued to RE Generators only• 1 MWh 1 REC • Purchase of REC would be considered as purchase of

RE • REC to overcome geographical constraints and provide

flexibility to achieve RPO compliance

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Eligibility criteria Eligible

RE technologies recognized by MNRE Grid connected RE generators of at least 250 KW capacity.

Not eligible RE project with existing PPA If RE sale at preferential Tariff

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Energy Saving Certificate

• NAPCC NMEEE• Target Energy Saving of 10000 MW by 2012• To achieve this target ESCs are proposed to energy

intensive industries• Specific Energy Consumption• Baseline Year for SEC – 2008• BEE – Nodal Egency

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Facilitating Launching

Evaluating Performance

Acquisition & Maintenance of REC

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Conclusion• Proposed ‘Renewable Energy Certificate’ has following distinct advantages:

– Offers viable solution to execute large number of RE transactions in cost effective manner

– Enables inter-State sale of Renewable Energy

– Creates competition among different RE technologies

– Compliant with the provisions of the Electricity Act 2003

– Not in conflict with either PTC or Carbon Credits

– Supports implementation of Generation Based Incentives

– Could be extended to Energy Efficiency Certificates.

• Existing legal framework does not prohibit implementation of REC mechanism for inter-state sales.

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