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Story of Renewable Energy Certificates for promoting the solar energy in India (Part 1)

Wednesday, April 21, 2010 Leave a Comment

The story so far

According to the Electricity Act 2003, there are number of provisions made acceleration of development of renewable energy in India. Regulatory commission specifies purchase obligation from renewable energy sources.

Tariff policy implemented in January 2006 has proposed that the Discoms (Distribution Companies) should procure renewable energy through competitive bidding within suppliers offering the same type of renewable energy. This would encourage the companies to be cost-competitive and bring in efficiencies in their operations. In long-term, no matter what the situation is RE technologies will need to compete with all other sources in terms of full costs.

In 2008, National Action Plan for Climate Change also laid down some concrete targets. At National level for FY 2010, target for RE purchase may be set at 5 % of total grid purchase, to be increased by 1 percent each year for 10 years. For keeping a check, Central and State governments may set up verification mechanism to ensure renewable power is actually procured.

Appropriate authorities may issue certificates that procure renewable power in excess of the national standard. Such certificates may be tradable, to enable utilities falling short to meet their Renewable Portfolio Standards (RPS).

Decoding Renewable Energy Certificates (RECs)

Internationally, two instruments are used for promotion of renewable energy:

Feed-in-tariffs: Germany, Spain, China

RPS/ RECs: REC (US and Japan), ROCs (UK)

According to wikipedia:

"Renewable Energy Certificates (RECs), also known as Green tags, Renewable Energy Credits, Renewable Electricity Certificates, or Tradable Renewable Certificates (TRCs), are tradable, non-tangible energy commodities in the United States that represent proof that 1 megawatt-hour (MWh) of electricity was generated from an eligible renewable energy resource. These certificates can be sold and traded or bartered, and the owner of the REC can claim to have purchased renewable energy."

REC mechanism can be introduced within existing framework of EA 2003. Cooperation among the States is essential and State Electricity Regulatory Commissions (SERCs) should recognize procurement of RE generated in other States for the purpose of compliance as Renewable Purchase Obligation (RPOs) by regulated entity in their respective jurisdiction.  

….To be continued in Part 2.…

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