Power distribution companies set to buy renewable energy certificates -Governance Now

Power distribution companies set to buy renewable energy certificates

Trading in certificates to begin by January 2011

Neha Sethi | November 18, 2010

Now power utilities which are not able to meet their obligation of procuring a part of their electricity requirement from green energy will be able to buy renewable energy certificates (REC) to compensate for it. Power minister Sushilkumar Shinde on Thursday launched the renewable energy certificate (REC) scheme in New Delhi. This scheme allows power utilities in green energy-deficient states to purchase these certificates to meet their renewable purchase obligations (RPO).

The power distribution companies in all the states need to purchase a fixed percentage of electricity from renewable sources following the targets fixed by the respective state electricity regulatory commission (SERC).

new and renewable energy ministry secretary Deepak Gupta said that this mechanism would go a long way in promoting further investment in renewable energy sources. “RPO is a good measure which has facilitated growth. However, I believe that the RPO without adequate provisions of enforcement would not lead to the desired results. The need is to institutionalise as early as possible, an effective RPO compliance mechanism,” he added.

The REC mechanism will be implemented through an automated and secure web-based application. “The entire process of accreditation, registration, issuance, trading and redemption is fully electronic and automatic. Adequate info systems have put in place for central electricity regulatory commission (CERC), the central agency, state agencies and renewable generators,” S K Chaturvedi, chairman and managing director, PowerGrid Corporation said. He added that the SERCs will designate the state agencies for the REC mechanism, apart from providing the regulatory framework.

The National Load Despatch Centre will be the central agency for issuing the certificates. One certificate will be equivalent to one megawatt hour of electricity.

power ministry secretary P Umashankar said that regulators have fixed RPOs ranging between one percent and ten percent. “Ministry of power is in the process of amending the tariff policy to provide for a solar specific RPO,” he added.

The trading of these certificates is expected to begin by January, 2011, Pramod Deo, chairman, CERC said. “Apart from power distribution companies, corporate houses, non-governmental organizations, and individuals who want to improve their green standing will also be allowed to purchase these certificates,” Deo said.

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