Renewable Energy Certificates-An Introduction

As part of the National Mission on Climate Change, a policy to implement Renewable Purchase Obligation (RPO) is being put in place by the Central Electricity Regulatory Commission. The new policy will require Electricity Distributors, large Captive Consumers and large Open Access Consumers to purchase a certain percentage of their total electricity needs from renewable sources.
Renewable Energy Certificates: Similar to Carbon Credits
Similar to the Carbon Credit Market, a market for meeting the RPO requirements is in the process of being set up in India. Just like at the international level, companies that do not meet their emission reduction targets can purchase Carbon Credits from the market, similarly, Electricity Distributors in India that do not buy the percentage of renewable energy required by law, will have the option to fulfil their obligation by purchase of Renewable Energy Certificates (REC). RECs will be traded at power exchanges in India.
Additional Source of Revenue
For renewable energy producers – wind farms owners, biomass power plants, small hydro projects, etc, RECs present a very valuable opportunity. These renewable energy producers will be able to sell REC at power exchanges in India, and will therefore be able to generate an additional source of revenue. Like Carbon Credits, REC are likely to be very valuable – the Central Electricity Regulatory Commission (CERC) has notified that the floor and ceiling prices will range from Rs 1.5 to Rs 3.9 per unit (for non-solar RECs).
Eligibility Criteria for RECs
Renewable Energy producers that sell power at the average pooled price in the region, or in the open access market will be eligible for availing the benefits and selling RECs. There are certain exceptions and differences in the regulations for each state. Individual projects needs to be evaluated based on their location for eligibility.

How to avail the benefits of RECs
To be eligible to avail RECs and sell them in the open market, a renewable energy producer will have to be registered with the Central and State Nodal Agencies. Once the registration is complete, Renewable Energy Producers will be eligible to claim and sell REC on a regular basis based on the actual energy produced.