REC Mechanism in India

Demand Side participation in REC Mechanism

In the REC Mechanism , obligated entities like distribution licensees, open access consumers and captive consumers having Renewable Purchase Obligation (RPO), need to buy either physical renewable energy or REC to meet RPO compliance. This provision would ensure that obligated entities that are not able to procure physical renewable energy, would purchase RECs to avoid penalty. Even though, the regulatory provision has been provided for mandatory RPO compliance, as the provision being enforced for the first time in India, a question on every stakeholder’s mind is “Who will actually buy RECs?” With the RPO being enforced, it is anticipated that only distribution licensees would contribute in bringing demand for RECs in the market. However, we believe that in the initial years, they would not be the only significant buyers of RECs in the market place. This is mainly because they already buy a significant volume of green power under preferential tariffs. Further, the revised RPOs set by various SERCs are set up in such a way that the net shortfall of renewable energy for a distribution licensee to meet its RPO would very minimal. (more…)

By Team REConnect, ago