Renewable Energy Certificates to be Valid Until Sold – Power Ministry

Floor and forbearance price limits removed for RECs

September 30, 2021


The Union Minister of Power R K Singh has approved amendments to the renewable energy certificate (REC) mechanism. According to the new amendments, the REC will remain valid until it is sold. As per the earlier guidelines, the validity of RECs was 1,095 days.

The decision aims to align the REC mechanism with the emerging changes in the power sector and promote new renewable technologies.

The changes are expected to provide flexibility to the players and address uncertainty regarding the REC validity period, among other things.

Earlier in June this year, the Ministry of Power released a discussion paper on redesigning the REC mechanism for stakeholder comments.

The government held extensive consultations with stakeholders regarding the changes to the existing mechanism.

The trading of RECs has been put on hold after the Appellate Tribunal for Electricity (APTEL) issued a stay order in response to petitions filed by several renewable energy associations regarding the revision in the floor and forbearance prices.

In June last year, the Central Electricity Regulatory Commission (CERC) had issued an order implementing revised forbearance and floor prices for solar and non-solar RECs. It had implemented a forbearance (maximum) price of ₹1,000 (~$13.16)/MWh for solar and non-solar RECs for 2020, down from 2017’s prices of ₹2,400 (~$31.59)/MWh and ₹3,000 (~$39.48)/MWh respectively.

Another important amendment states that there is no need for floor and forbearance prices to be specified, and REC holders will have the freedom to decide when they want to sell the RECs.

CERC will take care of the monitoring and surveillance to ensure there is no hoarding of RECs.

In another amendment, the Ministry has introduced a multiplier, under which less mature renewable energy technologies could be promoted over matured renewable technologies.

Also, RECs can be issued to obligated entities, including distribution companies and open access consumers, which purchase renewable power beyond their renewable purchase obligation (RPO) compliance notified by the Union government.

The amendments will also allow for an enhanced role for traders and bilateral transactions in the REC mechanism.

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