RECs (Renewable Energy Certificates) are the credits given to renewable energy generators who can sell these into the open market and compensate their additional cost of producing green electricity. RECs are awarded to renewable energy (RE) based projects like wind, biomass, small hydro, solar etc. Each REC represents 1000 kWh of electricity generated from renewable energy. While RE generating companies create a supply for RECs, the demand for RECs gets created through a legislation called Renewable Portfolio Obligation (RPO), which mandates all the electricity consumers to consume a certain percentage of green power or RECs.
REConnect Energy Soultions aims to help companies buy and sell green energy credits. REConnect also provides investment decisions support, regulatory guidance and strategy consulting to RE investors and very large industrial consumers.
Headquartered in Bangalore, REConnect is a team of 14 members with offices at Delhi, Mumbai, Pune, Chennai and Indore as well. Essentially a trading cum brokerage house, they earn revenues from the trading activities and are a self-sustainable organization now.
Founders, Background and Inception
Vishal Pandhya, Founder, REConnect is an engineer at heart with a passion for the energy market and renewable energy. He did his post-graduation in electrical engineering from IIT Bombay. Prior to REConnect, he worked with the Indian Energy Exchange – India’s largest energy exchange.
“Since my IIT days, the intention to ‘start-up’ was there after obtaining a few years of work experience. However, I built on the idea only when I met Vibhav Nuwal (my Delhi based partner and Co-Founder of REConnect) in early 2010, when a lot of regulatory developments were happening around the REC mechanism. Vibhav had an excellent experience in carbon markets and US REC markets while I possessed good experience in electricity and a really good insight into the Indian and international REC markets. Synergies struck between us, we decided to quit our jobs and take a leap of faith. Convincing families took a while and in September 2010 REConnect was finally incorporated.”
Currently, .REConnect is managing REC portfolios for about 75 corporates that represent over 130 projects spanned across 15 states in India. Since inception, their market share in REC trading has been about 35% of the total market volume.
The market size for FY 2011-12 was $140 Million (buy/sell side). The REC market is expected to become a $1.2-$1.5 billion market by 2015. A HSBC report on sustainability estimates the REC market to become a $2.5 billion market by 2020. With this, REConnect focuses purely at the domestic market currently.
Vishal believes rural markets in India would immensely benefit from higher penetration of renewable energy at local levels as it would provide increased electricity access for the under-served markets. “If instruments like RECs are promoted even for off-grid and stand-alone renewable energy based projects, it would offer very promising opportunities for end consumers of electricity,” he speculates.
At present, the RECs are not fungible with other international commodities like Carbon Credits. However, there could be a possibility of a PAN-ASIA REC market like the PAN-European REC market.
According to Vishal, the greatest contribution by REConnect as an organization has been in creating awareness about the REC mechanism and hence the promotion of renewable energy in India. They run a blog dedicated to REC market developments and also have a monthly newsletter – OPEN ACCESS which focuses on the latest developments around the REC mechanism. Both the blog as well as OPEN-ACCESS are open source and have a subscription base of over 7000 industry stakeholders. “Every month we get about 50 newsletter subscription requests from every corner of the country representing prestigious institutes like IIMs, ISB-HYD, research institutes like TERI, many consulting firms (including BIG 4) and obviously many RE stakeholders” says Vishal.