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According to recent news paper reports, the government is thinking through a Renewable Energy Certificate (REC) mechanism aimed at evolving green power as a tradable commodity to promote inter-State sales of clean energy. The ministry is reportedly in the process of hiring consultants for the development of a REC mechanism on the lines of “green tags” used in the UK and US.

The green-tag initiative follows firming up of Renewable Purchase Obligation (RPO) by several State Electricity Regulators, thereby making it mandatory for all distribution utilities to source a minimum quantum of electricity annually from renewable sources. While States such as Tamil Nadu and Karnataka have already approached the 10 per cent mark for renewable procurement (as prescribed under the RPO), many states are not procuring even 1 per cent of their obligation.

The certifications would essentially create a nationwide market for renewable energy, enabling renewable deficit States to tide over their RPOs and spur higher green power generation in surplus States.

The green tags have been in use in the US for several years now where Renewable Certificates (TRCs) of 1 MWh of electricity are commonly traded. A certifying agency gives each certificate a unique identification number to make sure it does not get double-counted. In the UK, the Renewables Obligation (RO) places an obligation on licensed electricity suppliers to source an increasing proportion of electricity from renewables.

This is a welcome move as the initiative is likely to encourage states  to generate more renewable energy. 

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