Transcript Voluntary REC Market 9 July, IHC, New Delhi

RECs as a tool to fulfill
CSR mandate
07th August,2014 New Delhi
Shruti Bhatia
Vice President-Policy and Communication
In this presentation
Introduction to REC Mechanism
CSR through Voluntary REC Market
International Scenario
About IEX
Introduction to
REC Mechanism
What are RECs?
Separating green attribute from electricity
Issues
Bundled Green Power
Seller (RE power)
Buyer (RPO Compliance)
Un-bundled Green Power
Electricity
Seller (RE power)
REC(Green Attributes)
•Uneven RE
resource
distribution
•Schedulability
•Uncertainty
•Transmission Loss
& Charge
Solution
•No geographic
barriers
• Reduced
transaction cost
REC(Green Attributes)
Buyer (RPO Compliance)
Electricity
Discoms, Power
exchanges , Bilateral
Contracts
•More shelf life:
Flexibility in
meeting the RPO
Evolution of REC Market in India
10 July 2013 : 2nd Amendment
to CERCs REC Regulation
proposes clarification on
various issues
30th May 2012 : 1st
Solar REC Traded
29th Sept 2010 : 1st
Amendment (Clarification on
eligibility condition of
renewable based CPPs
14th Jan 2010 : CERC REC
Regulation
28th Mar 2014 : Trade
reaches its maximum
(3,69,053) RECs
23rd Feb 2011 : Launch
of REC Trading on
Exchanges
Salient Features of REC Mechanism
Participation
Voluntary
REC Denomination
1 REC = 1 MWh
Validity
730 Days after issuance (As per CERC order dated 11th Feb’2013)
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
possible
Transfer Type
Floor Price (2012-17)*
Solar: Rs 9,300/MWh
Non Solar: Rs 1,500/MWh
Forbearance Price (2012-17)*
Solar: Rs 13,400/MWh
Non Solar: Rs 3,300/MWh
Penalty for Non-compliance
‘Forbearance’ Price (Maximum Price)
Price Guarantee
Through ‘Floor’ Price (Minimum Price)
*Reference :CERC in its order dated 23rd August, 2011 revised the floor & forbearance price for the
period April, 2012 to March,2017
REC Market Participants:
Sellers/Eligible Entity
ELIGIBILITY CRITERIA
Self
consumption
No promotional
Banking/
Wheeling
ELIGIBLE
PPAs with
distribution
licensee
Sale through: Open
Access/Bilateral
Sale at Mutually
agreed price
PPA at APPC
PPA at state
regulated tariff
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
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
Trading Time
1300-1500 Hrs
By 1530 Hrs
Verification by Central agency for Valid REC by
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)
MCP: Rs 2200/REC
3300
2200
3300
Buy@ @
RECSell
100 REC
1500
Rs Rs
100
Price in Rs/REC
Cleared volume : 600 RECs
200 REC sell @
Rs 1700
BUY
SELL
A 100 REC
@ Rs 3300
A
100 REC
@ Rs 1500
B 600 REC
@ Rs 2200
B
200 REC
@ Rs 1700
C 200 REC
@ Rs 1700
C
300 REC
@ Rs 2000
Total 900
RECs
300 REC sell @ Rs 2000
600 REC buy @ Rs2200
200 REC buy @
1700
600
No of REC
Total: 600 RECs
June'14
May'14
Apr'14
Mar'14
Feb'14
Jan' 14
Dec'13
40
35
25
2000
20
1500
15
1000
10
5
500
0
0
Price in Rs/REC
Traded
Nov'13
Oct'13
Sept'13
Aug'13
Buy Bid
July'13
Jun'13
May'13
Apr '13
Sell bid
Mar '13
Feb '13
Jan'13
Dec '12
Nov '12
Oct '12
Sept'12
Aug'12
Jul '12
Jun '12
May '12
Apr '12
No of REC (in lacs)
Non Solar Market : Increasing demand-supply mismatch
PRICE
3000
2500
30
June '14
May'14
Apr'14
Mar'14
Feb'14
Jan'14
2
1.8
1.2
10,000
1
8,000
0.8
6,000
0.6
4,000
0.4
0.2
2,000
0
0
Price in Rs/REC
Traded
Dec'13
Nov'13
Oct'13
Sept'13
Buy Bid
Aug'13
July'13
Jun'13
Sell Bid
May'13
Apr '13
Mar '13
Feb '13
Jan'13
Dec '12
Nov '12
Oct '12
Sept '12
Aug'12
July '12
June '12
May '12
No of REC's
Solar Market: Increasing demand-supply mismatch
PRICE
16,000
14,000
1.6
12,000
1.4
CSR through
Voluntary REC Markets
CSR through Voluntary REC Market
Companies Act 2013 provisions effective from 01.04.14:
• Section 135 provides: 2% of PAT towards CSR for Companies with Net worth > 500 Cr or
Turnover of over 1,000 Cr or Net profit > 5 Cr
• Schedule (VII) : Activities which may be included by companies in their Corporate Social
responsibility Policies
i.
eradicating hunger, poverty and malnutrition, promoting preventive health care and sanitation and making available safe drinking water;
ii.
promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly,
and the differently abled and livelihood enhancement projects;
iii.
promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day
care centres and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically
backward groups;
iv. ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal
welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water;
v.
protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art; setting
up public libraries; promotion and development of traditional and handicrafts:
vi.
measures for the benefit of armed forces veterans, war widows and their dependents;
vii.
training to promote rural sports, nationally recognised sports, paralympic sports and Olympic sports;
viii.
contribution to the Prime Minister's National Relief Fund or any other fund set up by the Central Government for socio-economic
development and relief and welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women;
ix.
contributions or funds provided to technology incubators located within academic institutions which are approved by the Central
Government
x.
rural development projects
CSR through Voluntary REC Market
• MOCA notification dated 18.06.2014 regarding Section 135 of
Companies Act 2013-” Liberal interpretation of Schedule VII (iv)”
Schedule VII (iv) Ensuring environmental sustainability, ecological
balance ……
CSR through Voluntary REC Market
• 5 PSUs have availed about 36,000 RECs through IEX to
meet their respective CSR Obligation
POSOCO (1603)
REC (32800)
SPMCIL (1334)
IREDA (200)
RINL (200)
Voluntary REC Market potential (in Rs Cr)
PAT
Of
ET
500
CSR
Budge
t
10 %
@ 2%
REC
for
2009/10/11
326,637
REC
Market
Size
90%
Floor Price
Non Solar
39 Lakh
No of REC
@
587
6,532
653
10%
Solar
70,000
66
Voluntary REC market has potential to absorb over 50 % of REC issued in a year
Free Participation for Voluntary Client at IEX
To promote Voluntary
purchase of RECs by
individuals, corporates, PSUs,
IEX has waived off registration
fees from Voluntary Clients
REC v/s setting up a RE Project for CSR
Setting up a RE Project
Buying RECs
Feasibility Study
PreDevelop
ment
Phase
Approvals, No Objection
Certificates from Nodal
Agencies
Huge Investments:
Develop
ment
Phase
Post
Develop
ment
Phase
• Land Acquisition
• Technology
• Rs 4.5 to 6.85 Crores per
MW for a Wind Farm
Evacuation of Power:
PPAs/Third Party
Arrangements
RECs is not just a paper, it represents the power
produced by a RE generator somewhere in the
country
No approvals required, anybody can
buy
More Flexibility: Based on CSR
commitment buy 1 REC for Rs 1500
or 1 lakh for 15 Crore
Why RECs for CSR
• RECs have several advantages as an
instrument:
Measurable
• RECs are measurable and it is easy to verify which specific
project they are coming from
Transparent
• RECs are issued by government appointed agency, and the
process and eligibility criterion are objective and transparent
Effortless
Cost effective
• RECs are de-linked from physical power, which makes the
consumption of green power easier to manage
• Both Solar and Non Solar RECs currently traded at the floor
price
Buy RECs to go green
Meet your CSR obligation
Green Building/office/organisation
Buy RECs equivalent to energy consumption for
an event
Make your home green with RECs equivalent to
your electricity consumption
Off set carbon footprints at individual level
International Scenario
Consumers demand ‘green’ products
• As per Global Consumer Study 2012 by TNSGallup and Vestas on
24,000 consumers in 20 countries:
– 74% consumers would have a better perception of a product if it
were produced using renewable energy
– In India, 74% consumers ready to pay mote for products
produced using renewable energy.
Enhanced efforts by companies globally
to ‘Go Green’
INDIAN COMPANIES RANKING IN THE
Newsweek Green Ranking 2014
Company
Name
Sector
Rank
Green
Score
Reliance
Industries
Energy
185
45.70%
Tata
Consultancy
Services
IT
212
42.00%
Oil & Natural
Gas
Energy
217
41.70%
IT
299
33.30%
ITC
Consumer
368
24.60%
HDFC Bank
Financials
380
22.80%
Coal India
Energy
445
13.30%
Infosys
Global Ranking
Company Name
Unilever
L'Oreal
Ericsson
MetLife
Siemens
Johnson & Johnson
National Grid
Hewlett-Packard
Samsung Electronics
Rolls-Royce Holdings
Apple
Toyota Motor
BP
Microsoft
Volkswagen
Vodafone Group
Colgate-Palmolive
Oil & Natural Gas
Google
Sector
Food & Beverages
Cosmetics
Information Technology
Insurance
Capital Goods
Health Care
Utilities, UK
Information Technology
Information Technology
Capital Goods
Information Technology
Automobiles
Energy
Information Technology
Automobiles
Telecomm
Consumer Staples
Energy
Information Technology
* Source Newsweek 2014 Green Ranking
Green Score
66.00%
65.50%
64.00%
62.20%
61.10%
60.10%
60.00%
59.60%
57.30%
56.90%
56.90%
54.90%
54.40%
52.80%
52.80%
49.20%
48.20%
41.70%
23.70%
RECs are popular way to go green
internationally
Company Name
Details
Intel
•Purchased 2.5 b kWh of RE and REC
•88% of total electricity consumed
Citi
•Purchased over 56m kWh of RECs in 2008
HSBC
•Purchased 276m kWh of RECs in US
•Over 96% of North America electricity offset by RECs
purchase
Yahoo!
•Purchased 1.6m kWh of RE & REC’s in 2010
•Uses 28% of RE power in its US operation
Apple
•11.5 m kWh of RE and REC purchased
•98% of total US consumption
About IEX
Company Snapshot
96% Market Share ~80,000MWh average daily trade
3000+ Participants
2100+ Industries
Transparency
Liquidity
Competition
Key statistics: REC Market at IEX
Portfolios
State
Utilities
Generators
Buyers
Cleared
Volume
IEX Data as on 3rd July 2014
2100+
15 States I 5 UTs
660
1663
>3 million RECs
Highest: 3,69,053
RECs
REC Market Share
(as on 31st Mar’14)
PXIL,
33%
IEX,
67%
IEX Market Segments
Delivery-based Contracts
Closed , Double-sided Auction
10-12 am bidding
Each 15-min block , 0.1 MW min NOC required
Day-Ahead
Market
since June,08
Day-Ahead Contingency – Another window 3-5pm
Term-Ahead
Market
since Sep,09
Intra-Day
- for the same day starting 2 pm
Daily- for rolling seven days (delivery starting after 4 days)
Weekly- for 1 week (Monday-Sunday)
Renewable Energy
Certificates
since Feb,11
Green Attributes as Certificates
Sellers : RE generators not under feed in tariffs
Buyers: Obligated entities
1MWh equivalent to 1 REC
Next… Energy Saving Certificates
Auction
Continuous
www.iexindia.com