In a recent article of www.moneycontrol.com ICRA says that the key development of Renewable Energy sector in India is the trading of RECs which going to complete one year this March. The new developing renewable projects especially the wind projects will prefer the REC route against the preferential tariff route as REC route is most remunerative option.

There are few issues which could affect the capacity addition in the REC route like implementation issues in complying with Renewable energy Portfolio Obligation (RPO) norms due to lack of consistency and a wide divergence in RPO norms across states, risk of any amendment in RPO norms by SERC (as observed in few states), no precedence of any enforcement of penalty on obligated entities for shortfall in RPO and absence of regular monitoring of RPO compliance by state agencies.

Past REC trading data since its commencement in March 2011 have proved that the growing demand to meet RPO requirements from obligated entities and quarterly compliance requirements as stated in RPO regulations by SERCs in some states.Further, long term certainity over the price range as per the order issued by CERC is a positive development.

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