REC Mechanism - Viability of solar projects in India
Overview
The Indian government has decided to incentivize the installation of solar PV in order to increase the energy supply of India, provide more energy security, offer de-central, power solutions and create a future industry. The policy initially focused on supply side measures. It started with ...expand
So-called “obligated entities”, who have to fulfil RPO quotas have four options. They can avoid fulfilling their obligations, in which case they could be penalized. Alternatively, they can purchase solar power from the market or generate their own solar power. The fourth option is to buy Renewable Energy Certificates (RECs) to meet the quota. Solar plant owners, who sell their power outside of preferential FiTs to the grid, generate these certificates. This offers a new type of project to solar project developers. They can find an off-take for their power under market conditions and simultaneously generate RECs.
