source-spefic tariff likely for renewable energy

Source -specific tariff likely for renewable energy

To encourage clean renewable energy government decided that energy distribution companies have to replace 6 per cent total power quantity with power generated from wind energy and  hydel power.

A new financial instrument reduction in emission certificate (REC) has been created that will be sold to Indian companies producing renewable energy to distributing companies like state electricity boards (SEB ) ,distributing companies, Tata power, reliance infrastructure on REC.  REC represent  I mega watt hour (mwh). An REC is there to meet their renewable purchase obligation what government  called R.P.O. The concept is directed specially at states that have no renewable energy potential but can meet through purchase of RECs.

“A  CER hour is targeted carbon emission hence it is measured in tonne while REC is measured  in unit of kilowatt hour “ an energy expert said.

The paper will begin trading from January on two national electrical exchanges. The India energy exchange  and power exchange of India. An official with power exchange said potential buyers will be distribution companies SEBs ,captive power plants and open access   to consumers.

Wind ,bio-mass and hydro generation are eligible to sell RECs.
Solar is separate category with separate energy because still being small generator.

With India  1.60 lakh M.W. installed capacity 9600 M.W. of power has to be brought  from renewable energy companies physically or on REC. government price brand RS 1.50 to RS 3.67 per mwh. We can earn over and above the price of unit that we get from  state power utilities . We get  RS 3.90 per unit of wind power we supply to state utilities.

“When tradable REC come into force ,we can get additional RS 1.50 mwh .” director Sahayadri industries  said. His company already installed 25 wind mills and plan to add six more to produce  23 M.W.  power not all which eligible REC trading though. Each seller will get REC from state electricity regulatory commission equivalent to quantity of actual renewable energy supplied to state grid.

The state grid the paper can then traded. To really take off the Pledging REC  market need  equal enthusiastic buyers. The government has stiff penalties for companies does not meet their 6 per cent obligation. It is also difficult to buy renewable energy only through short term contracts or spot market. Some such companies like Tata power are meeting their 6 per cent commitment though captive capacities.  

In a bid to make purchase of renewable energy attractive for power distribution companies ,the central electricity regulatory commission (CERC) is exploring the possibilities of introducing source-specific tariff for purchase of renewable energy which are obligatory for  renewable purchase obligation (RPO)  .

Currently the SEBs in order to meet their renewable purchase obligation, procure energy from sources such as wind power and small hydro at the CERC notified tariff. The need for having source -specific is being felt as energy from solar sources would be higher than other renewable energy sources.

As  a part of national action plan on climate change the distributing companies mandated 5 to 6 percent of their energy  mix from clean energy in current year and increasing 5 to 15 per cent by 2020.At present clean energy is mainly generated in state such as Tamil Nadu, Karnataka,A.P.,  Gujarat,Himachal Pradesh and Uttaranchal.

“We  are looking at how to create demand for various sources by giving good tariff and future making it an obligatory for utilities to buy “ Mr.Pramod Deo, chair person CERC told in press conference at the launch of REC mechanism.
The intension is to ensure that the distributing companies, open access consumers and captive power plants will have the option of purchasing the RECs to meet their RPO are mandated by state electricity regulatory commission (SERC) to purchase minimum level of renewable energy out of total consumption in the area of distribution licenses.

With  launch of REC  on Thursday the government seek to address the mismatch between availability of renewable  sources  and requirement of obligated entitles to meet RPO.

To enable  the other states meet their obligation clean energy requirement,REC mechanism has been introduced. It allows deficient states to meet their RPO  by purchasing the certificates.

The national load dispatch centre is nodal agency for implementation of REC. The REC market is likely to be operational zed by January .