States allowed to buy certificates from pvt players

States will now be able to buy renewable energy certificates (RECs) to make up for a portion of their mandatory renewable energy purchases from entrepreneurs who produce power and operate in rural areas. In a recent move, the Forum of Regulators (FoR), a statutory body of electricity regulators, has approved the proposal which policy-makers say will also encourage the expansion of renewable energy projects operating in rural India.

The FoR decision is considered significant in the light of the recent failures of the Northern and Eastern grids due to states overdrawing power, leading to the worst power failure in history. The establishment of smaller, ‘off-grid’ projects such as rice-husk or solar power plants is seen as essential both for reducing the burden on the grid as well as to ensure that rural areas have access to electricity. According to a 2011 survey, 40 per cent of India’s population is still without power.

Through recent regulations, the government has already opened up power supply in notified rural areas to private players. Since these projects are small and operate in remote areas, renewable energy is generally the preferred choice. However, since it has limited business potential due to the low paying power of villages, the decision to allow them to sell RECs in the power market is expected to make them viable, said Pramod Deo, chairman of the Central Electricity Regulatory Commission and the Forum of Regulators.

Source: The Indian Express