REC (Renewable Energy Certificate)

What a REC Actually Represents

A Renewable Energy Certificate does not represent electricity itself — it represents the environmental attribute of electricity that has already been generated and fed into the grid. Every time a registered renewable plant injects 1 MWh into the grid, it earns one REC. That certificate can then be sold separately from the underlying electricity, which is why REC trading exists as its own market rather than being folded into power purchase agreements. This separation is what lets an obligated entity — typically a DISCOM or a large captive consumer — satisfy its Renewable Purchase Obligation without needing to physically source power from a renewable generator at all.

Worked Example: Meeting an RPO Target with RECs

Consider a DISCOM operating in a state with limited solar generation of its own, falling short of its state-mandated solar RPO target for the year. Rather than contracting new solar capacity or negotiating a long-term PPA, the DISCOM can instead buy solar RECs on a power exchange such as IEX or PXIL from generators anywhere in India who have registered their plants with POSOCO and earned certificates for their metered MWh output. Solar and non-solar RECs trade as separate categories, and prices move with supply and demand — roughly ₹1,000–3,000 per certificate. The DISCOM retires the purchased RECs against its obligation, and its RPO compliance is met on paper even though none of that specific renewable electricity was physically delivered to its own network.

Key Takeaways

• REC = tradable certificate for 1 MWh of renewable energy.
• Used for Renewable Purchase Obligation compliance in India.
• Issued by POSOCO; traded on IEX, PXIL.
• Solar vs. non-solar RECs categorized separately.
• Prices ₹1,000–3,000 per REC (2024).

Related Reading

RECs are one of several regulatory tools — alongside Open Access and direct PPAs arranged through SECI — that Indian DISCOMs and captive consumers use to hit RPO targets, so it’s worth understanding how they compare before choosing a compliance path for a given project. Because REC and RPO rules sit within the same broader India regulatory landscape as permitting and interconnection timelines, our breakdown of state-wise solar permit processing times in India is a useful companion for teams tracking multiple compliance obligations across states. For background on the ministry that oversees RPO policy itself, see our MNRE glossary entry.