Renewable Energy Certificate (REC) mechanism is a market based instrument to promote renewable energy and facilitate compliance of renewable purchase obligations (RPO). The revenue for a Renewable Energy generator under REC scheme includes revenue from the sale of electricity component of RE generation and the revenue from the sale of environmental attributes in the form of RECs. One Renewable Energy Certificate (REC) is treated as equivalent to 1 MWh.
The increase in demand of renewable energy certificates points to the fortunes that the Wind Power plants can reap on the assumption that they will sell the certificates to bolster their profitability. REC’s are issued to those renewable energy companies that opt not to sell electricity at preferentially higher prices to energy utilities that supply power to consumers. These instruments are traded on IEX and PXIL which are the two energy exchanges in the country. The Energy utilities and customers include Cement and Steel Plants who are constrained to buy a particular quantity from renewable sources.
The trading of REC’s takes place on the last Wednesday of each month. The last Wednesday of the 2017 show cased a different picture, 2.78 million REC’s were offered for sale in the market but the demand stood at 2.98 million.
Rajesh Mediratta, Director, Indian Energy Exchange said,
“In this trading session, we were short of supply, something that has not happened in the last 4 years.”
Orient Green Power sold close to 7 lakh certificates amounting to Rs 100 crore. Other big players include Techno Electric, IL&FS and many sugar companies in UP. The demand is still expected to rise.
Source: Business Line