India Thursday launched a scheme that allows power utilities to purchase renewable energy certificates to meet their obligations of buying part of their electricity requirement from green energy sources.

The mechanism aims at encouraging competition among utilities and bringing renewable energy sources into the mainstream, federal Power Minister Sushilkumar Shinde said in a statement.

Power distribution utilities in India need to compulsorily purchase a fixed percentage of electricity from renewable sources according to targets determined by state-level regulatory bodies.

Utilities which can't meet their renewable energy targets can make up for the shortfall by purchasing such certificates in the power exchanges approved by the federal electricity regulator.

Renewable energy certificates are tradable instruments and serve as an economic incentive for generating electricity from renewable energy sources, which are usually costlier than fossil fuels.

One certificate will be equivalent to one megawatt of electricity added to the grid and such certificates can only be exchanged in power exchanges within a price range fixed by the federal regulator.

The ministry said that power distribution companies, captive power producers, voluntary buyers such as non-government organizations, corporate entities and individual buyers with social obligations will be allowed to purchase these certificates.

The use of such certificates will help states with high levels of renewable energy usage invest even more in the sector. It will also help states with less access to renewable energy to meet their targets, the statement said.
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