VIABILITY OF THE REC MECHANISM FOR SOLAR PROJECTS IN INDIA
Akhilesh Magal heads the Project Development team as a Senior Consultant at BRIDGE TO INDIA. He will be speaking on ‘Viability of REC projects in India’ at REaction2012 on 26th July 2012 at the Chennai Trade Centre. This blog looks at the growing relevance of REC mechanisms in India.
India is facing an acute energy deficit of 10-13%. Industrial and commercial electricity prices have risen by nearly 11% p.a. from 2000 to 2010 while agricultural electricity prices have remained more or less constant as a result of cross-subsidies. Rising grid electricity prices, frequent power interruption, costly diesel backup electricity, falling costs of solar energy and abundance of solar resource have made solar PV an attractive technological choice for industrial and commercial consumers.
- Solar PV is becoming an attractive choice for industrial and commercial consumers due to high prices of conventional power
- State regulators issue mandatory consumption quotas (Renewable Purchase Obligations) for solar energy which can be met by buying Renewable Energy Certificates (RECs)
- Currently, the demand for RECs is much greater than the supply and our analysis suggests that therein lies an innovative market opportunity for industrial and commercial consumers looking to reduce their expenditure on power