REChronicles - From the Editor's desk - EfficientCarbon

Feb 27, 2013 - Quite a few interesting updates this month. Andhra Pradesh Solar bidding was closed on 15th. February and the list of bidders details were announced subsequently. An analysis of data available revealed much interesting insights. More on this in our Renewable Energy News section. Also contained in this ...
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REChronicles - From the Editor’s desk Hello Readers. Hope you enjoyed the last issue of REChronicles. We would love to have your feedback on which articles you liked and which ones you didn’t. Quite a few interesting updates this month. Andhra Pradesh Solar bidding was closed on 15th February and the list of bidders details were announced subsequently. An analysis of data available revealed much interesting insights. More on this in our Renewable Energy News section. Also contained in this section is news about the recent REC validity extension to 2 years and Kerala Solar Policy draft. 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 February. While Non-Solar trading continued to do bad, Solar trading continued its new year bash. More on this in our REC trading section. We have published a separate article on Rooftop policies in India that have been in action for quite some time and also those that are yet to see implementation. Turn to page 6 for more on this. 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 – February 2013 REC Inventory: Opening at close to 1.78 Million, February trading session closed with an inventory balance of a little over 1.94 Million RECs. The following sections give an update on the Non-Solar and Solar front.

Non-Solar The month of February started with an Opening Balance of 1779466 Non-Solar RECs. Over the course of the month, 315795 Non-Solar RECs were issued thus putting the available number at 2095261. Of these, only 1742421 were put up for trading. Buy bids of 152952, all of which were cleared, led to a closing balance of 1942309. Following table gives the Non-Solar REC Inventory statistics for the last 3 months. Non-Solar REC Inventory for Dec-2012 to Feb-2013 (as on 27-Feb-2013) Month, Year

Opening Balance

REC Issued

REC Redeemed

Closing Balance

December, 2012

1559699

382391

273644

1668446

January, 2013

1668446

304357

193337

1779466

February, 2013

1779466

315795

152952

1942309

Solar Opening at 1251 Solar RECs, 1882 were issued over the course of the month thus putting the total available Solar RECs at 3133 - out of which only 2726 were put up for trading. The trading session closed with a Closing Balance of 899 after the redemption of 2234 Solar RECs. Following table throws more light on the Solar REC Inventory statistics for the last 3 months. Solar REC Inventory for Dec-2012 to Feb-2013 (as on 27-Feb-2013) Month, Year

Opening Balance

REC Issued

REC Redeemed

Closing Balance

December, 2012

469

992

1208

253

January, 2013

253

3306

2308

1251

February, 2013

1251

1882

2234

899

REC trading: The number of Non-Solar Buy-bids fell once again – by 21% compared to that of January. Solar REC trading, on the other hand, continued the new year bash. Here’s more on Non-Solar and Solar trading in the second month of 2013.

Non-Solar RECs Trading: Against expectations, no increase in trading has been witnessed even in the penultimate month of the Financial Year. As can be witnessed, there was actually a dip in demand (21%) and thus, trading volume. Supply continues to outstrip Demand (by a factor of 11). As is the trend, all the Buy Bids (152952) were cleared resulting in a Trading Value of Rs.22.94 Crores. Clearing Price stood at the usual Rs.1500. Closing Balance continues to rise owing to higher and ever increasing Supply. 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 December ’12 – February ‘13

1800000 1600000 V 1400000 o l 1200000 u 1000000 m 800000 e 600000 400000

1742421

1741892 1500

1500

1500

1453626

1600 1500 1400 1300 1200 1100 1000

273644

900 193337

200000

152952

800 700

0

600 December'12

Buy Bid (No. of certificates)

January'13 Sell Bid (No. of certificates)

February'13 Traded Volume

Clearing Price

Forecast for March trading session: The number of Non-Solar RECs available for trading in February crossed 2 Million. As inventory piles up, Trading Price is bound to stick to the Floor Price of Rs.1500/REC if the demand continues to stay low. The recent CERC order on REC validity extension to 2 years can be a useful tool in improving the price as developers can now put-off trading to a point when demand increases (which again is unpredictable) thus creating a supply shortfall in the short-term.

P r i c e

Solar RECs Trading: Solar REC trading continued its good run in the second month of the New Year. Though the demand was not as high as in January, the Traded Volume was close to that of last month. The high demand and comparatively low supply made sure that the clearing price stayed high. Against Buy Bids of 6777, 2726 Solar RECs were put up for sale and 2234 got cleared at an average Clearing Price (IEX and PXIL) of Rs.12569 resulting in a Trading Value of Rs.2.81 Crore. The Clearing Price touched Rs.13000/REC at PXIL only for the second time since the trading began in May last year. Clearing price at IEX stood at Rs.12500/REC. 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 December ’12 – February ‘13

42245

45000

V o l u m e

13000

40000

12900

35000

12800

30000 25000

12569 12501

12500

12400

15000

12300 6777

10000 0

12600 12500

20000

5000

12700

2191 1208

1461

December'12 Buy Bid (No. of certificates)

2308

3559

January'13 Sell Bid (No. of certificates)

2234

2726

12200 12100 12000

February'13 Traded Volume

Clearing Price

Forecast for March trading session: Being the last month of the financial year, March could witness good trading activity as was the case with the first 2 months of the quarter. There doesn’t seem to be any possibility of a fall in Clearing Prices atleast in the short term as demand continues to be higher than supply.

P r i c e

REC Capacity Addition - February A total of 9.5 MW was Accredited and 89.55 MW was Registered during the course of the month. The tables below indicate the Resource-wise capacity addition in February and the total capacity as on 27th February, 2013. Capacity Addition (MW) in February (As on 27th February 2013) 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 5 0 4.5 0 0 0 0 9.5

Registration 40.95 0 4 24 0 10 10.6 89.55

Capacity in MW based on Type of RE Source (As on 27th February 2013) 2500.00 2048.08

Capacity Accredited (in MW)

1910.03

2000.00

Capacity Registered (in MW) 1500.00 1000.00

787.87 571.45

729.3

562.9

500.00 208.0 187.5 0

0

32.42 23.67

0

16 0

0

0.00 Wind

Solar Thermal

Solar PV

Small Hydro Geo Thermal

Biomass

Bio-fuel Urban or Cogeneration municipal waste

1.67

1.67

Others

Rooftop Solar in India The energy consumption in our developing nation is soaring and we are facing severe electricity shortages in several cities and towns. Conventional energy sources are already making a serious environmental impact. So to have an ecologically sustainable growth and to overcome energy security challenges, we have to turn to clean and renewable energies –like solar. A 1 MW solar PV (photovoltaic) generation plant requires approximately 4.5-5 acres. Although India is quite vast, given our population density, the per capita land availability is low. Exclusive dedication of such large tracts of land for installation of solar arrays will come at the consequence of forsaking other necessities that require land. So the best suitable long term design solution for India would be a highly distributed set of individual rooftop power generation systems connected through a local grid. The rooftop power plants offer several other advantages including: -

Decrease in Transmission and Distribution (T&D) losses Low gestation time Improvement of tail-end grid voltages

The current cost of setting up an off-grid PV plant for a medium sized home is approximately Rs. 22.5 lakhs (for a 1-1.5 KW system with battery backup). To attract individual and average family size household consumer, the market price of solar technology has to go further down or the government should bring out policies to subsidize and support them.

JNNSM (Jawaharlal Nehru National Solar Mission): While JNNSM’s main focus has been on large scale grid connected solar projects, it does give incentives for small scale grid connected and off grid projects. Small grid connected rooftop PV plants (2 MW or less capacity, grid connection at < 33kV) are supported under the RPSSGP (Rooftop PV and Small Scale Generation Programme). The selected developers will be paid a levelized tariff as determined by State Electricity Regulatory Commissions (SERCs) for 25 years. Phase I of JNNSM targeted 100 MW capacity development of which 90MW are HT level (capacity of 0.1-2 MW) and 10 MW are LT level (<100 kW capacity). IREDA selected 78 rooftop projects of a total capacity of 98 MW from 12 states (Rajasthan, Madhya Pradesh, Andhra Pradesh, Tamil Nadu, Maharashtra, Odisha, Uttar Pradesh, Punjab, Haryana, Uttarakhand, Chhattisgarh and Jharkhand). As of September 2012, about 88 MW of this 98 MW capacity has already been commissioned.

The off-grid projects were offered mainly two kinds of financial incentives: A capital subsidy of 30% on capital expenditure for the <100KW projects in grid connected areas, either by commercial or

non-commercial entities. However, if the project is in remote areas, under rural electrification the capacity can be upto 250kW. There is also an interest subsidy at a low rate of 5% on 50% of the capital expenditure for 5 years. The commercial entities can claim only one of the above two subsidies, but non-commercial entities can claim both simultaneously. The mission’s phase II has updated initiatives for off grid projects (25-100 kW), which now include: -

MNRE’s 30% capital subsidy. With updated benchmark costs, this is Rs. 81/W for systems with battery backup and Rs. 57/W for those without. Promoter’s equity should be atleast 20% and the rest can be financed at the low subsidized interest of 5%/annum. The loan repayment is still 5 years.

The target capacity of rooftop projects under JNNSM Phase II is 200 MW (100MW for2013-2014, 100MW for 2014-2015). Under phase II of JNNSM, MNRE launched a pilot scheme for large scale grid-connected roof top PV projects with SECI as the implementing agency. The total capacity is 10 MW distributed among 6 major cities. The bid received good response in cities like Bangalore and Chennai and not so well in others. The upper limit of allowable cost was Rs. 130/W and the selection will be based on lowest offered price.

State-level policies: Certain states have also announced their own solar policies with initiatives for rooftops. The following are the various state policies that include rooftop solar as a critical component in the overall capacity addition: -

Gujarat: Gujarat already has 1.39 MW of rooftop capacity installed in Gandhi Nagar. It recently announced a rooftop scheme for development of 25 MW in 5 other cities. The DISCOMS will pay a feed-in-tariff for 25 years.

-

Tamil Nadu: TN’s solar policy 2012 includes a rooftop capacity target of 350 MW. In three phases of 100, 125 and 125 MW (per year), a total of 350 MW is to be developed during 2012-2015. Of this 50 MW is targeted from domestic customers who will receive a GBI of Rs. 2/kWh for the first two years, Rs. 1/kWh for the next two and Rs. 0.5/kWh for the subsequent two years. The remaining 300 MW will be from government buildings and government schemes for rural and urban lighting. It is first of its kind to announce GBI for rooftop projects.

-

Rajasthan: Rajasthan’s policy 2011 aims to promote rooftop projects via RPSSGP as well as another 50 MW through 1 MW capacity plants selected through competitive bidding.

-

Kerala: Kerala launched its 10,000 rooftop power plants programme for 2012-2013. With each applicant eligible to apply for 1 kW only, the total capacity target is 10 MW. Due to the small per capita limit; the target audience will be only households and small cottage

industries. Apart from the MNRE’s 30% capital subsidy, the state is offering a discount of Rs. 39,000. -

Haryana: Haryana’s solar policy targets commercial and industrial entities. It has approved two pilot projects of 100 KW with a financial assistance of Rs. 75 lakhs each.

-

Karnataka: Karnataka’s Solar Programme of 2009 targeted 25,000 Solar Roof Tops of 5-10 kW with net metering during next 5 years. So the total capacity potential is 250 MW. It has very recently (Jan 2013) released a tender for 1.3MW through 0.5-1kW household solar systems across some 1943 houses in several cities. The total tender cost was specified as Rs. 34 Crores.

-

Chhattisgarh: Chhattisgarh also mentioned in its recent solar policy (2012-2017) that rooftop plants can be setup under supported types of power generation plants. The total grid connected capacity target was 500-1000 MW by 2017, comprising of grid connected (which includes rooftops) and REC projects.

The JNNSM which supported only small scale and off-grid rooftop projects in Phase-I, now seems to be interested in developing large scale roof-top grid connected projects. This will appeal to large players, as can be seen in the bidding list for the SECI tender which included TATA power, Sun Edison, Azure among others. Among the state policies, it is clear that they are targeting different groups. Some of the states like Haryana, Gujarat and Rajasthan are targeting relatively larger scale projects, either grid connected or suitable for industries/ commercial establishments. Other states like Karnataka and Kerala are offering initiatives for projects with smaller capacity limit which would be more suitable for domestic and house hold consumers. So, whether you are interested in – large-scale grid connected/ small-scale grid connected /off-grid there are policies that support and offer incentives for that type of rooftop project.

Renewable Energy News State Andhra Pradesh Solar bidding closes and list of bidders announced: Andhra Pradesh Solar bidding was finally closed to bids on 15th February after being postponed from the initial deadline of 7th February. Subsequently, the list of bidders was announced on 16th February and the technical documents of all bidders were made available on e-Procurement website. An analysis of data by EfficientCarbon revealed interesting insights such as follows: -

1350 MW of total bids 184 bidders 294 bids Only 110 of the 161 locations received bids Largest bidder submitted bids for 80 MW Largest number of bids from a single bidder was 8 Medak, Mahabubnagar and Nalgonda received the highest number of bids and highest cumulative capacity.

More information regarding the analysis is available on our blogpost here.

REC validity extended to 2 years: CERC issued an order dated 11th February, 2013 in response to Petition No. 266/SM/2012 stating that the validity of Renewable Energy Certificates (RECs) is extended to 730 days (2 years) from the previous validity of 365 days (1 year). This was specifically done keeping in mind the fact that RECs of several Non-Solar developers recently got expired owing to the high Supply-Demand gap in the market. While the validity extension to 2 years might be a respite for the developers who are worried about expiration of their RECs, this decision is only going to worsen the already oversupplied market as there do not seem to be any signs in improvement in demand. Check out CERC order here.

Kerala releases Solar Policy Draft: Kerala has been pretty active on the Solar front for quite some time now, though on a small scale. Its rooftop policies have been much appreciated in the industry. It has now come out with a comprehensive Solar Policy. Here’s the link to the draft version of Kerala’s Solar Policy 2013

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 is a mistake that we have identified in the previous issue of REChronicles: 

Page 2 – REC Trading Update – REC Inventory section: Lines 1-2 should read ‘January trading session closed with an inventory balance close to 1.78 Million RECs’. The closing balance has been incorrectly mentioned as ‘1.68 Million RECs’.

Please correct the same at your end. We have ensured that there are no mistakes in the current issue. Please bring to our notice any mistakes you identify so that we can publish the same in the next issue for the benefit of all the readers. 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 March  REC projects capacity addition in March  Policy Update (If any)  More interesting and exciting articles on Renewable Energy developments from across the world and India.

Editorial Team -------------------------------------------------------------------------------------------------------------------------------------Pradeep Palelli Sindhura Gangireddy Managing Partner, Consultant, 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