Renewable Energy Certificates open for trade

21 April 2011

NEW DELHI: Tradable Renewable Energy Certificates (RECs) have recently been established in India to drive the expansion of the solar and wind sectors. In fact, the much-anticipated RECs were open for trade in late March for the first time in India. Viewed as one of the pioneering efforts in any developing country for mainstreaming the renewable generation through market mechanisms, RECs have been introduced by the Government of India to incentivize higher efficiencies and electricity output and to encourage the entry of independent power producers and more diverse investors.

Building on this momentum, a high-level delegation of participants representing India’s finance, energy, and banking sector met with key leaders in Europe and America in order to gain a better comparative understanding of REC market operations in other countries. From March 20 - 30, eight delegates comprising senior officials from the Central Electricity Regulatory Commission (CERC), National Load Despatch Centre (NLDC), Suzlon Energy Ltd., ICICI Bank and ABPS Infra (consulting organization involved in development of conceptual framework and implementation of REC mechanism in India) participated in this instructive visit.

Delegates visited the European Commission as well as German and Flemish government officials in Brussels; Department of Energy and Climate Change (DECC) and British Telecom (BT) in London; California Public Utility Commission (CPUC), Air Resources Board (ARB), Suntech and Center for Resource Solutions (CRS) in California; and Electricity Reliability Council Of Texas (ERCOT), Texas Public Utility Commission, Dell Inc. and Austin Energy in Texas. The range of stakeholders allowed delegates to consider mechanisms covering regulators, policy makers, utilities and system operators, RECs registries and voluntary buyers.

“For RECs to reach their full potential in India, it’s important for Indian policy leaders to compare and contrast their early experiences with those of their global counterparts,” said Aditi Dass, Program Manager, The Climate Group New Delhi. “This valuable sharing of best practices can only benefit a market poised to grow as companies and consumers’ awareness and confidence grows.”

The delegation visit concluded weeks prior to India’s next trading session in late April. This one-month gap between trading sessions will allow delegates to start applying knowledge gathered on their fact-finding visit at a critical juncture in the early growth phase of REC implementation in India. Mr Ajit Pandit, Director, ABPS Infra said of the timing of this visit: “[it] could not have been better given the first transaction for REC trading has just happened in India at Power Exchanges.” He also added: “The REC exposure visit was also useful in terms of diverse range of electricity markets and regulatory regimes that it covered, which definitely helped the group in understanding the broader contours of REC market operations and challenges encountered in different regimes.”

Luc Bas, Head of European Programs, The Climate Group who co-led the European leg of the delegation's visit said the delegation as well as the hosts at different organizations found the meetings mutually informative: "This visit was also about a two-way learning exchange between Indian delegates and their interlocutors. The substantive knowledge gained on both sides has already translated into mutual appreciation and strengthened ties."

Emboldened by the visit, Mr. Hemant Pandey, Deputy Chief Engineer summed up the experience by offering this insight: “In India, with new REC mechanism in place and incentives provided by the government to the wind and solar generators there is a confidence that the renewable energy generation will be promoted as per the targets. The unique REC mechanism with the floor and forbidden price and a platform to trade RECs through the power exchange will also have an edge over the other prevailing actors in the US and Europe."

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