Delhi High Court Suspends Renewable Energy Certificate Trading for Six Weeks

Petitioner challenged the latest regulation that removed the floor price for RECs

December 23, 2022

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The Delhi High Court has suspended the trading of renewable energy certificates (RECs) issued before October 31, 2022, for six weeks.

The order came in response to Indian Wind Power Association Northern Region Council’s petition challenging the Central Electricity Regulatory Commission’s (CERC) 2022 Regulations, which removed the floor price for RECs.

Industry sources said that the suspension of REC trading is a setback for the market, which had only resumed in November last year.

Sources added that the order would have an adverse impact on smaller generators as most of the projects under the REC mechanism were set up by them under the impression that they would get an assured floor price.

RECs are important for organizations like DISCOMs, open access consumers, and captive power projects to meet their renewable energy targets, which is crucial for India’s transition to a sustainable energy economy.

The CERC’s recent regulation in contention stated that REC price will be determined through the power exchanges or mutual agreements between eligible entities and electricity traders. The wind association argued that energy generators have the right to a floor price.

The Court will reconsider the petitions on January 31, 2023. The petitioners have been directed to file the counter affidavit within two weeks and any rejoinder within a week after that.

The Court however has declined to stay the 2022 regulations at this stage.

CERC had significantly increased the fees for various services related to REC trading. While the CERC claims that the fee revision is necessary to fund infrastructure upgrading, industry experts argue that the decision will negatively impact buyers and sellers in the market, particularly small businesses experiencing cash flow issues.

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