CERC asked to okay renewable energy certificate contracts

Indian Energy Exchange (IEX) and Power Exchange India (PXI), both involved in day-ahead trading, have approached the Central Electricity Regulatory Commission (CERC) for introduction of renewable energy certificate (REC) contracts.

Both have filed their petitions under Regulations 4 and 7 of the CERC (Power Market) Regulations, 2010, Detailed Procedure.

CERC sources said it had asked IEX and PXI to undertake a test run of the software for various scenarios, with at least 10 test cases covering the different types of demand/supply curves. The CERC (Terms and Conditions for recognition and issuance of Renewable Energy Certificate for Renewable Energy Generation) Regulations, 2010, have already been notified.

The mechanism aims at promoting additional investment in RE projects and to provide an alternative way for RE generators to recover costs. Currently, RE constitutes nearly 17,000 Mw of the all-India installed power capacity of 150,000 Mw.

IEX and PXI sources told Business Standard the REC mechanism sought to address the mismatch between availability of RE sources and the requirement of entities to meet their renewable purchase obligation.

It is also expected to encourage RE capacity addition in states, as the REC framework seeks to create a national market for such generators to recover their cost. Several state electricity regulatory commissions have notified the REC mechanism and therefore they have approached CERC with a plea to launch REC contracts on exchanges.

Sources said under the renewable power obligation guidelines issued by state electricity regulatory commissions, all entities covered would have to buy renewable power, both solar and non-solar, either on physical terms or through RECs, which would be traded through power exchanges.