Overview of Renewable Energy Development in India

This report presents the overview of renewable energy development in India and the present and future scenarios of RENEWABLE
ENERGY CERTIFICATES. The report assesses the RE potential to be harnessed in respect of each Renewable Energy technology.

Renewable Energy Development in India

India started its renewable energy program in 1981 with the establishment of Commission for Additional Sources of Energy which
was later converted into Ministry of Non-conventional Energy Sources in 1992. In the year 2006 it was renamed as Ministry of New
and Renewable Energy (MNRE). Today, MNRE operates one of the world’s largest programmes for promotion of RE sources in the
country. This section provides brief information about the technical potential and achievement in terms of cumulative installed
generation capacity for each RE source in India. It also highlights the huge gap between India’s gross potential and the capacity
installed, so as to develop appreciation of the need for development of suitable policy instruments for accelerated development of
renewable energy sources in India.

Technical Potential of Renewable Energy

India has been bestowed with huge RE potential; however it is not distributed uniformly across the country. Solar, wind, biomass and
small hydro are the major RE sources in India. India receives solar energy approximately 5000 trillion kWh/year equivalents, which is
far more than India’s total energy consumption of about 848 billion kWh as projected for FY 2010 by Central Electricity Authority in
its 17th Electric Power Survey. The various renewable energy sources currently being deployed by various states in India are Solar,
Wind, Biomass, Biomass & Bagasse Cogeneration, Small Hydro, Waste Based , Tidal and GeoThermal.

Wind energy constitutes largest commercially exploited RE source in India. Further, as per future government plans and policies,
the dominance of wind energy within overall renewable energy mix is expected to continue.

RENEWABLE ENERGY CERTIFICATES

Renewable Energy Certificates (RECs), also known as Green tags, Renewable Energy Credits, Renewable Electricity Certificates, or
Tradable Renewable Certificates (TRCs), are tradable, non-tangible energy commodities that represent proof that 1 megawatt-hour
(MWh) of electricity was generated from an eligible renewable energy resource (renewable electricity). Solar Renewable Energy
Certificates (SRECs) are RECs that are specifically generated by solar energy.

These certificates can be sold and traded or bartered, and the owner of the REC can claim to have purchased renewable energy. RECs
represent the environmental attributes of the power produced from renewable energy projects and are sold separate from commodity
electricity. While traditional carbon emissions trading programs promote low-carbon technologies by increasing the cost of emitting
carbon, RECs can incentivize carbon-neutral renewable energy by providing a production subsidy to electricity generated from
renewable sources. It is important to understand that the energy associated with a REC is sold separately and is used by another party.
The consumer of a REC receives only a certificate.

In states that have a REC program, a green energy provider (such as a wind farm) is credited with one REC for every 1,000 kWh
or 1 MWh of electricity it produces. A certifying agency gives each REC a unique identification number to make sure it doesn't get
double-counted. The green energy is then fed into the electrical grid (by mandate), and the accompanying REC can then be sold on the
open market.

NEED FOR RENEWABLE ENERGY CERTIFICATES

Since most of the energy generated today is non clean therefore as an obligation each and every producer
must offset his carbon emissions to a certain extent either by generating some percentage of the energy
Renewable Energy Certificate (REC) trading mechanism is an instrument to promote renewable energy and
facilitate renewable energy purchase obligations amongst various stakeholders. RECs have been
implemented successfully used in many countries such as Japan, Australia, Netherlands, US, and UK and
Denmark for promotion of renewable energy. However, these schemes are not consistent and need to be
customized for local legislations and market situations. Further structure of governance in India and
electricity being part of the list poses new challenges for development of such a scheme in India.