2. Total Installed Capacity (as on 30.11.2012) Renewable contributes only @ 5-6% of total Electricity Generation Source: Central Electricity Authority 2 10/17/2015

3. 3 Total Installed Capacity (as on 30.11.2012) SourceMW Wind18321.10 Small Hydro3464.59 Biomass1242.6 Bio fuel co- generation 2175.23 Solar PV1047.16 Municipal Waste93.68

4. 410/17/2015 Policy and regulatory intervention is essential to promote renewable energy

5. Notes: 1. Growth Rate 8% 2. Year 2031-32 India will continue to import significant amount of its energy requirement Source: Integrated Energy Policy Report 10/17/2015 5 Energy security is an area of prime concern for India. Hence the need for promotion of Renewable Energy

6. MW Wind and Solar are the predominant sources : Actual potential is much higher, A study conducted by the Lawrence Berkley National Laboratories (LBNL, USA indicates a higher wind potential of nearly 6-8 Lakh MW in India Huge RE potential need to be harnessed 6 10/17/2015

7.  Section 86(1)(e): Specify Renewable Purchase Obligation (RPO), grid connectivity  Section 61(h): Tariff regulations to be guided by promotion of renewable energy sources  Section 3: National Electricity Policy, Tariff Policy and Plan  Section 4: National Policy permitting stand alone systems including renewable sources of energy for rural areas 10/17/2015 7

8.  The State Commission shall discharge the following functions, namely: “promote cogeneration 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;” 10/17/2015 8

9.  The Appropriate Commission shall, subject to the provisions of this Act, specify the terms and conditions for the determination of tariff, and in doing so, shall be guided by the following, namely:- (h) the promotion of co-generation and generation of electricity from renewable sources of energy; 10/17/2015 9

10.  Urgent need of promotion non-conventional and renewable sources of energy  Efforts need to be made to reduce the capital cost of such projects  Cost of energy can be reduced by promoting competition within such projects  Adequate promotional measures would have to be taken for development of technologies and sustained growth of these sources  SERCs to provide suitable measures for connectivity with grid and fix percentage of purchase from Renewable sources  Progressively the such share of electricity need to be increased 10/17/2015 10

11.  Appropriate Commission shall fix RPO and SERCs shall fix tariff  Initially Appropriate Commission to fix preferential tariffs  In future Discoms to procure RE through competitive bidding within suppliers offering same type of RE  In long-term, RE technologies need to compete with all other sources in terms of full costs  CERC to provide guidelines for pricing non-firm power if RE procurement is not through competitive bidding 10/17/2015 11

12. 10/17/2015  National level target for RE Purchase  5% of total grid purchase in 2010, to be increased by 1% each year for 10 years: 15% by 2020  SERCs may set higher target  Appropriate authorities may issue certificates that procure RE in excess of the national standard  Such certificates may be tradable, to enable utilities falling short to meet their RPO  RE generation capacity needed: From 25000 to 45000 MW by FY2015 12

13.  Mission aims to achieve grid tariff parity by 2022 through  Bundling of solar power with un-allocated quota of central stations by NVVNL for resale to utilities  To deploy 20 million solar lighting systems for rural areas by 2022  Large scale utilization and rapid diffusion  R&D, Local manufacturing  In addition, 100 MW capacity distributed small grid connected power plants during Phase -1. 10/17/201513 MW

14.  SERC shall fix a minimum percentage of the total consumption of electricity in the area of a distribution licensee  Such purchase should takes place more or less in the same proportion in different States  SERCs shall also reserve a minimum percentage for purchase of solar energy  Up to 0.25% by the end of 2012-2013  Further up to 3% by 2022  Renewable Energy Certificate (REC) would need to be evolved with separate s olar specific REC 10/17/2015 14

15.  Renewable Purchase Obligation (RPO)  Preferential Tariff  Facilitative Framework for Grid Connectivity  Market Development (Tradable Renewable Energy Certificates) 10/17/2015 15

16. StatesSERC Notified Regulations 12-1313-1414-15 TAMILNADU 9% KARNATAKA 10%/7% MAHARASHTRA 8%9% KERALA 3.6%3.9%4.2% GUJARAT 7.0% RAJASTHAN 7.1% ANDHRA PRADESH 5.0% UTTAR PRADESH 6% HIMACHAL PRADESH 10.25% 10/17/2015

17. SERC Notified Regulations STATE12-1313-1414-15 CHHATISGARH 5.75% PUNJAB 2.9%3.5%4% UTTARAKHAND 6% MADHYA PRADESH 4.00%5.50%7.00% WEST BENGAL 4%5%6% HARYANA 2.0%3.0% DELHI 3.4%4.8%6.2% BIHAR 4%4.50%5% JHARKHAND 4% 10/17/2015

18. SERC Notified Regulations States12-1313-1414-15 JAMMU & KASHMIR 5% ASSAM 2% 2.50% MANIPUR 5.00% MEGHALAYA 1.00% NAGALAND 8.0% MIZOROM 7.0% TRIPURA 2.0% GOA AND Uts 3% 10/17/2015

19. State2012-132013-142014-152015-16 AP0.25% Assam0.15%0.20%0.25% Bihar0.75%1.00%1.25% Chhattisgarh 0.5% Delhi0.20%0.25%0.30%0.35% Gujarat1.00% Haryana0.75%1%1.25% Himachal Pradesh0.25% J & K0.25% Jharkhand1% Karnataka0.25% Kerala0.25% MP0.6%0.8%1.0%

20. 10/17/2015 State2012-132013-142014-152015-16 Maharashtra0.25%0.50% Rajasthan0.50%0.75% Manipur0.25% Meghalaya0.4% Mizoram0.25% Nagaland0.25% Orissa0.15%0.20%0.25%0.30% Punjab0.13%0.19% Tripura0.10% Tamil Nadu0.05% UP1% Uttarakhand0.05% UTs & Goa0.40%

21.  Wide Divergence in RPO Specifications across States  Varying RPO Trajectories  RPO being fixed based on resources available in the States  Different RPO as per RE Technology  Differential RPO for Discoms  No long term visibility 10/17/201521

23. SOLARWIND REC – CONTEXT Unevenly Distributed RE Resources 10/17/2015 23 Resource rich states not willing to purchase high cost RE power beyond RPO Variability : Inter-state transmission is also difficult

24. RE Generation REC Component Electricity Component Sale at Preferential Tariff Obligated Entities Local Discom/ Open Access /Power Exchange Obligated Entities Voluntary Buyers

25. Sale of Electricity at Market Price in open market Sale of electricity to Obligated Entities at regulated tariff Preferential Tariff [Regulated Tariff] REC [Solar & Non-Solar] Sale of RECs at Power Exchange * - Weighted Average Pooled Price at which distribution licensee has purchased electricity (including cost of self generation, long-term and short term purchase) in the previous year, but excluding the cost of RE power purchase Sell to local Discom at ≤ Pooled Cost of Power Purchase* REC Option Electricity Green Attributes Self Consumption 10/17/2015 25

26. Accreditation by State Agency Registration by Central Agency Issuance of RECs by Central Agency Redemption of RECs

27. 27 Salient features AccreditationState Agency RegistrationCentral Agency Revocation of Registration Central Agency Categories of RECSolar REC & Non-Solar REC Issuance of RECBy Central Agency only based on injection certificate REC Denomination1 MWh = 1 REC Time limit for claiming REC3 Months from injection Validity of REC365 days after issuance Dealing in CertificatesPower Exchanges only REC Price GuaranteeBetween ‘Floor’ Price and ‘Forbearance’ Price Monitoring MechanismsCompliance Auditor 27

28. Eligible Entity State Agency SLDC Central Agency Power Exchange Verify Accreditation Application Confirmation Intimation Application Confirmation Intimation

29. 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

30. 1 1 1 1 1 1 2 2 3 3 4 4 6 6 7 7 5 5 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 generatorsDiscom 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

31. Eligible Entity Obligated Entity SERC Central Agency Power Exchange Apply for Sale of REC Purchase RPO State Agency Intimation of Sale Intimation of Sale

32. 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

33. 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.

34. CERC has given the following price range for Solar and non-solar certificates: Non-Solar REC (Rs/MWh) Solar REC (Rs/MWh) Forbearance Price3,40013,400 Floor Price1,5009,300 These prices are calculated as under: Forbearance Price = Maximum (Preferential Tariff- Average Pooled Power Cost) Floor Price = Market Equilibrium Price (Minimum requirement for project viability of RE technologies – Average Pooled Power Cost)

35. ResourceCapacity in MWNo. of Projects Wind2041.88533 Small Hydro184.00023 Biomass583.94062 Bio fuel co- generation 777.27076 Solar PV20.91011 Municipal Waste16.00002 Other1.67001 Total3625.67708

36. ResourceCapacity in MWNo. of Projects Wind1879.38485 Small Hydro158.7020 Biomass566.9058 Bio fuel co-gen718.7070 Solar PV018.160007 Municipal Waste-- Other001.668001 Total3343.498641

37. StatesWindSHPBiomassCo-genM S WOthersSolar PVTotal Andhra71 (10) ------71 (10) Bihar--4 (1) 12 (2) ---16 (3) Chhattisgarh--112.5 (11) 2.5 (1) ---115 (12) Delhi16 (2) 16 (2) Gujarat400 (46) -1.2 (1) 7.25 (2) ---409 (49) Haryana--11.5 (4) ----11.5 (4) Himachal-47.5 (6) -----47.5 (6) 10/17/201537

38. StatesWindSHPBiomassCo-genM S WOthersSolar PVTotal Jammu & Kashmir -17.5 (2) -----17.5 (2) Karnataka150.1 (21) 23 (2) -----173.19 (23) Kerala-21 (1) 2.2 (1) ----23.2 (2) Madhya Pradesh 9.02 (3) 15.7 (2) 34.5 (3) --4.105 (5) 63.325 (13) Maharashtra539.6 (259) 35.9 (9) 56.27 (10) 212 (28) 1.7 (1) 10.5 (3) 855.35 (310) Odisha--5.4 (1) ----5.4 (1) Punjab--10.775 (1) 46 (2) ---56.775 (2) 10/17/201538

39. StatesWindSHPBiomassCo-genM S WOthersSolar PVTotal Rajasthan80 (17) -10 (1) ---5.25 (2) 92.5 (20) Tamil Nadu792 (177) -135 (14) ----927 (192) Uttarakhand-24 (1) -20 (2) ---44 (3) Uttar Pradesh--200.6 (14) 478 (39) ---678 (53) Total2042 (533) 184 (23) 584 (58) 777 (76) 16 (2) 1.7 (1) 20.91 (11) 3625.6 (708) 10/17/201539 18 States RE Generated participated in REC mechanism

40. StatesWindSHPBiomassCo-genM S WOthersSolar PVTotal Andhra71.2 (10) ------71.2 (10) Bihar--4 (1) 12 (2) ---16 (3) Chhattisgarh--101 (9) 2.5 (1) ---103.5 (10) Delhi-------- Gujarat3346 (40) -1.2 (1) 7.25 (2) ---354.5 (43) Haryana--8.5 (3) ----8.5 (3) Himachal-47.5 (6) -----47.5 (6) 10/17/201540

41. StatesWindSHPBiomassCo-genM S WOthersSolar PVTotal Jammu & Kashmir -17.5 (2) -----17.5 (2) Karnataka127 (13) 5 (1) -----132 (14) Kerala-21 (1) 2.2 (1) ----23.2 (2) Madhya Pradesh 3 (2) 15.7 (2) 34.5 (3) --2.605 (3) 55.845 (10) Maharashtra514.2 (242) 28 (7) 53.72 (9) 130.5 (17) 1.7 (1) 9.5 (2) 761.29 (283) Odisha--5.4 (1) ----5.4 (1) Punjab--10.8 (1) 46 (2) ---57 (3) 10/17/201541

42. StatesWindSHPBiomassCo-genM S WOthersSolar PVTotal Rajasthan75.75 (15) -10 (1) ---5 (1) 95 (19) Tamil Nadu737.1 (161) -135 (14) ----873.155 (176) Uttarakhand-24 (1) -20 (2) ---44 (3) Uttar Pradesh--200.6 (14) 478 (39) ---678 (53) Total1879 (485) 158 (20) 567 (58) 718.7 (70) -1.7 (1) 18.16 (7) 3343.5 (641) 10/17/201542 18 States RE Generated participated in REC mechanism

43. Month, Year Opening Balance REC Issued REC Redeemed Closing Balance Feb, 20123991520073620618834463 Mar, 20123446320381919973738545 Apr, 2012385451223697122689688 May, 201289688230697168685151700 June, 2012151700259125236827173998 Jul, 2012173998382712158399398311 Aug, 2012398311474784274272598823 Sep, 2012598823569567265606902784 Oct, 20129027846213582244911299651 Nov, 201212996513940881335711560168 Dec, 201215601683833832748521668699 Jan, 20136686993076631956451780717 Total: 47999893019272

44. 10/17/201544

45. 10/17/201545

46. 10/17/201546

47.  Non-Solar: Not adequate demand  Buyers : Largely CPPs and OA consumers; Very few Discoms (Torrent, Tata Power, REL, Chandigarh, DDN, JUSCO).  Solar: Inadequate supply and absence of large buyers  Buyers: Largely CPPs and OA consumers; Very few Discoms (Chandigarh, Tata Steel Power Distribution Licensee), OA consumers, CPP 4710/17/2015

49.  RPO being fixed keeping in mind availability of RE resources in State instead of availability of RE resources in the country as a whole  Need for National level RPO  Need for specifying RPO as a percentage of “total consumption” of electricity in the area of a distribution licensee  Need to recognise REC as valid instrument for compliance of RPO by the obligated entities  Applicability of RPO on Captive user, Open Access users and captive cogeneration : Regulations challenged in various High Courts  Lack of Long Term RPO Trajectory  Need for Long Term RPO Trajectory: At least for next 5 to 10 years  Lack of enforcement of RPO 4910/17/2015

50.  Financial conditions of distribution utilities  Higher RPO level leads to higher impact  Section 86(1) (e) of the Act mandates SERCs to promote RE in the State  Traditionally, RPO being fixed based on the resources available in the States 10/17/201550

51.  Whether NAPCC suggested target is achievable or not?  Whether enough RE sources are available in the country?  What is the achievable potential for various RE sources in different states?  How to determine optimum as well as achievable RPO trajectory for various States  What is the impact of RPO on the power purchase cost of the state? 10/17/201551

52.  NAPCC target could be achieved during the 12 th plan, if the adequate steps are taken to address the following issues:  Infrastructure Barriers:  Transmission and power evacuation infrastructure and grid management  Land approvals (Single window clearance), specially for solar  Policy and Regulatory Barriers:  long term perspective on RPO, RE Tariffs (and inter-state difference in tariffs)  Sale of RE power through open access and inter-state sale  Incoherent Resource Assessment  Financing Barriers 10/17/201552

53.  39600 MW (grid-connected) could be added during the 12 th plan  Based on the micro-level data provided by the SNA, STU and developers business plan  Insignificant impact on Power Purchase Cost (PPC) on Pan-India basis:  Incremental impact on the PPC is 1.0 paisa per unit for the first year, which gradually decreases to negative incremental impact (to the extent of 0.5 paisa per unit in FY17)  Suggested RPO trajectory for States for 12 th Plan period

54. FOR Model Regulations for REC Mechanism for SERCs  In the event of default the obligated entity have to deposit into a separate fund, on the basis of the shortfall in the units of RPO at the forbearance price decided by the Central Commission.  All SERC has specified above provision in the State REC/RPO Regulations Issues  Very few SERCs initiated proceeding for Enforcement of RPO  GERC, MERC, JERC, MERC,PSERC and MPERC has initiated suo-motu proceeding /acted on petition filed by utility for waiver of RPO FOR to develop mechanism for reporting requirement and institutional mechanism for follow up for enforcement 5410/17/2015

55.  Study on Preparing incentive structure for States for fulfilling Renewable Purchase Obligation (RPO) targets  Incentive scheme for resource rich states ▪ For specifying RPO up to national level ▪ For fulfilment of own RPO ▪ For supporting other states for fulfilment of RPO by purchasing RE at APPC ▪ Support for balancing power requirement  Incentive scheme for resource deficit states ▪ For specifying RPO up to national level ▪ For fulfilment of own RPO 10/17/2015 55

56.  CERC has given statutory advice to the Ministry of Power (MOP) for making specific provisions in the Electricity Act, 2003 for promotion of RE:  NEP And TP to provide long term RPO trajectory of 5 to 10 years  Act to provide that SERCs to fix RPO as per provisions of NEP and TP  Empowering SERCs to impose penalty (Addition to Sec. 142)  RPO applicability on Open Access and Captive users including Co-gen  Transmission planning with considering RE capacity addition Taking note of it, MOP constituted a Committee for accelerated development of RE through legislative & policy changes 10/17/201556

57.  Floor/Forbearance Price: Longer visibility more than 5 years  Vintage based floor price for solar REC  Multiplier linked to reduction in floor price: Legal interpretation  Trading of REC  Secondary Market, OTC market, Multiple Trading: Liquidity issue  Major Issue of Tracking and Monitoring of RECs  REC to Buyers  Issuance of RECs to Obligated entity for RE purchase beyond their RPO: Sale RECs to other obligated entities 57 Initiative: CERC recently awarded a study in this regard to strengthen the existing REC framework

58.  Wind & Solar Energy: Intermittent power  Roadmap given for scheduling of from 01.01.2012 by CERC : Grid Code (IEGC 2010)  Unscheduled Interchange (UI) ( Balancing charges) in case of deviation from schedule beyond ± 30%  Solar PV generator exempted from the burden of any deviation from schedule  In order to promote RE in resource rich States UI impact on host State to be socialized through Renewable Regulatory Fund (RRF)  RRF Implementation Issues 10/17/2015 58

59. 10/17/2015  Transmission charges and losses in regional grid for Solar Projects  CERC waived Inter-State Transmission Charges and Losses for the entire life for Solar projects to be commissioned in Phase-I i.e. by FY 2013 59

60. 10/17/2015  Amendment in CERC Grid Connectivity Regulations dated 7.9.2010  Threshold capacity for connecting to inter-State grid reduced to 50 MW for RE projects  RE projects having capacity less than 50 MW can also approach collectively with an aggregate installed capacity of 50 MW and above for connectivity with the CTU 60 Provide larger balancing area: Resolve variability and balancing power requirement issue

61. Issues  RE Sources remotely located and evacuation infrastructure is a major bottleneck  Evacuation responsibility of Central or State Transmission utility under the Act  Huge investment required in evacuation infrastructure  Upstream strengthening in the meshed transmission system 10/17/2015 Initiative: CERC /FOR awarded a study to CTU (Powergrid) on Transmission infrastructure development for the likely capacity addition of RE based power plants in the States rich in RE potential during 12 th Plan (FY 2012-2017) 61

62. 10/17/2015 Stimulate competition amongst renewable energy sources Create a market for power across States Help in bringing early grid parity for renewable energy sources 62 Thank you