Cement Energy and Environment

state (as per Sec 86 (1)(e) of the Act) • Under the RPO framework, obligatory entities like distribution licensees, open– access consumers and captive consumers would require to consume certain percentage of their energy from renewable sources of energy (both solar and non solar). • Obligatory entities can purchase REGs to discharge their RPOs Under an REG framework, utilities can inject a high share of renewable energy in their power mix by purchasing such certificates on an exchange. The REG mechanism classifies the cost of electricity generated into an energy cost equivalent to conventional energy and a cost for environmental attributes of such energy. The latter gets exchanged through the means of REGs. A renewable energy generator can either sell at preferential tariffs or sell the energy and environmental attributes separately. Solar power has a separate category of REGs, known as solar certificates to ensure greater support for solar power generators. Terms and Conditions for Issuance of RECs Some features of the CERC regulations on REGs are summarized as under: Categories There are two categories of REGs, namely solar and non-solar. Solar REGs reflect the regulatory support for the higher cost of solar power generation as compared to other renewable energy modes. Table-2 Price Band of RECs (Rs/MWh) Price Non-solar REC Solar REC Forbearance price 3,900 17,000 Floor price 1,500 12,000 Eligibility All grid-connected renewable generators having installed capacities of 250 kVA and above are eligible. The entity seeking an REG has to be accredited by the respective state agency (such as TEDA in Tamil Nadu) etc. Also, it should not have any power purchase agreement (PPA) with the state regulatory commission for selling the generation on preferential tariffs on offer. Further, the price of electricity sold by the entities to the local distribution utilities should not be more than the latter's 'pooled cost of power purchase'. The pooled cost of power purchase means weighted average pooled price at which the distribution licensee has purchased electricity the previous year-this includes the purchase of self generation, long term and short term purchase, but excludes purchase of RE generation. The generator could also be selling power to any other licensee or open access consumer at a mutually agreed price or through a power exchange at a market determined price. Central agency for REC The regulations provide for a central agency entrusted with all operational functions related to REGs such as registration of entities, issuance of certificates, maintaining and settling REG accounts, transaction repository and others. Taking specific note of procedural delays, REC regulations provide that the central agency will issue certificates to eligible entities within 15 days of application. CERC designated the National Load Despatch Centre (NLDC was constituted by the Ministry of Power in March 2005 for optimum scheduling and dispatch of ~lectricity) as the 'central agency' for the purpose of REG Regu lations, 2010. Denomination of certificates Each REG would represent one– megawatt hour of electricity generated by the renewable energy entity and injected into the grid. Transaction Certificates will be traded only through the power exchanges. The latter are required to get prior approval of CERC on rules and byelaws related to the price discovery process of REGs. Price Price determination of REGs will be within the limits set by CERC in terms of forbearance and floor price. As a follow up to its regulation on issuance of REGs, CERC notified the prices in suo mota order dated June 1, 2010. Validity REC will remain valid for up to a year from the date of issuance. The validity will stand even if the entity's accreditation is revoked at a later date. Compliance auditors CERC can appoint compliance auditors for verification of regulatory 23