CERC Issues New Regulations to Boost Renewable Energy Certificates Trading

The Central Electricity Regulatory Commission (CERC) has issued ‘Terms and Conditions for Renewable Energy Certificates for Renewable Energy Generation Regulations, 2022.’

According to the new regulations, renewable energy generating stations, captive generating stations based on renewable energy sources, distribution licensees, and open access consumers are now eligible to issue renewable energy certificates (RECs).

The national load despatch center (NLDC) has been designated the agency to implement these regulations.

In February this year, CERC had issued draft REC regulations and invited comments and suggestions from stakeholders.


Eligibility

A renewable energy generating station will be eligible to issue the certificates if it meets the following requirements:

  • The tariff of such renewable energy generating station has not been either determined or adopted, or the electricity generated is not sold directly or through an electricity trader or in the power exchange for renewable purchase obligation (RPO) compliance by an obligated entity
  • The renewable energy generating station has not availed any waiver of concessional transmission charges or concessional wheeling charges

A captive generating station will be eligible to issue certificates if issued for self-consumption.

An obligated entity being a distribution licensee or an open access consumer that purchases electricity from renewable energy sources above the RPO requirements, will be eligible to issue certificates to the extent of purchase of such excess electricity from renewable energy sources.

Grant of accreditation for certificates

The state agency will grant the accreditation to the eligible entities connected to the intrastate transmission system. Entities granted accreditation before these regulations will be deemed to have been granted accreditation until the validity of their accreditations.

Accreditation to the eligible entities connected to the interstate transmission system (ISTS) will be granted, provided that they were granted accreditations before these regulations came into force.

Issuance of RECs

An eligible entity that has been granted registration or deemed to have been granted registration may apply for the issuance of certificates to the central agency.

The application for issuing RECs can be made by a renewable energy generating station or a captive generating station based on the energy sources to the central agency within six months from the corresponding generation by the entity.

The application should be made by the distribution licensee or an open access consumer within three months from the end of a financial year.

Within fifteen days from receiving the application, the central agency should issue certificates or reject the application.

Exchange and redemption of certificates

The certificates must be exchanged through power exchanges or electricity traders. The eligible entities must inform the central agency about the number of certificates intended to be sold through electricity traders.

The trading margin for the exchange of certificates through electricity traders will be governed by the Trading Licence Regulations, 2020, treating one certificate representing one MWh of electricity.

Once exchanged through power exchanges or electricity traders and used for compliance with RPO by the obligated entities, the certificates will be considered redeemed. Upon redemption, the central agency will remove the certificates from the registry.

Denomination of certificates

Each certificate issued under these regulations will represent one MWh of electricity generated from renewable energy sources and injected or deemed to be injected into the grid.

Certificate multiplier

The central agency has also introduced the certificate multiplier, set at 1 for onshore wind and solar, 1.5 for hydro, 2 for municipal solid waste and non-fossil fuel-based cogeneration, and 2.5 for biomass and biofuel for three years.

The applicable certificate multiplier will be assigned to the renewable energy generating stations and captive generating stations based on renewable energy sources commissioned after coming into force of these regulations.

Once assigned to a renewable energy generating station, the certificate multiplier will remain valid for 15 years.

Pricing of certificates

The price of certificates should be as discovered in the power exchanges or as mutually agreed between eligible entities and the electricity traders, provided that the power exchanges and the electricity traders report all transactions to the central agency monthly.

Validity of certificates

The certificates issued will remain valid until they are redeemed. If an eligible entity has obtained accreditation or registration based on false information and the accreditation or registration of such entity is revoked later, the certificates already issued but not redeemed will stand extinguished from their issue date.

The Commission may, based on the proposal from the central agency, determine the charges payable by the eligible entities for accreditation, registration, issuance of certificates, and other connected matters.

IEX traded 249,000 RECs in April, including 171,000 non-solar RECs and 77,000 solar RECs. The exchange discovered a price of ₹2,200 (~$29) per certificate for solar RECs and ₹1,000 (~$13) per certificate for non-solar RECs.

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