Renewable Energy Certificates
Introduction
Renewable Energy Certificates (REC) is a market based instrument which enables the obligated entities to meet their Renewable Purchase Obligation (RPO).
Certificates are generated on account of production of renewable energy by renewable energy generators. These certificates can be sold and traded or bartered, and the owner of the REC can claim to have purchased renewable energy.
Rationale
- While some states are bestowed with more renewable energy potential others are deficient. However, the states which are harnessing more renewable energy based power are also bearing the impact of cost of renewable energy power. To avoid this effect of state specific availability/ lack of RE potential, REC mechanism provides an excellent market-based instrument to ensure that all states contribute in the development of renewable energy based power irrespective of technology, and facilitate renewable energy purchase obligations amongst various stakeholders.
Basic elements of design
One REC is issued to the RE generator on production of one Mkwh of electrical energy fed into the grid.
The renewable energy generator may sell electricity to the distribution company at the regulated price and its RECs to any buyer at market price through exchange mechanism in a transparent manner. The renewable energy generator may sell the certificates only through power exchange to those entities who have to meet with their RPO target.
Potential challenges
Accounting and verification.
India experience
Mechanism is under implementation and will facilitate RPO compliance in those states too where there isn’t sufficient RE potential/ capacity. Number of State Electricity Regulatory Commissions has also framed the REC regulations to guide the implementation.
The scheme is expected to meet the RPO compliance by states, which don’t have sufficient renewable energy potential but have been mandated to meet certain RPO by their respective regulators.
