Renewable Energy Certificate Mechanism in India

India has been richly endowed with renewable resources. Since the cost of electricity generated from such resources is expensive, large scale development of renewable resources did not take place. Concern about climate change and concerted action to reduce green house gas emissions are powerful drivers for renewable energy. Lately, in view of growing awareness about green environment, development of renewable energy has been promoted by fiscal policies of Government of India. These include tax incentives and purchase of electricity generated through renewable energy sources. Enactment of the Electricity Act 2003 (the Act) has lent further support to renewable energy by stipulating purchase of a percentage of the power procurement by distribution utilities from renewable energy sources. The renewable purchase obligation as well as preferential tariff for procurement of such power has been specified by various State Electricity Regulatory Commissions (SERCs). Renewable energy sources are not spread evenly across the state boundaries and the very high cost of generation from RE sources discourages local distribution licensees from purchasing electricity generated from RE sources. Renewable Energy Certificate seeks to address the mismatch between availability of RE sources and the requirement of the obligated entities to meet their renewable purchase obligation by purchasing green attributes of renewable energy remotely located in the form of Renewable Energy Certificate (REC). This paper discusses regulatory developments including Indian Electricity Grid Code-2010 (IEGC) for promotion of renewable energy in India and in particular the nationally tradable renewable energy credits in the form of Renewable Energy Certificates (REC) for achieving the targets set by respective SERCs for renewable purchase obligations. This would help to minimize cost of power procurement, and lead to efficient resource utilisation across the country and provide incentive for investment in appropriate technologies. The paper highlights salient features, advantages and implementation of REC mechanism in India.