Scope of work for Petition for deciding the methodology for sharing ...

Scope of work for Petition for deciding the methodology for sharing
of Clean Development Mechanism (CDM) benefits between investor
and utility.
Introduction:
Maharashtra Energy Development Agency (MEDA) is a state nodal
agency registered as a Society on 26 July 1985 to undertake development of
renewable energy and facilitate energy conservation in the State of Maharashtra,
as a state nodal agency under Ministry of New and Renewable Energy (MNRE)
GoI, India.
Hon’ble Commission ( Maharashtra Electricity Regulatory Commission) in
its order dated November 24, 2003 (case no 17(3), 3, 4 & 5 of 2002) for
procurement of wind energy and wheeling for third party and/or self use has
mentioned to device a suitable mechanism for the sharing of the CDM benefits.
The relevant paragraph in clause 2.4.9 on page no 74 of the said order is stated
under for ease of reference.
“The Commission understands that several renewable energy projects
may be eligible for the benefits available through the “Clean Development
Mechanism” under Kyoto Protocol. The Commission shall review the tariff
structure for RE Projects that become eligible for CDM or similar credits,
and devise a system, which will enable sharing of benefits between the
consumers and the project developers at that stage.”
Further, Hon’ble Commission in its order dated August 08, 2005 (case
no. 37 of 2003) in the matter of Tariff and Related Dispensation for Procurement
of Power from Biomass- based Generation Projects has emphasized the need of

sharing of CDM benefit. The relevant paragraph in clause 2.4 on page 20 of the
said order is stated under for reference.
“Since the consumer is supporting the renewable energy and related nonconventional
energy based projects by way of higher tariffs, it is essential
that any such benefits secured by a Project are shared equitably by the
Project holder with the Licensees and their consumers..”
Hon’ble Commission in its clarificatory order dated 12 th September, 2006
point no. 23 commented that it has provided for similar provision of sharing of
CDM benefit in order for other renewable energy technologies such as biomass ,
Waste to energy could be eligible for CDM benefits. It is necessary to devise a
scheme which would be uniform for all such technologies that could benefit CDM.
Therefore, development of an appropriate system for sharing of CDM benefits
addressing all renewable energy technologies needs to be prepared. In the order
Hon’ble Commission directed MEDA to develop suitable mechanism, and submit
the same to commission for approval. The commission would conduct a separate
regulatory process to approve the said mechanism.
Accordingly MEDA has submitted a petition at MERC for deciding the
methodology for sharing of CDM benefits between investors and utilities. First
hearing of this matter has taken place before the Hon. Commission on 18 th
December, 2007. During the hearing Hon. Commission instructed that the
projections submitted by us needs revision on the basis of actual facts and
figures.
In this context, to represent facts and figures related to transaction cost
calculations and related expenses, receipt of CER’s in each RE sector, it is
decided to call Expression of Interest from consultants in the field of CDM to
appear before Hon. commission within the prescribed time period.

Scope:
A) Several renewable energy projects may be eligible for the benefits
available through the “Clean Development Mechanism” under Kyoto
Protocol. Since the consumer is supporting the renewable energy projects
by way of higher tariffs, do the credits secured by a project be shared by
the investor & utility? Analyzing various intrinsic issues and related facts
associated with the CDM, it is proposed that consultant may come out
with a ratio for sharing of the CDM benefits between investor and
utilities that will promote the investment in renewable energy sector
and encourage to take efforts for availing CDM benefits.
B)
Hon’ble Commission has commented that it has provided similar provision
of sharing of CDM benefit in their earlier order for other renewable energy
technologies such as biomass, Waste to energy that are eligible for CDM
benefits. It is necessary to devise a scheme which would be uniform for all
such technologies that could benefit concerned stakeholders Therefore,
development of an appropriate mechanism for sharing of CDM
benefits addressing all renewable energy technologies needs to be
prepared.
C) The approach for sharing of CDM benefits in the ratio of 70:30 between
investor and utilities is generally adopted by few states like Karnataka,
Rajasthan and Gujarat but no adequate working for fixing up such
percentage is undertaken by their state electricity regulatory commissions.
The only rationale provided for reaching at this proportion is that, investor
should get the credits for the efforts they put and the risk they take for
implementing the RE project. Here the proposed study aims to review the
cost and benefits of various renewable energy technologies and cost of
CDM transactions so that a suitable mechanism can be proposed to share
the benefits of CDM projects between investor utility. The study should
collate and review available documents, literature and regulatory orders

issued by the regulatory bodies under renewable energy technologies
pertaining to sharing of CDM benefits. The consultant is required to
interact with various stakeholders such as project investor, financial
institutions, CDM service providers and Government bodies in order
to give clear indications for sharing of CDM benefits between
investor & utility.
D) The consultant shall present the case before Hon’ble Commission and/or
during the Public Hearing on the above matter, as and when scheduled to
be conducted by Hon’ble Commission. In this matter the consultant has
to advocate MEDA’s case before the commission with supportive
facts & figures.