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					</table>The Central Electricity Regulatory Commission (<a href="https://cercind.gov.in/" target="_blank" rel="noopener">CERC</a>) recently approved Power Exchange India’s (<a href="https://powerexindia.in/" target="_blank" rel="noopener">PXIL</a>) proposal to introduce high price bilateral market segment.
The Commission also approved PXIL’s proposal to introduce the High Price Term-Ahead Market (HP-TAM) and contingency contracts.
The central regulator directed <a href="https://grid-india.in/" target="_blank" rel="noopener">GRID-INDIA</a> to submit a report on the experience and performance of HP-TAM and HP-contingency contracts within three months from the date of introduction of these contracts.
PXIl had filed a petition seeking approval for introducing a high-price bilateral market segment with contracts operating under the provisions of CERC’s Power Market Regulations 2021 on PXIL’s PRATYAY platform.
Background 
PXIL has been offering contracts in the Integrated Day Ahead Market (IDAM), Real-Time Market (RTM), TAM, Green Term-Ahead Market (GTAM), Renewable Energy Certificates (RECs), and Energy Saving Certificates (ESCs) since 2008.
On April 11, 2023, the Commission had granted approval to PXIL for the introduction of HP-DAM on PXIL’s PRATYAY platform.
PXIL submitted that since the HP-DAM contract is transacted a day before delivery, buyers get exposed to price volatility in this segment. To overcome such a situation, it would be beneficial if the eligible sellers and buyers entered the transaction much in advance.
Accordingly, PXIL proposed to introduce seven new high-price bilateral market contracts. These contracts include a high-price intra-day contract, high-price day-ahead contingency contract, high-price daily contract, high-price weekly contract, high-price monthly contract, high-price any-day single-sided contract with reverse auction initiated by the buyer, and high-price any day single sided contract with forward auction initiated by seller.
Floor Price
GRID-INDIA submitted that in organized electricity markets, price formation plays a crucial role in determining market clearing prices for energy and ancillary services. It expressed concern that implementing a floor price could weaken the market signal for flexible resources like energy storage.
GRID-INDIA argued that as more flexible resources are integrated into the market, primarily to take advantage of price arbitrage and enhance resource adequacy, the natural diurnal price variations would become more stable. Introducing a floor price would introduce rigidity into the system and may not ensure the reliable operation of the grid, it said.
In response, PXIL highlighted that the eligible entities participating in the HP-TAM segment would be the same as those eligible for the HP-DAM segment. To maintain consistency and equity in market transactions, PXIL proposed that no floor price should be implemented to introduce high-price bilateral market contracts in the contingency and TAM segments.
Eligibility of Seller
GRID-INDIA asserted that relying on market data and information gathered from various power generating stations, it had proposed permitting a broader range of entities to participate in the HP-DAM segment through a transparent and non-discriminatory framework.
Meanwhile, PXIL said entities eligible to submit offers in the HP-TAM segment should be determined based on data provided by CERC, CEA, and GRID-INDIA, allowing for the exclusive inclusion of such entities in the HP-TAM segment. Additionally, PXIL suggested that the Commission could consider allowing generators not initially identified for HP-DAM and HP-TAM to approach the Commission for potential inclusion in these segments, contingent on specific considerations.
Schedule of HP-TAM Contract
GRID-INDIA also stated that in case of unit tripping of unit size 100 MW or more, revision of the short-term open access schedule is possible. Accordingly, suitable provisions may be put in place in the contract.
PXIL said that the power exchange will settle the transaction based on the revised schedule provided by the Regional Load Despatch Center on submission of the application for revision by the generator, electricity trader, or any other agency selling power from the unit of the generating station, in case of a forced outage of a unit of the generating station
Commission’s Analysis
The Commission noted that it had approved the introduction of the HP-DAM on PXIL’s PRATAY platform through its order dated April 11, 2023.
Later, on July 24, 2023, the Commission had granted approval to the Hindustan Power Exchange for the introduction of HP-TAM and HP-Contingency contracts.
HP-DAM and Contingency Contracts
The Commission endorsed implementing HP contracts, including daily, weekly, and monthly options, with predefined time blocks that will be communicated to market participants well in advance. Additionally, the Commission authorized the initiation of one-sided contracts by buyers through a reverse auction process. It also approved the introduction of High Price Day-Ahead contingency contracts and High Price Intra-day contingency contracts.
Eligible Entities
The Commission approved the inclusion of gas-based power plants utilizing imported regasified liquefied natural gas and naphtha, imported coal-based power plants using imported coal, as well as battery energy storage systems (BESS) to participate in the high-price bilateral market segment, encompassing TAM and contingency contracts. This decision was made to ensure uniformity across various market segments.
It also said all entities eligible for power procurement through open access would also be eligible to partake as buyers in the high-price bilateral segment.
Price Discovery Mechanism
The central regulator endorsed the adoption of a uniform price step auction as the matching methodology for price determination in the case of high-price daily, weekly, and monthly contracts. This aligns with the existing approach utilized in conventional TAM contracts. It directed PXIL to implement an open auction format for the uniform price step auction to allow participants to make informed decisions by observing buy and sell bids submitted by anonymous participants.
While it approved the reverse auction methodology as the price determination matching method for any-day single-sided contracts initiated by buyers, it did not endorse the proposed any-day single-sided contracts initiated by sellers through forward auction. This was deemed inconsistent with the goal of efficient price discovery.
CERC added that since the continuous matching methodology proposed for high-price Day-Ahead contingency contracts and Intra Day contingency contracts is the same as that of the methodology followed in the existing contingency and intraday contracts and green contingency and intraday contracts, it was approving the petitioner’s proposal.
Floor and Forbearance Price
Consistent with the floor and forbearance price structure established for the HP-DAM, the Commission specified that the floor price for the high-price bilateral market segment, encompassing TAM and contingency contracts, would be set at ₹0/kWh, while the upper price limit would be capped at ₹20 (~$0.241)/kWh.
Timelines for Bidding and Delivery Duration
The Commission approved the proposed HP-TAM contracts for a maximum of three months, considering the month the transaction is made as the zero month. Accordingly, the approved delivery duration for these contracts (for the pre-specified time blocks notified to the market participants well in advance) is as follows:
<ul>
<li>T+2 to T+90 days for daily contracts</li>
<li>TW+1 to TW+12 for weekly contracts</li>
<li>TM+1 to TM+3 months for monthly contracts</li>
<li>T+2 to T+90 days for any-day single-sided contracts for user-defined days and time blocks</li>
</ul>
T denotes the zero-day of trading, TW denotes the zero week of trading, and TM denotes the zero month of trading, and physical delivery of electricity starts on a day more than one day ahead.
Regarding PXIL&#8217;s proposal to extend the tenure of high-price bilateral segment contracts within TAM up to 11 months through the implementation of T-GNA provisions, the Commission took note of the fact that longer-duration contracts, specifically those lasting up to three months, have not yet generated sufficient trading activity on the petitioner&#8217;s platform.
In light of this, the Commission said it will initially consider contracts with a maximum duration of three months.
It also directed that timelines and delivery mechanisms for high-price Day Ahead Contingency and Intraday Contracts shall be on similar lines to the conventional and green power in the contingency segment.
NTSD Contracts
Consistent with the stipulated terms of the non-transferable specific delivery (NTSD) contracts, the Commission directed that high-price monthly contracts may be terminated or reduced without transferring positions in cases where transmission system constraints or force majeure events occur. However, these actions will require validation from the system operator and adherence to PXIL&#8217;s default mechanism.
Renewable Purchase and Energy Storage Obligation
Regarding PXIL&#8217;s proposal to instruct GRID-INDIA to furnish information concerning battery energy storage systems (BESS) that meet the criteria as eligible entities, thereby allowing buyers to meet their energy storage obligations through separate contracts within the high-price bilateral market, the Commission acknowledged that this matter was beyond the scope of the current petition.
It directed that all other features of the high-price bilateral market segment, including TAM and contingency contracts, would be similar to the conventional and green power segment.
Further, the Commission directed PXIL to schedule these high-price contracts initiated by the buyer on the first available day following the transaction day and to abide by the following conditions strictly:
<ul>
<li>The contracts are settled only by physical delivery without netting</li>
<li>The rights and obligations of contract parties cannot be transferred if the contract is not executed, either entirely or partially, by any means, leading to the absence of actual electricity delivery as specified in the contract or full payment for it</li>
<li>No circular trading shall be allowed, and the rights and liabilities of parties to the specific delivery contracts will not be transferred or rolled over by any other means</li>
<li>The trading will be done only by authorized grid-connected entities or trading licensees on behalf of grid-connected entities as participants</li>
<li>The contracts may be canceled or shortened due to transmission system limitations or other technical factors, with no transfer of positions allowed. However, once a contract is canceled, it cannot be reinstated or extended in any way to continue the same transaction</li>
</ul>
The capacity offered as a sell bid in a power exchange under the high-price Daily, Weekly, Monthly, and Any day single-sided contracts initiated by the buyer from a resource in the same time block will be separate and non-overlapping.
In January this year, CERC <a href="https://www.mercomindia.com/cerc-hydropower-contracts-green-term-ahead-market-2" target="_blank" rel="noopener">approved</a> Hindustan Power Exchange’s plea for introducing hydropower contracts in the GTAM beyond T + 11 days. The Commission directed HPX to incorporate the appropriate provisions in its by-laws and business rules and submit them to it within two weeks.
Subscribe to Mercom’s real-time <a href="https://mercomindia.com/product/mercoms-renewable-energy-regulatory-updates/" target="_blank" rel="noopener">Regulatory Updates</a> to ensure you don’t miss any critical updates from the renewable industry.

CERC Approves High Price Bilateral Market Segment on PXIL

The Union Minister of Power R K Singh has approved amendments to the renewable energy certificate (REC) mechanism. According to the new amendments, the REC will remain valid until it is sold. As per the earlier guidelines, the validity of RECs was 1,095 days.
The decision aims to align the REC mechanism with the emerging changes in the power sector and promote new renewable technologies.
The changes are expected to provide flexibility to the players and address uncertainty regarding the REC validity period, among other things.
Earlier in June this year, the <a href="https://powermin.gov.in/" target="_blank" rel="noopener">Ministry of Power</a> <a href="https://mercomindia.com/ministry-of-power-restructuring-renewable-energy-certificates/" target="_blank" rel="noopener">released</a> a discussion paper on redesigning the REC mechanism for stakeholder comments.
The government held extensive consultations with stakeholders regarding the changes to the existing mechanism.
The trading of RECs has been put on hold after the Appellate Tribunal for Electricity (APTEL) issued a <a href="https://mercomindia.com/trading-renewable-energy-certificates-postponed/" target="_blank" rel="noopener">stay order</a> in response to petitions filed by several renewable energy associations regarding the revision in the floor and forbearance prices.
In June last year, the Central Electricity Regulatory Commission (<a href="https://cercind.gov.in/" target="_blank" rel="noopener">CERC</a>) had <a href="https://mercomindia.com/cerc-removes-floor-prices-solar-non-solar/" target="_blank" rel="noopener">issued</a> an order implementing revised forbearance and floor prices for solar and non-solar RECs. It had implemented a forbearance (maximum) price of ₹1,000 (~$13.16)/MWh for solar and non-solar RECs for 2020, down from 2017’s prices of ₹2,400 (~$31.59)/MWh and ₹3,000 (~$39.48)/MWh respectively.
Another important amendment states that there is no need for floor and forbearance prices to be specified, and REC holders will have the freedom to decide when they want to sell the RECs.
CERC will take care of the monitoring and surveillance to ensure there is no hoarding of RECs.
In another amendment, the Ministry has introduced a multiplier, under which less mature renewable energy technologies could be promoted over matured renewable technologies.
Also, RECs can be issued to obligated entities, including distribution companies and open access consumers, which purchase renewable power beyond their renewable purchase obligation (RPO) compliance notified by the Union government.
The amendments will also allow for an enhanced role for traders and bilateral transactions in the REC mechanism.
Subscribe to Mercom’s real-time <a href="https://mercomindia.com/product/mercoms-renewable-energy-regulatory-updates/" target="_blank" rel="noopener">Regulatory Updates</a> to ensure you don’t miss any critical updates from the renewable industry.

Renewable Energy Certificates to be Valid Until Sold – Power Ministry

The <a href="https://www.sci.gov.in/" target="_blank" rel="noopener noreferrer">Supreme Court of India</a> has dismissed an appeal by the Green Energy Association (GEA) seeking a stay order on the Central Electricity Regulatory Commission’s (<a href="http://www.cercind.gov.in/" target="_blank" rel="noopener noreferrer">CERC</a>) order to reduce the floor price of renewable energy certificates (RECs) to zero.
In April, the CERC had <a href="https://mercomindia.com/cerc-forbearance-price-floor-prices-recs/" target="_blank" rel="noopener noreferrer">issued</a> a proposal for establishing forbearance (maximum) and floor (lowest) prices for RECs. It said that the market for RECs has matured and that there was no longer a need for floor prices.
Renewable energy certificates are financial instruments purchased by obligated entities like distribution companies, captive power project owners, and other power consumers to meet their renewable purchase obligation (RPO) targets. One REC certifies that the bearer owns 1 MWh of electricity generated from a renewable energy resource.
The forbearance price is derived based on the highest difference between the cost of generation of renewable energy source or tariff and the average power purchase cost (APPC) of the financial year for the respective states. The floor price is determined based on the difference between the project viability requirement and APPC determined for different renewable energy technologies across the states.
In its order, the CERC had proposed a forbearance price of ₹1,000 (~$13.16) for solar and non-solar RECs for 2020, down from 2017’s prices of ₹2,400 (~$31.59)/MWh and ₹3,000 (~$39.49) respectively. It also proposed a floor price of zero for both solar and non-solar RECs from ₹1,000(~$13.16) each previously. Until March 31, 2017,the floor price for solar RECs was ₹3,500 (~$46.07)/MWh.
As per the CERC’s proposal, forbearance prices would be down 58% and 67% for solar and non-solar RECs, respectively.
Notably, in 2018, the Supreme Court <a href="https://mercomindia.com/non-solar-rec-floor-price-1000/" target="_blank" rel="noopener noreferrer">ruled</a> that non-solar RECs issued on or after April 1, 2017, would be sold at a floor price of ₹1,000 (~$13.16)/MWh.
In its appeal, GEA said that the CERC had proposed an “illusion” that the certificates that were issued before April 1, 2017, can be sold within the previous price band of a minimum of ₹1,000 (~$13.16)/MWh and maximum of ₹2,400 (~$31.59)/MWh. It said that the CERC proposal was deceptive because once the selling price of the newer certificates is mandated to be in the new price band, any seller wanting to sell his certificates for higher will never manage to sell a single certificate as buyers will always only buy the cheaper newer certificates.
Further, it argued that the REC market is not a competitive market but a compliance market, where obligated entities buy certificates only to fulfill their renewable purchase obligations. Therefore, the minimum price is set to make renewable projects viable. While the CERC has proposed to reduce the minimum price to zero, it has proposed a maximum price of ₹1,000 (~$13.16)/MWh. So, even if the appellant gets the relief of 3.5 certificates for every one certificate owned, the generators will be forced to sell each certificate for less than ₹1,000 (~$13.16)/MWh if the CERC proceedings do not get stayed.
The company stated that if the floor price is completely removed, its request to be given 3.5 certificates for each of its certificates, even if granted, would be pointless. It also added that if the maximum price is reduced to ₹1,000 (~$13.16)/MWh, it would be put in a position of disadvantage in the market.
Further, it said that most renewable energy developers registered under the REC mechanism are located in the states of Maharashtra, Rajasthan, Gujarat, and Madhya Pradesh. All these states are severely impacted by the COVID-19 outbreak. Considering this, ample time will be spent on the restoration of business and ensuring the safety of employees. “In such a scenario, it may not be possible for the renewable energy generators to participate in the public hearing to be conducted by the CERC for the determination of REC prices. If the developers are unable to represent themselves before the CERC effectively, they will be irreparably aggrieved as any downward revision in the floor or forbearance price will cause great financial loss to them,” the appeal added.
However, the apex court dismissed the appeal for the stay order after considering all aspects of the case.
Meanwhile, there was a considerable <a href="https://mercomindia.com/solar-rec-trading-gathers-speed/" target="_blank" rel="noopener noreferrer">increase</a> in the trading of both solar and non-solar renewable energy certificates (RECs) in May 2020 compared to the last month. This increase comes as a respite even as the ongoing COVID-19 crisis and the subsequent lockdown across the country have thwarted business activities.A total of 41,469 solar RECs were traded on both the exchanges, out of which 35,793 solar RECs were traded on the Indian Energy Exchange (<a href="https://www.iexindia.com/" target="_blank" rel="noopener noreferrer">IEX</a>), and 5,676 solar RECs were traded on the Power Exchange India Limited (<a href="https://www.powerexindia.com/" target="_blank" rel="noopener noreferrer">PXIL</a>).

Supreme Court Dismisses Appeal for Stay Order on CERC’s Proposal to Revise REC Prices

After a buoyant May, trading in both solar and non-solar renewable energy certificates (RECs) saw a significant decline in June 2018.
In June 2018, 592,401 solar RECs were traded. This was 322,011 fewer than the 914,412 solar RECs traded in the <a href="https://mercomindia.com/solar-non-solar-redc-trade-spike-may-2018/" target="_blank" rel="noopener">previous month</a>.
All solar RECs were traded at a price of ₹1,000 (~$14.50).
<a href="https://mercomindia.com/wp-content/uploads/2018/06/iex1.png"><img loading="lazy" decoding="async" class="aligncenter size-full wp-image-10492" src="https://mercomindia.com/wp-content/uploads/2018/06/iex1.png" alt="Solar and Non-Solar REC Trading Slumps in June 2018" width="425" height="203" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2018/06/iex1.png 425w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2018/06/iex1-300x143.png 300w" sizes="(max-width: 425px) 100vw, 425px" /></a>
On the Indian Energy Exchange (<a href="https://www.iexindia.com/Default.aspx?id=1&amp;mid=0" target="_blank" rel="noopener">IEX</a>), a total of 288,070 buy bids were registered for solar RECs. This is 105,752 solar RECs fewer than the 393,822 solar RECs traded on IEX in May 2018. On the IEX, 394 entities traded in solar RECs in the June 2018 trading session; 23 entities fewer than the 417 entities that traded on IEX in May 2018.
The Power Exchange India Limited (<a href="http://www.powerexindia.com/pxil/" target="_blank" rel="noopener">PXIL</a>), registered 304,331 buy bids for solar RECs. This is 216,259 solar RECs fewer than the 520,590 that were traded on PXIL in May 2018. PXIL attained a market share of 51 percent in solar REC trade.
<a href="https://mercomindia.com/wp-content/uploads/2018/06/iex2.png"><img loading="lazy" decoding="async" class="aligncenter size-full wp-image-10493" src="https://mercomindia.com/wp-content/uploads/2018/06/iex2.png" alt="Solar and Non-Solar REC Trading Slumps in June 2018" width="424" height="193" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2018/06/iex2.png 424w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2018/06/iex2-300x137.png 300w" sizes="(max-width: 424px) 100vw, 424px" /></a>
Similar to the previous trading session, the non-solar RECs in this session were traded in two categories: RECs issued before April 1, 2017, and RECs issued after April 1, 2017. Mercom recently <a href="https://mercomindia.com/non-solar-rec-floor-price-1000/" target="_blank" rel="noopener">reported</a> that non-solar RECs issued on or after April 1, 2017, are to be sold at a floor price of ₹1,000 (~$14.809)/REC, in line with the latest ruling passed by the Supreme Court.
Non-solar REC trade also witnessed a slump after months of flying high. A total of 303,828 non-solar RECs were traded in the June trading session. This is 97,386 non-solar RECs fewer than the 401,214 traded in the May 2018 trading session.
<a href="https://mercomindia.com/wp-content/uploads/2018/06/iex3.png"><img loading="lazy" decoding="async" class="aligncenter size-full wp-image-10494" src="https://mercomindia.com/wp-content/uploads/2018/06/iex3.png" alt="Solar and Non-Solar REC Trading Slumps in June 2018" width="386" height="300" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2018/06/iex3.png 386w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2018/06/iex3-300x233.png 300w" sizes="(max-width: 386px) 100vw, 386px" /></a>
According to IEX, a total of 221,674 non-solar RECs issued after April 1, 2017, were traded with buy bids at 856,844 and sell bids at 295,070 with a clearing price of ₹1,150 (~$16.68)/REC. A total of 11,172 sell bids for non-solar RECs issued before April 1, 2017 were registered on the IEX, but none was traded.
Per PXIL, 82,154 non-solar RECs were traded in June. This is 4,934 non-solar RECs more than the 77,580 non-solar RECs traded in May 2018 on PXIL.
<a href="https://mercomindia.com/wp-content/uploads/2018/06/iex4.png"><img loading="lazy" decoding="async" class="aligncenter size-full wp-image-10495" src="https://mercomindia.com/wp-content/uploads/2018/06/iex4.png" alt="Solar and Non-Solar REC Trading Slumps in June 2018" width="460" height="284" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2018/06/iex4.png 460w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2018/06/iex4-300x185.png 300w" sizes="(max-width: 460px) 100vw, 460px" /></a>
A total of 20,000 sell bids for non-solar RECs issued before April 1, 2017, were registered on the PXIL, but no buy bids were received. Nearly 0.38 million RECs were cleared on PXIL leading to an overall market share of 43 percent.
When contacted, Mercom’s source at PXIL said, “When you look at it on month-by-month basis, there is decrease in numbers. But, you have to know that the obligation of FY 2017-18 has been completed and as RPO compliance is annual, during the initial few months of the fiscal, REC trading is always slow.”
“Having said that, I would also add that we have now almost exhausted non-solar REC inventory. And the REC trade that we witnessed this month (in terms of volume), will be hard to repeat,” the PXIL source said.
Another source commented on the June trading saying, “This is not really a slump. In FY 2017-18, REC trading witnessed an over 100 percent increase when compared to FY 2016-17. After such a peak, there will be slight lows, and there are reasons for that. Non-solar inventory has been exhausted, and if you have noticed, even in this trading session non-solar RECs sold above the floor price.”
The source further added, “Sell side is good for solar RECs too, but in that case the focus is more on actual procurement of solar energy. Procuring solar is doubly beneficial for any entity as they can meet RPO as well as have cheap power.”

Solar and Non-Solar REC Trading Slumps in June 2018

Non-solar renewable energy certificates (RECs) issued on or after April 1, 2017, will be sold at a floor price of ₹1,000 (~$14.809)/REC, the Supreme Court has ruled.
The court had admitted a civil appeal filed by the Indian Wind Power Association (IWPA) challenging the judgment passed by the Appellate Tribunal for Electricity (APTEL). While admitting the appeal, the apex court clarified, “Trading in non-solar REC issued prior to April 1, 2017, will be carried out at the floor price of ₹1,500 (~$22.215)/MWh. The obligated entities or power exchanges will have to deposit ₹500 (~$7.405)/MWh, the difference between the previous and the current floor price”.
“Non-solar RECs issued on or after April 1, 2017, will continue to be traded at the floor price of ₹1,000 (~$14.809)/MWh,” the court ruled.
Floor and forbearance prices of solar RECs for the purpose of trading at the power exchanges will continue to be governed in accordance with the Central Electricity Regulatory Commission (CERC)’s order dated March 30, 2017.
In <a href="https://mercomindia.com/cerc-reduces-forbearance-price-solar-recs-rs-2400-36-91mwh/" target="_blank" rel="noopener">March 2017</a>, the CERC issued new forbearance and floor prices for REC (solar, non-solar). Under the CERC order of 2017, the new forbearance price of solar RECs was set at ₹2,500 (~$37.41)/MWh and the floor price was ₹1,000 (~$14.962)/MWh. The forbearance price for non-solar RECs was decided to be ₹2,900 (~$43.39)/MWh while the floor price was set at ₹1,000 (~$14.962)/MWh.
In <a href="https://mercomindia.com/cerc-go-ahead-solar-non-solar-rec-trade/" target="_blank" rel="noopener">April 2018</a>, CERC gave its go-ahead for the trade of solar and non-solar renewable energy certificates (RECs) in the country. The new order came after the APTEL <a href="https://mercomindia.com/aptel-petitions-rec-pricing-cerc/" target="_blank" rel="noopener">dismissed</a> 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 had stated that the deposit of the differential amount of ₹500 (~$7.516) per REC with the commission would be discontinued.
Recently, in <a href="https://mercomindia.com/re-connect-interview-rec-mechanism/" target="_blank" rel="noopener">an interview with Mercom</a>, Vishal Pandya of Reconnect had said, “For non-solar RECs, the erosion of cost will be ₹6.5 billion if the multiplier is not brought into play.”
The current order will provide some relief to non-solar generators registered with the REC mechanism. If the floor price of ₹1,500 (~$22.215)/MWh is maintained for the old inventory, the generators will get a better return.
In <a href="https://mercomindia.com/solar-rec-trading-begins-april/" target="_blank" rel="noopener">April 2018</a>, a total of 1,87,543 non-solar RECs were traded at a price of ₹1,000 (~$14.943) per REC.
Image credit: By Legaleagle86 [<a href="https://creativecommons.org/licenses/by-sa/3.0" target="_blank" rel="noopener">CC BY-SA 3.0</a>], via Wikimedia Commons

Non-Solar RECs Issued on or After April 1, 2017 to be Sold at a Floor Price of ₹1,000

The Appellate Tribunal of Electricity (<a href="http://aptel.gov.in/" target="_blank" rel="noopener">APTEL</a>) has dismissed petitions filed by stakeholders against the issue of new forbearance and floor prices for solar and non-solar renewable energy certificates (RECs) by the Central Electricity Regulatory Commission (CERC).
In its order the APTEL has stated, “Issues raised in the Appeals bearing numbers 95 of 2017, 105 of 2017 &amp; 173 of 2017 are devoid of merit.” The tribunal found no issues with the change in methodology by CERC when they used bid-discovered prices as against the previously used CERC determined generic tariffs.
Per APTEL, “In earlier years of its regulations, the CERC used to determine the REC prices based on its own benchmark capital cost but with the growing competition and induction of efficient and cheaper technology, CERC has now switched over to the method of specifying REC prices based on the prices discovered from bids and or auctions. The earlier REC prices used to be higher due to higher generic tariff and higher benchmark capital cost of renewable energy projects. Now, the bid discovered prices of renewable energy generation are lower because of competition.”
Mercom <a href="https://mercomindia.com/cerc-reduces-forbearance-price-solar-recs-rs-2400-36-91mwh/" target="_blank" rel="noopener">previously reported</a> that the CERC issued new forbearance and floor prices for REC (solar, Non-solar). Per 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 floor price is ₹1,000 (~$14.962)/MWh.
Prior to the CERC order of 2017, for solar RECs the forbearance price was ₹5,800 (~$86.78)/MWh and the floor price was ₹3,500 (~$52.37)/MWh. For non-solar RECs, the forbearance price was ₹3,300 (~$49.38)/MWh and 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.
The APTEL at that time 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.
On <a href="https://www.iexindia.com/Uploads/CircularUpdate/26_05_2017Circular%20for%20Suspension%20in%20REC%20trading.pdf" target="_blank" rel="noopener">May 26, 2017</a>, the Indian Energy Exchange issued a letter announcing  the official suspension of REC trading. Then, after 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 <a href="https://mercomindia.com/breaking-supreme-court-issues-order-allowing-wind-rec-trade/" target="_blank" rel="noopener">July 2017</a>, 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. Since the order, up to March 2018, not a single solar REC has been traded. Back then, the Supreme Court had instituted a stay until further judiciary action took place.
According to REConnect, “We believe that this order will have a significant adverse impact on projects and investors that have invested in REC projects. An immediate impact will be that such projects will have to bear heavy losses on the existing inventory of RECs – the losses will be particularly heavy for solar projects.
It also does not bode well for future investment in the REC mechanism, as falling RE prices are an irreversible trend. Does this mean that REC projects will have to bear losses of such reduction every year?”

APTEL Dismisses Petitions Against New Solar and Non-Solar REC Pricing Issued by CERC

The Supreme Court of India has issued an order allowing the trade in Wind Renewable Energy Certificates (RECs). The highest court in India has removed the stay placed on the Appellate Tribunal’s order.
According to a release, “The Court felt that there should be no problem if Wind RECs were to be traded at the figures given previously.”
Mercom <a href="https://mercomindia.com/cerc-reduces-forbearance-price-solar-recs-rs-2400-36-91mwh/" target="_blank" rel="noopener noreferrer">previously reported</a> that the Central Electricity Regulatory Commission (CERC) issued new forbearance and floor prices for REC (solar, Non-solar).
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 Appellate Tribunal of Electricity (APTEL) to suggest a way to clear the existing REC stock.
While the APTEL agreed to introduce a vintage multiplier, it refused to put a stay on the 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.
On <a href="https://www.iexindia.com/Uploads/CircularUpdate/26_05_2017Circular%20for%20Suspension%20in%20REC%20trading.pdf" target="_blank" rel="noopener noreferrer">May 26, 2017</a>, the Indian Energy Exchange issued a letter announcing  the official suspension of REC trading. After much deliberation, the Supreme Court has 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.
It is a welcome news for all stakeholders involved. However, the stay on solar REC trading remains in place, and the hearing on that matter will be held in due course.
Image Credit: Legaleagle86 at en.wikipedia, <a href="http://creativecommons.org/licenses/by-sa/3.0" target="_blank" rel="noopener noreferrer">CC BY-SA 3.0</a> or <a href="http://www.gnu.org/copyleft/fdl.html" target="_blank" rel="noopener noreferrer">GFDL</a>, via Wikimedia Commons

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