The existing share of renewables in total electricity is around 3.9% in 2009-10. The National Action Plan on Climate Change (NAPCC) has recommended increasing the share of renewable to 10% by 2015 and 15% by 2020.
The policies framed under the “Electricity Act, 2003” & the “National Action Plant of Climate Change” provide for a roadmap for increasing the share of renewable in the total generation capacity in the country. The policies paved the way for the development of market in power from Non Conventional Energy Sources by issuance of transferable and saleable credit certificates – Renewable Energy Certificates (RECs).
Renewable Energy Certificates (RECs) represent the attributes of electricity generated from renewable energy sources.
These attributes are unbundled from the physical electricity and the two products— 1. the attributes embodied in the certificates and 2. the commodity electricity—may be sold or traded separately.
In other words, one REC represents that 1MWh of energy is generated from renewable sources.
1 REC = 1 MWh energy from renewable sources
RECs are expected to become the currency of renewable energy markets because of their flexibility and the fact that they are not subject to the geographic and physical limitations of commodity electricity. RECs can be used by the obligated entities to demonstrate compliance with regulatory requirements, such as Renewable Purchase Obligations.
The REC Framework was also adopted in India, with its adoption by energy exchanges like IEX (India Energy Exchange) and PXIL (Power Exchange of India Limited). The basic REC Framework remains the same as frameworks existing globally.