According to industry data, an inventory of 60.58 lakh RECs piled up till March 31, 2021, which includes 7.71 lakh solar and 52.88 lakh non-solar green certificates.
The renewable energy certificates market shrank to 9.2 lakh RECs in 2020-21 while 60.58 lakh RECs piled up till March-end due to a halt in trading, which also impacted the ability of distribution companies to meet their renewable purchase obligation (RPO).
According to industry data, an inventory of 60.58 lakh RECs piled up till March 31, 2021, which includes 7.71 lakh solar and 52.88 lakh non-solar green certificates. The data also showed that trading of just 9.2 lakh RECs was done in 2020-21 as the trading was suspended since July last year. REC trading was recorded at 89.27 lakh in 2019-20 and 126.08 lakh in 2018-19.
The REC or green certificate trades were suspended in July 2020 after the Appellate Tribunal for Electricity (APTEL) decided to postpone the trading by four weeks while hearing three separate petitions related to an issue of fixing floor and forbearance prices of RECs by the Central Electricity Regulatory Commission (CERC).
The trading did not resume as a result of an interim order by APTEL in July. The matter is still before the APTEL. The suspension of REC trade has significantly affected the discoms’ ability to meet their RPO. Under RPO, bulk purchasers like discoms, open access consumers and capacitive users are required to buy a certain proportion of renewable energy of RECs in lieu of that.
They can buy RECs from renewable energy producers to meet RPO norms. One REC is created when 1 megawatt hour of electricity is generated from an eligible renewable energy source. REC trading is conducted on the last Wednesday of every month on the Indian Energy Exchange (IEX) and the Power Exchange India (PXIL).
Talking to PTI on the issue, Prabhajit Kumar Sarkar, the Managing Director and Chief Executive Officer of PXIL, said, “The suspension of REC trading has adversely affected compliance of RPO targets for obligated entities. We do feel that putting a suspension on marketplaces ought to be an action of last resort, since they affect not just a few contending parties but the entire sector adversely.”
“The REC market has been playing a key role in facilitating the achievement of renewable energy targets and serving as a key segment for obligated as well as eligible entities to meet the committed RPO targets. Considering the state of the REC market and impact on participating entities, we feel that the early reopening of the REC market would be beneficial for the participants and the sector,” he added.
Earlier in July, APTEL had postponed the REC trading scheduled on July 29 by four weeks till August 26, after hearing three separate appeals filed by the Green Energy Association, the Indian Wind Power Association and Techno Electric and Engineering Company Ltd against the CERC order issued on fixing REC floor and forbearance prices.
In the order issued on August 26 after hearing the three appeals again, APTEL had said, “Interim order, if any, shall continue till the next date of hearing… List the matter for hearing on September 4 and 5.” Later the REC trading was not done from August 2020 onwards consequently because the interim order was for suspension of trade.
The PXIL and the IEX had filed impleadment applications on July 27, 2020 requesting early resolution of the matter. Thereafter multiple hearings in the matter were held till September 25, 2020, when judgement was reserved by the APTEL on the issue with a condition that interim order would remain enforced. That means the REC trading would not be conducted till the final judgement is pronounced.
Later in November 2020, the APTEL Member S D Dubey retired on completion of his tenure. The new APTEL Member R K Verma took charge as Member (Technical) in December 2020 and hearings in the matter were taken up again. In the recent hearing on April 19, 2021, the APTEL in its daily order has fixed the next date of hearing as on April 28, 2021.
According to a CERC order in June 2020, the floor price of solar and non-solar RECs had been reduced to zero from Rs 1,000 earlier. Similarly, the forbearance (ceiling) price of solar and non-solar was reduced to Rs 1,000 for both from Rs 2,400 and Rs 3,000, respectively.
The forbearance price and floor price fixed by the CERC were effective from July 1, 2020 to June 30, 2021 or until further orders of the commission. In June 2020, the Supreme Court had refused to entertain Green Energy Association’s (GEA) appeal on stopping REC price revision by the CERC.
Thereafter, three separate appeals were filed by the Green Energy Association, the Indian Wind Power Association and Techno Electric and Engineering Company Ltd against the CERC order issued on fixing REC floor and forbearance prices in APTEL last year.