Certificates from 15 registered generators to be traded at power exchanges; CERC specifies price bands
The 108 renewable energy certificates (RECs), from 15 registered renewable energy (RE) generators, would be traded at power exchanges from March 30 and on the last Wednesday of every month thereafter. These RECs have been approved by the Central Electricity Regulatory Commission (CERC).
REC is a tradable receipt, representing a value of one megawatt hour (MwH) of power injected into the grid through renewable resources. This would be issued to a generator of RE upon complying with conditions. Currently, 108 RECs issued represent 140 Mw power. All registered RE generators are either wind or biomass, not solar. The trading is important, since all states have to buy a certain proportion of their total power purchase from renewable resources. This purchase of RE power can only be done through power exchanges.
Policies framed under the Electricity Act, 2003, and also the National Action Plan on Climate Change provide for a road map for increasing the share of RE in total generation capacity in the country. Due to uneven spread of RE resources across the country, states have not been able to mandate a fixed renewable energy purchase obligation (RPO) for all states.
To begin with, all states have been advised RPO in the range of one-five per cent of total energy consumption, depending on the availability of RE power. It is one per cent for places like Delhi, which have no renewable resource. States like Gujarat or Tamil Nadu, with abundant wind energy, have a stipulated RPO of five per cent.
Meanwhile, availing power through RECs would push up incremental cost of power by 1.50 paise per unit in the short-term. But from 2015, the incremental cost will be zero considering the fact that the cost of conventional power will also go up in the meantime, a study by CERC estimated.
Officials explained that this cost may or may not be passed on directly to consumers. “If the power distributor decides to raise the tariff when it seeks a revision, then it could pass on the cost to the end user. If it seeks subsidy from the state to make up for the loss, then it is a different case”.
| POWER PACK |
| TRIGGER FOR RE PURCHASE |
| * Electricity Act 2003 and National Action Plan for Climate Change recommended power purchase from renewable resources — five per cent of total power purchase by 2010, 10 per cent by 2015 and 15 per cent by 2020 |
| * Accordingly, every state has a renewable power purchase obligation |
| * RE resources differ across states and thus standalone generation for all states is not possible |
| AVAILABILITY |
| * According to CERC-Crisil study, available RE potential in India is approximately 85,000 Mw for non-solar and more than 100,000 Mw for solar |
| * Installed capacity is only 17,220 Mw |
| * 69 per cent of installed RE capacity is from wind, 16 per cent from small hydro, eight per cent from cogeneration and seven per cent from other sources |
| * Current generation rate across states - wind (Rs 3.50-5.26 per unit), hydro (Rs 3.14-4.35 per unit ) and solar (Rs 12.54-17.14 per MwH) |
| * Major generating states are Gujarat, Rajasthan, Tamil Nadu, Maharashtra, Karnataka |
| TRADING MECHANISM |
| * REC , trading receipt derived from underlying electricity energy, based on the concept of separating environmental or green power attribute of renewable generation of electricity |
| * CERC appointed National Load and Despatch Centre as central agency for the scheme |
| * CERC price band for non-solar is Rs 1,500-3,900 per MwH, for solar it is Rs 12,000-17,000 per MwH |
| * Buyers are state distributing companies, open access consumers and captive power plants |
CERC has specified a price band of Rs 1,200-1,500 per MwH for trading of non-solar RECs. While solar RECs will be traded in a band of Rs 1500-3,900 per MwH. The band, called floor and forbearance price band for REC trading, has been prescribed by CERC to avoid wide fluctuation, given the high cost of RE generation compared to conventional power.
While 16 states have already notified their guidelines for meeting RPO, seven have drafted the regulation for final approval. Delhi, the largest power consumer in India has not even drafted any guidelines. Nor have West Bengal or Andhra Pradesh.
The CERC in its meeting with all state regulatory bodies in April, proposed to take up the issue, now that renewable power purchase is facilitated through power exchanges, said an official source.
