8/30/2017 What are, exactly, the RPO and REC?

t are, exactly, the RPO and REC? How will they play a role in a solar power plant? - Quora

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Anand Upadhyay, Solar enthusiast More Related Questions

Updated May 12

Thanks for A2A! Question Stats

RPO and REC are two inter related acronyms. Renewable Purchase Obligation (RPO) 7 Public Followers
refers to the 'obligation' of certain entities who have to meet a part of their electricity 2,914 Views
consumption using electricity from renewable resources. So basically, electricity Last Asked Jul 12
consumers who consume above a certain dened limit, have to (i.e. they are
Edits
obligated) purchase a xed part of their electricity from renewable energy sources.

Please note that the limit, how much renewable electricity is to be consumed and
what constitutes renewable sources, is dened under law.

REC - Renewable Energy Electricity on the other hand is the units which are up from
sale from renewable energy power producing companies. So to meet RPO you have to
buy REC, of course you also have the option of producing your own renewable energy.
1 REC is equivalent to 1 MWh of renewable energy.

As you can see, the government is trying to create a demand for renewable energy by
tweaking the policy.

Further reading:
http://www.mahaurja.com/PDF/PRD_...
Weekly Update: Can the proposed change in REC pricing revive a dysfunctional
market?
1.6k Views 6 Upvotes Answer requested by Arun Kumar Panchareddy

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Akash Jain, Engineer at Inox Wind (2015-present)

Updated Aug 9

Before explaining the dierence between the two terms, I will simplify the renewable
energy generation scenario for you.

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8/30/2017 What are, exactly, the RPO and REC? How will they play a role in a solar power plant? - Quora
If you compare RE (Renewable Energy) Generation with Non-RE (Non- Renewable
Energy) generation, you will nd that the former is more benecial to us in following
ways:

1. Almost zero impact on environment (i.e. 100% pollution free)

2. reusable without the fear of depletion of sources

3. Less destructive

Due to above and many more factors, Government needs to promote generation from
RE sources, in order to have sustainable energy system in future.

This seems quite easy to implement and we should adopt 100% renewable energy
sources. But it is not that easy.

Setup of Non-RE generation plant is cheaper than RE-generation plant. This prompts
the users and power generators to avoid RE sources and they use Non-RE sources like
coal, gas, oil etc.

Therefore, Government needed to implement some mandates that can push these
entities to use some portion of their usage from RE-sources. For example, a steel
production plant is using 10000 KWH energy per annum generated from a Non-RE
power plant. This means that this plant is playing a role in polluting the environment
which must be settled down by using RE-sources in many ways. In other words, this
plant must use a xed percentage of this usage (this percentage is dierent in
dierent states and announced by State Regulators) from RE- Sources generated
energy.

This percentage value is named as Renewable Purchase Obligation (RPO).

Any entity can meet its RPO target through any of the following three ways:

1. Setting-up its own RE generating plant anywhere in the Country.

2. Purchase power from any RE generators with ownership of RE generating plant

anywhere in the Country.

3. Purchase Renewable Energy Certicates (RECs) from Energy Exchange.

For dening RECs, I will explain Energy generation from RE-sources.

If you generate energy from RE-sources, it is sold in any of following 2 ways:

1. Bundled Energy

2. Un-bundled Energy

Bundled Energy comprises of combined price of electricity component (kWh) and

Green attribute. For example, Discom / Eligible entities purchase energy from RE
generators at a price of say Rs. 5.76/kWh. This tari comprises of actual price of
electricity and extra benet/incentive given for generation from green energy
sources.

Whereas, Un-bundled energy comprises of 2 dierent parts one is Electricity (kWh)

and second is Green Attribute. For example, Discom/Eligible entities purchase energy
from RE generators at a price of say Rs. 3.40/kWh and additionally, it gives the RE
generator a certicate for every 1000 units generated (1000 kWh). This certicate is
named as Renewable Energy Certicate (REC).

Now the generator, who has sold the un-bundled energy to Discom, is having
surplus RECs which will be put up at Energy exchange for sale. This REC shall
now be purchased by the industry / obligated entities as explained above (3rd
method of meeting RPO target).

Here price of REC is calculated by CERC after considering many factors. For FY 2017-
18 onwards, Non-Solar RECs and Solar RECs are both priced at Rs. 1000/MWH or Rs.
1000/REC.

I hope I have claried dierence between REC and RPO simply enough.

RECs and RPO play a signicant role in viability of a solar power plant. While RPO
requires an obligated entity to purchase energy from RE-generation plants, RECs

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8/30/2017 What are, exactly, the RPO and REC? How will they play a role in a solar power plant? - Quora
support the RE-generators by providing them extra revenue which makes their
business sustainable in ever growing RE market.
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Karthickram Ramanathan, M.tech Alternative Energy, Indian Institute of

Technology, Roorkee (2017)
Answered Feb 20

RENEWABLE PURCHASE OBLIGATION (RPO) it is an market system which

mandates state and private distributors to purchase energy generated from
renewables (solar, small hydro, wind, biomass). National Action plan on climate
change (NAPCCC) mandates states should purchase 5% of its electricity from
renewables in 2010 with 1% increase per year till 2022, the contribution of solar is 3%
of totla electricity purchase.

RENEWABLE ENERGY CERTIFICATE (REC) In this system 1MWh of renewable

generated electricity is treated as bundled good. it can be sold as electricity or as REC.
This can be either bought by distribution companies to produce equivalent
conventional power (thermal). also states which do not have renewable source can
buy this REC to meet RPO.

this RPO and REC are the incentive schemes to boost up the solar industry as the cost
per unit of solar is higher when compared to thermal it is the natural tendency for
distribution companies to purchase thermal as it is cheap this may slows india
commitment on climate change also by this incentive schemes per unit cost of solar
will come down as in recent feb 17, 2016 solar power sold for 3/unit in MP.
474 Views 1 Upvote Answer requested by Ruchi Patni

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Vinit Atha, I am a mechanical engineer(fresher) and always interested in

learning news ideas
Answered Feb 23

In order to boost the solar energy use the government of India came up with scheme
of RPO and REC.

RPO : Abbreviation of Renewable Purchase Obligation. For ensuring maximum use of

Renewable Energy government levied obligation to rm/companies for purchasing
minimum number of units produced through renewable sources of energies like,
solar, wind, hydro. The company/rm is even allowed to produce or posses their own
plants for meeting the requirement or they can directly purchase the RECs from other
company/rm involved in producing energy through Renewable sources and having
excess RECs.

RECs : Abbreviation of Renewable Energy Certicate. A certicate which approves

that you have used certain number of energy units from renewable energy sources.
One REC you possess, aliates you of using 1 MWh of units from renewable energy
source. 1 MWh = 1000 kWh and 1 kWh = 1 unit of electricity.

Hence, what will a company choose?

Option 1 : Buying RECs from the market, just to show that they are using Renewable
Energy when they have already paid there electricity bill??

or

Option 2 : They will venture into a renewable eld and use electricity from there own
plant, thus cutting there electricity bill short and saving from not buying REC levied
by PRO??

I guess you will get your ans from here.

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8/30/2017 What are, exactly, the RPO and REC? How will they play a role in a solar power plant? - Quora
Comment for any query.

HappyToHelp :)
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Sandeep p V, Post graduate in Renewable Energy Technology, The future is

in our hands.......
Answered Nov 9, 2016

RPO - Renewable Energy Purchase Obligation : It means that industries has to

purchase a minimum percentage of electricity from renewable energy. And RPO is
also two type, Solar RPO and RPO. In solar RPO force the customer to buy from solar
source its self. It will help the growth rate of solar power plants more faster and make
an market opportunities.

REC - Renewable Energy Certicate : It is the environmental values of renewable

resource based electricity. The environmental value means no CO2 emission and
other eco friendly terms. So, if a customer don't have Renewable power generation.
He/ She can achieve their RPO through purchasing REC. 1 REC equal to 1MWh energy
delivered to grid from renewable power plant.
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Sandeep Pv, Renewable Energy Technology
Answered Nov 13, 2016

In simple words, RPO is meant by the target a consumer to achieve. REC help to
achieve the RPO target, who do not have a renewable energy installation.
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