Agneya\'s REC sector newsletter. V1, Issue 8

1. March 2012, Volume I, Issue VIII agneya
Last Session Caps Eventful Five Years For RE
Financial year ends on a quiet note
REC Trade Volume Clearing Price
Buy Bids Sell Bids
March 2012 Traded Rs. per REC
IEX 272,366 223, 907 192,354 2,900
Non-Solar
PXIL 51,401 7,405 7,383 3,100
IEX 5,782 - - -
Solar
PXIL 3,319 - - -
Renewable energy in numbers
As the financial year comes to a close, we take a look at how far the Renewable Energy sector in India has
progressed and why the future for the REC market looks bright.
Capacity and Share of Renewable Energy in India have grown steadily. More RE capacity was installed in the
last five years than the cumulative total till then.
5 Yr Plan Ending 1992 1997 2002 2007 2012
RES Installed Capacity MW 32 902 1,628 7,761 22,233
5 yr CAGR NA 95% 13% 37% 23%
Increasing Share of RE in India’s Power Mix
Source: CEA, MNRE; 2012 data as on 29.02.2012
28 Mar, 2012 Page 1 of 4

2. March 2012, Volume I, Issue VIII agneya
Distribution of total installed power generating capacity
Distribution of Total Capacity and RE
Capacity
and capacity of Renewable Energy is skewed amongst
Regions. South accounts for 27% of total installed power
generation capacity but 49% of installed RE capacity
Total North South East West owing to wind energy capacity in Tamil Nadu.
RE
Source: CEA, East includes North East, South includes
0% 20% 40% 60% 80% 100%
Islands; 2012 data as on 29.02.2012
REC trading was launched in March 2011. It
Cumulative Trade Value in FY2011-12: Rs. 286
provides a market driven route for addressing Crores
skewed availability of RE. After a hesitant first
286
few months, the market has now picked up and
is substantial in size now – total traded value of 228
RECs in FY2011-12 was Rs. 286 crores. 165
113
80
49
13 23
0 3 5 8
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
2011 2011 2011 2011 2011 2011 2011 2011 2011 2012 2012 2012
Source: REC Registry, Trade Numbers in ‘000 RECs
Participants are warming up to the REC market. Evidence of this can be seen in various aspects of market
performance in the last twelve months.
a. Higher prices of RECs – prices picked up from floor level of Rs. 1500 to Rs. 3000 by last quarter of FY 2011-
12. There is more clarity now on what levels of pricing can be expected in the coming financial year.
b. Increase in number of participants in trading – number of participants rose from mere double digits in first few
months to around 400 in the last trading session. Higher number of participants encouraged better price
discovery for RECs.
c. More successful buy as well as sell bids – higher proportion of bids were cleared both from sellers as well as
buyers. This shows better clarity on prices, which have been stable in the range of Rs 2,700 to Rs. 3100.
28 Mar, 2012 Page 2 of 4

3. March 2012, Volume I, Issue VIII agneya
Prices and Trade Volumes in FY2011-12
3,051 3,065 2,907
2,891 2,950
2,710 200
2,300 172 206
1,789
1,500 1,500 1,505 1,554 112
106
96
46
25
19 16 19
0
Apr May Jun Jul 2011 Aug Sep Oct Nov Dec Jan Feb Mar
2011 2011 2011 2011 2011 2011 2011 2011 2012 2012 2012
Traded Volume Average Price
Source: REC Registry, IEX
% Redemption of available RECs in the month The REC market displays seasonal
81%
86% 85% characteristics. Pattern of increase in price
and redemption may change in coming
57% financial year.
48% 44% 51%
40% 39%
34% 37% a. Prices reached higher levels in last quarter
– this could be partly attributed to
6% compliance pressure from buyers’ side and
to urgency of sellers to cash in on the
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
2011 2011 2011 2011 2011 2011 2011 2011 2011 2012 2012 2012
energy generated within the financial year.
b. More redemption in last quarter – driven by
expectation of higher prices. Prices may
Cumulative Redemption for FY by month end increase in the first and second quarters in
the coming FY with more buyers looking to
94% 96% 97% comply with RPO early in the year to avoid
71%
80% last quarter rush. Redemption may become
65% 64% 68%
58% 59% 60% even faster if quarterly compliance is
followed.
14%
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
2011 2011 2011 2011 2011 2011 2011 2011 2011 2012 2012 2012
Source: REC Registry
28 Mar, 2012 Page 3 of 4

4. March 2012, Volume I, Issue VIII agneya
Scope for REC market in India is wide – Installed Capacity vs. Registered Capacity of RE
FY2011-12 was encouraging in many ways.
a. Significant unutilized potential yet to Installed MW
come on line – installed RE capacity grew
by 23% in FY2011-12. REC mechanism
Registered MW
will further boost investment in wind
energy while solar photovoltaic market is
0% 20% 40% 60% 80% 100%
yet to start in earnest.
b. Skew between installed capacity of RE Wind Bio-fuel cogeneration Biomass Small Hydro Solar Others
and RE capacity registered for REC –
Biomass and Cogen capacity has a
comparatively bigger share in REC Registered REC capacity by State, MW
registrations compared to installed wind Uttar Pradesh 658
energy capacity. Maharashtra 542
Tamil Nadu 529
c. Participation from more States to boost Gujarat 211
market further – Uttar Pradesh, Chhattisgarh 92
Rajasthan 50
Maharashtra and Tamil Nadu alone Punjab 46
Himachal Pradesh 35
account for three quarters of RE capacity Uttarakhand 24
registration (in MW). Gradual entry of Kerala 21
Madhya Pradesh 21
other States and more participation from J&K 18
them will strengthen REC market further. Haryana 9
agneya
Promoted by alumni of IIM Ahmedabad and IIM Bangalore, we at agneya work with Renewable Energy
Generators to manage their REC accreditation, registration, issuances and trading. We also work with
companies covered by the Renewable Purchase Obligation (RPO) on optimum ways to fulfill these obligations.
agneya also provides services in the following areas –
Renewable Energy Project Management – advising clients on the best possible portfolio of renewable energy
(wind, solar, bio) across tariff regimes, technology options, electricity sales structuring and availing incentives
like REC and GBI.
Electricity Market Regulations – advising clients on regulatory aspects of electricity market, options for
realizing the maximum value from their energy assets and minimizing costs related to regulatory compliance.
Carbon & Energy – measuring carbon footprint, energy audits and current/future energy profiling to assess
risks and opportunities related to energy security and climate change.
Sustainability – building robust long term foundations for business i.e. managing economic, environmental and
social aspects of business. These include water management, sustainability management and reporting.
For further information on Renewable Energy Certificates or other services, please contact us at –
E-mail – rahul@agneya.in | Phone – +91-88 06 07 07 83 | Website – www.agneya.in
28 Mar, 2012 Page 4 of 4