How REC trading pause will impact India’s green energy aspirations
The Central Electricity Regulatory Commission (CERC) introduced the Renewable Energy Certificate (RECs) mechanism in the year 2010 with an aim to ease the purchase of renewable energy by the state utilities and obligated entities, including the states which are not well endowed with renewable energy sources.
A generator can generate electricity through renewable sources in any part of the country and the REC framework seeks to create a national level market for renewable generators to recover their cost.
At the same time, obligated entities such as distribution utilities, open access consumers, and captive power plants from any part of the country can purchase these RECs to meet their Renewable Purchase Obligations (RPOs).
Over the last decade, REC Market has become a key avenue through which these entities have been able to fulfill their RPO targets in the most efficient and competitive manner. The market platform has also greatly helped in accelerating renewable energy penetration in the country’s energy mix.
Over the last decade, the REC market has traded 481 lakh RECs in the solar segment and 113 lakh RECs in the non-solar segment and has registered a cumulative trade volume of 60 billion units (BU) in both segments so far.
The REC market has a registered capacity of about 5,000 MW and is positioned as a market-based instrument playing a vital role in accelerating the growth of renewables allowing obligated and even voluntary entities to buy renewable energy in the form of RECs through market.
