India inaugurated energy trading recently. The first session of energy certificate trading was organized at Indian Energy Exchange on twenty third February 2011. This is India’s first and only energy exchange.
REC or renewable energy credit certificates are issued in lieu of alternative energy produced by a concern. These certificates are market based instruments and are issued to power generators linked with the grid. The REC is equivalent to 1 MWh electricity supplied to the grid. The power generators have to use technology approved by the MNRE.
These certificates are valid for one year and are issued by the State Agency. A generating company is eligible to apply deal in these credit certificates if it has the approval of State Nodal Agency and if it does not have any power purchase agreement to sell at a preferential tariff determined by the Appropriate Commission or if it sells its production. The REC Scheme also includes captive power producers provided it does not benefit from
certain sources as described in the scheme.
There are two types of energy certification in place as of now:
1) Solar Energy Certificate
2) Non Solar Certificates
The first one is issued in lieu of energy produced from the Sun using solar panels etc The second refers to mini hydro plants, biomass and all recognized alternative energy sources.
Large industrial concerns and regulated power distributors which are under obligation to get a percentage of their supplies from renewable energy sources are the buyers.
The procedure for availing REC eligibility requires successful application to the State Nodal Agency followed by Central Agency. After successful registration the registrant can avail REC from the Central Agency.
The purchase for RPO Compliance (Renewable Power Purchase Obligation) is made as per the Sec. 81 (1) e of electricity act year 2003. The trading is carried out in power exchange and where the price is determined. In case of non compliance of RPO the concerned SERC body will ask for shortfall funds to be deposited for the said purchase. In case of non availability of certificate the shortfall can be carried on the next year.
Uday writes on alternative wind energy companies in India hence the article. He also writes on renewable energy credit certificates and the trading in Indian Exchange. Uday writes frequently on green solutions.