Renewable Energy Credits (RECs) are a market based instrument to promote renewable energy power and facilitate renewable energy portfolio obligations. Tradable RECs have been used extensively as a successful market-based policy instrument to promote renewables in Australia, Japan, the US, the Netherlands, Denmark and the UK.

The Ministry of New & Renewable Energy of India has announced a scheme on Generation Based Incentive (GBI) for grid connected wind power projects. The announcement comes after a very good response from an incentive scheme for solar power generation.

The Renewables Obligation is part of the country's programme to tackle climate change and to encourage a more sustainable approach to energy consumption.

Karnataka is bestowed with good wind energy potential in the country. An assessment by the Centre for Wind Energy Technology (C-WET), Chennai shows that Karnataka has encouraging wind profile for harnessing of wind power. Further, C-WET had established 49 wind monitoring stations in Karnataka.

With increasing prices of fossil fuels across the globe, harnessing of renewable energy resources has assumed significance like never before. The Electricity Act, 2003 has several enabling provisions for promotion of renewable energy resources. However, renewable energy sources such as wind, small hydel, biomass etc are site specific resources, and the policies for promotion have been essentially driven by State specific requirements.

Storing energy from wind is an enormous challenge. Given the intermittent nature of wind, if wind power can be harnessed and stored during wind periods in on site batteries, it can ensure a constant supply to the power grid. This in turn will help to improve the penetration of the grid by wind energy.

The Tamil Nadu Electricity Board (TNEB) is a pioneer among the State Electricity Boards in India in promoting renewable energy programmes. Tamil Nadu is blessed with conductive natural meteological and topographical settings for wind power generation. There are three passes namely 'Palghat Pass', 'Shengottah Pass' and 'Aralvoimozhi Pass' that are endowed with heavy wind flows during the Southwest monsoon.

Grid connectivity does not mean only the physical linking with the state transmission system, but has to fulfill the operational and commercial needs of a power system.

Electricity generation from wind energy is characterised by significant daily and seasonal fluctuations, which is presently being forecasted with a limited certainty only. This gives rise to challenges for interconnection of wind energy system with the grid in regard to system safety security and reliability of electricity supply.

Renewable energy contributed 7% of India's electricity generation in 2006, with about 9.1 GW of capacity. Nearly two-thirds of this contribution was from wind sources, 1.8 GW from small hydro, and 1 GW from biomass derived energy. The total generation potential from renewables is estimated at 172 GW. Meanwhile, the Indian government has committed to generate 10% of power from renewables by 2012, the end of the next planning cycle. This paper is a review of the state of the wind energy sector, and points to the role of policy and the CDM in future growth.