REC Eligibility of Waste-to-Energy Projects

O P E N A C C E S S
REConnect Energy Solutions

REC, Energy Efficiency, Electricity Portfolio Management
Vol. XXII June 2012
REC Eligibility of Waste-to-Energy Projects

Index Waste to Energy Regulatory Updates REC Trade Report REC Project Statistics Green News About REConnect
Waste-to-energy is an important and growing source of power. Some waste-to-energy plants From Managements Desk also stand to benefit under the REC mechanism. However, the term waste-to-energy is a broad one, and not all types of projects are covered under the REC mechanism. Further, states Dear Readers, treat different type of waste-to-energy projects differently. In this note we have attempted to shed light on the eligibility and ineligibility of different types of waste-to-energy projects for Junes trading session was another one with RECs, and the differences in their treatment by states for RPO purposes. record volumes total cleared volume exceeded 236,000 RECs. However, we see signs We have considered two questions under this topic: of weakness ahead there has been no clear action on enforcement even after 3 months 1. What type of waste-to-energy plants are considered renewable power? of the end of FY 2011-12. As a result, in June 2. What type of waste-to-energy plants are eligible to get RECs? supply of RECs exceeded demand for the very first time. Solar REC however, registered a As we explain below, the answers to these two questions have significant implications. significant jump in demand. An important aspect to keep in mind while looking at waste-to-energy plants is that RenewThe main article this month focuses on wasteable Purchase Obligation regulations are state level regulations (jurisdiction of State Electricity to-energy project. Waste-to-energy is a broad Regulators), while REC regulations are central level (jurisdiction of Central Electricity Regulaterm, and there is a lot of detail one needs to tory Commission, of CERC). go through to understand its implications on RPO and REC. We provide some research that As per the CERC REC regulations, a project is considered renewable energy project if it is cov- sheds light on this topic. ered under Ministry of New and Renewable Energys (MNRE) definition of renewable sources. For waste-to-energy projects, this covers Prices were steady on IEX to Rs 2402, while Power from urban/industrial waste projects they increased on PXIL to Rs 2,460 (up 14%). Power from Black Liquor based projects (this category was recently added). Detailed trading statistics, analysis and regulatory updates are available in this newsletAccording to IREDA, the first category includes municipal solid waste projects, bio-waste from ter. Industrial sector (excluding Rice husk, bagasse, straw, stalks). Given that these projects are considered renewable as per MNRE, they are clearly eligible for RECs. As always, happy reading and we look forward to hearing feedback from you. However, waste-to-energy is a broad category. It can include waste heat recovery in cement, steel and various other manufacturing plants, off-gas and lean-gas based projects, and various other industrial wastes (Eg: Dola Char is a waste generated from sponge iron units and has a -Team REConnect high calorific value) As per CERC REC regulations, these projects are not considered renewable, and therefore are not eligible to get RECs (this will change if MNRE recognizes these as renewable). . However, the definition of RE power in the state RPO regulations differs in some instances from CERCs regulations. For example, the RPO regulations of UP and TN include sources identified as per state policies as renewable power, besides those in the MNRE list. This has resulted in the identification of Waste Heat Recovery (WHR) and some other waste processes as RE in those states.
1 As per
clarification II of Statement of Reason of CERC REC regulations First Amendment, dated 29 September 2010
Volume: XXII Month: June 12

Contents of this newsletter are for informational purposes only
Page 1
www.reconnectenergy.com

O P E N A C C E S S Vol. XXII
Index
Waste to Energy
Regulatory Updates
REC Trade Report
REC Project Statistics
Green News
About REConnect
Rajasthan also recently recognized WHR as renewable power by way of a circular. An important implication is that WHR and such other waste related sources can be used to meet the RPO in such states. However, since REC eligibility is determined by CERC regulations, they will not be entitled to get and trade RECs. We have observed that the argument that all waste-to-energy (and particularly WHR) projects should be considered RE hinged on two factors: These projects utilize heat or gases which would otherwise have been released in the atmosphere, and that power so generated displaces conventional power. Carbon credits are given to these projects The first argument is an important one there is no doubt about the need and importance to tap heat and gases that would otherwise have been wasted. However, a significant benefit from these efforts will now be available under the Energy Efficiency scheme (PAT; see our newsletter no 20), as such power will have zero net calorie value of input.
As far as carbon credit benefit is considered, it should be kept in mind that this benefit is on the basis of reduced emission, while REC benefit is on RE power generated. These benefits sometime overlap, but not always. In our interactions with various people in the industry, we have often heard that in trying to determine the status of a waste-to-energy project as RE or not, the key test is to look at the base fuel. If the WHR plants ultimate source is fossil fuel, then it should not be considered RE. As we understand, this is the guiding principal used by MNRE in determining which waste-to-energy technology to classify as renewable. This was also put to test recently by a petition by SAIL in Maharashtra. In the petition, SAIL argued that since it uses furnace off-gas for running a 4.2 MW power plant, it should be exempt from RPO. The commission rejected the petition on the grounds that such a waste heat recovery system is not covered under the definition of MNRE.
-End of Article-
Regulatory Updates
Co Generators exempted from RPO in Tamil Nadu: In a recent hearing of a petition filed by a Co Generator in Tamil Nadu for exemption from procuring power from Non Conventional sources to meet their RPO, it was declared that cogeneration plant, would be treated similar to a renewable energy generator. Consequently, the consumer who consumes the energy generated by this co-generation plant would be eligible for accounting the same for RPO subject to all other provisions of the RPO Regulations, 2010. The overall result will be reduction in demand of RECs/RE power. Punjab electricity duty : Captive Power Plants that want to avail benefit under the REC mechanism have to start paying electricity duty at the rate of 13% . Steel Authority of India (SAIL) filed petition seeking exemption from RPO : SAIL recently filed a petition seeking exemption from purchase of Renewable Energy Certificates (REC) in respect of 6 percent of its consumption from power generating towards its fulfillment of RPO. (see main article)

Page 2

Review of REC Trading-June 2012

Index Waste to Energy Regulatory Updates REC Trade Report REC Project Statistics Green News REC trading for June was conducted today (June 27, 2012). Compared to last month, there were a few surprises: Supply exceeded demand for Non-Solar RECs for the first time since start of trading Demand for Solar RECs grew significantly
About REConnect
Detailed analysis of Non-solar REC trading: Price on IEX remained the same as in May (Rs 2,402), while on PXIL it increased from Rs 2,150 to Rs 2,460 (increase of 14%). Aggregate demand reduced to 349,000 RECs from 365,000 last month (-4%). At the same time, supply of RECs increased from 275,000 to 361,000 (increase of 31%). Of these, 236,000 RECs were sold .
Detailed analysis of Solar REC trading: June was the second month when solar RECs were traded. Demand has grown significantly since last month (from 1,642 to 9,619; approximately a 6X growth). Available RECs increased to 563 from 249 last month (2.2X). Pricing fell marginally from the high of Rs 13,000 last month to Rs 12,750 on IEX and Rs 12, 506 on PXIL. 342 Solar RECs were sold, up from 10 RECs last month.
Total market value exceeded Rs 57 crore, of which Rs 44 lakhs were from Solar RECs.

Page 3

Status of projects in REC Mechanism

Index Waste to Energy Regulatory Updates REC Trade Report REC Project Statistics Green News
About REConnect
Accredited Capacity : 3157.313 MW

Page 4

Status of projects in REC Mechanism

About REConnect
Registered Capacity : 2741.213 MW

Page 5

Green News
About REConnect
Green Infra May Get $50 Million Solar Loan From IFC The World Banks private-sector financing arm may provide a $50 million loan to Green Infra Ltd. to build two solar power plants in India.The International Finance Corp. is considering offering the funding over the next two years for a 20-megawatt project and a five-megawatt plant in Rajasthan state, according to a proposal dated June 29 on the lenders website. http://www.bloomberg.com/news/2012-07-02/green-infra-may-get-50-million-solar-loan-from-ifc.html Jharkhand to set up 300MW power plants from renewable sources . Secretary, department of power, Vimal Kirty Singh said under present rules out of the net generation 5% of power must come from renewable sources. He said given the existing and upcoming power plants in the state, Jharkhand would roughly have a net installed capacity of 4000MWs shortly. http://timesofindia.indiatimes.com/city/ranchi/Jharkhand-to-set-up-300MW-power-plants-from-renewable-sources/ articleshow/14436537.cms?
Commercial establishments tap renewable energy for power It is not just industries here that are going in for renewable sources, such as wind power, to meet their energy needs. Some of the retail outlets have also started exploring the green energy options. Recently, Chennai Silks installed a stand-alone, rooftop wind and solar power plant to generate electricity to operate one division of their showroom. http://www.thehindu.com/news/cities/Coimbatore/article3572017.ece
Wind energy sector opposes Tangedcos plan to do away with energy banking The wind energy sector in Tamil Nadu has objected to the State power utility blaming the system of banking of energy for its financial loss and planning to scrap the system. The utility, Tamil Nadu Generation and Distribution Company (Tangedco), has blamed the system which provides for wind energy producers to bank the energy during the windy season and utilise it later. http://www.thehindubusinessline.com/companies/article3489694.ece
Rs 13,000 cr booster for electric , hybrid vehicles on the anvil The government plans to invest around Rs 13,000 crore over a period of eight years to promote electric and hybrid vehicles in the country and the Department of Heavy Industries is expected to seek Cabinet approval for the same within the next three months. http://zeenews.india.com/business/news/technology/rs-13-000-cr-booster-for-electric-hybrid-vehicles-on-theanvil_54833.html
India setting up investment cell for new energy: Abdullah India is setting up an Investment Promotion Cell for the energy sector to provide a single point of contact for investors, Minister of New and Renewable Energy, Mr Farooq Abdullah, has said. In the next five years, he said that the the country plans to invest $50 billion in renewable energy, including $19 billion in wind, $25 billion in solar and $3 billion each in the hydro and biomass segments. http://www.thehindubusinessline.com/industry-and-economy/article3523106.ece
State distribution utilities to be rated: Power Ministry The Ministry of Power said that an integrated rating methodology to cover the state power distribution utilities have been put in place. Marks would be assigned for both current levels of performance and relative improvement over the baseline parameters. It would also rank the utilities on the basis of performance. http://www.thehindubusinessline.com/industry-and-economy/article3455768.ece

Page 6

RPO on OA Users?
Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes
Status of RPOs across various states in India - As on April 24 , 2012

State Status of Regulation 201213 RPO Obligation
4.75 % + 0.25 % 4.05 % + 0.15 % 4.1 % +0.1 % 3.25 % + 0..75 % 5.25 % + 0.50 % 3.25 %+ 0.15 % 6.00 % + 1.00 % 1.50 % + 0.50 % 10.00 % + 0.25 % 4.75 %+0.25 % 3.00 % + 1.00 % 10 % + 0.25 % (BESCOM,MESCOM,CHESCO M), 7 % + 0.25 % for others 3.35 %+0.25 % 3.40 % + 0.60 % 7.75 % + 0.25 % 0.60 % + 0.40 % 5.35 % + 0.15 % 2.83 %+0.07 % 7.10 % + JNNSM 8.95 % + 0.05 % 0.90 % + 0.10 % 4.5 % + 0.025 % 5.00 %+ 1.00 % 4 % + NA 2.60 % + 0.40 % 4.75 % + 0.25% (Man) 6.75% + 0.25% (Miz) 7.75 % + 0.25%
RPO on CPP?
Penalty ?
Andhra Pradesh Assam Arunachal Pradesh Bihar Chhattisgarh Delhi Gujarat Haryana Himachal Pradesh J&K Jharkhand Karnataka
Final Final Final Final Final Draft Final Final Final Final Final Final
Yes Yes Yes Yes Yes Yes Yet to be notified Yes Yes Yes Yes (>5MW)
Not Specified Yes (RECmax) Yes (RECmax) Yes (RECmax) Yes (RECmax) Yes (RECmax) Yes (RECmax) Yes (RECmax) Yes (RECmax) Yes (RECmax) Yes (RECmax) Yes (RECmax)
Yes (>5MW) 5% RPO Yes Yes Yes Yes Yes(>5MW) Yes Yes Yes Yes (>5MW) Yes Yes NA Yes Yes Yes
Yes (>5MW) 5% RPO Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes NA Yes Yes Yes Yes (RECmax) Yes (RECmax) Yes (RECmax) Yes (RECmax) Yes (RECmax) Yes (RECmax) Yes (RECmax) Yes (RECmax) Yes (RECmax) Yes (RECmax) Yes (RECmax) REC not recognized Yes (RECmax) Yes (RECmax) Yes (RECmax)
Kerala Madhya Pradesh Maharashtra Meghalaya Orissa Punjab Rajasthan Tamil Nadu Tripura Uttrakhand Uttar Pradesh West Bengal JERC for Goa and UTs JERC for Manipur and Mizoram Nagaland
Final Final Final Final Final Final Final Final Final Final Final Final Final Final Final

Page 7

Past Newsletters
Dear Readers, Our previous newsletters are available at our website www.reconnectenergy.com and can be downloaded from : http://www.reconnectenergy.com/rec/index.php/newsletters-on-rec-mechanism.html The summary of our previous newsletters we have published is available below. Volume XI: July 2011 Applicability of REC/RPO on Co-Generation Power Plants
Volume XII: August 2011 REC & RPO: The Dilemma of Double Accounting of Green Tags Volume XIII: September 2011 Metering Issues in CPPs and Co-Gen: From REC Perspective Volume XIV: October 2011 Introduction to Renewable Regulatory Fund Volume XV: November 2011 Renewable Purchase Obligation A Demand - Supply Analysis Volume XVI: December 2011 Analysis of Draft RPO of Andhra Pradesh + REC Market Update Volume XVII: January 2012 Voluntary Market for RECs Volume XVIII: February 2012 Off Grid Projects and REC: A new socio-development tool? Volume XIX: March 2012 Applicability of RPO on Co-Generation Projects (An Update) Volume XX: April 2012 Analysis of the Energy Savings Certificate Markets Volume XXI: May 2012 Trading of First Solar RECs - Interview with Mr Vikalp Mundra of M&B Switchgear Ltd
Feedback: We wholeheartedly thank you for providing your valuable feed-back on our last newsletter. Your feedback on the newsletter keeps us motivated and would certainly help us to improve the quality of it. Kindly keep writing to us. We are eager hear your views.
Best Regards, Team - REConnect

Page 8

Services Provided by REConnect

About REConnect
Detailed Services in REC Space

Services for RE Generators
Services for Obligated Entities (Distribution Companies / Open Access Consumers / Captive Consumers)

Page 9

About REConnect
About REConnect
REConnect is a venture focused on the Renewable Energy Certificates, Energy Efficiency and Electricity Portfolio Management.
Contact REConnect New Delhi

Vibhav Nuwal vibhav.nuwal@reconnectenergy.com +91 88006 79988
REConnects team has extensive experience in the environmental markets both in India and internationally:
Worked in the international carbon markets for several years and has expertise in the consulting and trading of emissions reductions
Bangalore
Vishal Pandya vishal.pandya@reconnectenergy.com +91 96202 21101 Suresh Kumar (for RPO) suresh.kumar@reconnectenergy.com +91 99727 24727
Extensive knowledge about various Renewable Energy Certificate and Energy Efficiency Certificate markets in USA, Europe and Australia etc.
Worked with Indian Energy Exchange (IEX), Indias leading power exchange, and have extensive knowledge and experience of power markets
Mumbai
Ramkumar K ramkumar@reconnectenergy.com +91 99303 59992
Alumnus of Columbia University, an Ivy League University in USA, and IIT Bombay
Highly experienced core team worked with organizations like J P Morgan, Indian Energy Exchange, Asia Carbon and Gensol.
Chennai
Rajesh Vaidyula rajesh.vaidyula@reconnectenergy.com +91 99404 78306
Pune
Mohit Tyagi mohit.tyagi@reconnectenergy.com +91 96650 42397

Page 10

REC Eligibility of Waste-to-Energy Projects

Uploaded by

Copyright:

Available Formats

You might also like

REC Eligibility of Waste-to-Energy Projects

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

REC Eligibility of Waste-to-Energy Projects

Uploaded by

Copyright:

Available Formats

O P E N A C C E S S

REConnect Energy Solutions

Vol. XXII June 2012