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1lume: XXInth: May 12ents of this newsletter are for informational purposes only
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Dear Readers,
Mays trading session was momentous for theREC markets and for us we traded the very
first solar RECs this month. This was another
important milestone in our journey, the first
of which trading of the very first RECs in India
in March 2011.
To reflect the important of the first solar REC
trading, we have included an interview with
Mr. Vikalp Mundra, Managing Director of
M&B Switchgear Ltd (M&B). M&B traded the
first RECs for its solar PV installation in MP.
Mr. Mundra and M&B are trailblazers in thesector, and solar developers and investors will
find his experience of setting up the first Solar
PV plant under REC very valuable. We have
come across several issues and questions that
most solar developers have to deal with, and
we found that Mr. Mundras experience can
be instructive.
Prices increased on IEX to Rs 2402 (up 9%)
while they declined marginally on PXIL to Rs
2,150 (down 2%). The important part was the
spurt in demand to over 365,000 this washigher than in March 2012 (323,000). High
demand this early in the compliance period is
a very encouraging sign for the market.
As always, happy reading and we look for-
ward to hearing feedback from you.
-Team REConnect
REConnect Energy SolutionsREC, Energy Efficiency, Electricity Portfolio Management
Solar RECs: Straight from the heart of an Indian Entrepreneur
From Managements Desk
Regulatory News REC Trade Report REC Project Statistics Green News About REConnectIndex Interview on Solar REC
eam REConnect :Tell us about yourself and your companys back-
round.
Mr.Vikalp Mundra :Im Vikalp Mundra, age 40 yrs, joined business in
994 after compelting BE (Elect) & completed MMS (Finance) in 1996.
MBSL being the company is promoted by Mr. Shyam Sunder Mundra, Mr.
ikalp Mundra and Mr. Anurag Mundra. Originally Mr. Shyam Sunder
Mundra started manufacturing of transformers in the year 1976 in a pro-
rietorship concern M AND B Switchgears. Later the same was con-
erted into a partnership, Private Limited & now, MBSL had become NSE/
SE Listed Public Entity.
oday MBSL which ,is an ISO 9001:2008 & ISO 14001:2004 certified company, is engaged in
wo different business areas viz... Transformer Manufacturing and Solar Power Generation. As
or the Transformer /business/Industry/ Activity, MBSL has an existing capacity up to 25 MVA
t 132 KV class, Automatic Voltage Controllers. MBSL has an installed capacity to manufacture
more than 5000 transformers of different capacities & class and is selling its products to vari-
us state electricity boards, public sector undertakings, and private sector companies engaged
n Generation and Distribution Electricity and other Industrial undertakings engaged in Steel,
ower, Textile, Coal & Mine, Infrastructure, Engineering & Automobile Sectors etc.
With its 2MWpGeneration Plant at District Rajgarh (Madhya Pradesh) MBSL has achieved fol-
owing two milestones:
. First Solar Power Plant in India under REC Mechanism.
. First MW level grid connected Solar Power Plant in MP.
MBSL is now moving ahead with setting up a 20 MWp solar power generation plant in the
icinity of its existing site of Power Plant
eam REConnect :How did you come across the idea of investing in solar power?
Mr.Vikalp Mundra : There were three reasons for us investing into Solar Power.
. With National Solar Mission 2010 a new business opportunity is opened up in field of So-
lar Power Generation in India, we find it a natural forward integration in this field as our
existing business of Transformer is a product of Distribution of Energy. So from Distribu-
tion to Generation is a natural progression.
. This is a very scalable business in which there is no restriction of growth & practically nocompetition in initial years.
. In holistic view, it is returning back something back to nature & making mother earth
happy.
REConnect traded the first ever Solar RECs
M & B Switchgear, which operates a 2 MW Solar power plant in Madhya Pradesh was issued
he first ever Solar RECs . Their Solar RECs were traded for first time in Mays trading session.
Mr. Vikalp Mundra,Managing Director of M&B Switchgear Ltd (M&B). has a very rich experi-
nce in the Solar space. REConnects team had a small chat with Mr. Mundra regarding solar
ower in India.
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REConnect Energy SolutionsREC, Energy Efficiency, Electricity Portfolio Management
Team REConnect : Any specific reasons behind opting for REC
mechanism especially in a scenario where there were very few
projects were considering REC route?
Mr.Vikalp Mundra : We saw a great opportunity in REC mecha-
nism, it is a perfect business model where risk is rewarded favoura-
bly & we can generate decent returns to all stake holders. With the
First sale of REC @ Rs. 13, it has been proved that revenue return
is almost Double the traditional PPA route. It is a business of de-
mand & supply like in any other businesses.
Further, this REC mechanism is beautifully drafted & I can say it is
one among the best conceived, documented & implemented
mechanism in the history of Indian Power Industry after Electricity
Act 2003, which is mother of all such initiative.
REC mechanism is bundled with great amount of transparency &
almost paperless working.
Team REConnect : What are your future plans in energy sector or
more specifically in solar sector?
Mr.Vikalp Mundra : We are going ahead with our next phase of 20MWp in REC Mechanism.
Team REConnect : How do you see the progress of renewable
energy market and its future in our country?
Mr.Vikalp Mundra : Solar energy is vital to India, we started late,
but I have firm belief like in Mobile telephony; India had evolved
leaving behind its baggage of late starter, the same will be re-
peated in Solar. It is written on the wall that the next decade
would be decade of Solar Power in India.
The first leg of putting up MW level plants already geared up its
pace, but even the bigger revolution would be roof top. For this
regulation like net-metering should come up fast.
Regulatory News REC Trade Report REC Project Statistics Green News About REConnectIndex Interview on Solar REC
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our banking industry is not showing its enthusiasm
towards REC mechanism, may be for some reasons.
But, there are certain banks which respect the
entrepreneurship & evaluate risk-reward ratio.
Team REConnect : How did you manage the funding part and
what kind of difficulties you have faced?
Mr.Vikalp Mundra : Im sorry to say that in-general our banking
industry is not showing its enthusiasm towards REC mechanism,
may be for some reasons.
But, there are certain banks which respect the entrepreneurship &
evaluate risk-reward ratio. We could able to get funding for our
existing 2 MWp plant from one of the nationalised bank. Our sin-
cere gratitude to them.
It is difficult but Banks are now realising and coming ahead in
favour of REC Mechanism funding.
We are in advance stages of financial closer of our next phase of 20
MWp.
Team REConnect :Do you see market structure in REC mechanism
need to be changed to make project financing easier? If so, what
are your views?
Mr.Vikalp Mundra : Firstly, the RPO should be with quarterly com-
pliance. Then a vintage value should be added with the REC
mechanism and if the REC mechanism can be put under Securitisa-
tion Act in some way or other it will make it more comfortable for
financial institutions.
Team REConnect :What is your message for the upcoming inves-
tors/project developers in the solar REC market?
Mr.Vikalp Mundra : We whole heartedly welcome to all such in-
vestors & urge them to see the IRR which can be generated in this
route of business, which is slightly risky but rewards are worth
taking this risk.
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REConnect Energy SolutionsREC, Energy Efficiency, Electricity Portfolio Management
Regulatory News
Regulatory News REC Trade Report REC Project Statistics Green News About REConnectIndex Interview on Solar REC
Revision of Electricity Tariff in Karnataka for the year 2012-13
Karnataka Electricity Regulatory Commission (KERC) has ordered revision of electricity tariff for all the Electricity Supply Companies in the
State for the Financial Year 2012-13 and will come into effect for the electricity consumed from the first meter reading date falling on or
after 30th April 2012.
The average tariff increase approved by the KERC amounts to 13 paise per unit and varies across different categories of consumers.The
existing tariff for Commercial and Industrial consumers across the State has been increased by 20 paise per unit.
A new HT tariff category namely HT5 is introduced for consumers availing temporary supply with a demand of 67HP or more.
Cross Subsidy Surcharge:
Cross subsidy Surcharge has been reintroduced for consumers availing Open Access. The cross subsidy payable for the year 2012-13 by
different category of consumers is provided in the table below:
The reason quoted forimposing cross subsidy charges in place by the commission is due to the prevailing situation of power availability
during the relevant years.The point to be noted is that Since 2009 Tariff Order, the cross subsidy charges was Zero in order to encourage
open access and to incentivise the State consumers (especially industrial and commercial consumers) to purchase power from outside the
State at reasonable rates.
In our view, we see this has a discouraging development for open access consumers of the State (especially Industrial & Commercial).
Fuel Cost Adjustment Charge
KERC has proposed to introduce fuel cost adjustment mechanism in order to incorporate any increase / decrease in fuel cost from time to
time. The Commission had sought data of fuel variation costs from ESCOMs. After due analysis of the same, the Commission will issue a
separate Order in the matter which will be effective from the current year.
Time of Day Tariff
The Commission has decided to make Time of Day Tariff compulsory for HT2(a) and HT2(b) consumers with a contract demand of 500 KVA
and above with effect from 1st September 2012.
Green Tariff
Green Tariff introduced in the previous tariff order for HT Industries & HT Commercial Consumers at their option, to promote purchase of
energy from Renewable Sources and toreduce carbon footprint is continued. Consumers opting for green tariff have to Pay Re. 1.00/unitover and above the normal tariff.
Encouraging Solar Energy Generation
The Commission has decided not to charge any wheeling charge on transmission / wheeling of solar energy.
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Solar RECs were traded for the very first time in India in the May trading session. REConnect sold Solar RECs issued to M&B Switchgear
Ltd (a company that operates a 2MW solar plant in MP). The market clearing prices on both exchanges was Rs.13,000. The total demand
of Solar RECs was 1642, whereas the supply was only 249. With 17.16 MW capacity already accredited under the REC mechanism, and
more in the pipeline, we expect Solar REC trading to be a regular feature going forward.
Non-solar RECs
Aggregate prices and volume increased from previous month, despite significantly higher participation by sellers (275000 RECs were bid
for sale in May 2012, 107% over April 2012). This may have been a function of higher than expected prices in April.
Demand jumped significantly too total demand was for over 365,000 RECs, up 38% from last month. The more important point here is
that demand this month was higher than in March 2012, which was the end of the compliance period. For demand to be this high in the
second month of the new compliance period is an important sign for the market.
Prices rose at IEX the market clearing price was Rs. 2,402/REC (increase of 9% over April 2012) ,whereas at PXIL prices declined margin-
ally to Rs. 2,150 /REC (reduction of 2%). Last month, prices were Rs. 2201/REC at both the exchanges.
Overall, robust demand and high prices are a good sign for renewable generators.
REConnect Energy SolutionsREC, Energy Efficiency, Electricity Portfolio Management
Review of REC Trading-May 2012
Regulatory News REC Trade Report REC Project Statistics Green News About REConnectIndex Interview on Solar REC
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Status of projects in REC Mechanism
REConnect Energy SolutionsREC, Energy Efficiency, Electricity Portfolio Management
Accredited Capacity : 2951.893 MW
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Status of projects in REC Mechanism
REConnect Energy SolutionsREC, Energy Efficiency, Electricity Portfolio Management
Registered Capacity : 2663.308 MW
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REConnect Energy SolutionsREC, Energy Efficiency, Electricity Portfolio Management
Solar RECs traded at Power Exchanges for first time
olar RECs were traded for the very first time in India in the May trading session .The market clearing prices on both ex-
hanges was Rs.13,000. The certificates belonged to Indore-based M&B Switchgear (a company that operates a 2MW solar
plant in Madhya Pradesh)
http://www.thehindubusinessline.com/industry-and-economy/article3475896.ece?homepage=true
Decline in solar module prices to slow down: CRISIL
CRISIL believes that the pace of reduction in capital costs of solar PV projects is expected to moderate in 2012 resulting in
pressure on profitability of players who have bid aggressively below Rs. 9 per unit under batch 2 of JNNSM. Almost half the
bids under JNSSM have been below Rs 9 per unit and about a fourth of the bids below Rs 8.5 per unit, making these invest-ments highly risky.
http://economictimes.indiatimes.com/news/news-by-industry/energy/power/decline-in-solar-module-prices-to-slow-down-
risil/articleshow/13897939.cms
Suzlon launches environment app for Apple iOS and Android
The Minister for New and Renewable Energy, Farooq Abdullah, launched the 'Suzlon Earth - an Environment Diary' a digital
pplication for Apple iOS and Android platform on the occasion of World Environment Day.
http://economictimes.indiatimes.com/tech/software/suzlon-launches-environment-app-for-apple-ios-and-android/
articleshow/13895366.cms
IFC launches off-grid lighting programmeFC, a member of the World Bank Group, has launched a programme aimed at providing off-grid lighting to two million people
ving in rural India. The company said that this will be achieved over the next three years.
http://www.thehindubusinessline.com/companies/article3489694.ece
India's Low-carbon technology market likely to be worth $135 billion by 2020
Billions of dollars worth of investment in clean technology and green energy are eyeing India, where the market for low-
arbon technology is expected to expand to $135 billion by 2020, according to industry experts, making the country one of
he most lucrative destination for companies in the domain.
http://timesofindia.indiatimes.com/business/india-business/Indias-Low-carbon-technology-market-likely-to-be-worth-135-
billion-by-2020/articleshow/13835316.cms
Power trading prices up 20-25%
With the mercury rising this month, short-term power prices have seen an increase of 20-25 per cent, with the highest price
t which power was traded touching Rs 5 per unit. The average for power trading was Rs 3.5-4 per unit whereas last year the
verage rates were 2.9 per unit in the same period.
http://business-standard.com/india/news/power-trading-prices20-25/475744/
Delhi Metro to tap solar power
Delhi's new age transport system is going green, with the Delhi Metro Rail Corporation planning to tap solar power in some of
ts facilities. The initiative announced to coincide with the World Environment Day, will help generate renewable energy and
educe DMRC's dependence on non-renewable sources of power.
http://www.thehindu.com/news/cities/Delhi/article3492671.ece
Green News
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Status of RPOs across various states in India - As on April 24 , 2012
REConnect Energy SolutionsREC, Energy Efficiency, Electricity Portfolio Management
State Status of Regulation 201213 RPOObligation RPO on CPP? RPO on OAUsers? Penalty ?
Andhra Pradesh Final 4.75 % + 0.25 % Yes Yes Not Specified
Assam Final 4.05 % + 0.15 % Yes Yes Yes (RECmax)
Bihar Final 3.25 % + 0..75 % Yes Yes Yes (RECmax)
Chhattisgarh Final 5.25 % + 0.50 % Yes Yes Yes (RECmax)
Delhi Draft 3.25 %+ 0.15 % Yes Yes Yes (RECmax)
Gujarat Final 6.00 % + 1.00 % Yet to be notified Yes Yes (RECmax)
Haryana Final 1.50 % + 0.50 % Yes Yes Yes (RECmax)
Himachal Pradesh Final 10.00 % + 0.25 % Yes Yes Yes (RECmax)
J&K Final 4.75 %+0.25 % Yes Yes Yes (RECmax)
Jharkhand Final 3.00 % + 1.00 % Yes (>5MW) Yes Yes (RECmax)
Karnataka Final 10 % + 0.25 %(BESCOM,MESCOM,CHESCO
M), 7 % + 0.25 % for othersYes (>5MW)
5% RPOYes (>5MW)
5% RPO
Yes (RECmax)
Kerala Final 3.35 %+0.25 % Yes Yes Yes (RECmax)
Madhya Pradesh Final 3.40 % + 0.60 % Yes Yes Yes (RECmax)
Arunachal Pradesh Draft 4.1 % +0.1 % Yes Yes Yes (RECmax)
Maharashtra Final 7.75 % + 0.25 % Yes Yes Yes (RECmax)
Meghalaya Final 0.60 % + 0.40 % Yes Yes Yes (RECmax)
Orissa Final 5.35 % + 0.15 % Yes(>5MW) Yes Yes (RECmax)
Punjab Final 2.83 %+0.07 % Yes Yes Yes (RECmax)
Rajasthan Final 7.10 % + JNNSM Yes Yes Yes (RECmax)
Tamil Nadu Final 8.95 % + 0.05 % Yes Yes Yes (RECmax)
Tripura Final 0.90 % + 0.10 % Yes (>5MW) Yes Yes (RECmax)
Uttrakhand Final 4.5 % + 0.025 % Yes Yes Yes (RECmax)
Uttar Pradesh Final 5.00 %+ 1.00 % Yes Yes Yes (RECmax)
West Bengal Final 4 % + NA NA NA REC not recognized
JERC for Goa and
UTs
Final 2.60 % + 0.40 % Yes Yes Yes (RECmax)
JERC for Manipurand Mizoram
Final 4.75 % + 0.25% (Man)6.75% + 0.25% (Miz)
Yes Yes Yes (RECmax)
Nagaland Final 7.75 % + 0.25% Yes Yes Yes (RECmax)
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REConnect Energy SolutionsREC, Energy Efficiency, Electricity Portfolio Management
Dear Readers,
Our previous newsletters are available at our website www.reconnectenergy.com and can be downloaded from :ttp://www.reconnectenergy.com/rec/index.php/newsletters-on-rec-mechanism.htmlhe summary of our previous newsletters we have published is available below.
Volume X: June 2011Analysis on proposed Floor & Forbearance Prices for control period 2012-2015
Volume XI: July 2011
Applicability of REC/RPO on Co-Generation Power Plants
Volume XII: August 2011REC & RPO: The Dilemma of Double Accounting of Green Tags
Volume XIII: September 2011Metering Issues in CPPs and Co-Gen: From REC Perspective
Volume XIV: October 2011Introduction to Renewable Regulatory Fund
Volume XV: November 2011Renewable Purchase Obligation A Demand - Supply Analysis
Volume XVI: December 2011Analysis of Draft RPO of Andhra Pradesh + REC Market Update
Volume XVII: January 2012Voluntary Market for RECs
Volume XVIII: February 2012Off Grid Projects and REC: A new socio-development tool?
Volume XIX: March 2012Applicability of RPO on Co-Generation Projects (An Update)
Volume XX: April 2012Analysis of the Energy Savings Certificate Markets
Past Newsletters
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
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Services Provided by REConnect
REConnect Energy SolutionsREC, Energy Efficiency, Electricity Portfolio Management
Detailed Services in REC Space
Services for RE Generators
Services for Obligated Entities (Distribution Companies / Open Access Consumers / Captive Consumers)
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REConnect is a venture focused on the Renewable Energy Certificates,
Energy Efficiency and Electricity Portfolio Management.
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
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 ex-
change, and have extensive knowledge and experience of power
markets
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 Carbonand Gensol.
Contact REConnect
New DelhiVibhav Nuwal
+91 88006 79988
Bangalore
Vishal [email protected]
+91 96202 21101
Suresh Kumar (for RPO)
+91 99727 24727
MumbaiRamkumar K
+91 99303 59992
ChennaiRajesh Vaidyula
+91 99404 78306
Pune
Mohit [email protected]
+91 96650 42397
About REConnect
REConnect Energy SolutionsREC, Energy Efficiency, Electricity Portfolio Management
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