LIVE GREEN. DO RIGHT. Renewable Energy Certificates By: Gensol Consultants Pvt. Ltd.

Contents  Renewable Energy Certificates (REC)  Conceptual framework of REC  Operational framework of REC  REC Pricing  Case Study  Important features of REC mechanism  Services offered LIVE GREEN. DO RIGHT.

Renewable Energy Certificates (REC)  REC is deemed as certificate of power generated from Renewable Energy sources;  1 REC = 1 Mega Watt hour of renewable energy generated;  Can be sold or traded to meet mandatory RPO targets set by State Electricity  Regulatory Commissions for renewable energy purchases by utilities/distribution companies;  Exchanges identified for REC trading- Indian Energy Exchange & Power Exchange of India;  REC would be divided into two categories: Solar Certificates Non-Solar Certificates LIVE GREEN. DO RIGHT.

 All renewable energy generators already NOT having PPA with the distribution licensees for contracted quantum;  RE generator selling electricity generated either : i.to the distribution licensee of the area in which the eligible entity is located, at a price not exceeding the pooled cost of power purchase of such distribution licensee; or ii.to any other licensee or to an open access consumer at a mutually agreed price, or through power exchange at a market determined price; iii.eligible CPP utilizes electricity for self consumption  All REC based captive power produces shall be eligible for their entire energy generation including self consumption. Eligibility Criteria

Conceptual framework LIVE GREEN. DO RIGHT. RE Generator Sale in REC framework Sale at Preferential tariff Obligated Entities Renewable Component (REC) Electricity Component Obligated Entities (Sale through power exchanges Sale through power exchanges Third party sale on mutually agreed price Distribution Utility at a price not more than average pool price

Operational framework LIVE GREEN. DO RIGHT. Accreditation by State Agency Registration by Central Agency Issuance of RECs by Central Agency Redemption of RECs

Accreditation & Registration Process LIVE GREEN. DO RIGHT. Eligible Entity State Agency SLDC Central Agency Power Exchange Verify Accreditation Application Confirmation Intimation Application Confirmation Intimation

Issuance of REC Process LIVE GREEN. DO RIGHT. SLDC Central Agency Power Exchange Eligible Entity Verification Pre Condition Regular Injection Verify before Issuance Application Joint Meter Reading Apply for sale of REC State Agency Issuance Intimation For Meter Reading SLDC

LIVE GREEN. DO RIGHT. REC Trading Central Agency- NLDC Electricity to Grid Electricity from Grid RE Generators RPS Obligated entities Energy Accounting Trading Platform Open access users Other obligated entities Captive generators Discom s REC purchase agreement/ trading Redemption of REC Application to issue REC Issuance of REC SLDC Confirmation of Energy Accounting Compliance reporting Monitoring Committee of each State Quarterly Reporting

Redemption Process LIVE GREEN. DO RIGHT. Eligible Entity Obligated Entity SERC Central Agency Power Exchange Apply for Sale of REC Purchase RPO State Agency Intimation of Sale Intimation of Sale

REC- Timelines, Fees & Charges LIVE GREEN. DO RIGHT. Application Three months from the date of generation Issuance Fifteen days from the date of application Validity 365 days from the date of issue or exchange by way of sale whichever is earlier Fees Registration, Annual & Transaction Fees Charges at Exchange Membership Charges Transaction Charges

Pricing of REC LIVE GREEN. DO RIGHT. CERC has finalized the floor and forbearance price of REC based on:  Variation in cost of generation of different renewable energy technologies falling under solar and non-solar category, across States in the country;  Variation in the Pooled Cost of Purchase across States in the country;  Expected electricity generation from renewable energy sources including:- i. expected renewable energy capacity under preferential tariff ii. expected renewable energy capacity under mechanism of certificates;  Renewable Purchase obligation targets set by State Commissions.

Cont… LIVE GREEN. DO RIGHT. CERC has given the following price range for Solar and non-solar certificates: Non-Solar REC (Rs/MWh) Solar REC (Rs/MWh) Forbearance Price 3,90017,000 Floor Price 1,50012,000 These prices are calculated as under: Forbearance Price = Maximum (Preferential Tariff- Average Power Pool Cost) Floor Price = Market Equilibrium Price (Minimum requirement for project viability of RE technologies - Average Power Pool Cost)

LIVE GREEN. DO RIGHT. Case Study - Solar

LIVE GREEN. DO RIGHT. Under JNNSM, targets set for Solar Penetration Phase 1 (2010 –2013)Phase 2 (2013 –2017)Phase 3 (2017 –2022) 1,100 MW4,000 MW20,000 MW Phase - 1CategorySize of ProjectStatus of Allocation 1100 MW 90 MW, Small scale Projects 0.1 to 2 MW grid connected Projects have already been shortlisted 10 MW Off-grid and decentralized applications Up to 100 kW Applications open from center. State notification awaited. Haryana has released policy 500 MW Grid Connected Solar Photovoltaic technology 5MW +- 5% FY MW FY MW 500 MW Grid connected Solar Thermal Projects 5MW +- 5% FY MW Solar policy Landscape

LIVE GREEN. DO RIGHT. PARAMETERS100 kW200 kW Solar Modules120 Lacs240 Lacs Electric Equipments60 Lacs120 Lacs Civil Work30 Lacs60 Lacs EPC30 Lacs60 Lacs Preoperative and Consultancy10 Lacs20 Lacs TOTAL250Lacs500 Lacs Area Requirement1200 sq. Km.2400 sq. Km. Power Generation1.5 Lac units3.0 Lac units Off-grid Solar system with Battery Back-up

Renewable Energy Certificate 1 Tax Saving due to Accelerated Depreciation 2 Freedom from grid-based electricity 3 LIVE GREEN. DO RIGHT. Off-grid Solar system with Battery Back-up

LIVE GREEN. DO RIGHT. Combined Benefits for a 100 kW system IncentiveEquity (75 Lacs)Debt (175 Lacs) Revenue from sale of REC18.1 Lacs-NA- Revenue against tax saving48 Lacs-NA- Revenue against saving from grid based electricity 7.2 Lacs-NA- Returns in 1 st year73.3 LacsLoan repayment of Rs 175 Lacs at rate of 5% Total Project CostEquityDebt 250 Lacs75 Lacs175 Lacs

LIVE GREEN. DO RIGHT. Combined Benefits for a 200 kW system IncentiveEquity (150 Lacs)Debt (350 Lacs) Revenue from sale of REC36.2 Lacs-NA- Revenue against tax saving96 Lacs-NA- Revenue against saving from grid based electricity 14.4 Lacs-NA- Returns in 1 st year146.6 LacsLoan repayment of Rs 350 Lacs at rate of 10-12% Total Project CostEquityDebt 500 Lacs150 Lacs350 Lacs

LIVE GREEN. DO RIGHT. Important features of REC mechanism  REC mechanism is NOT an incentive scheme. Rather it’s main aim is to enable sale and purchase of renewable component across the State boundaries;  REC mechanism will coexist with all current incentive based schemes, since most of these schemes are based on certification of generation;  In surplus scenario max 25% of REC, generated in a year, can be carried over only for next year;  Though REC represent environmental attribute, it will not be related to carbon credits. These two mechanisms will operate independent of each other.

Services Provided LIVE GREEN. DO RIGHT. Gensol Consultants Pvt. Ltd. Accreditatio n & Registration support Data compilation & application Obtaining Issuance Trading strategies & brokerage

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