Global Inequality keeps getting Worse Each Year with Globalization and Specialization
September 28, 2013Chile to see a 70 MW Solar Power Plant without any Subsidies as Grid Parity Arrives
October 1, 2013India’s Renewable Market is in for deep trouble as the market linked Renewable Energy Certificate market remains in a deep fund. The Indian government has an ambitious program of increasing the share of clean energy in its electricity generation. The government wants the share to go upto 15% by 2020. However, the REC mechanism devised by the government to boost the market remains dysfunctional due to inappropriate enforcement mechanism. There is no law to force utilities and large industrial consumers to increase their renewable energy purchases. The State Electricity regulators are not forcing the buyers to purchase the RECs to meet their obligations. Though some states like Delhi have cracked down others are not doing it. This means that the poor renewable energy producers who invested in green energy plants building RECs in their business model, are now in deep trouble. Only 1.4% of the total RECs on offer were traded and that too at the floor prices. Even solar credits which were finding a good market due to shortage also traded at a floor price.
Read on GWI Renewable Energy in India – Past,Present and Future.
Renewable Purchase Obligations are very difficult to manage and control given the periodic oversupply and under supply conditions. The ups and downs decrease the RE investment by private players. RE producers need certainty of cash flows before making large ticket investments. Same is the case with lenders who do not want to invest in a new sunrise sector which does not have fixed cash flows. Lets hope like the rest of the Indian economy the lazy government gets its act together. Otherwise the RE targets will remain a pipe dream.
The market for ‘renewable energy certificates’ (REC) has collapsed — a blow to those who produce electricity from renewable sources.In the trading session that took place on September 25, 34.50 lakh RECs were offered for sale. Less than 50,000, or 1.4 per cent of what was offered, was sold.
But given the state of the market, it appears that the regime is a total failure. In the first six months of the current financial year, only 4.22 lakh non-solar RECs were sold, compared to 11.73 lakh certificates in the corresponding period of last month. However, electricity regulators of Punjab, Delhi, Maharashtra and Chhattisgarh have cracked the whip. They have given deadlines to OEs in the State. As these deadlines kick-in, there will be more sales of REC, says Pandya.