Solar power producers find new source of revenue generation

MUMBAI: The two power trading exchanges Indian Energy Exchange (IEX) and Power Exchange India (PXIL) commenced trading of solar renewable energy certificates (RECs) today, thus opening a new source of revenue generation for solar power producers apart from third party sale of power through open access.

The trading of RECs makes it easy for several obligated entities that may be required to purchase a certain quantum in either green power or RECs.

M and B Switchgears, which has become the first solar power producer in India to be issued 249 solar RECs by the National Load Dispatch Centre in New Delhi, expects to generate an additional revenue of around Rs 4 crore from RECs. These certificates are tradable on the power exchanges and are bought by 'obligated entities' which are either specified consumers or electricity distribution companies (under RPO - renewable purchase obligation).

The Electricity Act 2003 mandates the state commissioning to specify a percentage of the total consumption of electricity in the area of distribution licensee, for purchase of electricity from renewable sources - renewable purchase obligation (RPO).

According to Vikalp Mundra, director, M and B Switchgears: "The company is expected to generate close to 3,200 RECs in 2012-13. The project will be generating approximately 32 lakh units of electricity per annum and saving carbon emission equivalent to 3,360 tonnes annually. For M and B Switchgears, the trading of RECs is expected to cause additional revenue of approximately Rs 4 crore.''

The company is currently planning to set up a 20 MW solar power project under the REC scheme.

Renewable energy certificate mechanism has been promoted by ministry of new and renewal energy in order to encourage non-conventional energy sources.