Renewable Energy Certificate

Renewable Energy Certificate (REC) Mechanism

  • Renewable Energy Certificate (REC) is a mechanism to address the demand supply mismatched of Renewable Energy (RE) in various state having low potential of Renewable Energy my purchase RECs from Power Exchange to fulfill their renewable purchase obligation (RPO). RPO is the minimum specified percentage of Renewable charges consumption based on the total Energy consumption of the obligated entities.

  • One (1) REC is equivalent to 1MWh of Energy injected in to the grid. The Energy injection report issued by concerned SLDC is considered.

  • Any RE generator who wants to avail REC benefit needs to exercise any one of the following option:
    1. Can sell the power generated from such plant to the local distribution licensee at a price not exceeding the pooled cost of power purchase.
    2. Can sell the power generated from such plants to 3rd party consumer, trader or open access consumer at a mutually agreed price.
    3. Can sell power in power exchange at market determined price.

  • REC certificate are issued for each 1mm (1000 KWh) supplied to grid & certificates are tradable at power exchange. The present rate is minimum Rs. 9.30 and maximum Rs. 13.33 till FY 2016-2017.

  • In REC mechanism the power produced and sold at average pooled purchase cost(APPC) of last year. In Rajasthan the APPC applicable for 2011-2012 is Rs. 2.57 and will be applicable for 2012-2013.

  • The project is financially viable, as you can take accelerated depreciation of 100% in first year thereby saving 33.245% income Tax. In this case the payback period is about 5 years.

  • ‘Samta Power’ provide complete range of services for “REC Mechanism” like
    1. Feasibility of going through REC Mechanism.
    2. Sale of Power from the plant to the distribution utility at its average power purchase price/3rd party mutually agreed rate.
    3. Accreditation with state nodal agency.
    4. Registration with central agency i.e. National Load Dispatch Center.
    5. Issuance of renewable Energy Certificate ( RECs)
    6. Sale of RECs on power exchange.

  • By adopting this mechanism the renewable energy developer can gain higher returns on its investment which is not possible in the present mechanism of long term PPA at preferential tariff.