Power distribution companies purchasing solar power in excess of their obligations might get due entitlement for renewable energy certificates (RECs). The ministry of new and renewable energy (MNRE) is expected to approach the Central Electricity Regulatory Commission (CERC) soon for the formulation of regulations in this regard.

If the CERC formulates supporting regulations, it will benefit states like Rajasthan, Gujarat, Punjab, Maharashtra and Karnataka, where solar power generation potential is comparatively high.

Presently, only power project developers are entitled

for RECs. But now states like Rajasthan and Gujarat are pushing for issuance of the certificates to their discoms as well for solar power purchased by them in excess of their obligations.

These states have urged MNRE’s intervention for the formulation of a regulatory framework. ?We have received representation from some states for issuance of RECs to discoms. The proposal is under consideration,? a senior MNRE official told FE.

REC is an instrument meant to attract investment into renewable power generation. The CERC has set floor price for issuance of RECs at R9,300 a megawatt (MW) and forbearance price of R13,400 a MW for the period up to 2016-17.

Demand for this instrument is increasing after the CERC gave the go-ahead for the trading of RECs through power exchanges. Monthly volume of REC issued and traded on exchanges has gone up to 1.35 lakh in November after exchanges started trading it in March 2011.

Although all states are required to meet a part of their electricity requirements from solar power plants, solar irradiation is not equally distributed across the country. States, where enough solar power is not available for discoms to comply with the regulatory mandate, have the option to buy RECs.

Developers are setting up solar power plants in Gujarat and Rajasthan to benefit from the REC mechanism that can be easily sold through exchanges.

Given the growing investors interest in their solar sector, these states have also sought MNRE’s help for the strengthening of the transmission network for evacuation of their solar power.