Abstract
Renewable Energy Certificate (REC) mechanism is a market-based policy instrument, which facilitates Renewable (Energy) Purchase Obligations (RPOs) and encourages renewable energy (RE) generation. The aim of this chapter is to position the REC mechanism as a leveraging tool to attain Sustainable Energy Security (SES) for India. This chapter presents an analysis of the first year of REC mechanism and derives the characteristics of the REC market. It then compares the financial viability for sale of RE by project developers in certain key states and shows that the REC route is more profitable than feed-in-tariffs. This chapter also analyzes the market clearing volume (MCV) and market clearing price (MCP) of the REC market for the year 2011–2012, and draws inference for its market in the near term. This chapter further forecasts the market size in the short term using past trends and scenario analysis and predicts that the REC market, which is currently only 2.21 % of the total RE market will have a share of 7–11 % (₹ 10–17 billion) by 2012–2013, which will further rise to 11–22 % (₹ 36–71 billion) by 2016–2017. RECs can also be used as credit enhancement products for providing capital investment for setting up new RE-based projects and the REC mechanism can be effectively leveraged to simulate RE development in the country.
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Notes
- 1.
Provisioning of energy to the consumers at the lowest cost, with limited resources.
- 2.
Average power purchase cost means “the weighted average pooled price at which the distribution licensee has purchased the electricity including cost of self-generation, if any, in the previous year from all the energy suppliers, but excluding those based on liquid fuel, short-term purchases and renewable energy sources.”
- 3.
From financial institutions, commercial banks, and multilateral agencies.
- 4.
Very few projects, which are working on this model in India.
- 5.
Market trends indicate more than 90 % of transactions in electricity are tied up in long-term PPAs.
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Acknowledgements
This work has been undertaken as a part of my PhD research, and I gratefully acknowledge the support of Dr. B Sudhakara Reddy under whose guidance this work was undertaken.
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Narula, K. (2015). Leveraging Renewable Energy Certificate (REC) Market for Attaining Sustainable Energy Security (SES) for India. In: Reddy, B., Ulgiati, S. (eds) Energy Security and Development. Springer, New Delhi. https://doi.org/10.1007/978-81-322-2065-7_5
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DOI: https://doi.org/10.1007/978-81-322-2065-7_5
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