Power Engineer Journal

India's grid connected installed capacity as on 31.10.2011 was about 182 GW with renewable capacity of about 21 GW which constitutes about 11% of total installed capacity. India has a huge renewable energy potential, which is estimated at 85,000 MW for non-solar sources and more than 100,000 MW for solar. Electricity Act 2003 mandates the promotion of efficient and environmentally benign policies. National Action Plan on Climate Change (NAPCC) has been formulated at the National policy level and clearly states that the National RPO must be set at 5% at the beginning of 2009–10, which is to be increased by 1% each year for the next ten years. By 2015, every state in India will need to source at least 10% of its energy from green sources. Government of India has also announced the National Solar Mission, which mandates 20 GW of solar energy in the Country by 2022. To promote renewable resources, various policy initiatives have been taken. One such policy tool is Renewable Purchase Obligation (RPO) specified by the Appropriate Regulatory Commissions, under which the States have been obligated to prescribe a portion of power to be purchased from renewable sources. In India, wind, solar, biomass, co-generation and small hydro plants with capacity of less than 25 MW are considered as renewable energy sources. Both non-market and market based mechanisms are in operation in India for promotion of renewable energy sources. Various initiatives taken in the form of non-market based instruments for promotion of renewable energy are tax waivers, accelerated depreciation (80% in the first year), Preferential Tariff for Electricity generated from Renewable Energy Sources, Generation Based Incentive, etc. Renewable Energy Certificate (REC) Mechanism, a market based instrument, has been introduced in India on 18^th November 2010. REC Mechanism provides a means to address the dispersed availability of renewable energy sources across various States in the Country separates the ‘green’ component from the ‘electricity’ component and facilitates meeting of the RPO by the obligated entities. A pan-India market has been created for trading in RECs through the Power Exchanges. A unique attribute of RECs is that it is fungible and facilitates inter-state transaction of renewable energy with least cost and technicality involved. One REC represents one MWh of energy generated from renewable sources. The paper discusses the regulatory framework, various aspects associated with the implementation of REC Mechanism in India, experience gained so far.