It “Pays” to be Environment Friendly Renewable Energy Certificates: IPP Perspective

It “Pays” to be Environment Friendly Renewable Energy Certificates A concept developed under the Electricity Act, 2003 and National Action Plan on Climate Change (NAPCC) to enhance the share of renewable in the total generation capacity of the country. 1 REC = 1 MWh of electricity injected in grid

It “Pays” to be Environment Friendly Salient features of REC To Promote RE & to facilitate RPO Framed by CERC Governed by NLDC Trading at Power Exchanges Solar & Non Solar

It “Pays” to be Environment Friendly Power Scenario in Himachal Pradesh Considerable increase in power generation in last three decades observed Strong morphology and network of rivers and glaciers – great potential for hydro power Hydropower generation is more economical than thermal power generation in Himachal Pradesh Solar is also being greatly encouraged

It “Pays” to be Environment Friendly Ctd… Estimated installed capacity of SWH: 14,460 m 2 Hydropower potential in Himachal Pradesh

It “Pays” to be Environment Friendly Major sources for meeting power requirement Own hydel generation Free power entitlement of GoHP Central sector stations where HPSEB has share allocations Purchased through private micro hydel plants installed in the State and bilateral short term contracts

It “Pays” to be Environment Friendly Pricing of Electricity Market prices of electricity Done based on supply-demand dynamics Price discovery generally through competitive bidding or power exchanges Average Power purchase price Calculated by pooling the price from all sources of power for a state Generally lower than normative tariff Feed-in-tariff or the Preferential tariff

It “Pays” to be Environment Friendly RPO Status ( )

It “Pays” to be Environment Friendly REC in Himachal Pradesh Applicability of RPPO The distribution licensee Any other person consuming electricity generated from conventional Captive Generating Plant having capacity of 1 MW and above for his own use and/or procured from conventional generation through open access third party sale Notification by HPERC on the Regulations: 26 th May 2010 Designation of “Directorate of Energy” as a state agency: 19 th June 2010

It “Pays” to be Environment Friendly Ctd… Defined ‘minimum percentage’ to be abided as per RPPO YearMinimum Quantum of purchase (in %) from renewable sources (in terms of energy in kWh) of total consumption (1) Total (2) Non -Solar (3) Solar (4) % 0% %11%0.1% %12%0.1% i)The distribution licensee shall purchase electricity (in kWh) from renewable sources, at a defined minimum percentage of the total consumption including transmission and distribution losses, within the area of the distribution licensee, during a year ii)The Captive and Open Access User(s)/ Consumer(s), shall purchase electricity (in kWh) from renewable sources, at a defined minimum percentage of his total consumption

It “Pays” to be Environment Friendly Ctd… Certificate by CERC: Instrument of discharge of obligation Segregated meeting of obligation viz. a viz. Solar and Non- solar Consequence of default Penalty Creation of separate fund

It “Pays” to be Environment Friendly Ctd… No project accredited till date PPA for maximum number of projects have been signed on preferential tariff. Projects intended for third party sale are in process of commissioning.

It “Pays” to be Environment Friendly Alternate Revenue Stream Analysis Hydro power generationPPA with preferential tariff PPA with APPC Third party sale - within state Third party sale - outside state Electricity tariff REC Benefits01.5 Transmission losses in CTU0% 4% Wheeling charges & losses0010% Royalty0012% CTU charges per kWh Net realization Upside in % wrt Option 10.00%1.02%32.20%20.00% *APPC price for as per CERC ** Deduced from last two year data of power exchange

It “Pays” to be Environment Friendly Liability Consistency in observing all the timelines and rules and regulations of the mechanism required RE Generator monitoring of electricity generated installation of requisite metering system clarification on all predicaments, different states have different set of rules and regulations State Regulatory Agencies

It “Pays” to be Environment Friendly Risk Assessment On non abidance of RPO On persistence of APPC Risk = Feed-in-tariff – APPC = (2.95 – 1.48) Rs./unit = 1.47 Rs./unit On persistence of competitive bidding price Risk = Feed-in-tariff – competitive bidding price = (2.95 – 3.50) Rs./unit = Rs./unit

It “Pays” to be Environment Friendly Ctd… On abidance of RPO With the availability of RECs On persistence of APPC Risk = Feed-in-tariff – APPC + REC = (2.95 – ( ) Rs./unit = Rs./unit On persistence of competitive bidding price Risk = Feed-in-tariff – competitive bidding price + REC = (2.95 – ( ) Rs./unit = Rs./unit

It “Pays” to be Environment Friendly Ctd…

It “Pays” to be Environment Friendly Recommendations Successful implementation of the REC mechanism State Regulatory Agencies Bankers RE Generators

It “Pays” to be Environment Friendly Ctd… For Bankers APPC along with REC generates considerable revenue. Hence, shouldn’t be rejected. For Project participants Increased awareness required Competitive bidding tariff appears most profitable For regulating agencies Stringency in abidance of RPO obligation required. Appropriate channelization of defaulters

It “Pays” to be Environment Friendly THANK YOU!!!