REC (Renewable Energy Certificate) is a tool to implement Renewable Purchase Obligations (RPOs) for buyers like state electricity distribution utility, open access users and captive generators from conventional sources from sellers of renewable energy generators. It is an environmental commodity that:
- captures the environmental benefits of renewable electricity generation
- provides a market mechanism to incentivize Renewable Energy producers
- Market is created through requirement on the various companies to have % RE in portfolio
Wind, Solar, Small Hydro (below 25 MW of capacity), Biomass based power generation (including co-generation), Bio-fuels and Municipal solid waste based power generation projects are eligible to apply for REC. One REC is created when one megawatt hour of electricity is generated from an eligible renewable energy resource.