According to reports, the market for ‘renewable energy certificates’ (REC) has collapsed — a blow to those who produce electricity from renewable sources.
In the trading session that took place on September 25, 34.50 lakh RECs were offered for sale. Less than 50,000, or 1.4 per cent of what was offered, was sold.
RECs are generation-based ‘certificates’ awarded to those who generate electricity from renewable sources .
These certificates are trade-able on the energy exchanges and are bought by ‘obligated entities (OE),’ who are either specified consumers or electricity distribution companies (discoms). The OEs may either be required to purchase a certain quantum of green power or RECs. Trading happens on the last Wednesday of each month. Within the obligation, there is a small slice carved out for solar RECs, or RECs from solar power generators. So, there are non-solar and solar RECs. The REC regime was brought in to pep up the renewable power industry by enabling renewable power producers to get higher revenues than what the discoms would pay them.
But given the state of the market, it appears that the regime is a total failure. In the first six months of the current financial year, only 4.22 lakh non-solar RECs were sold, compared to 11.73 lakh certificates in the corresponding period of last month. “The data clearly suggests that OEs who bought RECs last year are abstaining from further participation on the account of no regulatory accountability being imposed on the defaulters of 2010-11 and 2011-12,” says Vishal Pandya of REConnect Energy, a consultancy that operates in the REC area.
However, electricity regulators of Punjab, Delhi, Maharashtra and Chhattisgarh have cracked the whip. They have given deadlines to OEs in the State. As these deadlines kick-in, there will be more sales of REC, says Pandya.