In the recent news, a substantial 79% increase in the sales of Renewable Energy Certificates (RECs) has been observed. As per reports, RECs sales have mounted to 8.38 lakh units in March, from 4.68 lakh units during the same period last year. This significant surge is noted due to an excellent supply of RECs.
Understanding Renewable Energy Certificates (RECs)
The Renewable Energy Certificate (REC) serves as a market-based instrument that promotes renewable energy sources and stimulates market development in electricity. For every megawatt-hour of electricity generated from an eligible renewable energy source, one REC is created. In essence, RECs act as a tracking mechanism for various green energies like solar and wind when they are fed into the power grid. RECs are known by several other monikers, including Green tags, Tradable Renewable Certificates (TRCs), Renewable Electricity Certificates, or Renewable Energy Credits.
The Role of Renewable Purchase Obligation (RPO)
Under the Renewable Purchase Obligation, large-scale purchasers such as discoms, open access consumers, and capacitive users are necessitated to buy a certain proportion of RECs. They can procure these RECs directly from renewable energy producers. The RPO, established in 2011, mandates large power procurers to purchase a predetermined fraction of their electricity from renewable sources. The renewable energy proportion for utilities is determined by both central and state electricity regulatory commissions.
Trading of RECs in India
In India, RECs are traded on two prominent power exchanges – Indian Energy Exchange (IEX) and Power Exchange of India (PXIL). The price of RECs is governed by market demand and is constrained between the ‘floor price’ (minimum price) and ‘forbearance price’ (maximum price), as specified by the Central Electricity Regulatory Commission (CERC).
About Central Electricity Regulatory Commission (CERC)
The Central Electricity Regulatory Commission (CERC) is a key regulator of the power sector in India. It aims to encourage competition, efficiency, and economy in bulk power markets. Additionally, it seeks to enhance the supply quality, foster investments, and advise the government on eliminating institutional barriers to bridge the demand-supply gap. CERC operates with quasi-judicial status under the Electricity Act of 2003, functioning as a statutory body.
This rise in REC sales marks a significant step forward in promoting and utilizing renewable energy sources, thus reflecting the shifting focus towards sustainable development in India. By ensuring a steady supply of RECs, the country can effectively track green energy contributions to the power grid, ultimately leading to a cleaner and greener future. The role of regulatory bodies like CERC is instrumental in managing and monitoring this change.
(Source: ET)
