India’s Solar REC Renewable Energy Certificates Issued to M&B Switchgear

CHENNAI — The country’s first solar ‘Renewable Energy Certificates’ were issued today.

NSE and BSE-listed M and B Switchgear Ltd was issued 249 RECs by the National Load Despatch Centre in New Delhi.

RECs are generation-based ‘certificates’ awarded (electronically, in demat form) to those generating electricity from renewable sources such as wind, biomass, hydro and solar, if they opt not to sell the electricity at a preferentially higher tariff.

These certificates are tradeable on the power exchanges and are bought by ‘obligated entities’ that are either specified consumers or electricity distribution companies. These obligated entities may be required to purchase a certain quantum of either green power or RECs.

The obligations are split into non-solar and solar — which means the obligated entities have to purchase either power from solar power projects or RECs generated by them.

M and B Switchgear, headquartered in Indore, is a manufacturer of transformers. In 2010-11, the company’s turnover was Rs 37 crore on which it made a net profit of Rs 77 lakh. For the first nine months of 2011-12, its turnover was Rs 18 crore, and net profit, Rs 32 lakh. M and B’s shares closed on the CSE on Wednesday at Rs 76.85.

The company also has a 2 MW solar photovoltaic power plant. In 2012-13, this plant is expected to generate close to 3,250 RECs, says Mr Vishal Pandya, Director, REConnect, M and B Switchgear’s consultants for REC-related matters.

The government fixes the floor and ceiling prices of RECs for a specified period. The minimum and maximum prices for solar RECs for 2012-17 are Rs 9,300 and Rs 13,400 respectively. Therefore, if M and B’s solar plant generates 3,250 RECs, the company could be richer by anywhere between Rs 3 crore and Rs 4.35 crore.

Getting the certificates is a two-step process — first ‘registration’ with the state load despatch centre and then ‘accreditation’ by NLDC. While M and B Switchgear is the only one to be accredited so far, four other solar power developers have been registered for RECs. They are: Jain Irrigation – 8.5 MW Maharashtra; Kanoria Chemicals – 5 MW, Rajasthan; Gupta Suns – 0.5 MW, Madhya Pradesh; and Numeric Power Systems – 1.0555 MW, Tamil Nadu, according to information provided by REConnect.