Resume REC trade soon, trading pause to impact discoms’ ability to meet RPO targets: Power exchanges

By: |
November 29, 2020 1:44 PM

With renewable energy taking a centre stage in India's energy future, such matters require expeditious resolution to keep the country on track to achieve its renewable targets, Bajaj said.

electricity, power, discoms, generators, economic growth, economyIt is important to place access to reliable and affordable electricity in the front and centre of policy and regulatory efforts.

Further suspension on trading of renewable energy certificates (RECs) would impact state power distribution utilities’ ability to meet renewable purchase obligation (RPO) targets, electricity exchanges PXIL and IEX said, stressing that the trade should be resumed at the earliest.

Talking to PTI, Indian Energy Exchange (IEX) Head and Senior Vice President – Business Development Rohit Bajaj said, “REC market is a key avenue for obligated entities such as captive power producers, discoms and open access consumers to fulfil their RPO requirements. “Owing to the pause in REC trade since the last five months (July 2020), and compliance year coming to an end in the next four months, any further delay in resuming the trade will greatly impact their ability to meet their RPO targets in a timely manner,” he added.

With renewable energy taking a centre stage in India’s energy future, such matters require expeditious resolution to keep the country on track to achieve its renewable targets, Bajaj said. “We hope that honourable APTEL soon issues the final order so that the trading can commence in December,” he added.

Trading of RECs was suspended in July this year after the Appellate Tribunal for Electricity (APTEL) decided to postpone trading by four weeks while hearing three separate petitions related to issue of fixing floor and forbearance prices of RECs by the Central Electricity Regulatory Commission (CERC). Later, the trading was not resumed as APTEL directed to enforce the interim order on suspension of REC trade till the final judgement.

Trading of RECs or green certificates takes place on the last Wednesday of every month on IEX and the Power Exchange of India Ltd (PXIL). Under RPO, bulk purchasers like discoms, open access consumers and capacitive users are required to buy a certain proportion of RECs.

They can buy RECs from renewable energy producers to meet RPO norms. One REC is created when the 1-megawatt hour of electricity is generated from an eligible renewable energy source. Talking to PTI on the issue, PXIL Vice President, Business Development Kapil Dev said, “Functioning of the market in the REC segment should be allowed sooner than later as almost half of the sessions in the financial year have already been lost.”

“In a compliance-driven market wherein the last quarter has always witnessed significant volumes, this assumes additional significance. Any further delay might warrant providing for the lost sessions.” Dev added that the floor, as well as forbearance prices, should be left on the collective wisdom of market forces to decide. The Green Energy Association, the Indian Wind Power Association, and Techno Electric and Engineering Company Ltd had filed three separate appeals in APTEL against the CERC order on fixing floor and forbearance prices for RECs.

According to the latest update available on APTEL portal, the arguments on the three petitions have concluded and judgement is reserved. It also says that the interim order, if any, shall continue till the judgment is pronounced. It means REC trading would not take place till the final judgement is pronounced. Consequently, REC trading did not take place on August 26, September 30, October 28 and November 25.

According to a CERC order passed in June, the floor price of solar and non-solar RECs was reduced to zero from Rs 1,000 earlier. Similarly, the forbearance (ceiling) price of solar and non-solar RECs was reduced to Rs 1,000 from Rs 2,400 and Rs 3,000, respectively. The forbearance price and floor price fixed by CERC are effective from July 1, 2020 to June 30, 2021 or until further orders of the commission.

In June, the Supreme Court had refused to entertain Green Energy Association’s appeal on stopping revision of REC price by the CERC. Industry experts were of the view that higher REC prices put an additional burden on consumers.

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