Green Energy in India gets unexpected boost as Central Electricity Regulatory Commission (CERC) mandates 6% Renewable Energy generation

India’s Green Energy Sector got an unexpected boost when the Central Electricity Regulatory Commission (CERC) mandated that utilities all over India will have to compulsorily generate 6% of their energy generation from renewable energy sources from the current 4% generation.India has approximately 167 GW of electricity capacity with 17 GW of Renewable Energy capacity,however the percentage generation from RE is lower because of lower capacity utilization.The notification has given weightings to different forms of green energy like wind,solar,hydro,biomass and bagesse.This decision which came out of the blue has put the electricity utilities in a bind since India does not have enough sources of renewable energy.Only 4% of India’s electricity generation comes from non-hydro energy sources which will make the task of utilities difficult.CERC has allowed the utilities to buy Renewable Energy Certificates (RECs) in case they are unable to generate Green Energy on their own.The REC scheme has been notified by CERC  in September of last year.This was done in order to promote the renewable energy generation in India and give an incentive to investors in Green Energy.

This ad-hoc decision seems quite arbitrary as most states don’t have enough Renewable Energy Capacity and will have to bear a large monetary burden from buying RECs.India has done well till now being one of the biggest promotes of solar energy in developing countries.India’s JNNSM plan is quite ambitious and could make solar energy one of the biggest opportunities in the 21st century.However such arbitrary decisions won’t help India’s Green Energy ambitions.India has done well to set up National Action Plan on Climate Change (NAPCC) with 10% RE target by 2015 and 15% target by 2020 with 1% increase every year .However such sudden increase to 6% will make it difficult for utilities to set up RE plants in such a short period of time.A more well thought of holistic policy is needed rather than sudden adhoc decisions which will lead to unnecessary waste and confusion.

Regulator makes it mandatory for power cos to buy 6% renewable energy – Economic Times

In an apparently absurd decision, the central power regulator has made it mandatory for all power utilities to purchase 6% green power, even though the country doesn’t have enough electricity generated through renewable energy sources. What’s adding to the woes of the utilities is a hefty penalty that follows if they fail to procure green power.

In a notification, the Central Electricity Regulatory Commission (CERC), to ensure its compliance, has made it clear that power companies need to buy a minimum 6% of their total installed capacity from renewable energy sources. These sources include solar, wind, mini and micro-hydro projects, along with electricity generated by using bagasse and biomass.Each category has been given a separate weightage. For example, for the Maharashtra state power distribution company, it is necessary to buy 140 mw of solar power and 10 mw of electricity generated by mini and/ or micro-hydro projects. Against this, the state has just about 1 mw of solar electricity available, whereas the electricity from mini/micro projects available is 1.5 mw.

The option given to power utilities, in case of a failure to procure green electricity, is to buy ‘Renewable Energy Certificates’ (REC). Designed on the lines of carbon credits, these certificates can be bought from utilities that generate green power. To oversee the transactions, CERC has designated certain agencies. “This is nothing but a ploy to help certain players who have made huge investments in renewable energy,” a top official from the Union energy ministry said, requesting anonymity.

The rate at which power utilities can buy RECs has also been fixed by CERC. For solar power, it would be Rs 17/unit, while the electricity generated from mini/micro projects has been set at Rs 3.9/unit. The CERC-appointed agency has been mandated to certify buying of RECs. Power utilities need to deposit the requisite amount with these agencies, which in turn will release it to units producing green electricity.

“On solar power alone, a state like Maharashtra shall have to fork out close to Rs 358 crore. The state’s total outgo on buying RECs would be Rs 944 crore for the current financial year,” the official said. The regulator has allowed utilities to recover this cost from consumers by levying additional charges.