EVER SINCE the Copenhagen mess happened, India has been planning to independently launch a Renewable Energy Certificates (REC) trading programme to bring down carbon-intensive energy consumption. The New and Renewable Energy Ministry and the Central Electricity Regulatory Commission (CERC) want to roll it out in April.
CERC deputy chief Sushanta Chatterjee told TEHELKA that all state electricity boards (SEBs) will soon have to meet renewable energy (RE) quota obligations; and those without any RE potential will be required to buy certificates from states with RE surpluses. “This will ensure that areas rich in RE potential attain full capacity,” adds Chatterjee.
Due to the high price of RE power, states faced with RE glut can consume only a fraction of it, Thus the only way to further develop these resource-rich areas is to create countrywide demand, so that investment in resource-rich states becomes viable.
“Since the extra cost of renewable energy is spread over a large consumption base, the need for subsidies will gradually decline,” says Vinod Kala, MD of Emergent Ventures, a New Delhi-based consultancy. He feels South Asia will soon become one of the most progressive regimes as far as renewable energy is concerned. In fact, trade in renewable energy credits could rise to as much as $10 billion in a decade’s time.
But till this happens, RE producers have a single option: they can only sell power to the home state at prices higher than charged by conventional power through special power purchase agreements. Higher prices allow them to cover costs and earn a good return, making investments viable in RE-rich areas. However, this arrangement has a ceiling: when the home SEB completes its quota it stops buying more RE, as it cannot afford to pay extra. States like Rajasthan with vast wind potential have failed to create wind farms up to optimum capacity because the surplus power cannot be sold to other states.
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And this is precisely where RE certificates come in. Once these arrive it will become possible to do away with this ceiling. Producers in RE-rich states will also have a second option: once their SEB quota obligation is met, they can go on paying for their remaining power needs at normal rates. Penalties will ensure that each state meets its RE target.
This will substantially lower India’s dependence on fossil fuels. Says Kala: “What we need is a large renewable mix base.” RECs will cut the amount of coalbased energy fed into the national grid. Although India’s current RE capacity is 15 percent of the total, the erratic nature of wind, water and sun power prevents it from generating more than 3.5 percent of the total RE need. “Though these RE activities reduce carbon production, they do not supply RE power to the grid,” explains Shirish Garud of TERI, which piloted the first study of RECs.
The REC system will strongly impact India’s consumption of coal that contributes almost 50 percent of its greenhouse emissions. The pressures are mounting fast. And once the RE mechanism is fully in place India can lay claim to being one of Asia’s leading green power stalwarts.