RREC REC Mechanism Renewable Projects

The Rajasthan Renewable Energy Corporation Limited (RRECL) has suspended the approval of all renewable energy (wind, solar) projects under the REC Mechanism in Rajasthan. The RRECL has issued the order of suspension of approval with immediate effect.

The RRECL stated, “No new renewable energy projects under Renewable Energy Certificate (REC) mechanism will be approved by the state level screening committee (SLSC) and no applications for registration of projects under REC mechanism will be entertained by the RRECL till further orders,” in a letter addressed to stakeholders.

An official at the RRECL told Mercom, “This is still under consideration yet binding for the time being, there will be a state cabinet meeting in which the duration of suspension will be decided.”

According to Mercom’s India Solar Project Tracker, Rajasthan has an installed solar capacity of over 1.9 GW and around 1.4 GW are under development. The solar renewable purchase obligation of the state is 4.75 percent for financial year (FY) 2017-18 and 6.75 percent for FY 2018-19. The non-solar RPO is 9.50 percent for FY 2017-18 and 10.25 percent for FY 2018-19.

When asked why the RRECL issued the suspension, an RRECL official said, “In Rajasthan the lowest solar tariff was quoted at, ₹2.44 (~$0.038)/kWh; if distribution companies (DISCOMs) purchase power through the REC mechanism, they pay a higher price at 3.46 (~$0.054)/kWh. The first issue is that they are paying more for power than they can on the open market; the second issue is that the  DISCOMs are not getting credit for meeting their RPO obligations when they purchase power under the REC mechanism – the generators receive the RPO credit.”

“So DISCOMs end up purchasing more expensive power and still not meeting RPO obligations. If DISCOMs purchase through the open market or through bidding, the power is cheaper and it applies to the DISCOMs RPO obligation,” added the RRECL official.

The official also said, “These matters are under the prerogative of the state government and once the state decides it will be final.”

Image credit: flickr