Allows states to buy renewable energy certificates.
The Central Electricity Regulatory Commission (CERC) has announced renewable energy certificate (REC) norms in a bid to promote power generation from clean sources in the country.
The REC scheme aims at increasing power generation capacity from renewable sources by allowing utilities from green energy-deficient states to buy renewable energy certificates to offset their lag.
The Electricity Act of 2003 mandates state distribution utilities to purchase electricity from renewable energy sources, as a certain minimum percentage of the total consumption of power in the state.
“The new regulations will benefit renewable power generators, who will be able to recover their cost by selling RECs to deficient states like Delhi. They will also benefit distribution utilities by enabling them to purchase tradable energy certificates at market determined prices who have to otherwise buy costly power to meet their renewable purchase obligations (RPOs),” said CERC Secretary Alok Kumar.
According to the new norms, the regulator will designate a central agency to issue RECs to generators who can sell them to green energy-deficient states utilities.
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The value of an REC will be equal to 1 Mw-hour of electricity injected into the grid from renewable energy sources. These certificates will be exchanged at the power exchanges within a price band that will determined by CERC.
The uneven distribution of renewable energy potential in India discourages states with lesser renewable energy generation sources from committing higher RPOs. In New Delhi, for example, the state regulator has specified an RPO of merely 1 per cent to the three distribution utilities, as the capital lacks potential for green energy generation.
“The cost of generating renewable energy is high, and distribution companies are reluctant to buy green power beyond their RPO level. The new norms will address this mismatch,” Kumar added.
The commission had issued draft of the new regulations last year, which were followed by a public hearing with the stakeholders last month.
Industry experts have welcomed the new regulations. “It is a positive development as it benefits both the generators and distribution utilities. It will definitely encourage the capacity addition of renewable energy as well. The commission has chosen an approach which could be refined over time,” said Chandrashekar Iyer, associate director, PricewaterhouseCoopers.