Recently, the Ministry of Power revamped the Renewable Energy Certificate (REC) system.
Its objective is to adapt the REC system to the emerging changes in the power landscape and to promote new renewable energy technologies.
The Renewable Energy Certificate (REC) mechanism is a market-based tool for promoting renewable energy and facilitating compliance with renewable purchase obligations (RPOs).
The RPO mandates obliged entities (Distribution Licensees, Open Access Consumers and Captive Electricity Consumers) to purchase at least some part of their total energy requirement from renewable energy sources.
Its goal is to bridge the imbalance between the availability of renewable energy resources in the country and the need for institutions bound to meet RPOs.
There are two categories of REC:
- Solar REC and non-solar REC. A REC is created when one megawatt (MWh) of energy is produced per hour from a qualified renewable energy resource.
- REC is traded on the Indian Energy Exchange and Power Exchange of India.
Major changes proposed in the revised REC mechanism:
The validity of the REC will be permanent, that is, until it is sold. Currently it is of 1095 days (about 3 years). The monitoring mechanism will ensure that there is no hoarding of RECs. Obliged entities may be issued RECs beyond their RPO compliance.
Source – The Hindu