Solar Renewable Energy Certificates (RECs) started trading in India in 2012 and have been growing steadily since the first year trading volume of 6,288. In 2014, there was a slight dip from the previous year’s number (48,717 in 2013 and 43,260 in 2014), but this was compensated in 2015 with a more than tenfold increase and trade volume of 494,470. The year-to-date trading volume has reached 506,148, already surpassing 2015 trade volume numbers.

The price for solar RECs were traded in the range of Rs.11,490 (~$172) to Rs.13,000 (~$195) in 2012 and 2013 respectively. The trading dropped to floor price of Rs.9,300 (~$139) starting June 2013 and to Rs.3,500 (~$52.50) starting January 2015. One REC is equivalent to 1 MWh of electricity.

An official at the Ministry of New and Renewable Energy (MNRE) told Mercom that the REC market is in a control period until 2017 after which the regulator will decide on the future of RECs, based on trade volumes and participation. They further expect the REC market to continue to grow with the emphasis on REC trading laid down by the new National Tariff Policy released in 2016.

According to Vishal Pandya, Director at REConnect Energy, an REC trading company, the REC market is on an upward growth curve and demand is forecasted to exceed the fresh issuance of RECs.

Elaborating on the issues faced by the REC market, Mr. Pandya said that State Electricity Regulatory Commissions (SERCs) are lenient and fail to question captive and open access developers about RPO compliance. Even at the nodal agency level, compliance is not enforced authoritatively leading to utilities not being penalized for not purchasing adequate RECs even when they fall short of the Renewable Purchase Obligation (RPO).

Mr. Pandya added that recent Central Electricity Regulatory Commission (CERC) amendments to the Electricity Act have empowered SERCs and nodal agencies to enforce RPO targets and penalize defaulters. He believes that if all captive producers and open-access consumers start meeting their RPO compliance, the REC backlog will be a thing of the past.

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