Current status of REC mechanism in India and possible policy modifications to way forward

Abstract

Govt. of India has come up with renewable energy (RE) promotional policies and regulations to tap the abundant renewable energy sources in the country for energy security and to reduce the dependance on fossil fuels. Subsequent to the enactment of the Electricity Act 2003, Renewable purchase obligation (RPO) became mandatory on power distribution companies. Renewable energy certificate (REC) was introduced to help the obligated entities to meet their RPO irrespective of the availability of local RE sources and its trading started in India in March 2011. This paper briefs about the RE promotional policies and regulations of Govt. of India and analyses the RPO announced by various state electricity regulatory commissions (SERCs). A detailed analysis of REC trading at the energy exchanges till February 2013 is presented to show the REC market trend and the share of REC in the total RE requirement of the country. The impact of RE promotional policies and regulations on the RE sector is also analysed. Based on the above analysis, realistic policy modifications are suggested to improve the current status of the RE sector of India.