REC Market updates in India :

REC Market updates in India:

At present there is very weak enforcement action by electricity regulators of different states, which has widened the demand supply gap of REC (Renewable Energy Certificates).

As per a news published in the Business Standard, Mr. Tarun Kapoor (Joint Secretary of MNRE) said “ we have realized that few state discoms and private companies are not following regulations of RPO and not complying with minimum RPO targets for the year. To make it mandatory, we have proposed an amendment to the Electricity Act.”

It will be a big push to strengthen the REC market in India, as this will be the strong driving force of RPO, being regulated by this enforcement. At times, state regulators tend to postpone enforcement of RPO obligations. Considering law is being amended, state regulatories would have to strictly enforce it and a penalty could be imposed for non-compliance, which in turn would put pressure on discoms to meet their obligation properly, during the year.

REC mechanism can be installed properly only by Government make it mandatory and enforce binding provisions to meet RPO on timely intervals. If Solar REC certificates are not sold, their incentive for setting up of Solar Power Project declines and make it totally unviable financial project for developers. State discoms are largely benefited by REC, as they are real beneficiaries due to availability of electricity on pooled cost under 25 years PPA with solar project developers. This availability of solar power is going to reduce their dependency on environment harmly pollutive electricity being generated by coal, gas, lignite and other sources.

Authored by :

CA Yogesh
Director
BWPM Co.

visit us at : www.Yogesh-CA.blogspot.com