The Central Electricity Regulatory Commission (CERC) has issued the CERC (Terms and Conditions for Renewable Energy Certificates for Renewable Energy Generation) (First Amendment) Regulations, 2026, amending the principal 2022 REC Regulations. The amendments came into force on March 24, 2026.

The eligibility criteria under Regulation 4 have been expanded to include captive generating stations that do not meet the criteria under the Electricity Rules, 2005, but have self-consumption of renewable energy, thereby widening the scope of entities eligible to participate in the renewable energy certificates (REC) mechanism.

The amendment introduces key definitions under Regulation 2, including “designated consumer” aligned with the Energy Conservation Act, 2001, “renewable consumption obligation (RCO)” defined as the minimum share of consumption from non-fossil sources specified by the Central Government, and “virtual power purchase agreement (VPPA)” as defined under the CERC Power Market Regulations, 2021.

In September 2025, CERC had issued the draft amendment to the REC Regulations.

Revised Issuance Timeline and VPPA Mechanism

Under the amended Regulation 10, the Commission has introduced a timeline for the issuance of RECs. Distribution licensees and open-access consumers must apply for REC issuance within three months of the State Commission’s certification regarding excess renewable energy procurement, failing which no certificates will be issued.

A new Regulation 14A establishes a framework for VPPAs, under which RECs generated from such arrangements will be automatically transferred to the consumer or the designated consumer.

These certificates can be used to comply with the renewable purchase obligation (RPO) or the renewable consumption obligation (RCO) and will be extinguished upon use. Excess certificates can be carried forward but are not permitted to be traded on power exchanges.

The regulations also mandate that generators disclose VPPA-linked projects to the central agency, which is responsible for tracking compliance, extinguishment, and record maintenance.

Multiplier Framework

A key feature of the amendment is the restructuring of the REC multiplier framework under Regulation 12.

For projects commissioned between December 5, 2022, and March 24, 2026, multipliers have been specified, including 1 for solar and onshore wind, 1.5 for hydro, 2 for municipal solid waste (MSW) and non-fossil cogeneration, and 2.5 for biomass and biofuel projects

For projects commissioned after the amendment, multipliers will be determined using a principles-based approach based on three parameters: tariff range, technology maturity, and capacity credit or peak support.

Tariff Scoring

Tariff scoring ranges from 0 for tariffs up to ₹4 (~$0.042)/kWh to 100 for tariffs above ₹12 (~$0.127)/kWh, based on data from competitive bidding, CERC, and State Commission tariff orders, and project-specific tariffs.

Technology maturity is scored from 0 for fully commercialized technologies to 100 for those in research and development stages, while capacity credit is assessed from 0 for nil contribution to 100 for very high grid support capability.

The weightage assigned is 40% to tariff, 30% to technology maturity, and 30% to capacity credit.

Based on this methodology, the Commission has determined final multipliers for various technologies, including 1 for solar and wind, 1.5 for hybrid renewable energy, 2.5 for small hydro, 3 for biomass, biofuel, pumped hydro, cogeneration, municipal solid waste, large hydro, and battery energy storage systems charged from renewable sources, and 4 for offshore wind projects.

The multiplier will be valid for 15 years from the date of commissioning, after which a uniform rate of one REC per MWh will apply.

The Commission has stated that the revised framework reflects economic viability, level of technological development, and contribution to grid stability, thereby aligning the REC mechanism with evolving renewable energy market structures, compliance requirements, including RCO, and emerging instruments such as VPPAs.

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