REC could boost investment in renewable energy, says FitchEC could boost investment in renewable energy

REC could boost investment in renewable energy, says FitchEC could boost investment in renewable energy, says

fe Bureau
Posted: Wednesday, Sep 15, 2010 at 2235 hrs IST
Updated: Wednesday, Sep 15, 2010 at 2235 hrs IST

New Delhi: India's move to introduce renewable energy certificate (REC) scheme should help improve cost economics of renewable energy projects and attract investments to the sector. However, there are still many regulatory and institutional challenges to be tackled to make the scheme successful, says the international credit ratings agency Fitch Ratings.

The Central Electricity Regulatory Commission (CERC) has laid out REC norms in a bid to promote green energy. Under the scheme, an REC is issued to renewable power generators for each 1 mw of electricity generated. Generators can sell the certificate in the market and generate additional revenue. Discoms failing to meet their renewable energy target can buy RECs as an option.

"The Indian government is promoting the addition of renewable energy capacity via the introduction of an REC scheme. The proposal should benefit the sector by improving cost economics and enhancing credit quality, which should, in turn, attract new capital," Fitch says in its special report on the Indian renewable energy released on Tuesday.

However, developing a successful REC scheme would be a challenge, given the constraints in the Indian power market like high commercial losses of state electricity boards and their weak financial health.

India has envisaged the target of meeting 15% of its electricity requirement from renewable sources by 2020 under the national action plan on climate change. But cost of generating electricity from renewable sources tends to be higher compared with fossil fuel-generated electricity.

In case, discoms are not all allowed to pass through high cost of renewable energy to consumers, their financial health might further weaken.

Further, there is risk that flexibility envisaged for current renewable generators to opt out of the scheme and instead sell power at a preferential rate may lead to inadequate supply of RECs, making the market volatile.

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Gopinath S
Chief Executive
nRG Consulting Services, Bangalore
http://in.linkedin.com/in/gopimysore
http://nrgcs.blogspot.com/
+91 99161 29728

Electrifying India with rice husk

Manisha Pande  | 2010-09-13 10:10:00

 

Having grown up in Baithania village of Bihar, Gyanesh Pandey knows how erratic electricity supply can be. Today, the 34-year-old, along with his friend Ratnesh Yadav, has found a way to generate electricity with rice husk. Husk Power Systems, founded by the duo in 2007, is helping power rural India with the use of biomass gasification technology to convert rice husk into combustible gases, which then drive a generator to produce clean electricity at affordable rates.

In the last three years, Husk Power Systems has generated electricity in 200 villages, a single plant can catering to up to four villages, depending on the size and consumption. Villagers have to pay an initial connection charge of Rs 100. Pandey adds: "We have initiated a pre-paid system of billing, where, on an average, for two CFLs and charging a mobile phone, user pays about Rs 80 per month."

He lists that for more than 125,000 villages in India, access to electricity is a distant dream and more than 25,000 have been declared economically impossible to reach via conventional methods. "Electricity was always an election issue in Bihar, but, sadly, that is what it remained and not much has been done," Pandey, an engineering graduate who rejected an opportunity to work in the US semiconductor industry, notes. Husk Power Systems now employs about 270 people across villages where it has set up plants. Once the plant is set up, the villagers take care of the rest of the operations and ensure its smooth run on their own.

The government noticed what Pandey and his partners were doing and the Ministry of New and Renewable Energy extended their subsidy scheme to fit the needs of the project. Pandey expects the revenue generation for 2010-11 to be about Rs 2.5 crore and is ready to set up 2014 electricity generator plants by 2014. "We call it 2014 by 2014 and would like to light up 5,000 villages across India," he says. Husk Power Systems is also competing with nine other businesses across the world that have been chosen by BBC World News for its World Challenge 2010 competition, which identifies people and businesses bringing economic, social and environmental benefits through innovation at the grassroots level.

 

--
Gopinath S
Chief Executive
nRG Consulting Services, Bangalore
http://in.linkedin.com/in/gopimysore
http://nrgcs.blogspot.com/
+91 99161 29728