From UPSC perspective, the following things are important :
Prelims level : REC Mechanism
Mains level : Renewable Energy in India
Union Minister of Power and New & Renewable Energy has given his assent to amendments in the existing Renewable Energy Certificate (REC) mechanism.
What are RECs?
- Renewable Energy Certificates (REC) is a policy instrument to catalyze the development of renewable energy.
- It is a market-based mechanism that will help the states meet their regulatory requirements (such as Renewable Purchase Obligations (RPOs)) by overcoming the geographical constraints on existing renewable potential in different states.
- REC mechanism is a market-based instrument to promote renewable energy and facilitate compliance of renewable purchase obligations (RPO).
- It is aimed at addressing the mismatch between availability of RE resources in state and the requirement of the obligated entities to meet the RPO.
- 1 REC is treated as equivalent to 1 MWh.
How many types of RECs are there?
There are two categories of RECs, viz., solar RECs and non-solar RECs.
- Solar RECs are issued to eligible entities for generation of electricity based on solar as renewable energy source.
- Non-solar RECs are issued to eligible entities for generation of electricity based on renewable energy sources other than solar.
Sources of revenue under REC mechanism
- Revenue for a RE generator under REC scheme includes revenue from the sale of electricity component of RE generation and the revenue from the sale of environmental attributes in the form of RECs.
What are the proposed changes?
The salient features of changes proposed in revamped REC mechanism are:
- Validity of REC would be perpetual i.e., till it is sold.
- Floor and forbearance prices are not required to be specified.
- The RE generator who are eligible for REC, will be eligible for issuance of RECs for the period of PPA as per the prevailing guidelines.
- The existing RE projects that are eligible for REC would continue to get RECs for 25 years.
- A technology multiplier can be introduced for promotion of new and high priced RE technologies, which can be allocated in various baskets specific to technologies depending on maturity.
- RECs can be issued to obligated entities (including DISCOMs and open access consumers) which purchase RE Power beyond their RPO compliance notified by the Central Government.
- No REC to be issued to the beneficiary of subsidies/concessions or waiver of any other charges.
- Allowing traders and bilateral transactions in REC mechanism.