The Central Electricity Regulatory Commission (CERC) is planning to introduce a scheme that will enable states to buy renewable energy produced and fed into the grid by other states, a top official said.
Such non-physical trade of renewable energy will help states meet their obligations of consuming a certain amount of energy generated through renewable sources and allow vending states to recover the high cost of generating renewable energy, CERC chairman Pramod Deo said. “We are working on introducing a renewable energy certificate scheme, whereby we will frame regulations to give targets to states for having a certain renewable energy component in their energy consumption mix,” he said.
Once operational, the scheme will enable states to meet their renewable purchase obligation through purchasing the certificates from states producing more renewable energy then their obligation under the National Action Plan on Climate Change, Deo said.
“The states actually generating renewable energy and delivering it into the grid will be more than adequately compensated by selling the certificates of surplus renewable energy produced by them,” he added.
Some southern states in India like Tamil Nadu and Karnataka have already reached a level to procure as much as 10% of their total energy consumption through renewable sources, while others like Delhi have not been able to procure even 1% of their energy requirement through renewable sources, Deo said.
The National Action Plan on Climate Change, unveiled earlier last year, envisages 5% of energy consumed to be procured through renewable sources by the year 2010.
The trade in renewable energy certificates can either be bilateral between the vending and the buying state or can be facilitated through a central trading market — like a renewable energy exchange.
One of the key benefits of the scheme being propagated is that it makes it possible for states where there are no renewable energy producers to have a renewable purchase obligation in place that the utilities can meet by acquiring certificates from outside the state. On the other hand, the producers can locate their projects in places more feasible locations without having to worry about the appetite of the market in that particular state only.
Tradable renewable energy certificates have been used extensively to promote renewable energy in Australia, Japan, United States, Netherlands, Denmark and the UK.
