Falling Short: An Evaluation of the Indian Renewable Certificate Market

In 2008, India’s National Action Policy on Climate Change (NAPCC) set a target, called the Renewable Purchase Obligation (RPO), to produce 15% of the country’s electricity with renewable energy sources by 2020. Further, under the Jawaharlal Nehru National Solar Mission (JNNSM), the Indian government aims to develop 20,000 MW of solar energy by 2022. To help reach these targets in a cost-effective manner, India recently launched a market-based mechanism called Renewable Energy Certificates (RECs). However, in the one year of trading so far, participation in the REC markets has been low: RECs have failed to attract investment. In this paper, we evaluate the effectiveness of Indian REC markets against eight government objectives and offer suggestions for improving their design.