According to reports, Renewable energy certificates (REC) for power generated from wind, biomass , bio-fuel and small hydro plants are stacking up in the absence of takers, eroding a key incentive for renewable electricity.
Out of 8.5 lakh such certificates offered for sale in December, barely 1.73 lakh found buyers – at a price of Rs 1,500 each, which is about 45% lower than a year ago.
According to data provided by the Indian Energy Exchange, the number of certificates being offered for sale is steadily increasing since April, when it was about 1 lakh. However, buy bids have been hovering at 2 lakh and below every month, except for June when it touched 3.3 lakh. During November as many as 9.2 lakh RECs were offered for sale – the highest so far. Only about 55,000 were sold during the same month. An energy certificate is a tradable certificate that represents 1,000 units of power generated from renewable sources and sold to the grid.
State utilities are to buy these certificates from a power exchange like the Indian Energy Exchange ( IEX) or the Power Exchange India, to meet their obligation of sourcing 5% of power from renewable sources in a year.
These certificates have a life of one year and if they are not sold at the power exchanges during a year they lapse – meaning the non-renewable power generators’ income from sale of power turn out to be marginal.