REC Update March 2014

Highlights:
Indias monthly non solar REC issuance crossed 1 million for the first time with 1.71 million RECs majorly attributed to the UP sugar cogen projects pending issuance On the other hand, solar issuance this month decreased by 32% to 24,370 RECs Non Solar demand increased by 74% leading to 12% clearance (11.5% on PXIL and 12.5% on IEX) Total both exchanges traded 6,69,746 RECs with 55,07,742 RECs carried forward Market value increased by 69% to INR 109.06 Cr - Crossing the billion rupees mark

Analysis of Non-Solar REC trading:

Non Solar REC issuance increased more than five times from last month with 17,41,142 RECs issued Volume IEX Buy demand doubled to 3,61,842 compared to 1,76,107 RECs in February PXIL Buy demand increased by 46% to 2,96,885 from 2,02,718 RECs in February. The total demand of RECs increased by 74% as compared to February session. The total supply increased by 22% to 54,76,896 from 44,93,708 last month. At the end of session 48,18,169 RECs remained untraded on exchanges.
Traded Price (Wt) Traded Qty Buy Qty Sell Qty Non Solar 658,727 IEX PXIL 54,76,896 IEX PXIL 1,500 IEX PXIL 658,727 IEX PXIL

3,61,842 2,96,885 28,93,896 25,83,000 1,500 1,500 3,61,842 2,96,885

Non Participation almost tripled after consistent decrease in non participation since last 4 trading sessions with a total of 5,50,084 RECs not participating in this session Price Price on IEX and PXIL remained at floor level, i.e. INR 1,500.

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Analysis of Solar REC trading:

A total of 1,50,508 Solar RECs were available for trade during this session.IEX and PXIL cleared the sell bids at percentages of 5% and 21% respectively Volume This month buy demand for Solar showed a 33% increase to 11,019 from 8,308 RECs. Sell showed an increase of 13% to 1,49,516 from 1,32,066 RECs.
Traded Qty 11,019 Buy Qty Sell Qty Traded Price (Wt) Solar 11,019 1,49,516 9,300 IEX PXIL IEX PXIL IEX PXIL IEX PXIL 7,211 3,808 1,31,759 17,757 9,300 9,300 7,211 3,808

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

Overall the untraded 49,56,666 (solar & non solar) plus non participant 5,51,076 i.e. a total of 55,07,742 RECs will be carried forward to the next trade session on 30th April 2014.

Other Market Updates:

Maharashtra issues orders for FY2012-13 RPO compliance by Discoms
The MERC in separate orders has given judgment on fulfillment of the RPO for power utilities Maharashtra State Electricity Distribution Company Limited (MSEDCL), Reliance Infrastructure Limited Distribution (RInfra-D), and Tata Power Company Distribution (TPC-D) and Brihan Mumbai Electricity Supply and Transport (BEST) Undertaking. Details as follows: MSEDCL: The Commission observed that MSEDCL has shortfall of 684.89 MUs for FY 2012-13 in meeting their non- solar RPO targets. After considering the surplus of 386.52 MUs of previous years, there is still a shortfall of 298.37 MUs in FY 2012-13 and the Commission has allowed MSEDCL to meet its non-solar RPO shortfall of 298.37 MUs for FY 2012-13 before 31st March 2014 on cumulative basis and its RPO target of Solar and Mini/Micro Hydro by FY 2015-16 on cumulative basis. RInfra-D: has successfully met its cumulative solar RPO target with surplus of 2.13 MUs and non-solar RPO target with surplus of 9.29 MUs except mini/micro hydro RPO targets. The mini/micro hydro RPO carried forward from FY 2010-11 to FY 2012-13 is cumulatively 1.57 MU and MERC has decided that the same shall be fulfilled on a cumulative basis in addition to the RPO target for FY 2013-14 to FY 2015-16 before 31 March, 2016. TPC-D: has successfully achieved its cumulative non-solar RPO targets by FY 2012-13 with surplus of 1.2 MUs except for its mini/micro hydro RPO targets. The solar RPO

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carried forward from FY 2010-11 to FY 2012-13 is cumulatively 35.36 MU. The Commission has directed TPC-D to fulfill its solar RPO target for FY 2010-11 to FY 201213 on a cumulative basis by FY 2015-16. BEST: The Commission had already relaxed the solar RPO targets for BEST for FY 201011 and FY 2011-12 and directed BEST to fulfill its solar RPO target on a cumulative basis by FY 2015-16. The total solar and non-solar RPOs carried forward from FY 2010-11 to FY 2012-13 into FY 2013-14 are 36.53 MU and 4.23 MU, respectively. The Commission has decided that no RPO regulatory charges will be applicable on BEST for non fulfillment of RPO targets for non-solar segment during FY 2010-11, FY 2011-12 and FY 2012-13 provided that the same shall be fulfilled on cumulative basis in addition to the RPO target for FY 2013-14 before 31 March, 2014.

Indian regulator halts wind forecasting on inaccurate results

An Indian rule requiring wind farms to predict output or face fines has been temporarily suspended as the regulator reconsiders the best way to ensure stability of the grid, which suffered the worlds biggest outage in 2012. The CERC last year ordered wind farms to predict their day-ahead generation within a 30% band. Developers including Tata Power Co and Goldman Sachs Group Incs ReNew Wind Power protested the directive, saying it was impossible to comply with and that penalties would wipe out profits in an industry that has drawn about $10 billion of investment since 2011. The mechanism has been put on hold, said Sunil Jain, CEO at Hero Future Energies and president of the Wind Independent Power Producers Association. Not a single project has been able to produce data within the margins, Jain said in an interview. It defeats the purpose. Its too inaccurate.

Revised Procedure for Wind Open Access in Maharashtra

MSEDCL has given revised procedure for Wind Open Access (for seeking open access permissions w.e.f. 01.04.2014 & onwards) which has raised some concerns regarding the feasibility of wind based open access in Maharashtra. Some of the major points are: 1. If an open access consumer, subsequent to grant of open access permission, fails to achieve the Maximum Demand equal to or greater than 80% of the threshold level, the open access permission will be cancelled and further he shall be liable to pay, to MSEDCL, a penalty equal to two times the wheeling charges for the financial year or part thereof for which he had failed to achieve such Maximum Demand. 2. Renewal of Open Access Permission shall be subject to use of Maximum Demand equal to or greater than 80% of the threshold level (i.e. 800 KVA) during previous open access period. 3. If the contract demand of the open access consumer is in the range of 1000 KVA 1500 KVA (just above the eligibility bar), energy bills of last 12 months need to be submitted along with the open access application for verification of maximum demand availed in the past year/period.

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4. The open access consumer will be entitled to seek open access for sourcing 100 % power generated from a wind power project. Open access permission shall not be granted to avail power from a wind power project in part or on percentage basis 5. Open Access application for sourcing power from more than one/multiple generating companies will not be processed. 6. The open access consumer shall declare in advance if he is applying for/already availing/enjoying Open access permission to source power from any other source or any other generation company. Open Access permission to source wind energy in addition to existing permission will not be granted to the consumer. 7. SEM (ABT meters) must be installed at both the ends - generator & consumer.

Gujarat imposes ban on power sourcing from other states

Narendra Modi-led Gujarat government has banned state-based companies from sourcing electricity from other states, a move that will compel them to buy costlier power from government-run utilities. The decision, ahead of the general elections beginning next month, will affect companies across industries such as Reliance Industries, Nirma, Larsen & Toubro, Hindalco, Apollo Tyres, Sun Pharma, Petronet LNG, Gujarat Florochemicals, United Phosphorus and Alembic. Gujarat-based industries import close to 1,000-Mw power from other states through trade on electricity exchanges, while state-run utilities have almost 2,500-Mw of idle generation capacity. The government has, however, defended its decision, saying it will help the power surplus state save thousands of crore of rupees every year. "Gujarat has to pay close to Rs 8,000 crore annually as fixed or capacity charges to power producers since it is unable to buy as much power as it contracted," said an industry expert closely working with the state's energy department. "Gujarat government disallowed power imports to find market for the excessive electricity generation capacity."

National Solar Mission generated 252.5 MW against the target of 1100 MW in 2010-13
Three years after Prime Minister Manmohan Singh announced an ambitious plan to generate 20,000 MW of solar power by 2022 under the Jawaharlal Nehru National Solar Mission, the programme is yet to take off in a meaningful way and remains far behind target. Marred with delays, trade disputes and competition from state-level schemes, the central programme could so far contribute just one-third to the India's total solar capacity. The first phase of the solar mission from 2010 to 2013 added just 252.5 MW of solar power generation capacity against the targeted 1100 MW. In the second phase started in 2014, a year later than planned, the government aims to add 10,000 MW solar energy capacity by 2017, under both photovoltaic (PV) and concentrated solar power (CSP) or solar thermal technology.

Karnataka to come out with rooftop solar energy policy soon

To encourage people to take up rooftop solar energy production, the Karnataka Government will come out with a solar energy policy soon, according to D K Shivkumar, Karnataka Power Minister. If they have excess power after generating power through rooftop solar system, they

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can supply it to the State grid. Such people will be given a good price for the power they sold to the grid, he said. The proposed policy will be placed before the Cabinet soon.

Gujarat losing its place in the Sun

Gujarat may be the pioneer Indian state to harvest solar energy, but it is losing its pre-eminence due to a mix of policy indifference, rising land costs and the state driving a hard bargain on the price it pays for power. A couple of years ago, it had 70% of the country's 1,000 MW solar generation capacity. Of the 2,208.36 MW capacity across the nation, Gujarat now has 39%. The slide is mainly due to policy inaction. No new scheme has been announced since 2009. Land prices have also shot up substantially in the state and solar power developers, whose land requirements are substantial, must invest more per MW in Gujarat.

Key reforms in power sector stuck as elections draw near

Some very important decisions that were crucial for the power sector now face uncertainty and would be delayed since the model code of conduct for General Elections has come into force. Some of the key issues in the pipeline include amendments to the Electricity Act, revival package for gas-starved power plants and options for reviving the stranded Dabhol power station. The Ministry has circulated notes for seeking approval from Cabinet for all these issues. Moreover, several Discoms are yet to file their application for new tariffs. Delhi, Haryana and Maharashtra have announced lowering of consumer tariffs by increasing subsidy. With elections round the corner, States will not be keen on hiking tariffs.

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