CERC Gives its Go-Ahead to Solar and Non-Solar REC Trading

The Central Electricity Regulatory Commission (CERC) has given its go-ahead for the trade of solar and non-solar Renewable Energy Certificates (RECs) in the country.

The new order comes after the Appellate Tribunal for Electricity (APTEL) dismissed the petition filed by stakeholders against the issue of new forbearance and floor prices for solar and non-solar RECs.

In its new order, the CERC has also stated that the deposit of the differential amount of ₹500 (~$7.516) per REC with the commission will now be discontinued.

Quick Recap of the Case

In March 2017, CERC had issued new forbearance and floor prices for RECs, both solar, and non-solar. According to the CERC order of 2017, the new forbearance price of solar RECs is ₹2,500 (~$37.41)/MWh and the floor price is ₹1,000 (~$14.962)/MWh. The forbearance price for non-solar RECs is ₹2,900 (~$43.39)/MWh and the corresponding floor price is ₹1,000 (~$14.962)/MWh.

Before the CERC order of 2017, solar RECs came with forbearance price of ₹5,800 (~$86.78)/MWh and the floor price was ₹3,500 (~$52.37)/MWh. For non-solar RECs, the forbearance price was fixed at ₹3,300 (~$49.38)/MWh while the floor price was ₹1,500 (~$22.44)/MWh.

After the issuance of new forbearance and floor prices for REC trading, many REC generators filed petitions citing losses due to exclusion of vintage multiplier in the new prices. The petitioners first approached the APTEL to suggest a way to clear the existing REC stock.

However, at the time, APTEL refused to put a stay on the REC trading, which led the petitioners to approach the Supreme Court. Upon hearing the petition, the Supreme Court put a stay on REC trading and the new prices introduced by the CERC.

Then, after due deliberation, the Supreme Court asked the respondents to ensure that any obligated entity purchasing RECs at the new floor price determined by CERC must deposit the difference between the earlier floor price and the present floor price.

Later, in July 2017, the Supreme Court of India issued an order that enabled the trading of non-solar RECs, with obligated entities required to pay the old REC rate of ₹1,500 (~$23.5)/REC. Back then, the Supreme Court had instituted a stay until further judiciary action took place.

Recently, the CERC created a set of procedures for the issuance of RECs to eligible entities (distribution companies and renewable energy generators). This procedure will apply to renewable energy generation projects and DISCOMs that have received the certificate of registration from the central agency and are eligible to avail RECs. The procedure will also apply to the central agency and stakeholders while issuing the RECs to eligible entities.