Sales of renewable energy certificates rose over 64 per cent to 21.42 lakh units in February compared to 13.02 lakh in the same month a year ago owing to high demand, according to official data.
Renewable Energy Certificates (RECs) are a type of market-based instrument. One REC is created when one megawatt hour of electricity is generated from an eligible renewable energy resource.
According to official data, a total of 14.91 lakh RECs were traded on Indian Energy Exchange (IEX) in February compared to 10.59 lakh in the same month last year.
Power Exchange of India (PXIL) recorded sale of 6.51 lakh RECs in the month under review against 2.43 lakh in February 2019.
IEX and PXIL are engaged in trading of RECs and electricity. The REC trading is conducted on the last Wednesday of every month.
The IEX data showed that both non-solar and solar RECs witnessed good demand, with buy bids exceeding sell bids. There were buy bids for over 17 lakh RECs in the month against sell bids for over 12 lakh RECs for the month of February 2019.
However the demand was slightly low at the PXIL. There were buy bids for over eight lakh RECs and sell bids for over 11 lakh units for the month at PXIL.
Overall demand for RECs was high as the total sell bids at both power exchanges was over 25 lakh units against sell bids of over 23 lakh units.
Under the renewable purchase obligation (RPO), bulk purchasers like discoms, open access consumers and capacitive users are required to buy certain proportion of RECs.
They can buy RECs from renewable energy producers to meet the RPO norms. The proportion of renewable energy for utilities is fixed by the central and state electricity regulatory commissions.
The REC mechanism is a market-based instrument to promote renewable sources of energy and development of market in electricity.