Daily News Analysis

Renewable Energy Certificate (REC) mechanism

1st October, 2021 ENVIRONMENT AND ECOLOGY

                                                     

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Context: Union Minister of Power and New & Renewable Energy, has given his assent to amendments in the existing Renewable Energy Certificate (REC) mechanism.

                         

Aim: The intent behind this decision is to align the ‘mechanism’ with the emerging changes in the power scenario and also to promote new renewable technologies.

 

Significance of the move:

  • It will provide some flexibility to the players, additional avenues, rationalization and also addressing the RECs validity period uncertainty issues.

 

Salient features of changes proposed:

 

  • Validity of REC would be perpetuale., till it is sold.
  • Floor and forbearance prices are not required to be specified.
  • Central Electricity Regulatory Commission (CERC) to have monitoring and the surveillance mechanism to ensure that there is no hoarding of RECs.
  • The RE generator who are eligible for REC, will be eligible for issuance of RECs for the period of PPA as per the prevailing guidelines.
  • The existing RE projects that are eligible for REC would continue to get RECs for 25 years.
  • A technology multiplier can be introduced for promotion of new and high priced RE technologies, which can be allocated in various baskets specific to technologies depending on maturity.
  • RECs can be issued to obligated entities (including DISCOMs and open access consumers) which purchase RE Power beyond their RPO compliance notified by the Central Government.
  • No REC to be issued to the beneficiary of subsidies/concessions or waiver of any other charges. The FOR to define concessional charges uniformly for denying the RECs.
  • Allowing traders and bilateral transactions in REC mechanism.
  • The changes proposed in revamped REC mechanism will be implemented by CERC through regulatory process.

 

What is REC mechanism?

  • To address mismatch between availability of RE sources and the requirement of the obligated entities to meet their renewable purchase obligation (RPO), Pan-India market-based Renewable Energy Certificate (REC) Mechanism was introduced in the year 2010.

                          

What is the objective of Renewable Energy Certificate (REC) mechanism?

  • Renewable Energy Certificate (REC) mechanism is a market based instrument to promote renewable energy and facilitate compliance of renewable purchase obligations (RPO).
  • It is aimed at addressing the mismatch between availability of RE resources in state and the requirement of the obligated entities to meet the renewable purchase obligation (RPO).

 

What is the denomination of each REC issued?

  • One Renewable Energy Certificate (REC) is treated as equivalent to 1 MWh.

 

How many types of RECs are there?

  • There are two categories of RECs, viz., solar RECs and non-solar RECs.
  • Solar RECs are issued to eligible entities for generation of electricity based on solar as renewable energy source, and non-solar RECs are issued to eligible entities for generation of electricity based on renewable energy sources other than solar.
  • The solar certificate shall be sold to the obligated entities to enable them to meet their renewable purchase obligation for solar, and non-solar certificate shall be sold to the obligated entities to enable them to meet their obligation for purchase from renewable energy sources other than solar.

 

https://www.pib.gov.in/PressReleasePage.aspx?PRID=1759300