Renewable energy certificate mechanism in India: A preliminary assessment

The Indian National Action Plan for Climate Change (NAPCC) envisages several measures to address global climate change. One of the important measures identified involves increasing the share of renewable energy in total electricity consumption in the country. This would mean NAPCC envisages renewable energy to constitute approximately 15% of the energy mix of India by 2020. To achieve the target set by the NAPCC, Indian Ministry of Power launched Renewable Energy Certificate (REC) mechanism in November 2010. However, participation in the REC markets is low and RECs have failed to attract significant investment so far. In this study a preliminary attempt has been made to assess the performance of existing REC mechanism in India. After highlighting the salient features of the Indian renewable energy policy framework a brief description of renewable purchase obligation (RPO) and source specific RPOs for different states is discussed along with an overview of REC market in India to date. The performance of Indian REC mechanism is evaluated by cost competiveness, decentralized distributed generation and renewable energy portfolio diversity and their effectiveness has also been measured on the basis of the available data. Although, it is difficult to make any conclusive remark on the success or failure of REC mechanism due to its short experience, this study examines the process to date to come out with some recommendations which can be used to fine tune the functioning of existing REC market in India. For instance, REC price bounds should be revised because it has been not explicitly supporting cost competiveness by offering 60.33% higher average price than the existing average feed-in tariff (FiT). It is also observed that state-wise contribution in registered capacity is skewed towards few states like Tamil Nadu (27%), Maharashtra (23%), and Uttar Pradesh (22%), which puts pressure on policy makers to restructure the existing REC mechanism. (C) 2013 Elsevier Ltd. All rights reserved.