Sales of renewable energy certificates(REC) rose over 79 per cent to 8.38 lakh units in March compared to 4.68 lakh in the same month a year ago owing to good supply, 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 source.
According to official data, a total of 5.2 lakh RECs were traded on the Indian Energy Exchange (IEX) in March, compared to 2.25 lakh in the same month last year.
Power Exchange of India (PXIL) recorded sale of 3.18 lakh RECs in the month under review against 2.43 lakh in March 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 supply, with sell bids exceeding buy bids. There were buy bids for over 6.93 lakh RECs in the month against sell bids for over 26.84 lakh RECs for the month of March 2020.
Similarly the supply was high at the PXIL. There were buy bids for over 3.73 lakh RECs and sell bids for over 5.59 lakh units for the month.
Overall supply for RECs was high as the total sell bids at both power exchanges was over 10.66 lakh units against sell bids of over 32.43 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.
It provides an alternative voluntary route to a generator to sell its electricity from renewable sources just like conventional electricity and offer the green attribute (RECs) separately to obligated entities to fulfil their RPO.