Renewable energy certificate mechanism to be restructured

10 Jun 2021 CW Team

According to the proposed restructuring of the REC mechanism, it will remain until it sells. Currently, the validity of the RECs is 1,095 days, and the Central Electricity Regulatory Commission (CERC) determines the floor and forbearance prices, which till now have been revised four to five times for solar and non-solar RECs.

As it will be perpetually valid, there is no need to be specific about the floor and forbearance prices, and the REC holders will have the freedom to decide when they want to sell their RECs. The CERC will have to monitor the process to ensure there is no hoarding of the RECs and the creation of artificial prices in the market.

As per the proposed measures, the renewable energy generators will be eligible to issue RECs for 15 years from the date of commissioning of the projects. Similarly, the already existing renewable energy projects will continue to get RECs for 25 years.

The introduction of a multiplier has also been proposed in the measures by the ministry, under which less mature renewable energy technology can be promoted over matured renewable energy technology.

Any technology to be promoted should be identified two years in advance. For those projects, at least 15 years of policy visibility will be provided to attract investments and promote such technologies in renewable energy.

A technology multiplier can be allocated for various technologies depending on their maturity. The multiplier would take care of the mature technologies depending upon the commissioning of the project. Also, one multiplier would continue for 15 years for that project.

To incentivize renewable energy procurement beyond the renewable energy obligation (RPO) targets, only distribution companies (DISCOMs) will be issued RECs for quantity beyond RPO.

RECs can be issued for entities that purchase renewable power beyond their RPO targets to incentivize them to achieve their RPO targets and go beyond the level of RPO.

According to another proposed measure by the ministry, RECs will not be provided to a seller who is benefitting or preferential treatment.

The ministry has also proposed the trade role enhancement in REC trading, which will bring two advantages—it will give long-term visibility to the REC buyers, and they can easily fulfil their RPO targets. The small buyers can also bank on the traders for buying the RECs. It will ensure that small buyers don't face difficulties in REC trading and fulfil their RPO targets.

Image Source

Also read: BPCL invites bids for 15 MW open-access renewable power

Also read: Renewable energy capacity surged over 250% in 6-7 years: Narendra Modi

The Ministry of Power released a discussion paper for redesigning the renewable energy certificate (REC) mechanism for the stakeholder comments. The stakeholders have to submit their suggestions by June 25, 2021. According to the proposed restructuring of the REC mechanism, it will remain until it sells. Currently, the validity of the RECs is 1,095 days, and the Central Electricity Regulatory Commission (CERC) determines the floor and forbearance prices, which till now have been revised four to five times for solar and non-solar RECs. As it will be perpetually valid, there is no need to be specific about the floor and forbearance prices, and the REC holders will have the freedom to decide when they want to sell their RECs. The CERC will have to monitor the process to ensure there is no hoarding of the RECs and the creation of artificial prices in the market. As per the proposed measures, the renewable energy generators will be eligible to issue RECs for 15 years from the date of commissioning of the projects. Similarly, the already existing renewable energy projects will continue to get RECs for 25 years. The introduction of a multiplier has also been proposed in the measures by the ministry, under which less mature renewable energy technology can be promoted over matured renewable energy technology. Any technology to be promoted should be identified two years in advance. For those projects, at least 15 years of policy visibility will be provided to attract investments and promote such technologies in renewable energy. A technology multiplier can be allocated for various technologies depending on their maturity. The multiplier would take care of the mature technologies depending upon the commissioning of the project. Also, one multiplier would continue for 15 years for that project. To incentivize renewable energy procurement beyond the renewable energy obligation (RPO) targets, only distribution companies (DISCOMs) will be issued RECs for quantity beyond RPO. RECs can be issued for entities that purchase renewable power beyond their RPO targets to incentivize them to achieve their RPO targets and go beyond the level of RPO. According to another proposed measure by the ministry, RECs will not be provided to a seller who is benefitting or preferential treatment. The ministry has also proposed the trade role enhancement in REC trading, which will bring two advantages—it will give long-term visibility to the REC buyers, and they can easily fulfil their RPO targets. The small buyers can also bank on the traders for buying the RECs. It will ensure that small buyers don't face difficulties in REC trading and fulfil their RPO targets. Image Source Also read: BPCL invites bids for 15 MW open-access renewable power Also read: Renewable energy capacity surged over 250% in 6-7 years: Narendra Modi

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