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Environmental commodities market updates – September 2014 Highlights

Highlights  of REC trade session September 2014:

  1. Closing balance of RECs after the September trade session crosses 1 Crore mark

  2. The trade volumes hit new low of just 24,013 RECs (both solar and non-solar)

  3. Non Solar REC purchase decreased further by 55% to 22,650 (as compared to 50,681 in August), while 1,363 Solar REC were purchased (compared to 1,163 in August)

  4. Market value decreased to 3-year low of INR 4.67 Cr (from INR 8.68 Cr in August)

Analysis of Non-Solar REC trading:

Non Solar REC issuance saw a 36% increase from last month’s 5,59,850 RECs to 7,61,455 RECs. The numbers of Non-solar RECs which did not participate in the session were 4,33,216.. However, clearance on IEX was only 8,994 RECs (clearing ratio of 0.21%) and clearance on PXIL was 13,656 (clearing ratio of 0.27%).

Volume

  1. IEX – Buy demand fell from 15,736 last month to 8,994 in September

  2. PXIL – Buy demand also dropped to 13,656 in September as compared to 34,945 of August

The total untraded Non Solar RECs on both the exchanges at the end of the session were 93,39,823.Non SolarBuy Qty22,650IEX8,994PXIL13,656Sell Qty9,36,2473IEX43,42,307PXIL50,20,166Traded Price (Wt)1,500IEX1,500PXIL1,500Traded Qty22,650IEX8,994PXIL13,656

Price

  1. Price on IEX and PXIL remained at floor level, i.e. INR 1,500.

Analysis of Solar REC trading:

A total of 3,69,977 Solar RECs were bid for sale during this session. IEX and PXIL cleared the sell bids at percentages of 0.16% and 0.53% respectively.

Volume

  1. IEX – Buy demand reduced from 367 last month to 264 in this trade session

  2. PXIL – Buy demand increased to 1,099 in September as compared to 796 of August

  3. Sell showed an increase of 10% to 3,69,977 from 3,35,835 RECs in August.SolarBuy Qty1,363IEX264PXIL1,099Sell Qty3,69,977IEX1,61,260PXIL2,08,717Traded Price (Wt) 9,300IEX9,300PXIL9,300Traded Qty1,363IEX264PXIL1,099

Price

  1. The Solar RECs continued to be traded at floor price i.e. INR 9,300.

Overall the untraded 97,08,437 (solar & non solar) plus non participant 4,41,797 i.e. a total of 101.5 Lacs RECs will be carried forward to the next trade session on 29th October 2014.

Other Market Updates:

REC Self-retention process operational from 01.09.2014

After the last amendment in CERC approved procedure, RE Generator is permitted to retain RECs for offsetting its RPO as a consumer, subject to certification and verification by the concerned State Agency (SA). While RE generator shall not be permitted to retain the certificates for offsetting RPO of its group companies as a consumer, they can retain RECs for their RPO on consumption units located in different States. Highlight of the procedure:

  1. The eligible entities may apply online from 1st to 5th of every month and mention the quantity of RECs for which they want to retain and the name of their plant and the State for which the eligible entity wants to retain RECs.

  2. Thereafter, the host SA shall check the proposed volume for each eligible entity against the quantity of valid RECs for that entity for both “Solar‟ and “Non-Solar‟ Certificates by 15th of the every month.

  3. The SA shall send the final list of certificates to be retained for eligible entities to the Central Agency for extinguishing of the RECs.

  4. The certificates will be extinguished by the Central Agency in the “First-in-First-out” order by 22nd of the every month.

  5. The State Agency shall issue the certificate of purchase to the eligible entities.

MPERC amends RE based generation and Co-generation regulation, 2010

Madhya Pradesh Electricity regulatory Commission (MPERC) had notified MPERC (Cogeneration and generation of electricity from renewable sources of energy) (Revision-I) Regulations, 2010 on 19.11.2010. Subsequently, two amendments to the aforesaid Regulations were notified. Following the order dated 02.12.2013 by the Hon’ble APTEL in the matter of M/s Lloyds Metal & Energy Ltd. Vs MERC & Anr., MPERC had framed the third amendment where it had proposed to substitute the word “co-generation” by ‘Co-generation from renewable sources of energy” and to obligate scheduling of Wind power plant with collective capacities of 10 MW and above and the solar power plants with collective capacities of 5 MW and above. After hearing the various stakeholders and considering their comments/suggestions, MPERC released the third amendment order on 10.09.2014 in which it accepted the clause related to scheduling of power but dropped the amendment related to cogeneration.

PSERC allows carry forward of PSPCL’s shortfall in RPO compliance

Punjab State Power Corporation Limited (PSPCL) had filed a petition Punjab State Electricity Regulatory Commission (PSERC) pleading that the net shortfall in RPO compliance for FY 2013-14 i.e. 178.14 MU (Non-Solar) and 41.51 MU (Solar) be allowed to be carried forward to FY 2014-15. RPO compliance specified by the state for FY 2013-14 was 3.37 % for Non-Solar & 0.13 % for Solar, which PSPCL failed to meet due to the several reasons given by PSPCL like delay in commissioning of RE projects, non-operation of four Micro Hydel Power Projects owned by PSPCL, efforts for leasing out the 1×10 MW rice straw based power plant at Jalkheri were not fruitful, less generation from the existing / newly commissioned NRSE Projects, etc. In the hearing, PSERC admitted that there have been some factors beyond the reasonable control of PSPCL such as delay in commissioning of the new RE Projects by the developers and less generation from existing and newly commissioned RE Projects etc. besides other reasons, and hence allowed PSPCL to carry forward the shortfall in RPO compliance for FY 2013-14 to FY 2014-15 to be complied with by 31.12.2014, failing which actions might be taken against PSPCL. This will be in addition to the RPO compliance for FY 2014-15 as specified in the PSERC RPO Regulations, 2011.

Ministry of power raises hopes of introducing RPO related amendments

In a press release by Ministry of Power regarding achievements of the new Government in 100 days, MOP emphasized on its achievements like effective utilization of coal in power generation, reinstating accelerated depreciation benefit to wind power developers, speedy environmental clearances to power projects, etc. Also it stated that the regulatory moves such as amendments in Electricity Act 2003 and Tariff Policy have been finalized and this would unleash the next wave of reforms such as competition in retail and RPO enforcement. As per this, the GOI seems to have finalized the draft and it can be very soon presented in the parliament for discussion/ enactment and reforms including stricter open access implementation and RPO enforcement can be expected. Further, Piyush Goyal said that the government is gearing up to make companies building fossil fuel based plants to also set up renewable energy project to meet clean energy vision of GOI. He also suggested the national giants like NTPC and Coal India Ltd., to invest in RE projects.

MNRE plans to set up 20,000 MW of solar capacity

MNRE has released a draft scheme for development of solar Parks and Ultra Mega Solar power Projects and invited comments/ suggestions on the same. MNRE through this scheme plans setting up 25 solar parks, each with a capacity of 500 to 1000 MW; thereby targeting around 20000 MW of solar power installed capacity. These solar parks will be put in place in a span of 5 years and the solar projects may then come up as per demand and interest shown by developers. At the state level, the solar park will enable the states to bring in significant investment from project developers, meet its RPO mandates and provide employment opportunities to local population. The state will also reduce its carbon footprint by avoiding emissions equivalent to the solar park’s installed capacity. Further, the state will also avoid procuring expensive fossil fuels to power conventional power plants of equivalent installed capacity.

DERC notifies Net Metering Regulations, 2014

DERC has notified the Delhi Electricity Regulatory Commission (Net Metering for Renewable Energy) Regulations, 2014 which enables the consumers of a distribution licensee to export surplus power to the discom grid from their RE projects using net meters. The generated units will be adjusted against the consumption of the consumer in their electricity bills and surplus units (if export exceeds consumption) injected by the consumer shall be carried forward to the next billing period as energy credit. The minimum capacity of RE system to be installed at the premises of any consumer is 1 KWp. While the RE & net-meter are to be procured & installed by the Discom, the cost, testing and installation of RE Meter shall be borne by the discom and those for Net Meter shall be borne by the consumer. While such RE projects are made eligible for registering under REC scheme (within the CERC REC regulations), the quantum of electricity generated are also allowed to be qualified towards compliance of RPO for the discom if the generator is not an obligated entity. This may lead double accounting of the RE attribute from the same power source.

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