CERC Reduces Floor Price of Solar RECs to Rs.1,000/MWh
The Central Electricity Regulatory Commission (CERC) has issued new forbearance and floor prices for Renewable Energy Certificates (REC). The CERC has announced that the forbearance price of solar RECs will be set to Rs.2,500 (~$37.41)/MWh and the floor price will be Rs.1,000 (~$14.962)/MWh. The forbearance price for non-solar RECs will be set to Rs.2,900 (~$43.39)/MWh and the floor price will be Rs.1,000 (~$14.962)/MWh.
Currently, the forbearance price is Rs.5,800 (~$86.78)/MWh and the floor price is Rs.3,500 (~$52.37)/MWh. For non-solar RECs, the forbearance price is Rs.3,300 (~$49.38)/MWh and the floor price is Rs.1,500 (~$22.44)/MWh. The new trading prices will commence on April 1, 2017.
While determining the new pricing structure, the CERC considered the variations in cost of generation of different renewable energy technologies, variations in the average pooled cost of power, expected electricity generation from renewable energy sources and renewable purchase obligation targets.
“We have seen a decline in the purchase of RECs over the past few months; hopefully the new prices will lead to an escalation in REC trades,” stated an official at CERC. The prices that have been proposed are much lower than the prices at which solar and non-solar RECs are currently being traded. Reductions in tariffs quoted by developers is a major contributor in the decline in REC prices, added the CERC official.
According to Indian energy Exchange (IEX), this quarter, IEX has already traded 2,149,000 RECs, 20 percent more than the trade done in first three quarters of this fiscal. A few power distribution companies (DISCOMs) participated in this session for the first time. Further, this fiscal, the renewable purchase obligation (RPO) compliance by DISCOMs has been far better than compliance in the previous years. Improvement in RPO compliance by DISCOMs has been the key reason for trade of 3,900,000 RECs this fiscal (year to date) compared 3,139,000 RECs traded in the previous fiscal, an increase of about 24 percent said IEX.
The number of certificates being traded will increase, the inventory of RECs that has built over time will now be swiftly traded, stated an official at IEX. The market dynamics change which leads to change in policies, regulations hence the removal of vintage multiplier, stated another IEX official.
Sampath has been part of the Mercom India research and news team since the company’s inception. He currently oversees all data and research relating to news published on the MercomIndia.com platform. Sampath received his Bachelor’s of Commerce Degree from Kuvempu University and Post Graduate Diploma in Management, from Indira Gandhi National Open University. More articles from Sampath Krishna.