RENEWABLE ENERGY CERTIFICATE (REC) Mechanism

RENEWABLE ENERGY CERTIFICATE (REC) Mechanism

Subject: Governance

Context: Recently, the Ministry of Power has circulated a discussion paper on redesigning the Renewable Energy Certificate (REC) Mechanism for comments of stakeholders in power sector.

Concept:

Renewable Energy Certificate (REC)

• It is a market based instrument to promote renewable energy and facilitate compliance of renewable purchase obligations (RPO).
• It is a tradable, legal mechanism that represents the environmental benefits associated with one Megawatt-hour of electricity generated from a renewable energy resource.
• It is aimed at addressing the mismatch between availability of RE resources in state and the requirement of the obligated entities to meet the renewable purchase obligation (RPO).
• One Renewable Energy Certificate (REC) is treated as equivalent to 1 MWh.

Eligibility under Renewable Energy Certificate (REC)

• A generating company engaged in generation of electricity from renewable energy sources shall be eligible to apply for registration for issuance of and dealing in Certificates if it fulfills the following conditions:
• It has obtained accreditation from the State Agency; and
• It does not have any power purchase agreement for the capacity related to such generation to sell electricity, with the obligated entity for the purpose of meeting its renewable purchase obligation.
• A distribution licensee shall be eligible to apply for registration with the Central Agency for issuance conditions:
• It has procured renewable energy, in the previous financial year, at a tariff determined under Section 62 or adopted under Section 63 of the Act; and
• It has obtained a certification from the Appropriate Commission towards procurement of renewable energy.