Day-4, Mr. MG Raout

1. Presentation on
Promotion of Renewable Energy
– Exchange perspective
The Regulators & Policymakers Retreat 2013, Goa
August 4, 2013

2. 2
Wind
Power, 18552
MW, 69%
Small
Hydro, 3506
MW, 13%
Biomass, 124
9 MW, 5%
Bagase
cogeneration
, 2281
MW, 8%
Solar, 1236
MW, 4%Municipal
Waste, 96
MW, 0%
Nuclear
4,780
MW, 2% Hydro
39,623
MW, 18%
Renewable
Energy
27,542
MW, 12%
Coal
131,628
MW, 58%
Gas 20,360
MW, 9%
Diesel 1,200
MW, 1%
Renewable Energy
Source: CEA Report – May 2013
Renewable Energy Potential (GW)
Installed Capacity 223,125 MW Source: MNRE, 28709 MW – June 30,2013

3. 3
Legal & Regulatory provisions
 Section 86 (1) (e) of EA 2003 provides the Regulatory framework
“Section 86 (Functions of the State Commission)
Promote co-generation and generation of electricity from renewable sources of energy
by providing suitable measures for connectivity with the grid and sale of electricity to
any person, and also specify, for purchase of electricity from such sources, a
percentage of the total consumption of electricity in the area of a distribution
licensee;”
 All SERC’s have notified Regulations on Regulated purchases and RPO
Obligation
 Specified categories for promoting different types of RE technologies
 Solar, Non Solar [Small Hydro (< 25 MW), Mini Hydro, Bio Mass/Bio Gas & Co-Generation]

4. 4
RPO target
S. No. State Source FY 12-13 FY 13-14 FY 14-15 FY 15-16 FY 16-17 FY 17-18 FY 18-19 FY 19-20 FY 20-21 FY 21-22
Wind 5.50%
Solar 1.00%
Others 0.50%
Total 7.0%
Non-solar 7.75% 8.50% 8.50% 8.50%
Solar 0.25% 0.50% 0.50% 0.50%
Total 8.0% 9.00% 9.00% 9.00%
3 Chhattissgarh 5.75%
Non-solar 3.40% 4.70% 6.00%
Solar 0.60% 0.80% 1.00%
Total 4.0% 5.50% 7.00%
Non-solar 2.60%
Solar 0.40%
Total 3.00%
Non-Solar 5.0%
Solar 0.5%
Total 5.5%
Non-Solar 5%
Solar 1.00%
Total 6%
Non-Solar 6.35% 7.00%
Solar 0.75% 1.00%
Total 7.10% 8.20%
Non-Solar 10.00% 10.00% 10.00% 11.00% 12.00% 13.00% 14.00% 15.00% 15.50% 16.00%
Solar 0.25% 0.25% 0.25% 0.25% 0.25% 0.50% 0.75% 1.00% 2.00% 3.00%
Total 10.25% 10.25% 10.25% 11.25% 12.25% 13.50% 14.75% 16.00% 17.50% 19.00%
Non-Solar 2.83% 3.37% 3.81%
Solar 0.07% 0.13% 0.19%
Total 2.90% 3.50% 4.00%
Non-Solar 2.00% 3.00%
Solar 0.05% 0.10%
Total 2.05% 3.10%
Non-Solar 3.25% 4.60% 6.0% 7.30% 8.65%
Solar 0.15% 0.20% 0.3% 0.30% 0.35%
Total 3.40% 4.80% 6.2% 7.60% 9.00%
13 Jammu & Kashmir Total 5%
4 Madhya Pradesh
10 Punjab
9
8 Rajasthan
12 Delhi
5 JERC For Goa and UT's
11 Haryana
State-wise Yearwise RPO targets
Himachal Pradesh
7 Uttar Pradesh
1 Gujarat
2 Maharashtra
6 Uttaranchal

5. 5
RPO target
S. No. State Source FY 12-13 FY 13-14 FY 14-15 FY 15-16 FY 16-17 FY 17-18 FY 18-19 FY 19-20 FY 20-21 FY 21-22
Solar 0.15% 0.20% 0.25% 0.30%
Non-solar 1.4% 1.6% 1.8% 2%
Co-gen 3.95% 4.2% 4.45% 4.70%
Total 5.50% 6% 6.5% 7%
Solar 1.0%
Non-solar 3.0%
Total 4.0%
Non-solar 3.75% 4.70% 5.60% 6.50% 7.40%
Solar 0.3% 0.3% 0% 0.5% 0.6%
Total 4.00% 4.0% 5.00% 6.00% 7.0% 8.0%
Non-solar 4% 4.00% 4.25%
Solar 0% 0.50% 0.75% 1.00% 1.25% 1.50% 1.75% 2.00% 2.50% 3.00%
Total 4% 5% 5%
18 Tamil Nadu 9%
Non-solar 4.75% 4.75% 4.75% 4.75% 4.75%
Solar 0.25% 0.25% 0.25% 0.25% 0.25%
Total 5.0% 5.0% 5.0% 5.0% 5.00%
20 Karnataka 11%
Non-Solar 3.65% 3.95% 4.25% 4.55% 4.85% 5.15% 5.45% 5.75% 6.05% 6.35%
Solar 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
Total 3.9% 4.2% 4.5% 4.8% 5.10% 5.40% 5.70% 6.00% 6.30% 6.60%
Non-solar 4% 5% 7%
Solar 0.15% 0.20% 0.25%
Total 4.20% 5.60% 7.00%
Non-Solar 4% 5% 7%
Solar 0.10% 0.15% 0.20%
Total 4.20% 5.60% 7.00%
24 Meghalaya 1%
Non-Solar 4.75%
Solar 0.25%
Total 5%
Non-solar 6.75%
Solar 0.25%
Total 7%
Non-solar 1.90%
Solar 0.10%
Total 2%
Non-solar 7.75%
Solar 0.25%
Total 8.00%
27 Tripura
28 Nagaland
State-wise Yearwise RPO targets
Mizoram
Orissa14
25
19
23
15 Jharkhand
26
Manipur
Kerala21
22 Assam
Arunachal Pradesh
17 Bihar
Andhra Pradesh
16 West Bengal

6. 6
Framework
RE Generation
Sale at
Preferential Tariff
Distribution
licensees
Sale under REC
Framework
Electricity
Component
Distribution licensee
at a Price not more
than Average Power
Purchase Cost
Third Party sale at
mutually agreed Price
Sale through Power
Exchange
Renewable
Component
Sold to Obligated /
Voluntary Entity (on
Power Exchange)

7. 7
Salient Features of REC Regulations
 REC Issuing Authority
 The National Load Despatch Centre (NLDC) is the Nodal Agency for implementing the REC scheme
 NLDC to issue REC to the Eligible entities based on the Energy Injection Report prepared by SLDC
 Trade of REC
 REC is valid for a period of 730 days from the date of issuance
 Transaction of REC shall takes place only at Power Exchanges
 REC issued to an Eligible entity is redeemed on being sold to an Obligated or Voluntary Entity
 Only single trade (once through) permissible, multiple trades not allowed
 Price Range
Particular
Period : Apr 2012 – Mar 2017
Solar Non Solar
Floor Price (in `) 9300 1500
Forbearance Price (in `) 13400 3300

8. 8
REC – Issuance & Trade
 H1 generally Seller drive vis-à-vis H2 being Buyer driven – Q3 & Q4 of FY 12-13 subdued vis-à-vis Q3 & Q4 of FY 11-12
 Obligated entities tend to participate in Q4 to comply with RPO target
73,965
25,47,987
0
500000
1000000
1500000
2000000
2500000
0
100000
200000
300000
400000
500000
600000
700000
Mar-11
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
REC(Closingbalance)
NoofRECs(Issuance&Redemption)
REC Issued REC Redeemed Closing Balance

9. 9
REC Trade Price (Solar & Non-Solar)
0
2000
4000
6000
8000
10000
12000
14000
16000
0
500
1000
1500
2000
2500
3000
3500
4000
4500
Mar-11
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
PriceSolarREC(in`)
PriceNonSolarREC(in`)
Month
Mar-
11
Apr-
11
May-
11
Jun-
11
Jul-11
Aug-
11
Sep-
11
Oct-
11
Nov-
11
Dec-
11
Jan-
12
Feb-
12
Mar-
12
Apr-
12
May-
12
Jun-
12
Jul-12
Aug-
12
Sep-
12
Oct-
12
Nov-
12
Dec-
12
Jan-
13
Feb-
13
Mar-
13
Apr-
13
May-
13
Jun-
13
PXIL Solar MCP (Rs./REC) 1300 1250 1280 1285 1290 1250 1210 1210 1250 1300 1300 1200 1099 9300
IEX Solar MCP (Rs./REC) 1300 1275 1280 1285 1250 1268 1272 1262 1250 1250 1340 1220 1149 9300
PXIL MCP (Rs./REC) 2225 0 1500 1500 1550 1710 2300 3000 2800 2950 3051 3051 3100 2201 2150 2460 2202 1555 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500
IEX - MCP(Rs./REC) 3900 1500 1500 1505 1555 1800 2300 2700 2900 2950 3051 3066 2900 2201 2402 2402 2000 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500
Monthly REC Trade Price

10. 10
Challenges for REC mechanism
 Comprehensive monitoring & Verification of
compliance to RPO targets to be devised for all States
 Laxity in levying penalty in case of non-compliance
 Arrest the long period of non-compliance
Developers & Investors are revisiting REC route as a viable mechanism

11. 11
Alternate approach (1/2)
 Mandatory purchase by Thermal Generating plants
 ISGS have contracted their capacities with beneficiaries (i.e. all the States and UTs
of the country)
 ISGS that generate power from Thermal sources vis. from Coal and Gas, should be
levied RPO targets on behalf of the beneficiaries
 ISGS to purchase RECs on PXs by participating in monthly REC Auctions
 REC purchase cost to be a pass-through in ARR of beneficiaries
 International experience
 South Korea enacted the Renewable Portfolio Standard -2010,
 Generators >500 MW to generate a minimum of 2% from Renewable sources in 2012.
 Target is increased by 1% every year and eventually reaches 10% by 2022
 Defaulting Generators to fulfill their targets by purchasing RECs on Power Exchange

12. 12
Alternate approach (2/2)
 Benefits under proposed mechanism:
 Ease in monitoring compliance to RPO targets as energy injection from
Generating sources is recorded on monthly basis
 Cash flow situation of Developers improves by active participation from
Generators
 Provides a fillip to the Market based mechanism for promotion of
investments in Renewable energy based projects
 Distribution licensees avoid the hardship of allocation of funds for
purchase of RECs
 The redemption Price would happen within the Floor and Forbearance
band instead of the current phase of redemption that’s happening at Floor
Price during the past 10 Monthly Auction

13. 13
New avenues to promote REC
 Policy related measure
 Incentivise compliance to RPO targets undertaken by Distribution licensees
 Voluntary participation as Corporate Social Responsibility (CSR) needs to be encouraged
 Purchase of RECs to be linked with Tax-breaks
 Change in Trade Mechanism:
 > 2.6 Mn RECs are available in the Market
 Introducing Continuous trading by allowing Voluntary Buyers and Traders to take position
on PXs
 Generators realise revenues immediately, improve their cash flows
 Obligated entities to purchase RECs as and when required.
 RECs would be subject to continuous trading till its residual maturity or till the Obligated
entities surrender them for RPO compliance
Explore new avenues for trading in RECs

14. 14
Way forward
 Promote all avenues to increase Renewable Energy capacity
 Share of renewables have increased over the past, from 2% in 2003-04 to 6%
in 2006-07 and now to 12% in 2012-13
 Strengthen REC Mechanism
 Reward complaint Obligated entities / Penalise defaulting entities
 Initiate Monitoring of RPO targets on Quarterly basis
 Encourage avenues of Voluntary participants
 Develop alternate models for trading of RECs on PXs
Strengthening REC Mechanism is need of the hour

15. THANK YOU
POWER EXCHANGE INDIA LIMITED
5th Floor, Tower 3, Equinox Business Park, (Peninsula Techno Park)
Off BKC, L.B.S. Marg, Kurla (W), Mumbai-400 070, India
Tel: +91-22-26530500 Fax: +91-22-26598512
website: www.powerexindia.com

16. 16
Salient Features of REC Regulations
PARTICIPANTS
 BUYERS: Obligated Entities or Voluntary Entities
 Obligated entities - Distribution licensees, OA User, Captive Consumer
 Voluntary: Any entity or group of individuals or as defined by Ministry of Heavy
Industries & Public Enterprises, CPSEs
 SELLERS: Eligible Entities
 All sources recognised by MNRE under Renewable Energy Category
 Two Categories of Certificates depending on the Source: Solar and Non-Solar
 Grid Connected RE Power Projects having No PPA at Preferential Tariff and received
accreditation certificate from State Agency
 RE projects which have not availed of
 Concessional/promotional Transmission or Wheeling charges;
 Banking facility benefit and;
 Waiver of Electricity Duty