REC floor prices: Tribunal upholds CERC decision

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New Delhi | Published: April 14, 2018 4:45:44 AM

The Green Energy Association, Indian Wind Power Association and the Uttar Pradesh Sugar Mills Co-Gen Association claimed that the CERC decision dealt an adverse blow to them, causing 70% in net worth of a number of companies that depend on the REC mechanism.

The Appellate Tribunal for Electricity (Aptel) has upheld the decision of the Central Electricity Regulatory Commission (CERC) to decrease minimum prices at which renewable energy certificates (RECs) can be traded in power exchanges.

The Appellate Tribunal for Electricity (Aptel) has upheld the decision of the Central Electricity Regulatory Commission (CERC) to decrease minimum prices at which renewable energy certificates (RECs) can be traded in power exchanges. The regulator had cut floor prices of solar and non-solar RECs to Rs 1,000 per certificate (Rs 1/unit). The previous rates of solar and non-solar RECs were Rs 3,500 and Rs 1,500, respectively. The Green Energy Association, Indian Wind Power Association and the Uttar Pradesh Sugar Mills Co-Gen Association claimed that the CERC decision dealt an adverse blow to them, causing 70% in net worth of a number of companies that depend on the REC mechanism. The quantum of the losses were estimated at around Rs 1,855 crore. As on April, 2017, 1,236 renewable energy projects with a total capacity 5,540 MW were accredited to trade RECs.

Aptel noted that the CERC’s decision was compliant to the legal and statutory framework and price reductions were in line with the falling renewable tariffs discovered in various reverse auctions. It also noted that cutting down REC prices would help liable entities meet their renewable purchase obligations (RPO).

REC, an alternative to physical procurement of renewable energy, is a market-based instrument designed to promote renewables and facilitate RPO compliance. One REC is treated as equivalent to 1 Mwh of green electricity. RPO mandates that all electricity distribution licensees should purchase or produce a minimum specified quantity of their requirement from renewable energy sources.

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