ESCerts Trading under PAT Scheme - BEE PATNET

ESCerts Trading under PAT Scheme - BEE PATNET

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)
INTRODUCTION TO PAT SCHEME
 MoP prescribed Energy Consumption Norms and Standards vide S. O. number 687(E)
dated 30th March, 2012 under the Energy Conservation Rules 2012 (common parlance
being PAT Rules) notified vide G.S.R. number 269 (E) dated 30th March 2012.
 The EC Act was amended on 24th August 2010 to give powers to the Central Government
to issue Energy Savings Certificates (ESCerts) u/s 14A while also giving powers u/s 14 B
to specify the value of energy.
 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….Cont.
 Quantified energy savings are converted into Energy Saving Certificates (ESCerts).
 When a designated consumer achieve and surpass the target, the ESCerts are to be
issued by Central Government and the same can be sell to the designated consumer who
fails to achieve their targets to comply the energy consumption norms and standards.
PROCESS FLOW FOR ISSUANCE OF ESCerts
PROCESS FLOW FOR ISSUANCE OF ESCerts Cont...
Targets
DC Account
Central
Government
Recommendation
for ESCert issuance
Registry
ESCert
credit to a/c
ESCert
issuance
Designated
Consumer
Form-A & B
PATNet
Portal
BEE
(Administrator)
SDA(s)
Electronic ESCert issuance instruction
Form-A &B with comments for issuance, if over achieved
ESCert CERTIFICATE NUMBER - FORMAT
CYCLE
-
DC Registration
Number
-
S No.
C1
-
TPP0001MH
-
0000001
- Issued –Date
[DDMMYY]
-
C1-TPP0001MH-00000001-171015
171015
Progress So Far
•
Identification of interface activities
•
Finalization of Roles and Responsibilities of Entities Involved
•
Finalization of ESCerts Exchange Regulations
•
Up-gradation of PATNet Portal including M & V process, ESCerts Issuance, Check
Verification Process, Trading, Compliance Process, Banked ESCerts.
•
MoP authorized official for online issuance
•
Determination of value of one ESCert
•
Manual on Penalty & Adjudication Process
•
Formulation of Business Procedures for ESCerts Exchange on Power Exchanges
MARKET DEVELOPMENT OF ESCerts
 Regulatory Structural changes NAPCC-2008, NMEEE, 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
ESCert MARKET ARCHITECTURE
 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 COMMODITISATION
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’s EFFECTIVE DELIVERY MECHANISM
 ESCert contracts are designed with physical delivery features
 MoP has approved BEE’s proposal to designate POSOCO as Centralized Registry
for ESCerts exchange
 BEE developed a secure internet-based infrastructure to enable 24x7
accessibility of account by each designated consumer who participate in
ESCerts exchange process
 ESCerts have assigned with unique individualized serial numbers according to
International standards with 100% tracking features in each session of
exchange
ENTITIES INVOLVED IN ESCerts TRADING MECHANISM
7
7
 Bureau of Energy Efficiency
3
(BEE)
PXs
6
4
5
 Central Electricity
Regulatory Commission
(CERC)
CERC
EE
 Registry (POSOCO)
 Power Exchanges (PXs)
1
 Eligible Entity (EE)
[Designated Consumers
(DC)]
BEE
PATNet
8
`
REGISTRY
DC
2
ENTITIES INVOLVED IN ESCerts TRADING MECHANISM
COMMISSION:
 CERC would be the Market Regulator for development of ESCert Market.
 Central Electricity Regulatory Commission (CERC) defines the regulatory
framework
for
trading
of
Energy
Savings
Certificate
on
Power
Exchanges to facilitate the trading component of PAT scheme under NMEEE.
 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.
ESCerts TRADE/EXCHANGE REGULATIONS
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 the 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 EXCHANGE REGULATIONS - DEFINITIONS
 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.
ROLE OF REGISTRY
 Assist in registrations process of ESCerts including crediting of ESCerts to DCs.
 The agency may collect fees and charges, approved by the commission in
consultation with Bureau for the purpose of meeting the cost and expense
towards the management of Registry and software platform.
 Management of ESCerts trading/ exchange.
 Coordination and information dissemination with DCs, Power Exchanges, BEE and
Commission.
 Assist in development of IT platform along with guidance on hardware
infrastructure for maintaining database of ESCerts and records of trading of
ESCerts.
ROLE OF POWER EXCHANGES
 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
DEALING IN ENERGY SAVINGS CERTIFICATE (ESCerts)
 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 per 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.
 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.
PROCESS FLOW FOR ESCerts TRADING
Market Regulator: CERC
Confirmation &
Shortages, if
any
(by
3
16:00)
Registry
2
6
A/C
Update
on
PATNet
5
Sell Bids for
verification
(by 15:30)
Trade Results
(by 17:00)
#The time shown above is the tentative time.
Reports
PX Member
4
Sell Bid
(13:00 to 15:00)
DC (Buyer)
Power
Exchange(s)
1
Buy Bid
(13:00 to 15:00)
Market
Clearance
(Volume &
Price) by 16:30
DC (Seller)
PROCESS FLOW FOR EXTINGUISHING ESCerts
7
BEE (Administrator)
3
Debit DC1
Extinguish
Power Exchange(s)
Registry
Form-D with
comments
4
6
Credit DC2
8
Banking
SDA(s)
Buy Bid
Sell Bid
2
1
5
Form-D
DC 1
Form-D ( by 5 months from closure of Cycle)
DC 2
ESCerts TRANSFER OWNERSHIP
ALM0000MH
ESCerts Issued
CYCLE I
Trading
Session I
CYCLE II
Trading Session II
S. No
4
C1-ALM0001MH-0000001171015
C1-ALM0001MH-0000002117015
C1-ALM0001MH-0000003171015
C1-ALM0001MH-0000004171015
5
C1-ALM0001MH-0000005171015
1
2
3
TPP0057TN
IX
TPP0057TN
IX
TPP0001MH PX
TXT0001RJ PX
Trading
Session I
Trading
Session II
ADJUDICATION PROCESS FLOW
ENTITIES INVOLVED:
FOR
: Forum of Regulators;
AO
: Adjudicating Officer
BEE
: Bureau of Energy Efficiency
CP
: Concerned Person
SERC
SDA
AT
: State Electricity Regulatory Commission
: State Designated Agency
: Appellate Tribunal
CHALLENGES
 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 (Financials, traders, corporates etc.)
CONCLUSION
 Address the Challenges
 Making mechanism simple and transparent,
 Linking of ESCerts to other similar product (RECs & CERs)
 Tax and accounting treatment of ESCerts
तेन (समस्त ऊर्जा को ) त्यक्तेन (त्यजग के सजथ ) मुंर्ीथ: ( उपयोग करे )
-----ईशजवजस्योपननषद
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]