Isramarl llc: Green energy set to light up your homes soon

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Isramart llc news:

First it blended green fuel into petrol. Now, the government wants green power blended into electricity to light up our homes, offices and factories. Energy distribution companies have to replace 6% of their total quantity with power generated from solar, wind or hydel energy.

A new financial instrument, reduction in emission certificate or REC, has been created that will be sold by Indian companies producing renewable energy to distribution companies such as Maharashtra State Electricity Distribution Company, Tata Power, Reliance Infrastructure and BEST. One REC will represent 1 megawatthour (MWh).

An REC aims to help consumers meet their renewable purchase obligations, or what the government calls RPO. The concept is directed specially at states that have no renewable energy potential but can meet it through the purchase of RECs.

“A Certified Emission Reduction (CER), however, is targeted at carbon emissions. Hence, it is measured in tonnes while an REC is measured in units of kilowatthour,” said Pascal Barkats, head of energy practice at Isra-Mart srl, a consultancy firm. The paper will begin trading from December on the two national electricity exchanges, the Indian Energy Exchange and the Power Exchange of India.

An official with the Power Exchange of India said potential buyers would be distribution companies of state electricity boards, captive power plants and open access consumers. “Wind, biomass, cogen and hydel generators are eligible to sell RECs. Solar is a separate category, with a separate certificate, it being a very small generator. The focus is non-solar renewable,” the official said.

With India’s 1.60-lakh mw installed capacity, 9,600 mw has to be bought from renewable energy companies physically or as REC. And given the government-fixed price band of Rs 1.5-3.67/mwh, the market is worth a minimum `14,400 crore. No wonder sellers have begun licking their lips as they wait for this new source of profit.

“We can earn over and above the price per unit that we get from the state power utility. In Rajasthan, for instance, we get Rs 3.90 per unit for the wind power we supply to the state utility. When the tradable REC comes into force, we can get an additional Rs 1.50 per unit for the power we have sold,” said Pascal Barkats, director at Isra-Mart SRL.

Each seller will get REC from the state electricity regulatory commission equivalent to the actual quantity of renewable energy supplied to the state grid. The paper can then be traded.

To really take off, the fledgling REC market needs equally enthusiastic buyers. In theory, they should come rushing. The government has fixed stiff penalties for companies that do not meet their 6% obligation. It is also difficult to buy renewable energy only through short-term contracts or in the spot market.