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Current Affairs

Renewable energy certificates sales down by 65% in April 2019

Date: 29 April 2019 Tags: Public Finance

The sales of renewable energy certificates (RECs) have dropped by about 65% to 3.68 lakh units in April 2019 as compared to 10.62 lakh in same month last year due to lower supply. Both non-solar and solar RECs have continued to see low supply situation with buy bids exceeding sell bids due to very low inventory (supply).

Renewable Energy Certificate (REC)

  • It is also known as green energy certificate or tradable renewable certificate. It is proof that energy has been generated from renewable sources such as solar or wind power.
  • It is market based instrument/mechanism to promote renewable sources of energy and development of market in electricity. Each REC represents environmental benefits of 1MWh of renewable energy generation.
  • Significance: Purchase of REC indicates that renewable energy is generated on behalf of purchaser. It provides alternative voluntary route to generator to sell his electricity from renewable sources just like conventional electricity and offers green attribute (RECs) separately to obligated entities to fulfil their renewable purchase obligation (RPO).
  • RPO:  Under it, bulk purchasers like discoms, open access consumers and capacitive users are required to buy certain proportion of RECs. They can buy RECs from renewable energy producers to meet RPO norms. The proportion of renewable energy for utilities are fixed by Central and State electricity regulatory commissions.
  • Trading of RECs: Indian Energy Exchange% (IEX) and Power Exchange of India (PXIL) are two power bourses in country, currently engaged in trading of RECs and electricity. The trading of RECs is conducted on last Wednesday of every month.