Check out the announcement and discuss how this will effect the renewable energy market in India.
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New Delhi, the 18th January, 2010
PRESS RELEASE
CERC announces Renewable Energy Certificate (REC) Regulation – a
step forward for Green Energy promotion
Central Electricity Regulatory Commission (CERC) has notified
Regulation on Renewable Energy Certificate (REC) in fulfillment of its
mandate to promote renewable sources of energy and development of market
in electricity. The framework of REC is expected to give push to Renewable
Energy (RE) capacity addition in the country.
With this Regulation, broad architecture of REC has been crafted at the
national level:
• There will be a central level agency to be designated by the Central
Commission for registration of RE generators participating in the
scheme.
• The RE generators will have two options – either to sell the renewable
energy at preferential tariff fixed by the concerned Electricity
Regulatory Commission or to sell the electricity generation and
environmental attributes associated with RE generation separately.
• On choosing the second option, the environmental attributes can be
exchanged in the form of REC. Price of electricity component would be
equivalent to weighted average power purchase cost of the distribution
company including short-term power purchase but excluding
renewable power purchase cost.
• The Central Agency will issue the REC to RE generators .
• The value of REC will equivalent to 1 MWh of electricity injected into
the grid from renewable energy sources.
• The REC will be exchanged only in the Power Exchanges approved by
CERC within the band of a floor price and a forbearance (ceiling) price
to be determined by CERC from time to time.
• The distribution companies, Open Access consumer, Captive Power
Plants (CPPs) will have option of purchasing the REC to meet their
Renewable Purchase Obligations (RPO). Pertinently, renewable
purchase obligation is the obligation mandated by the State Electricity
Regulatory Commission (SERC) under the Act, to purchase minimum
level of renewable energy out of the total consumption in the area of a
distribution licensee.
• There will also be compliance auditors to ensure compliance of the
requirement of the REC by the participants of the scheme.
The Electricity Act, 2003, the policies framed under the Act, as also the
National Action Plant of Climate Change (NAPCC) provide for a roadmap for
increasing the share of renewable in the total generation capacity in the
country. However, RE sources are not evenly spread across different parts of
the country. On the one hand there are States (like Delhi) where the potential
of RE sources is not that significant. This inhabits SERCs in these States from
specifying higher renewable purchase obligation. On the other hand there are
States (like Rajasthan and Tamil Nadu) where there is very high potential of
RE sources. In such states there are avenues for harnessing the RE potential
beyond the RPO level fixed by the SERCs. However, the high cost of
generation from RE sources discourages the local distribution licensees from
purchasing RE generation beyond the RPO level mandated by the State
Commission.
It is in this context that the concept of REC assumes significance. This
concept seeks to address the mismatch between availability of RE sources and
the requirement of the obligated entities to meet their renewable purchase
obligation. It is also expected to encourage the RE capacity addition in States
where there is potential for RE generation as the REC framework seeks to
create a national level market for such generators to recover their cost.
The concept of a national framework for REC was evolved by the
Forum of Regulators (FOR). Along with adopting these Regulation of CERC,
the State Commissions are expected to notify their regulations for enabling
fulfillment of obligations by purchasing RECs to make the framework
complete for implementation. Model regulation for State Commissions have
already been evolved by FOR. Full text of the regulations is available on the
website of CERC and FOR.
Sd/-
(ALOK KUMAR)
SECRETARY
Download the press release here
http://www.cercind.gov.in/Regulations/REC_PRESS_RELEASE_2010.pdf
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