Trading Mechanism. Bureau of Energy Efficiency

Transcription

1 Trading Mechanism Bureau of Energy Efficiency

2 Agenda PAT Mechanism Market Design Institutional Design

3 PERFORM ACHIEVE AND TRADE MECHANISM

4 PAT Mechanism Overall structure Market Based Mechanism Reward over - achiever Administrator Set target and compliance period Designated Consumers 8 sectors Thermal Power Plant, Steel, Cement, Fertilizer, Pulp & Paper, Textile, Aluminium, Chloralkali Auditing Agencies Independent Penalize under - performer Monitor, verify and certify Market Place Transaction of energy efficiency instrument Set Targets Setting targets on the basis of current specific energy consumption Set compliance period May take into account Location, Vintage, Technology, raw materials, product mix etc. Monitoring & verification of targets by Designated Energy Auditors (DENA) Check if designated consumer has achieved targets Underachievement: Obligations to buy ESCerts or pay penalty Overachievement: Issuance of ESCerts for banking for later use or trade Trading of ESCerts Participation by Designated consumers on platform provided by Power Exchanges Symmetrical flow of information

5 Activity Flow Sheet Baseline & Target Setting Baseline Format Design Getting Information Through Base Line Format Data Compilation/ Evaluation Designated Consumer Prepare PAT Assessment Document (PAD) Verification of PAD by DENA Submission of PAD to BEE Issue of e-certs after successful M&V BEE may verify data submitted by DENA/DCs Target Setting [Target Year: ] Issuance: ESCerts or Penalty

6 Stakeholder Consultation Stakeholders comments and concerns hearings & discussions PAT Mechanism- Key Steps Baseline Study Target Setting Assessment of energy consumption & SEC Establishing baseline energy consumption norms Setting EE targets Defining compliance period Market design Scheme Participants Market structure and overall process Liquidity, tradability and fungibility Trading Cycle Institutional Design Scheme Participants - Roles and Responsibilities Implementation & Registration of EE projects M&V & Issuance of EE certificates Trading & Redemption of EE Certificates Regulatory Framework Draft regulations governing the overall PAT Mechanism Regulations Final Regulation Detailed procedures

7 Why market based mechanism? Allow quantification of volatile and not so measurable EE Market based EE instruments serve as accounting tool to demonstrate that certain amount of energy has been saved Offer alternative to PURE obligation of achieving EE Reduced cost of compliance to EE targets Greater flexibility Serve as additional source of revenue

8 Market Design

9 Major Points Target: In % of Specific Energy Consumption ESCerts: in toe or kgoe For ESCerts or Penalty: (Baseline Production) x (% change in SEC)

10 Example SEC in 2011: 10 toe/unit of production Baseline Production: units Target: 4% reduction in SEC SEC at the end of : 9.6 toe/unit prod For ESCerts or Penalty: Reduction requirement: 4000 toe Case1 (Achieved SEC = 9.8): toe (Penalty) Case2 (Achieved SEC = 9.4): toe (ESCerts)

11 Market Design Designated Consumers are obligated to improve energy efficiency Energy Efficiency Targets are %-age reduction in SEC expressed in Absolute Savings terms Various plants in an industry clustered on the basis of different parameters like technology etc Each DC will get an energy efficiency improvement percentage target The target would be converted into absolute energy saving target (in mtoe terms) on the basis of plant capacity The absolute energy saving target (obligations) would be applicable for a compliance period of three years Designated consumer can meet target by Undertaking energy efficiency measures themselves Buy ESCerts from someone else

12 Market Design Compliance and Reporting Total compliance period of 3 years Designated Consumers would undertake energy efficiency measures and submit annual reports If submitted annual reports show over-achievement, ESCerts to be issued for level of over-achievement Provision of annual reporting along with penalties in case of non- compliance After period of 3 years, a complete gate-to-gate measurement to be undertaken for verifying SEC and plant capacity for each DC BEE would appoint Designated Energy Auditors (DENAs) for M&V DENAs would be organizations, which meet minimum capability norms DENAs would be accredited and empanelled by BEE BEE can initiate compliance checks on dip-check basis on both DC and DENA In case of non-compliance State Designated Agencies to levy penalties on DC

13 Market Design ESCerts are issued When energy efficiency improvements surpass targets With 1 mtoe improvement above target = 1 ESCert Banking of ESCerts allowed during each cycle 1 st cycle ESCerts to 2 nd cycle 2 nd cycle ESCerts to 3 rd cycle Partial issuance of ESCerts will be allowed on Ex-ante basis to DC

14 Market Design Registry Obligations and ESCerts would be held in electronic form and be registered with a depository All DCs would have electronic accounts and trading systems System Registry would maintain track and record of all transactions of any particular tradable instrument (obligation or ESCerts) throughout its life cycle Trade All obligations and ESCerts can be traded through electronic platforms provided by power exchanges Trades would take place through automated order driven exchange trading systems Auction sessions and timings would be notified to the participants well in advance Expected to be monthly sessions to begin with Financial settlement would be undertaken through electronic bank interfaces

15 Market Design Schematic Designated Consumers (DC) 2 Target setting 6 Annual Redemption of ESCerts 7 Decide & Levy penalty State Designated Agency 4 Monitoring, verification & reporting to administrator Scheme Administrator Information Exchange (compliance reports) Designated Energy Auditor (DENA) 1 Appointment & empanelment Energy Auditors Information Exchange (instruction to monitor transactions) 5 ESCerts Trading Issue ESCerts Registry/ Depository 3 Obligations Trading Power Exchange Information Exchange (trade data)

16 Institutional Design

17 Proposed Institutional Design Schematic MoP BEE Market Regulator & Administrator Updated list of DCs and DENA SDA Any Baselines Improvement Audited Result of DCs Regular updates Any Baselines Improvement DENA Apply for Empanelment Audit E-filing PAD Information Apply for ESCerts through PAT Assessment Document (PAD) Designated Consumers (DCs) Issuance of EScerts Updated Obligation of DCs: Deficit or Surplus Regular Checks & Levy Penalties in case of defaults Central Registry ESCerts Trading Updated ESCerts Account Info Settlement Details Trading Exchange

18 Conclusion Easy to implement Robust and Reliable Induces Tradability and Liquidity Allows development of energy efficiency market Multiple trading opportunities-creation of demand In line with the existing structure and practices

19 THANK YOU FOR YOUR KIND ATTENTION