Tips to deepen the REC market

How to ensure that there is enough demand for ‘renewable energy certificates’ (RECs)? RECs are basically generation-based, market tradable certificates issued to green power producers which can be sold to ‘obligated entities’ who are mandated to buy them. A suggestion has come up from industry watchers such as Mr Vineeth Vijayaraghavan, Editor, Panchabuta, an online newsletter.

The suggestion goes like this: The ‘obligated entities’, who are mandated to buy either green power or RECs, are big ticket consumers of electricity. Now, if you really look at it, the thermal power plants themselves are also big consumers of electricity. These plants need power to run the plant itself – to run coal and ash handling plants, to run the fans etc. This ‘auxiliary consumption’, in a well-run plant, is around 7 per cent of the generation of the plant. Thus, a 1,000-MW thermal power plant will consume 70 MW of power. Then, are these plants not consumers of electricity? Why not named them also as ‘obligated entities’, he asks.

The thermal power capacity in India is over 100,000 MW. At a highly conservative estimate, the ‘auxiliary consumption’ of these plants works out to 7,000 MW. Let’s say a 10 per cent ‘renewable purchase obligation’ (RPO) on them — and you straightaway add 700 MW worth of demand for (either green power, or) RECs.


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