The Central Electricity Regulatory Commission (CERC) announced massive surges in the applicable charges for various services involved in Renewable Energy Certificate (REC) trading.

While the CERC allowed the fee revision to help the implementing agency fund the upgradation of the infrastructure, industry experts said the decision was a dampener for both buyers and sellers in the market, especially the small entities with cash-flow issues.

The order came in response to the petition filed by the National Load Despatch Centre (NLDC), the designated central agency for implementing the REC regulations.

The agency also highlighted that as per the regulations, the registration granted stays valid for 25 years, further impacting the revenue needed for the REC Web application and the exclusive expenditure towards the cyber security infrastructure.

It furnished income statements highlighting the losses of ₹5.59 million (~$67,630) and ₹5.01 million (~$60,613) in the previous financial years, 2020-21 and 2021-22, respectively.

The NLDC service fees that were revised include:

• One-time registration processing fees has been revised to ₹10,000 (~$121), up ten-fold from ₹1,000 (~$12.10) currently.
• New one-time registration fees were revised is ₹25,000 (~$302.50), up five-fold from the existing ₹5,000 (~$60.50)
• Annual registration charges have been revised to ₹10,000 from the current rate of ₹1,000
• Renewable energy certificate issuance fee was revised to ₹5 (~$0.061) from ₹2 (~$0.024)

Amit Kumar, Co-Founder and Managing Partner at Altilium, a power trading consultancy company, said, “This huge increase in the charges is definitely a negative for generators as well as buyers in the market, as there is very little liquidity in the market now. The government should have gradually increased the prices, not a 10x increase in one go. This is basically a way to monetize the demand in REC amongst companies.”

REC has played a significant role in helping DISCOMs and corporates in the country who have set long-term net-zero and RE100 goals.

“The future of REC trading is uncertain with such one-off increases as they penalize both the buyer and the seller. The smaller generators who have to register for every project will now have to pay a hefty price for different small-capacity projects. The uncertainty will drive participants to trade on the GCC (Global Carbon Council) platform rather than on the domestic REC platform as the cash flow and regulations remain consistent,” Kumar added.

Further, the RLDC fee revision includes an increase in the one-time accreditation processing fee to ₹10,000 from ₹5,000.

The one-time accreditation and annual accreditation charges were retained at the same rate.

In May this year, the CERC issued the new regulations after REC trading was reinstated in November after the yearlong ban.

In November, a total of 372,000 RECs were cleared, comprising of 68,000 non-solar RECs with a clearing price of ₹1,000 ($12.09)/REC and 303,000 solar RECs with a clearing price of ₹1,000/REC.