REChronicles - From the Editor's desk - Efficient Carbon

Nov 30, 2012 - in our Renewable Energy News section on page 8. We are once again bringing to you the monthly REC Inventory and Trading update and the capacity addition under REC scheme in the month of November. Non-Solar REC trading continued to be depressing and reached new lows – lowest Buy Bids in 16 ...
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REChronicles - From the Editor’s desk Hello Readers. Hope you enjoyed the fourth issue of REChronicles. We would love to have your feedback on which articles you liked and which ones you didn’t. As promised, we are sending out the 5th issue of REChronicles on the immediate next day of trading. Andhra Pradesh finally announced amendments to the AP Solar Policy which, though initially well received, later led to confusion regarding the aspects of applicability of benefits to REC based projects and more. Turn to page 6 for the full article on this. Also, TANGEDCO arranged a consultation meeting with the industry for the upcoming 1000 MW bidding process. This is covered in our Renewable Energy News section on page 8. We are once again bringing to you the monthly REC Inventory and Trading update and the capacity addition under REC scheme in the month of November. Non-Solar REC trading continued to be depressing and reached new lows – lowest Buy Bids in 16 months and Supply outstripped Demand by a factor of 9.3. Solar REC trading continued to do well though there was a dip in the Buy Bids and Traded Volume. We have, as always put in our best efforts in order to come up with the articles in this issue. We hope you would enjoy it as much as we did while preparing it. Kindly give your valuable feedback on how we can improve REChronicles and make it even more delightful and interesting for you. Happy reading!!

REC Trading Update – November 2012 REC Inventory: Opening at close to 1.3 Million, November trading session closed with an inventory balance of close to 1.54 Million RECs. The following sections give an update on the Non-Solar and Solar front.

Non-Solar The month of November started with an Opening Balance of 1299566 Non-Solar RECs. Over the course of the month, 370248 Non-Solar RECs were issued thus putting the available number at a little under 1.67 Million. Of these, only 1230061 were put up for trading. Buy bids of 132352, all of which were cleared, led to a closing balance of 1537462. Following table gives the Non-Solar REC Inventory statistics for the last 3 months. Non-Solar REC Inventory for Sep-2012 to Nov-2012 (as on 30-Nov-2012) Month, Year

Opening Balance

REC Issued

REC Redeemed

Closing Balance

September, 2012

598642

568124

264446

902320

October, 2012

902320

619946

222700

1299566

November, 2012

1299566

370248

132352

1537462

Solar Though the Opening Balance of Solar RECs for November (85) was the lowest thus far, a 14% increase in Solar RECs issued during the month and a 32% drop in Solar RECs redeemed compared to October led to the highest ever Closing Balance of 469. Following table throws more light on the Solar REC Inventory statistics for the last 3 months. Solar REC Inventory for Sep-2012 to Nov-2012 (as on 30-Nov-2012) Month, Year

Opening Balance

REC Issued

REC Redeemed

Closing Balance

September, 2012

181

1443

1160

464

October, 2012

464

1412

1791

85

November, 2012

85

1603

1219

469

REC trading: Non-Solar REC trading continued to be depressing and reached new lows – lowest Buy Bids in 16 months and Supply outstripped Demand by a factor of 9.3. Solar REC trading continued to do well though there was a dip in the buy bids and traded volume. Here are a few numbers and forecast for next month.

Non-Solar RECs Trading: November witnessed the lowest number of Buy Bids (132352) since July 2011. Though all the Buy Bids were cleared, the Closing Balance still stood high due to the ever increasing Sell Bids and hence the inventory. The number of Sell Bids was 1230061 which is more than 9 times the Buy Bids. Clearing Price stood at Rs.1500. An important point to note is that the number of Non-Solar RECs issued is the lowest in the last 5 months indicating that project developers may be waiting for demand to pick up so that applying for RECs (which have validity of 365 days) at a later point may help them to put the RECs for sale at a time when the price is right. The graph below shows the trends in Buy Bids, Sell Bids, Traded Volume and Clearing Price for the last 3 months. Non-Solar REC trading from September – November 2012 1600000

1500

1500

1500

1600 1500

1400000

1400

V 1200000 o 1000000 l 800000 u m 600000 e 400000

1300 1200 1100 1000 900 800

200000

700

0

600 September'12

Buy Bid (No. of certificates)

October'12 Sell Bid (No. of certificates)

November'12 Traded Volume

Clearing Price

Forecast for December trading session: High Closing Balance continues to worry project developers and investors. As the Clearing Price continues to stay low and as there is no sign of Buy Bids increasing, more and more project developers may put-off applying for RECs which may be the only factor that would bring down the rate of increase in REC inventory next month.

P r i c e

Solar RECs Trading: Solar REC trading continues to fare well as compared to Non-Solar Trading. Higher demand (2578) and still insufficient supply (1688) made sure that the clearing price stayed high (Rs.12473). Against Buy Bids of 2578, 1688 Solar RECs were put up for sale and 1219 got cleared at an average Clearing Price (IEX and PXIL) of Rs.12473 resulting in a Trading Value of Rs.1.52 Crore. The 33% dip in Trading Value as compared to October (2.25 Crore) is due to the 32% dip in Clearing Volume. The graph below shows the trends in Buy Bids, Sell Bids, Traded Volume and Clearing Price for the last 3 months. Solar REC trading from September – November 2012 4000

12647

12582

12800 12473

12600

3000

12400

V o l 2000 u m 1000 e

12200 12000 11800 11600 11400 11200

0

11000 September'12 Buy Bid (No. of certificates)

October'12 Sell Bid (No. of certificates)

November'12 Traded Volume

Clearing Price

Forecast for December trading session: Trading is expected to be smooth as it was in the last few months as there has not been any new Capacity Addition on the Solar REC front in November. However, a continuation of decrease in BuyBids and higher inventory might lead to a decreased Clearing Price (below the current Rs.12463 of November).

P r i c e

REC Capacity Addition - November November witnessed a huge dip in capacity addition as compared to October. As little as 8.5 MW was Accredited and 7.85 MW was Registered during the course of the month as against 77 MW (Accredited) and 166.85 MW (Registered) last month. The tables below indicate the Resource-wise capacity addition in November and the total capacity as on 30th November, 2012. Capacity Addition (MW) in November (As on 30th November 2012) S.No. 1. 2. 3. 4. 5. 6. 7.

Source Wind Urban or Municipal Waste Solar PV Small Hydro Others Biomass Bio-fuel Cogeneration Total

Accreditation 0 0 0 0 0 2.2 6.3 8.5

Registration 0.85 0 0 5 0 0 2 7.85

Capacity in MW based on Type of RE Source (As on 30th November 2012)

2500 2019 2000

1878

Capacity Accredited (in MW)

Capacity Registered (in MW)

1500 1000

777 584

500 0 0 0

19

18

173 159 0 0

555

719

16 0

2

2

Policy Update: Amendments in AP Solar Policy On 16th November, 2012, Government of Andhra Pradesh issued G.O.Ms. No.44 providing amendments to the Andhra Pradesh Solar Power Policy issued by it on 26th September, 2012 through G.O. Ms. No.39. The following are the amendments as per the order:   





State will promote Solar Power developers to setup Solar Power plants for captive use or sale of power to 3rd party/State within the state only. V.A.T refund will be done for payments made in the state of Andhra Pradesh only. Irrespective of voltage level, Open Access Clearance shall be provided to both generator and consumer for 25 years or life of the project (whichever is earlier) within 15 working days of application provided that the energy transaction (between generator and consumer) is IntraState. Banking of 100% energy will be permitted for a period of 1 year from the date of banking subject to the condition that the banked energy cannot be redeemed between February-June and TOD hours as provided from time to time. The incentives mentioned in the AP Solar Power Policy shall be applicable to REC based projects (sale to DISCOM/open access/Captive Consumption) subject to CERC/APERC guidelines.

In our earlier blogpost on Andhra Pradesh Solar Power Policy, titled AP Solar Power Policy – The Challenges, we clearly highlighted the issue related to applicability of incentives to REC based projects and how the Andhra Pradesh government plans on dealing with CERC/APERC guidelines which clearly state that REC based projects cannot use the benefits of concessional/promotional transmission or wheeling charges, banking facility benefit and waiver of electricity duty. Accordingly, after close to 2 months of discussions and consultations, the Government has finally bowed to CERC/APERC regulations on this front. As a whole, the amendments can be summarized as – “Solar Power Projects to be setup in A.P. will receive support (for setting up and for availing several benefits) from the government only if the RE generator purchases equipment from a supplier in A.P., sets up the plant in A.P. and supplies power to a consumer in A.P. Solar PV projects will not receive any special benefits in the case of REC based projects.” The exact text of the amendments is as below. 1. Para 4(a) In Para 4 (a) “States other than AP State” in the heading and content shall be read as “within the State.” In addition, the following sentence will be added: ”They will qualify for REC subject to applicable CERC/APERC guidelines.”

2. Para 8(d) After “VAT”, “paid in A.P. only ” shall be added.

3. Para 5 Clause in Para 5 shall be substituted with the following “Intra-state Open Access clearance for the whole tenure of the project or 25 years whichever is earlier will be granted within 15 working days of application to both the generator and consumer irrespective of voltage level”. 4. Para 7 Clause in Para 7 shall be substituted with the following; Conditional Banking (heading) “Banking of 100% of energy shall be permitted for one year from the date of banking. The settlement of banked energy will be done on monthly basis. However, banked units cannot be consumed/redeemed from February to June and also during TOD hours as amended from time to time. Developer will be required to pay 2% of the banked energy towards banking charges. Suitable amendment will be incorporated in the concerned regulation of APERC.’ 5. Para 8 In Para 8 (a) “through 33 KV system” shall be substituted with “through Grid”. Clause in Para 8 (f) shall be substituted with the following; “All projects developed with the above incentives will be eligible for REC benefits subject to applicable CERC/APERC guidelines. Developer may decide either to avail eligible incentives or only the incentives permissible under the CERC/APERC guidelines. Deemed injection into grid for in-house/ co-located solar generation will also be eligible for REC benefits subject to applicable CERC/ APERC guidelines.” Check out the actual amendment document here.

Renewable Energy News National TANGEDCO consultation meeting with Solar Power Developers/Bidders: TANGEDCO arranged a consultation meeting on 23rd November, 2012 with prospective Solar Power Developers/Bidders for the upcoming bidding process for 1000 MW of Solar Power capacity addition. While the meeting was attending by a huge crowd unlike anticipated by TANGEDCO, a couple of key issues have been raised on how the bidding process is going to be. Some of these are: lack of Upper Limit for individual Power Plant Capacity (minimum is 1 MW) and ‘Single Price for all’ mechanism. At the same time there are a few positive features to note: constantly increasing Tariff (5% per annum) upto year 10 (and fixed thereafter at the 10th Year price) and a low Net Worth requirement (Rs.1 Crore/MW). Here’s the link to the TEDA document regarding the meeting: http://www.teda.in/pdf/pdf1.pdf The article by EAI sums up the consultation meeting in a detailed manner.

Technology EnergySail by Eco Marine Power: Japan based company Eco Marine Power has given quite a modern twist to the sails used in ships by including Solar Panels in the sails. Called EnergySail, this unique sail harnesses the Sun’s energy and reduces the fuel consumed by the ship’s auxiliary generators in addition to performing the conventional function of propelling the ship using wind energy. More on http://bit.ly/W3M87H

(Image Source: Gizmag.com)

To Err is Human As true as that quote may be, we try to avoid any mistakes in the information we give our readers. The following are the corrections for the mistakes in the October issue. 



Page 5 – “REC Capacity Addition-October”: The first line of the article reads ‘Wind, as usual, encountered the highest capacity addition under REC scheme in September’. Kindly note that it should be ‘October’ and not ‘September’. Also, the second sentence mentions that ‘Small Hydro, Biomass and Bio-Fuel Cogeneration also witnessed capacity additions’. Kindly note that ‘Small Hydro’ did not witness any capacity addition in October. Page 4 – REC Trading section – Solar REC Trading sub-section: Line 3 should read ‘Against Buy-bids of 3363’ and not ‘Against Sell-Bids of 3363’. Also, Clearing Price in line 4 should be Rs.12582 and not Rs.12647.

Thank you!!

What next? We hope we have met your expectations thus far. If we haven’t, do write to us or call us on the contact details provided below. Our next issue will contain:  RE Trading Update for December  REC projects capacity addition in December  Policy Update (If any)  More interesting and exciting articles on Renewable Energy developments from across the world and India.

Editorial Team -------------------------------------------------------------------------------------------------------------------------------------Pradeep Palelli Harsha Yadav Managing Partner, Co-Founder, EfficientCarbon EfficientCarbon -------------------------------------------------------------------------------------------------------------------------------------We would love to hear from you. Drop us an email to [email protected] or give a call on +91-9052224701. Thank you!

About EfficientCarbon EfficientCarbon (http://efficientcarbon.com/) is a Hyderabad based company working in the Energy, Environment and Sustainability domain. We provide focussed services in the following areas:

Renewable Energy Technical Consulting

REC Advisory

Carbon Management

Sustainability Strategy

Our team consists of graduates from respected institutions such as BITS-Pilani and IFMR-Chennai with several years of experience in companies like Infosys, Godrej and Titan. We are also supported by a team of advisors who, on average, have more than 25 years of experience in the above mentioned areas. We have successfully executed several projects for our esteemed clients such as Maha Cements, Andhra Pradesh State Co-operative Bank (APCOB), Ramco Systems, Capital IQ, GTP Granites and Andhra Pradesh Pollution Control Board (APPCB). Renewable Energy and REC Advisory: We have a highly qualified team with expert knowledge on the commercial and technical aspects of various Solar Energy technologies. Also, we pride ourselves in being capable of delivering the best services on the REC front as we are backed-up by a powerful back-end which constantly monitors the REC Market.

Renewable Energy Certificates

Solar Power Plants

Accreditation, Registration, Issuance and Trading

Financial Analysis for Industrial and Gridscale Evaluating technology options

Financial Analysis for projects Market Assessment and Pre-Feasibility Reports Market Intelligence

Preparing Bid documents for tenders