The Central Electricity Regulatory Commission (CERC) has extended the validity of renewable energy certificates (RECs), which have or are due to expire shortly.
The Commission observed that the RECs that have expired or are due to expire between November 1, 2019, and March 31, 2020, will now remain valid up to March 31, 2020. This move will provide relief to renewable energy generators of both solar and non-solar projects, which are a part of the REC mechanism.
The Commission stated that the validity of the 9,514 RECs (4,960 solar RECs and 4,960 non-solar RECs) issued before April 1, 2017, which expired in November 2019, needs to be extended.
The Commission further noted that 216,849 RECs issued before April 1, 2017, have expired or are due to expire in the next four months. This includes 29,808 solar RECs and 1,87,041 non-solar RECs. The Commission observed that there is a need to extend the validity of these RECs, which are due to expire in the next four months up to March 31, 2020.
Earlier, the Commission in its order dated April 30, 2019, had extended the validity of RECs, which were likely to expire between April 1, 2019, and October 31, 2019, up to December 31, 2019. The Commission had observed that 1,21,888 RECs, which had been issued before April 1, 2017, were due to expire within the next six months and it included 8,307 solar RECs and 113,581 non-solar RECs. The decision provided the sellers with eight REC trading sessions to close the entire inventory.
Similar to this order, back in October 2018, the central Commission had issued an order extending the validity of 183,999 RECs that were issued before April 1, 2017, and were due to expire between October 31, 2018, and March 31, 2019. In October 2017, the Supreme Court had extended the validity of solar and non-solar RECs that were due to expire between April 1, 2017, and March 31, 2018, up to March 31, 2018.
There was a significant decline in the number of solar and non-solar RECs that were traded in November 2019 compared with the preceding month. A total of 54,453 solar RECs were traded on the Indian Energy Exchange (IEX) and Power Exchange India Limited (PXIL) together. These RECs were traded at ₹2,400 (~$33.9)/REC, and the price remained unchanged on both the trading platforms. Since March 2019, the REC inventory has been declining steeply, resulting in the prices spiking. In June 2019, Mercom reported that India’s REC inventory was almost exhausted.
Various state distribution licensees off late have been complaining of not being able to meet their renewable purchase obligations (RPO) because of the shortage of REC supplies and increase in prices. Recently, the Joint Electricity Regulatory Commission (JERC) in its order directed Dadra and Nagar Haveli Power Distribution Corporation Limited (DNHPDCL) and the electricity department of Daman & Diu to purchase RECs to meet its RPO. In its reply, the DNHPDCL commented that the availability of solar RECs is hardly 21% against the market demand, and the settlement ratio is 13%, and solar RECs are being traded nearly 140% above the CERC notified floor price of ₹1,000 ($14.09).
The CERC’s decision to extended the validity of RECs is a relief to the obligated entities looking to buy RECs. The stress on the trading platforms under the pressure of short supply of both solar and non-solar RECs also has been temporarily lifted.
Rakesh is a staff reporter at Mercom India. Prior to joining Mercom, he worked in many roles as a business correspondent, assistant editor, senior content writer, and sub-editor with bcfocus.com, CIOReview/Silicon India, Verbinden Communication, and Bangalore Bias. Rakesh holds a Bachelor’s degree in English from Indira Gandhi National Open University (IGNOU).