What is Renewable Purchase Obligation – RPO and Renewable Energy Certificate – REC

The concept of Renewable Energy Certificates (RECs) seeks to address mismatch between availability of renewable energy and the requirement of the obligated entities to meet their renewable purchase obligation (RPO) by purchasing green attributes of renewable energy remotely located in the form of RECs. The REC mechanism is a market based instrument, to promote renewable sources of energy and development of electricity market.

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Renewable Energy Certificates (RECs)

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What is Renewable Energy Certificates (RECs) ?

Renewable Energy Certificates (RECs) represent the attributes of electricity generated from renewable energy sources. One REC represents that 1MWh of energy is generated from renewable sources. RECs can be used by the obligated entities to demonstrate compliance with regulatory requirements, such as Renewable Purchase Obligations. The REC is exchanged only in the power exchanges approved by CERC within the band of a floor price and forbearance (ceiling) price as notified by CERC from time to time. The first REC trading was held on power exchanges in May, 2011.

What are the Categories of REC’s ?

There are two categories of certificates:

1. Solar REC’s issued to eligible entities for generation of electricity based on solar as renewable energy source. Solar RECs include both PV and CSP technologies.
2. Non-solar REC’s issued to eligible entities for generation of electricity based on renewable energy sources other than solar. Non-solar RECs include renewable energy technologies such as biomass, wind, biofuel, cogeneration & small hydro. 

Who are eligible to sell RECs ?

Eligible entities are those renewable generators who meet following criteria:

1. Type of renewable source is approved by MNRE and respective State Commission.
2. Not have any Power Purchase Agreement (PPA) for the capacity related to such generation to sell electricity at a preferential tariff determined by the appropriate commission.
3. Not having agreement to sell electricity to local distribution company at price not exceeding pooled cost of power purchase of that distribution company
4. Sells electricity to the
   1. distribution licensee of the area at a price not exceeding the pooled cost of power purchase of such distribution licensee, OR
   2. to any other licensee or to an open access consumer at a mutually agreed price, or through power exchange at market determined price. Selling electricity to any entity other than local distribution company at market driven prices or otherwise.

Where can one buy REC’s ?

RECs are traded on the Indian Energy Exchange (IEX) and the Power Exchange of India Ltd (PXIL). Solar RECs are traded once a month – last Wednesday of every month.

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Renewable Purchase Obligation (RPO)

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What is Renewable Purchase Obligation (RPO) ?

Renewable Purchase Obligation (RPO) is a mechanism by which the State Electricity Regulatory Commissions oblige entities to purchase a certain percentage of power from renewable energy sources.

What are the Categories of RPO ?

RPO is of two categories –

• (a) Non Solar
• (b) Solar.

Who are the entities Obligated under RPO ?

Following entities are generally obligated in the State:

1. Distribution Licensees
2. Captive Consumers
3. Open Access Consumers

How can an Entity meet its RPO ?

Any entity can meet its RPO target through any of the following three ways:

• 1. Setting-up its own Renewable Energy generating plant anywhere in the Country.
• 2. Purchase power from any Renewable Energy generators with ownership of Renewable Energy generating plant anywhere in the Country.
• 3. Purchase Renewable Energy Certificates (RECs) from Energy Exchange