India’s renewable energy certificate (REC) market has recorded net sales worth Rs 9,266 crore during its decade of existence, according to a study released on Thursday by the CEEW-Centre for Energy Finance (CEEW-CEF). It said that this was an encouraging sign, given that the country would increasingly bank on market instruments such as RECs to support its energy transition.
RECs are market-based instruments that can help discoms and others meet their renewable purchase obligations (RPOs) without actually buying renewable power. But, REC trading has been suspended since July 2020 due to an ongoing legal arbitration.
The study said that as many as 99 per cent of all RECs sold have served to fulfill RPO requirements. Still, poor RPO compliance across India has contributed to a demand shortfall of 7 per cent, represented by the 5.1 million RECs unsold as of December 2020.
It added that India’s 27 RPO under-compliant states would have needed to buy an additional 67.2 million certificates in 2020 if they had chosen only to use RECs to meet their targets — total REC issuances between 2011 and 2020 amounted to just 70.6 million.
According to the study, solar projects account for as few as 16 per cent of all RECs issued to power generators. Discoms, the largest consumers of solar power in India, account for a mere 12 per cent of the total REC issuances.