The government thrust to increase the use of renewable energy has put power utilities in a fix as there is just not enough installed capacity to meet the new six per cent norm mandated by the Maharashtra Energy Regulatory Commission(MERC).
According to the MERC (Renewable Purchase Obligation, its compliance and REC framework implementation) Regulations, 2010, which come into force from the financial year 2010-2011, power utilities have to ensure that six per cent of all the power they buy comes from renewable energy. The regulations come in the wake of the Electricity Act, 2003 and Central Electricity Regulatory Commission (CERC) guidelines on renewable energy.
The renewable purchase obligation (RPO) on power utilities under the Electricity Act 2003 has mandated that State power distribution companies buy renewable power and has fixed the percentage of that power in each category. The eligible renewable energy sources shall include non fossil fuel, including bagasse based co-generation projects, wind energy, biomass power based on the more efficient Rankine cycle technology, small hydro, mini hydro, micro hydro power, municipal waste based power and solar power.
As per section 4.3 of the MERC regulations, “procurement of renewable energy certificates (REC) issued for renewable energy generation outside Maharashtra as well as RECs issued for renewable energy generation within the State shall be considered as an eligible instrument for the purpose of RPO compliance by the obligated entities which are specified in the rules.” In short, the power distribution companies if they fail to procure the fixed amount of power from renewable sources of energy will have to buy the RECs to save face. It will remain a paper transaction with no real addition of power.