REC Market May17 Email: info@iexindia.com For Public Use In this - PowerPoint PPT Presentation

REC Market May’17 Email: info@iexindia.com For Public Use

In this presentation Renewable Energy in India Introduction to REC Mechanism Market snapshot Voluntary REC Market Trading @ IEX

Installed RE Capacity Renewable Installed Capacity Total Installed Capacity RES 57260 MW Solar; 12,288 Hydro 44,594 MW Biopower; Wind Power; 8,181 32,279 Nuclear 6,780 MW Thermal 2,20,569 MW Small Hydro Power ; 4,379 329,203 MW Total Installed Capacity 57,257 MW Renewable Installed Capacity as on 30 th April’17 as on 30th April’17 Source: CEA , MNRE

REC Genesis: Separating green attribute from electricity Bundled Green Power Issues • Schedulability Seller (RE power) Buyer (RPO Compliance) • Uncertainty • Transmission Loss & Charge Un-bundled Green Power Electricity Solution • No geographic Seller (RE power) barriers REC(Green Attributes) • Reduced transaction cost • Flexibility in Buyer (RPO Compliance) REC(Green Attributes) meeting the RPO Discoms, Power exchanges , Electricity Bilateral Contracts

REC Participants: Sellers/Eligible Entity Identified Sources for RE Wind Solar Small Biomass, Municipal Black Source Hydro Biofuel, Waste Liquor appro ved by Cogenera MNRE tion

REC Market Participants: Sellers/Eligible Entity ELIGIBILITY CRITERIA PPAs with Self Sale through: Open distribution consumption Access/Bilateral licensee No promotional Sale at Mutually PPA at state Banking/ PPA at APPC agreed price regulated tariff Wheeling ELIGIBLE ELIGIBLE ELIGIBLE NOT ELIGIBLE

REC Market Participants : Buyers Obligated Entities • Distribution Companies • Open Access Consumers • Industries consuming Captive Power Voluntary Entities • Corporates under CSR • Individuals

Mechanisms to fulfill compliance REC (Renewable Purchase of RE Feed in Tariff Energy at market price Certificates) at PXs Buy from third Regulated tariff Non Solar REC party Purchase of electricity from RE Solar REC Generator at Regulated tariff Penalty for non compliance in the provisions • If an obligated entity fails to comply with the RPO, it shall also be liable for penalty as may be decided by the commission under section 142 of Electricity Act, 2003 : • The Commission may direct the entity to deposit penal charges equivalent to the forbearance price of REC multiplied by shortfall in units of RPO

Salient Features of REC Mechanism Participation Voluntary REC Denomination 1 REC = 1 MWh Validity 1095 Days after issuance* Categories 1. Solar REC 2. Non-Solar REC Trading Platform Power Exchanges only Banking/Borrowing Not Allowed Single transfer only , repeated trade of the same certificate is not Transfer Type possible Floor Price: Rs 1000 /MWh Solar RECs* Forbearance Price: Rs 2400/MWh Floor Price: Rs 1000/MWh Non-Solar RECs* Forbearance Price: Rs 3000/MWh Penalty for Non-compliance Forbearance Price (Maximum Price) Price Guarantee Through Floor Price (Minimum Price) *Vide CERC Order dated 30 March 2017 which is presently under stay by Supreme Court Order dated 08.05.2017

REC Mechanism Procedure for ACCREDITION ( Through State nodal Agency) Procedure for REGISTRATION (Through Central Agency NLDC) Procedure for ISSUANCE (Through Central Agency NLDC) Procedure for TRADING & REDEMPTION (Through PXs)

Trading at IEX Trading Day Last Wednesday of every Month Market Clearing Closed Double sided auction 1300-1500 Hrs Trading Time Verification by Central agency for Valid REC by Verification by Central agency for Valid REC by By 1530 Hrs cleared seller at IEX cleared seller at IEX By 1600 Hrs Central agency confirms REC By 1630 Hrs IEX finalizes trade By 1700 Hrs Buyer & Sellers informed to Central Agency By 1800 Hrs Invoice raised (proof of REC trade)

Cleared volume : 600 RECs MCP: Rs 2200/REC BUY SELL A 100 REC A 100 REC @ Rs 3300 @ Rs 1500 Price in Rs/REC B 600 REC B 200 REC 3300 @ Rs 2200 @ Rs 1700 C 200 REC C 300 REC 100 REC Buy @ Rs 3300 @ Rs 1700 @ Rs 2000 200 REC sell @ 100 REC Sell @ Rs 1500 Rs 1700 300 REC sell @ Rs 2000 2200 600 REC buy @ Rs2200 200 REC buy @ 1700 600 No of REC

REC: Fee & Charges State Nodal Agency Central Agency Registration Fee & Charges Accreditation Fee & Charges Application Rs. 1000 Application Rs. 5000 Processing Fee Processing Fee Registration Rs. 5000 Accreditation Rs. 30,000 Charges (One Time – Charges (One Time – for 5 Years) for 5 Years) Annual Charges Rs. 1000 Annual Charges Rs. 10,000 Re-Validation Rs. 5000 Re-Validation Fees Rs. 15000 Fees (After 5 Years (After 5 Years Central Agency IEX Issuance Fee & Charges Redemption Fee & Charges Fees Per REC Rs. 4.0 Fees Per REC Rs. 20 issued traded

REC Fee & Charges Impact Cost Impact of Fee and charges in First Year Cost Head REC @ 1500 REC @ 2600 REC @ 3300 Assumptions: Accreditation 45,000 45,000 45,000 • Project of Capacity = 1 MW Registration 7,000 7,000 7,000 • Capacity Utilisation Factor = 22% Issuance 7,708 7,708 7,708 • No. of Units Generated = 1.927 MU TOTAL COST 59,708 59,708 59,708 • No. of REC Issued = 1927 Revenue from 28,90,800 50,10,720 63,59,760 REC % Cost 2.07% 1.19% 0.94% Incurred Paise Impact Per Unit 3.09 3.09 3.09 (kWh) Similarly the cost impact (in Paise / Unit) for: TWO Year THREE Year FOUR Year 2.03 Paise 1.68 Paise 1.5 Paise

Market Snapshot

An update on RECs Accredited Registered RECs Issued RECs Traded Inventory Capacity (MW) Capacity (MW) (Lacs) so far (Lacs) (Lacs) Non -Solar 3805 338 Lacs 199 Lacs 128 Lacs 4790 Solar 749 729 64 Lacs 16.57 Lacs 47.92 Lacs As on 30th April 2017 Source: REC registry India

Projects under REC Mechanism As on 10 th Dec’14 As on 12 th Feb’15 As on 9 th jan’15 Accredited Capacity : 5,056 MW State-wise RE As on As on 4 th Sept’14 As on 11 th Aug’14 As on : 4 th January,2014 Registered Capacity : 4,785 MW As on 2 nd July 2014 Capacity (MW) 353 As 104 25 119 1222 38104 234 256 As on 49 248 162 1227 12 th 161 Feb Registration Capacity: 4,773 MW RP : 3975 MW ,2014 Accreditation Capacity : 4,989 MW 635 AP : 4336 MW 634 137 245 1164 1009 351 Registered Projects 347 464 Accreditated Projects 794 Tamil Nadu Maharashtra Uttar Pradesh Gujarat Karnataka Rajasthan Andhra Pradesh Madhya Pradesh Chhattisgarh Punjab Himanchal Pradesh Others Source: REC registry India As on 30-04-17

Projects under REC Mechanism As on 12 th Feb 2014 As on 10 th Dec’14 As on 12 th Feb’15 As on 11 th Aug’14 As on 7 th Nov’14 Accredited Capacity : 5,112 MW As on : 14-10-14 As on 6 th March ,2014 As on 4 th Sept’14 As on 2 nd July 2014 As on 31 st October’2013 Registered Capacity : 4,838 MW Source wise RE capacity (MW) 10 As on 7 th May 2014 750 2 731 293 252 718 2440 583 2693 529 Registered Projects Registered Projects 1075 Accreditated Projects Accreditated Projects Wind Bio-fuel cogeneration Biomass Small Hydro Solar Others Source: REC registry India As on 30-04-17

Key statistics: REC Market at IEX Portfolios 3581 State REC Market Share 17 States I 5 UTs Utilities IEX PXIL Generators 894 37% 63% Industrial 2450 Consumers >1 Crore RECs >1 Crore RECs Cleared Highest: 12,87,814 RECs RECs Volume IEX Data as on 30 th April 2017

Participation Details at IEX Non-Solar Buyer Mix FY 17-18 3576 Voluntary Registered Participants ; 0; 0% Captive User; 106,760 ; 29% Distribution Open Access Licensee; Consumer; 2658 20,000; 6% Obligated Entity 238,060; 65% DISCOMs 33 OA consumers 2486 Solar Buyer Mix FY 17-18 Captive Voluntary Captive Consumer 139 User; ; 1; 0% 23,444.00 ; 26% 19 Voluntary Distribution 899 Eligible Entity (Sellers) Licensee; Open 20,350.00 ; Access 23% Consumer; 44,738.00 ; 51% As on 30 April 2017

N-Solar REC trade detail Total Volume traded IEX-Volume traded PXIL- Volume traded Price @ IEX Price @ PXIL 1600000 1600 1400000 1400 1200000 1200 1000000 1000 800000 800 600000 600 400000 400 200000 200 0 0 Apr'16 May'16 Jun'16 July'16 Aug'16 Sept'16 Oct'16 Nov'16 Dec'16 Jan'17 Feb'17 Mar'17 April'17

Solar REC trade detail IEX-S REC PXIL-S REC 250000 4000 3500 200000 3000 2500 150000 2000 100000 1500 1000 50000 No. of RECs traded 500 0 0 Apr'16 May'16 Jun'16 July'16 Aug'16 Sept'16 Oct'16 Nov'16 Dec'16 Jan'17 Feb'17 Mar'17 Apr'17

Voluntary REC Market

Corporate Social Responsibility through REC Companies Bill,2012: Mandates 2% of profits in CSR for all companies with: net worth ≥ 500 crore/ turnover ≥1000 crore/ net profit ≥ 5 crore Profit making CPSEs are required to spend upto 0.5% of their profit after tax (PAT) on Sustainable Development The Department of Public Enterprises (DPE) came out with an amendment to Sustainable Development (SD) Guidelines in December 2011: • CPSEs can purchase RECs on voluntary basis as a part of their CSR Obligation.

Free Participation for Voluntary Client at IEX To promote Voluntary purchase of RECs by individuals and corporate No fees will be charged from Voluntary Clients registered at IEX

Company Snapshot 98% Market Share ~109,000 MWh average daily trade 4300+ Participants 3800+ Industries Transparency Liquidity Competition