The CERC has issued a suo motu petition proposing a
downward revision of the trading floor and forbearance (ceiling)
prices of RECs between 6.7% and 17.9% for the financial year
Lower price bands for both solar and non-solar RECs are
proposed (see table below) and the CERC is seeking comments and
suggestions on its proposal by 5 July 2011. The hearing on the
petition will be held on 14 July 2011.
The CERC is permitted (in consultation with the Central Agency
and Forum of Regulators) to specify floor and forbearance prices
for RECs from time to time by the Central Electricity Regulatory
Commission (Terms and Conditions for recognition and issuance of
Renewable Energy Certificate for Renewable Energy Generation)
The Regulations specify a number of principles which the CERC
should take into consideration when setting the floor and
forbearance price, including:
variation across states in the cost generation of different
renewable energy technologies under the categories of solar and
variation in the Pooled Cost of Purchase
and expected electricity generation from renewable
Key data used by the CERC in setting the price bands is the
Annual Pooled Purchase Cost (APPC) which is the weighted average
pooled power purchase by distribution licensees (excluding power
sourced from renewable energy projects and costs of transmission)
in the Indian states during the financial year 2011-12.
The floor price for non-solar RECs is based on the difference
between the APPC and project viability costs corresponding to the
renewable power generation forecasted for 2012.
The forbearance price for non-solar RECs is based on the
highest difference between the forecasted APPC for all the states
and the costs of generation/RE tariff offered in various
The floor price for solar RECs is based on the highest
difference between the project viability cost for solar PV or
thermal projects for FY2011-12 and the APPC.
The forbearance price for solar RECs is based on the highest
difference between the solar PV/thermal tariff for FY2011-12 and
The proposals suggest a drive from the CERC to promote
competition, efficiency and investment in renewable energy
projects. It would be interesting to see following the consultation
whether the market agrees with its approach.
RECs are a policy mechanism to promote renewable energy based
power generation in India. Obligated entities are able to purchase
RECs to meet their Renewal Purchase Obligations (RPO).
REC trading was launched in India in February 2011 in an effort
to promote cleaner energy nationwide. Under this programme, the
clean energy producers are allowed to trade in RECs through CERC
approved power exchanges. Technologies such as wind, solar PV,
solar thermal, biomass and hydro are eligible to earn RECs.
An REC is created when one megawatt hour of electricity is
generated from an eligible renewable energy resource. RECs
represent the benefit of renewable energy based electricity over
electricity from non-renewable resources.
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