ESCerts Trading under
PAT Scheme
Girja Shankar Assistant Energy Economist
BUREAU OF ENERGY EFFICIENCY (A Statutory body under Ministry of Power, Government of India)
4th Floor, Sewa Bhawan, R. K. Puram, New Delhi – 110 066
EVOLUTION OF PERFORM ACHIEVE & TRADE (PAT)
The EC Act was amended on 24th August 2010 authorizing Central Government
to issue Energy Savings Certificates (ESCerts) u/s 14A
to specify the value of energy u/s 14 B .
Prescribed Energy Consumption Norms and Standards notified vide
S. O. number 687(E) dated 30th March, 2012
G.S.R. number 269 (E) dated 30th March 2012.
PAT Cycle I covers 478 Designated Consumers (DC) of eight energy intensive sectors :
Aluminum, Cement, Chlor-alkali, Fertilizer, Iron and Steel, Pulp and Paper, Textile and Thermal
power plant
Targeted reduction in the average energy consumption by 2014-15:- 4.05%
Annual energy saving of about 6.686 million tonnes of oil equivalent (mtoe)
Annual reduction of carbon dioxide emission is about 23 million tonnes
INTRODUCTION TO PAT SCHEME
Quantified energy savings are converted into Energy Saving Certificates (ESCerts).
Trade of ESCert Cost effective instrument for energy efficiency improvement
INTRODUCTION TO PAT SCHEME….Cont.
Purchase ESCert or pay penalty
ESCert issued
Saving of about 8.67 MTOE from the assessed 427 DCs (5.24%) CO2 mitigation - 31 million
tonne
PAT Cycle I – ACHIEVEMENTS
PAT Cycle II – [2016-2019]
Baseline Year: 2014-15 Assessment Year: 2018-19
Total Energy Consumption from 11 sectors: 227 mtoe
National Target = 8.869 mtoe at the end of 2nd PAT Cycle (by 2018-19)
PAT Cycle II – NOTIFIED SECTORS
ENERGY SAVINGS CERTIFICATES (ESCerts)
The energy savings certificate shall be issued in electronic form.
The value of one energy savings certificates shall be equal to one metric ton of
oil equivalent of energy consumed.
The designated consumer who has been issued energy savings certificates may
sell them through the power exchange. Each certificate will be unique tradable
commodity which will be traded in two exchanges
The designated consumer who has been issued the energy savings certificates
during the current cycle may use them for the purpose of banking until the next
compliance cycle after which they stand expired.
REC v/s ESCerts
REC ESCerts
Cycle 1 year 3 years
Life of Certificate 365 days (2nd time extended to 1095) Closure of second Cycle (> 3 years)
Target State specific set by SERC Plant/DC specific, set by GoI
Unit 1MWh equivalent 1 Toe Energy Conserved
Buyers Obligated Entities (Discoms, CPPs and OA Consumers)
Designated Consumers falling shortfall of Target
Sellers Qualified Renewable Generators Designated Consumers surpassing Target
Banking No Yes (1 Cycle)
Floor Price Yes No
Forbearance Price Yes No
Regulator CERC (Trading) & SERCs (Compliance) BEE(Scheme) & CERC(Trading)
Penalty SERCs SERCs
Issuance Central Agency (POSOCO) MoP
PROCESS FLOW FOR ISSUANCE OF ESCerts
Electronic ESCert issuance instruction
DC Account
ESCert issuance
Targets
Form-A & B
Form-A &B with comments for issuance, if over achieved
ESCert credit to a/c
Recommendation for ESCert issuance
Central Government
Registry
BEE (Administrator)
SDA(s)
Designated Consumer
PATNet Portal
PROCESS FLOW FOR ISSUANCE OF ESCerts Cont...
CYCLE
-
S No.
-
DC Registration
Number
-
Issued –Date
[DDMMYY]
01
-
00000001
-
TPP0001MH
-
170916
01-00000001-TPP0001MH-170916
ESCert CERTIFICATE NUMBER - FORMAT
• Issuance of Central Electricity Regulatory Commission (Terms and Conditions for Dealing in Energy Savings Certificates) Regulations, 2016 on 27th May, 2016
• Draft Procedures on:
– Registration of Designated Consumer as Eligible Entity
– Interface activity between different entities involved in exchange of ESCerts
• Up-gradation of IT Platform
– PATNet Portal including M & V process, ESCerts Issuance, Check Verification Process, Trading, Compliance Process, Banked ESCerts.
– CRM Portal (In Progress) including Registration of Eligible Entity and Trading Activities
• MoP authorized official for online issuance, advised CERC for market regulation, directed POSOCO for Registry function
• Determination of value of one ESCert
• Manual on Penalty & Adjudication Process
PROGRESS SO FAR….
MARKET GENESIS OF ESCerts
Regulatory Structural changes-
Power System Reforms-EA 2003, Power Market Regulation 2010
NAPCC-2008, NMEEE, EC Act, PAT Scheme, INDC,
Emergence of Uniform Standards-
Norms & standard assigned to Designated Consumers under PAT rules and EC-Act
Evidence of ownership/legal
instrument for transfer
Definition of ESCert, issuance & exchange of ESCerts with ownership right,
Development of informal spot markets. Future linking of ESCerts with CERs or REC, bilateral trading
Emergence of Exchange based trading Two power exchange under regulation of CERC
Creation of organized futures markets and
options
Proliferation of over-the-counter markets
Existing regulatory framework is the basis for existence of ESCert market
Transparent & clearly defined regulatory attributes
Mandate
Administrator & regulator
Timelines of mandate
Consequences of non-compliance
Interlinking between PAT cycles
Streamlined and straightforward process for ESCert issuance
Standardization of baseline, quantification, normalization and monitoring
methodologies for various mandated sectors
ESCert MARKET ARCHITECTURE
ESCert already have standardized Commodity attribute that allows economic gains from trade/ exchange
Standardization
Specifying quality attributes of the deliverable commodity
Allows buyers and sellers to focus on price negotiation
Trading Unit
Smallest indivisible unit for transactions equal to One (1) ESCert
Price Basis
Quoted in Indian Rupees
ESCert COMMODITISATION
ESCert contracts are designed with physical delivery features
MoP designated POSOCO as Centralized Registry for ESCerts exchange
Developed a secure internet-based infrastructure
to enable 24x7 accessibility of account
ESCerts assigned with unique individualized serial numbers
according to International standards with 100% tracking features in each session of exchange
ESCert’s EFFECTIVE DELIVERY MECHANISM
Bureau of Energy Efficiency
(BEE)
Central Electricity
Regulatory Commission
(CERC)
Registry (POSOCO)
Power Exchanges (PXs)
Eligible Entity (EE)
[Designated Consumers
(DC)]
ENTITIES INVOLVED IN ESCerts TRADING MECHANISM
2
3
4 5
1
7 7
6
8`
EE
PXs
DC
REGISTRY
BEE
PATNet
CERC
COMMISSION:
CERC is Market Regulator for development of ESCert Market.
Central Electricity Regulatory Commission (CERC) defines the regulatory
framework for trading of Energy Savings Certificate.
MoP agreed to issue the advisory to CERC to frame Regulations and issue
necessary Orders / Guidelines.
POWER EXCHANGE:
Power Exchange means the power exchange as defined in Power Market
Regulations of the Commission.
ENTITIES INVOLVED IN ESCerts TRADING MECHANISM
Central Electricity Regulatory Commission (Terms and Conditions for
Dealing in Energy Savings Certificates) Regulations, 2016
OBJECTIVE: To define a framework for trading of Energy Savings Certificate on Power
Exchanges to facilitate the trading component of Perform, Achieve and Trade (PAT)
scheme under NMEEE.
The Regulation covered
definitions,
functions of the Commissions & the Bureau,
Category of Certificates,
dealing of ESCerts,
pricing of Certificate,
fees and charges,
market oversight, power to Relax.
ESCerts TRADE/EXCHANGE REGULATIONS
EXCHANGE OR TRADE OF ESCerts: Sell or purchase of ESCerts under the Perform, Achieve
and Trade (PAT) scheme on Power Exchanges, Including the delivery of ESCerts.
ELIGIBLE ENTITY: Any Designated Consumer registered with Registry who has been
issued or deemed to have been issued ESCerts and desire to sell or purchase ESCerts for
compliance with the energy consumption norms and standards under clause (g) of section
14 of the EC Act.
POWER EXCHANGE: Means the power exchange as defined in Power Market Regulations of
the Commission.
POWER MARKET REGULATIONS: Power Market Regulations means the Central Electricity
Regulatory Commission (Power Market) Regulations, 2010 and as amended from time to
time.
REGISTRY: Registry means POSOCO or any other agency appointed by the Commission for
management of exchange of ESCerts.
ESCerts EXCHANGE REGULATIONS - DEFINITIONS
Define detailed procedure in consultation with the Registry: (i) Interface activities between Power
Exchanges and Registry, Administrator and Registry and Registry and Designated Consumer (s);
(ii) Registration of eligible entities; and (iii) Dealing, transfer and other residual matters.
provide assistance to the Commission in the matters involving transaction of ESCerts
disseminate relevant market information to all stakeholders
monitor to ensure that transaction in ESCerts takes place in a transparent manner,
provide relevant information regarding Designated Consumer(s) to the Registry
adhere to all compliance under EC Act pertaining to ESCerts
signing of Non Disclosure Agreement with the Registry
coordinate with the Software developer/agency who maintains the IT portal
intimate the Registry regarding the extinguishment of ESCerts from the accounts of the concerned
Eligible Entity;
coordinate with the Power Exchanges and Registry for smooth interface for transaction of ESCerts;
ROLE OF ADMINISTRATOR
Registration of Eligible Entity;
Maintaining records of ESCerts viz., issuance, dealing, etc;
Dissemination of information in coordination with the Bureau ;
Assistance in development of IT Platform for maintaining database of ESCerts;
Signing of Non Disclosure Agreement with the Administrator ; and
Any other function, as assigned by the Commission in consultation with the
Bureau, after assessment of the prevailing market conditions.
ROLE OF REGISTRY
Exchanges provide standardized procedures and regulated market conditions
Aggregate market interest in one platform
Provide efficient price discovery
Provide clearing function by assuming default risk of transaction
Ensure financial integrity of market participants
Provide professional management of Trading Ecosystem
ROLE OF POWER EXCHANGES
Exchange of ESCerts shall be in accordance with the rules and bye laws of
respective Power Exchanges.
The frequency of exchange of ESCerts shall be on monthly basis or in such
periodicity as approved by the Commission.
All eligible entities who intend to participate in the exchange of ESCerts shall
register themselves with the Power Exchange.
Eligibility Entity can exchange the ESCerts either directly on a Power Exchange
or through a Member of a Power Exchange.
The matching mechanism on Power Exchanges for ESCerts exchange shall be
closed bid double-sided auction
In any trading session, an eligible entity shall not place sale bids in excess of total
ESCerts held in its Registry Account. In case of breach, such eligible entities shall
be treated as defaulter and any bid submitted by such eligible entity shall not
be considered by the Power Exchange for the purpose of price discovery.
DEALING IN ENERGY SAVINGS CERTIFICATE (ESCerts)
Application Form for Registration of Designated Consumer to become Eligible
Entity shall contain the following information:
PAT Cycle Details
Owners Details
Details of Fees and Charges
Declaration
Attachments (Scan copy of PAN, TAN, CIN, Service Tax Number,
Authorisation letter)
APPLICATION FORM TO BECOME ELIGIBLE ENTITY
Coordinate with the Registry and shall be responsible to submit the information
in a timely manner so as to enable Registry to comply with requirements for
Registration within the time frame envisaged under CERC ESCerts Exchange
Regulations.
Pay one time non-refundable registration fee and cycle fee/charges as
determined by the CERC from time to time.
Comply with the duties and obligations specified by the Registry.
Follow directions given by any other competent authority from time to time.
ELIGIBLE ENTITY – ROLE & RESPONSIBILITIES
ESCerts TRADING ACTIVITY FLOW
Task
Sequen
ce
Activity Responsible Entity Day Time
Frame
1. DC registers to become Eligible Entity (EE) DC 0th Day 15 Days
2. Registry registers DC as EE Registry 1st Day 30 Days
3. Database of issued ESCerts is created for the
respective EE
D-CRM 1st Day 30 Days
4. Registry approve the Eligible Entity Registry 30th Day 1 Day
5. Publish - Certificate of Registration on PATNet (D –
CRM)
Registry 30th Day 1 Day
6. Certificate of Registration is uploaded in each DC’s
dashboard on PATNet Portal
Software 30th Day 1 Days
7. Register with Power Exchange for trading of ESCerts DC 30th Day 45 Days
ESCerts TRADING ACTIVITY FLOW
8. Any EE directly or through any power exchange member
place their sell or buy bids on the Power Exchange(s)
DC/Power
Exchange
10:00 – 12:00
9. Each Power Exchange uploads the ‘Cumulative
Sale Bids’ through their account on PATNet (D –
CRM)
Verifier PXs 12:00 – 12:30
Approver 12:30 – 13:00
Software 13:00 – 13:15
10. Cross-check the cumulative sale bids placed on
Power Exchanges with availability of ESCerts in
respective Registry account(s)
Verifier Registry 13:15 – 13:45
Approver 13:45 – 14:15
Software 14:15 – 14:30
11. Cross – check report is generated in the Registry Account Software 14:15 – 14:30
12. Registry publish the cross-check report to both the Power
Exchanges
Registry 14:30 – 15:00
13. PX(s) receives and download the cross-check report from
their PATNet (D-CRM) account
PX 15:00 – 15:30
ESCerts TRADING ACTIVITY FLOW
14. Trading of ESCerts takes place in the respective Power
Exchange in accordance with the CERC approved
procedures.
PXs 15:30 – 16:30
15. Each Power Exchange uploads the
‘Confirmation Report’ on PATNet (D-CRM)
account
Verifier PXs 16:30 – 17:00
Approver 17:00 – 17:30
Software 17:30 – 17:45
16. Registry receives the ‘Confirmation Report’ from both
the Power Exchanges
Registry 17:30 – 17:45
17. Registry sends the ‘Trade Approval Acknowledgement’
to each Power Exchange
Registry 17:45 – 18:15
Software 18:15 – 18:30
18. Registry triggers the ‘Generate Transaction Certificate’
Button
Registry 17:45 – 18:15
Software 18:15 – 18:30
19. Registry triggers the ‘Upload –portal’ Button Registry 17:45 – 18:15
Software 18:15 – 18:30
ESCerts TRADING ACTIVITY FLOW
20. Software update the ‘Trading Tab’ of the respective DC
on PATNet portal with the details of quantity of ESCerts
traded on any the exchange, closing balance (Sell |
Purchase), opening balance (Sell | Purchase) for the
next trading session
Software 18:15 – 19:00
21. Software upload the “Balance Certificate’ to the
respective DC dashboard on PATNet Portal
Software 18:15 – 19:00
22. Registry triggers the ESCerts Allocation Mechanism –
(Button)
Registry 18:30 – 19:00
Software 19:00 – 19:15
23. Evacuation of ESCerts from the Seller’s Registry Account
– Based on FIFO Concept
Software 19:00 – 19:15
24. ESCerts Allocation to the Buyer’s – Based on Queuing
Theory
Software 19:00 – 19:15
25. Registry receives the acknowledgement of “ESCerts
Allocation”
Software 19:15 – 19:30
26. Registry can view the ownership of each ESCert through
their D – CRM account in the KYE (Know Your ESCerts)
Tab
Software 19:15 – 19:30
5
4
DC (Buyer)
DC (Seller) Buy Bid
(13:00 to 15:00)
Sell Bid
(13:00 to 15:00)
1
PX Member
Power Exchange(s)
Market Clearance (Volume &
Price) by 16:30
Reports Confirmation &
Shortages, if any (by
16:00)
Registry Sell Bids for verification (by 15:30)
2
3
6
Trade Results (by 17:00)
A/C Update
on PATNet
#The time shown above is the tentative time.
Market Regulator: CERC
PROCESS FLOW FOR ESCerts TRADING
ESCerts TRANSFER OWNERSHIP
ALM0000MH
CYCLE I CYCLE II
S. No
ESCerts Issued Trading
Session I
Trading Session II
Trading
Session I
Trading
Session II
1
01-00000001-ALM0001MH-
170916 TPP0057TN IX
2
01-00000002-ALM0001MH-
170916 TPP0057TN IX
3
01-00000003-ALM0001MH-
170916 TPP0001MH PX
4
01-00000004-ALM0001MH-
170916
5
01-00000005-ALM0001MH-
170916 TXT0001RJ PX
ADJUDICATION PROCESS FLOW
ENTITIES INVOLVED: FOR : Forum of Regulators; SERC : State Electricity Regulatory Commission AO : Adjudicating Officer SDA : State Designated Agency BEE : Bureau of Energy Efficiency AT : Appellate Tribunal CP : Concerned Person
Forbearing and floor prices
Reduction in the transaction cost to DCs
IT related issue-fail safe mode of operation of software, non editable audit trail
of all activities
Transparent and flawless exchange of ESCerts
Multiple rolling cycles
Liquidity of ESCerts
Bilateral trading
Inclusion of non-compliance players (Financial institutions, traders, other
entities etc.)
CHALLENGES
Address the Challenges
Making mechanism simple and transparent,
Reduction of transaction cost to DC
Linking of ESCerts to other similar products (RECs & CERs)
Tax and accounting treatment of ESCerts
CONCLUSION
THANK YOU
BUREAU OF ENERGY EFFICIENCY A Statutory body under Ministry of Power, Government of India
4th Floor, Sewa Bhawan, R. K. Puram, New Delhi – 110 066
Ph: +91- 11- 2617 9699 | Fax: +91- 11- 2617 8352 | Email: [email protected]
तेन (समस्त ऊर्जा को ) त्यके्तन (त्यजग के सजथ ) म ुंर्ीथ: ( उपयोग करे )
-----ईशजवजस्योपननषद
Top Related