1. General Carbon Newsletter
ENERGY & ENVIRONMENTAL COMMODITIES NEWSLETTER APRIL 2012, ISSUE:10
The last few days have produced numerous events that will impact our view of REC PROJECT
HIGHLIGHTS
energy and environmental commodity markets for the days to come. This
(as on 1st April 2012)
mountain of news flow will result in temporary indigestion due to the level of
impact. Some key pieces to chew on Accredited Projects:451
(2630.148 MW)
REC - While the volume of REC traded was heartening, prices were much lower
Registered Projects: 366
than the ceiling price of 3,900 which was expected given the shortfall in RPO (2318.628 MW)
compliance. A reasonable attempt by DISCOMs or captive/open access
REC Issuance:
consumers should have resulted in significant demand i.e. price of 3,900. A
REC Issued: 2,03,819
price of 2,900 suggests that the fear of penalty does not seem to have caused REC Redeemed: 1,99,737
the required "fear factor". Softer prices in coming months are now projected. Closing Balance: 38,545
(Source: Recregistry, India)
PAT - On March 30, the Government of India notified the launch of the first
phase of the Perform-Achieve-Trade (PAT) scheme. A total of 478 Designated
REC PRICE WATCH
Consumers (DCs) are included in the scheme which is viewed as an "Indian
energy efficiency cap-and-trade scheme”. More on this in the article below. Mar 2012 Session
IEX: Price (Volume)
Accelerated Depreciation - Another era in incentive based development of Non solar -INR 2,900
renewable energy comes to an end in 2012 as the Income Tax department (192,354)
withdrew accelerated depreciation benefit for wind turbines. Accelerated Solar - (Not traded)
depreciation had helped retail investment in the wind sector. While the removal
of benefit will facilitate IPP led growth of the market it will also require revisit in PXIL: Price (Volume)
the sales model of wind turbine suppliers. Non solar -INR 3,100
(7,383)
Carbon - More negative news on the pricing front as EU emission data shows
Solar - (Not traded)
Carbon dioxide emissions from most of the plants under compliance fell by 2.4
percent in 2011 from 2010. This drop in emissions reduces demand for EUAs
and CERs. The fall is due to lower power generation and stagnating industrial CER PRICE WATCH
production in the EU. Unless some kind of market intervention takes place 29 February 2012
carbon prices could fall below current levels. BlueNext Daily Spot: Price
(Volume)
Best, € 3.48 (145, 000)
Satish Kashyap

2. Perform – Achieve-Trade (PAT) launched!
Bureau of Energy Efficiency (BEE) has launched its long awaited initiative to Energy Market
improve energy efficiency across leading industrial establishments across India, News
called Perform-Achieve-Trade or PAT mechanism. With a view to encourage
cost effectiveness in improving industrial energy efficiency, Ministry of Power Tamil Nadu’s new
has come up with a notification on March 30, 2012. The notification details the solar energy policy
process for preparation and implementation of the PAT scheme and procedure to add 3,000 MW
for issue of Energy Savings Certificate (EsCerts). The notification includes Tamil Nadu will soon
targets for specific energy consumption for the period from April 2012 to come out with a new
March 2015 for each designated consumers. policy on solar power
to generate 3,000
The Perform, Achieve and Trade (PAT) mechanism, which is a market-based MW by 2015-16
mechanism to make improvements in energy efficiency in energy-intensive which is more than
large industries and facilities more cost-effective by certification of energy 33 percent of the
savings into a tradable commodity. The identified sectors for which the norms Indian target.
have been specified are aluminium, chlor alkali, textile, pulp and paper, iron and
steel, fertilizer, cement and thermal power plants. Gujarat cuts solar
PV tariff by 17.3 %,
A total of 478 Designated Consumers (DCs) will be included under the PAT
raises solar thermal
scheme. The largest number of DCs are from power sector (144) followed by
tariff by 39%
the textile sector (90) and the cement sector (85). Some prominent Designated
The GERC has
Consumers include NTPC, Raymond, Ambuja Cement, Essar Steel, Tata
announced the solar
Chemicals Limited, Hindalco etc. An indication of the level of savings targeted
power tariffs for
is listed below:
projects
commissioned after
Sector & Entity Baseline Target Savings %
January 2012.
(MTOE) (MTOE) (MTOE) reduction
…levelised tariff for
Power - NTPC 5,03,74,800 4,99,35,020 4,39,780 1%
ground-mounted
solar PV projects has
Textile - Raymond 27,365 25,802 1,562 6% been reduced by
17.3 % …..
Cement - Ambuja 2,72,029 2,61,331 10,697 4%
Cement CERC moots harsh
Iron and Steel- 20,22,914 19,13,196 1,09,717 5% penalties for failure
Essar Steel to adhere to grid
Fertilizers - Tata 2,96,739 2,93,418 3,321 1% discipline.
Chemicals A move by the
Central Electricity
Aluminium - 90,792 87,025 3,767 4% Regulatory
Hindalco Commission (CERC)
to notify
amendments in
Indian Electricity Grid
Kshitija Rangnekar
Code and
unscheduled

3. What can we learn from Australia’s REC experience interchange (UI)
regulations with
Australia's renewable energy target aims to ramp up renewable energy effect from April 2 will
purchase towards a target of 20% renewable by 2020 based on an REC push electricity
scheme launched in 2001. RECs are awarded to generators for every MWh of supply companies
renewable power produced in excess of a regulatory baseline established by (Escoms)
the Office of Renewable Energy Regulator. REC value is determined by supply
and demand and no floor or forbearance price has been fixed. Prices of A$45 -
A$50 are seen as necessary to support the development of new wind projects in WB, MP rejects new
Australia. The development of the market since 2001 can be clubbed into three interpretation of
phases open access.
The Centre’s new
Phase I – From 2001 to 2006 interpretation of open
access in the
Phase II - From 2006 to 2010
Electricity Act, 2003
that distribution
Phase III - From 2011 onwards
companies need not
Phase I – From 2001 to 2006 provide power at
regulated tariffs to
During Phase I prices of REC were expected to rise above A$45/REC, as most industrial consumers,
RECs were expected to be generated from sugarcane residue. However, the has led to a chaotic
actual supply of RECs came from solar water heater, wind mills and hydro situation with certain
power which generated two times the annual demand of RECs in 2005. REC states such as
prices crashed in 2005 to around half of initial forecasts. Rajasthan asking
such consumers to
make their own
arrangements. .
Govt explains logic
behind climate
diplomacy
For the first time, the
government has set
down the framework
and reasoning behind
its stance on future
climate talks in a
(Source: Green Energy Markets (2009); www.rec-registry.gov.au) policy document - the
Economic Survey.
Phase II - From 2006 to 2011
No new gas – based
After prices crashed in 2005, the REC market was revived in 2006-2007 when
power plant to be
State Governments announced their own renewable energy targets and overall
set up till 2015-16 :
target was increased from 9500 GWh to 45,000 GWh. Accordingly, REC prices
CEA
jumped to around A$50 by April 2008. However, by October 2009, prices had
The Central
again dipped to A$30. This dip was due to the oversupply created by solar

4. water heating RECs in 2008 & 2009. Electricity Authority
(CEA) has said no
Also, Solar PV had generated very few RECs in first few years but sales of solar new gas-based
PV jumped when the price of solar PV systems halved in 2009. It had an power plants will be
amplified effect on the overall REC system because of the multiplier. From set up in the country
almost nil in 2007, solar PV generated more than 50% of RECs in 2010. till 2015-16, as the
natural gas output is
expected to fall
considerably…
India's natural gas
production is likely to
fall by 35 per cent to
27.64 million metric
standard cubic metre
per day (mmscmd) in
the next fiscal and
may further dip by
another 12 per cent
to 24.22 mmscmd in
2013-14.
(Source: Redding Energy Management (1999); www.rec-registry.gov.au)
Coimbatore - Rs 900
Wind power which was expected to increase capacity by 500 MW to 1000 MW cr loss due to one
per year did not even start. In December 2010, due to large volumes of RECs day power holiday
flowing from solar PV, the government reduced the Solar REC Multiplier from About 40,000
five times to four times and further phased down by one each year until the industries in and
multiplier is phased out by July 2013. around Coimbatore
suffered Rs 900 crore
Current: production loss today
on the first day of
Since January 2011, the REC market was separated into two parts – the Large implementing the
scale Renewable Energy Target (LRET) and the Small scale Renewable Energy power holiday
Scheme (SRES). Under SRES, Small-scale Technology Certificates (STCs) can announced by the
be sold through the STC Clearing House for a fixed price of A$40. The LRET Tamil Nadu
covers large-scale renewable energy projects and aims to deliver the 2020 government to tide
target of 41,000 GWh of Australia's energy through renewable resources. over the severe
power crisis, industry
The experience from Australia shows the impact of inability to predict supply of
bodies said.
REC. Clearly, analysts and developers have been unable to predict REC pricing
and supply due to a range of market variations. While many of these factors are
Rs. 10.7 lakh Crore
specific to Australia, Indian renewable energy developers could do well by
Coal Scam Rocks
learning from them.
Parliament
Krishna Kuya
Parliament was
rocked by reports of
an alleged coal scam

5. Power Price Trend to the tune of Rs 10.7
lakh crore with the
Opposition forcing
adjournment of both
the Houses till noon.
As soon as the Lok
Sabha met for the
day, JD-U members
were on their feet
demanding
immediate discussion
on a report of the
Comptroller and
(Source: IEX website) Auditor General on
allocation of 155 coal
acreages between
2004 and 2009 to
REC Price Trend some 100
companies.
Renewable Energy
RPO enforcement
key to growth of
solar energy in India
Encouraging domestic
manufacturing is one
of the objectives of the
National Solar
Mission. It is there in
the Mission document.
The way we are
looking at expanding
solar power, we feel
that solar is going to
play a very vital role in
the energy scenario in
the country. No
country of the size of
India can afford to be
dependent upon only
imported equipment.
We would like the
(Source: PXIL and IEX websites)
Indian industry to

6. Market Updates come up and supply
the requirements of
Environmental Market News such a large
programme.
BLY – Work on Compact Fluoroscent Lamps distribution comes to a
standstill. India now ranks fifth
in wind energy
In a highly ambitious energy saving effort, the Bureau of Energy Efficiency (BEE),
a statutory body under the Union Power Ministry, launched a project in February "India now ranks fifth
2009 to replace 400 million incandescent lamps (ICLs) - the conventional 'light in wind power. We
bulbs' - with compact fluorescent lamps (CFLs) across the country. generate 17,000 MW
power from wind
Indian airlines not submitting emission details to EU turbines. By 2013, we
target 1300 MW of
India's airlines are not submitting emission details to the European Union (EU) as solar power under
it had directed, Civil Aviation Minister Ajit Singh. "Though the European Union Jawaharlal Nehru
has directed Indian carriers to submit emission details of their aircraft by March National Solar
31, 2012, no Indian carrier is submitting them in view of the position of the Mission", said Farooq
government," the minister said in a written reply to the Rajya Sabha. Abdullah.
EDITOR
Rameez Shaikh
rameez.shaikh@general-
carbon.com
Kshitija Rangnekar
kshitija.r@general-
carbon.com
GENERAL CARBON