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CERC to increase Renewable Purchase Obligation (RPO) frequency compliance to facilitate lumpy REC Trading

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Central Energy Regulatory Commission (CERC),India’s Electricity Regulator is planning to increase the frequency of compliance of the Renewable Purchase Obligation (RPO) for states from an annual affair to a bi or quad annual affair.Note Renewable Energy Certificate (REC) Trading in India started in 2011 to facilitate the development of the Renewable Energy Industry in India.According to the RPO,a certain percentage of a state’s electricity generation must come from clean energy sources.States and utilities which can’t meet their  renewable energy requirements can buy REC from Indian Energy Exchanges to meet their needs.Power Exchanges in India have already set the ball rolling in terms of trading in RECs.

However the trading has been lacklustre as there is no urgency for states to buy REC until the end of the fiscal year in March when they have to meet their compliance numbers.This has led to low illiquid trading of Renewable Energy Certificate which has made price discovery difficult.Also it acts as a major problem for green energy producers as they can’t get remunerative prices as the market does not exist in a proper form.Note the REC Trading in India only takes place on the last Wednesday of each month.Non-Solar and Solar RECs are the two types of REC being traded.Note CERC seems to be proactive in developing the market which is essential if it wants to meet its own target of 15% of generation of electricity from renewable energy.

States may have to buy renewable power more often

The Central Energy Regulatory Commission (CERC) proposes to spread the renewable power purchase obligation of states staggered over one year and at specified intervals.The proposal comes as a move to make renewable power trading on the exchanges more vibrant and gain volumes. Officials explained that states have to take five per cent of their entire annual power requirement from renewable resources, a mandatory obligation, called as renewable power purchase obligation (RPO).

He further aid this was no way for any market to develop. “It is not only detrimental to the market and price discovery but also for the renewable energy generators who could not even recover cost this way.Thus, the proposal envisages making the five per cent RPO staggered twice or four times annually. “It is proposed to make it mandatory for the states to meet a certain percentage of their entire five per cent RPO biannually or four times a year. Discussions are underway with various stakeholders right now,” said an official.Besides, CERC has also decided to audit the price discovery mechanism being used at the country’s two power exchanges — Indian Energy Exchange and Power Exchange of India.


Abhishek Shah

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