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<p>The Central Electricity Regulatory Commission (<a href="http://www.cercind.gov.in/" target="_blank" rel="noopener noreferrer">CERC</a>) has issued an order implementing revised forbearance and floor prices for solar and non-solar renewable energy certificates (RECs).</p>
<p>In its order, the Commission implemented a forbearance (maximum) price of ₹1,000 (~$13.16) for solar and non-solar RECs for 2020, down from 2017’s prices of ₹2,400 (~$31.59)/MWh and ₹3,000 (~$39.48) respectively.</p>
<p>It also issued a floor price of zero for both solar and non-solar RECs from ₹1,000 (~$13.16) each previously. Until March 31, 2017, the floor price for solar RECs was ₹3,500 (~$46.07)/MWh.</p>
<p>The CERC had <a href="https://mercomindia.com/cerc-forbearance-price-floor-prices-recs/" target="_blank" rel="noopener noreferrer">proposed</a> this revision in April, stating that the market for RECs has matured and that there was no longer a need for floor prices.</p>
<p><a href="https://mercomindia.com/wp-content/uploads/2020/06/CERC-Forbearance-Floor-Price-for-Solar-Non-Solar-REC.png"><img decoding="async" loading="lazy" class="aligncenter size-full wp-image-19874" src="https://mercomindia.com/wp-content/uploads/2020/06/CERC-Forbearance-Floor-Price-for-Solar-Non-Solar-REC.png" alt="CERC - Forbearance &amp; Floor Price for Solar &amp; Non-Solar REC" width="413" height="134" srcset="https://cms.mercomindia.com/wp-content/uploads/2020/06/CERC-Forbearance-Floor-Price-for-Solar-Non-Solar-REC.png 413w, https://cms.mercomindia.com/wp-content/uploads/2020/06/CERC-Forbearance-Floor-Price-for-Solar-Non-Solar-REC-300x97.png 300w" sizes="(max-width: 413px) 100vw, 413px" /></a></p>
<p>Renewable energy certificates are financial instruments purchased by obligated entities like distribution companies, captive power project owners, and other power consumers to meet their renewable purchase obligation (RPO) targets. One REC certifies that the bearer owns 1 MWh of electricity generated from a renewable energy resource.</p>
<p>The forbearance price is derived based on the highest difference between the cost of generation of renewable energy source or tariff and the average power purchase cost (APPC) of the financial year for the respective states. The floor price is determined based on the difference between the project viability requirement and APPC determined for different renewable energy technologies across the states.</p>
<p>The Commission said that these revised prices would come into effect on July 1, 2020, and remain in force until June 30, 2021. It clarified that the revised forbearance and floor prices would be applicable for all non-solar RECs issued on or after April 1, 2017.</p>
<p>“With this development, the obligated entities, both the distribution utilities as well as industries availing open access, are expected to find RECs buying as lucrative as renewable energy itself. Many obligated entities who have unmet RPOs are now expected to participate actively in the market,” said Shruti Bhatia, Head-Corporate Communications and Corporate Social Responsibility, Indian Energy Exchange Limited (<a href="https://www.iexindia.com/" target="_blank" rel="noopener noreferrer">IEX</a>).</p>
<p>“Further, with India and countries across the globe undergoing an accelerated energy shift dominated by renewable energy, this development will support the energy transition in the long run and facilitate industry to adopt sustainable energy practices even in a voluntary way,” Bhatia added.</p>
<p>Recently, the Supreme Court of India <a href="https://mercomindia.com/supreme-court-dismisses-appeal/" target="_blank" rel="noopener noreferrer">dismissed</a> an appeal by the Green Energy Association seeking a stay order on the CERC’s order to reduce the floor price of renewable energy certificates to zero.</p>
<p>Mercom <a href="https://mercomindia.com/solar-rec-trading-gathers-speed/" target="_blank" rel="noopener noreferrer">reported</a> that there was a considerable increase in the trading of both solar and non-solar RECs in May 2020 compared to April. A total of 41,469 solar RECs were traded on both the exchanges, out of which 35,793 solar RECs were traded on the Indian Energy Exchange, and 5,676 solar RECs were traded on the Power Exchange India Limited (PXIL).</p>
<div class="saboxplugin-wrap" itemtype="http://schema.org/Person" itemscope itemprop="author"><div class="saboxplugin-tab"><div class="saboxplugin-gravatar"></div><div class="saboxplugin-authorname"><a href="https://cms.mercomindia.com/author/nithin-thomas-prasad/" class="vcard author" rel="author"><span class="fn">Nithin Thomas</span></a></div><div class="saboxplugin-desc"><div itemprop="description"><div class="designboxt">
<p><img class="alignleft" style="border-radius: 50%;height: 50px;margin-top: -4px;border: 1px solid #00b451" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/04/Nithin-2-1.jpg" width="50" /></p>
<p><strong style="text-decoration: underline">Nithin Thomas,</strong> Staff reporter at Mercom India<br />
<a href="https://www.mercomindia.com/author/nithin-thomas-prasad/" target="_blank" rel="noopener">More articles from Nithin Thomas.</a></p>
</div>
<div class="authorboxn"><img class="alignleft" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/04/Nithin-2-1.jpg" width="102" height="102" /><a href="https://www.mercomindia.com/author/nithin-thomas-prasad/" rel="noopener">Nithin Thomas</a> is a staff reporter at Mercom India. Previously with Reuters News, he has covered oil, metals and agricultural commodity markets across global markets. He has also covered refinery and pipeline explosions, oil and gas leaks, Atlantic region hurricane developments, and other natural disasters. Nithin holds a Masters Degree in Applied Economics from Christ University, Bangalore and a Bachelor&#8217;s Degree in Commerce from Loyola College, Chennai.<a href="https://www.mercomindia.com/author/nithin-thomas-prasad/" rel="noopener">More articles from Nithin Thomas Prasad</a></div>
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CERC Removes Floor Prices for Solar and Non-Solar RECs

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