Renewable Energy Certificate(REC) Mechanism as an enabler of Renewable energy penetration in India: Looking back and way forward

As of 31.05.2022, the Renewable Energy (RE) installed capacity of India is 113 GW whereas Hydro Generation capacity stands at 47 GW, and to meet the target of 500 GW from non-fossil fuel sources to take forward the mission announced by Hon’ble Prime Minister of India Narendra Modi at the COP26 climate conference, approximately 340 GW of RE and Hydro capacity is to be added by 2030. Robust market mechanisms will play an important role to achieve this target. With an impetus on promoting RE, Central Electricity Regulatory Commission (CERC) introduced pan- India market-based Renewable Energy Certificate (REC) Mechanism in the year 2010 to address the mismatch between the availability of RE sources and the requirement of the obligated entities (OE) to meet their renewable purchase obligation (RPO). Recently, it is observed that the cost of power generation from conventional sources is increasing due to a hike in the cost of fossil fuels, however, the cost of power generation from RE sources is witnessing a downtrend. In view of the changes in the market dynamics, CERC notified REC Regulations, 2022. The present paper discusses the decadal experience of implementation of the REC Mechanism by the Central Agency in India, recent regulatory developments, the behavior of the market participants, the role of REC in RPO compliance, challenges, and the way forward.