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India's commitment to promote Renewable energy: Proposes to revamp the Renewable Energy Certificate (REC) Mechanism

Press Information Bureau:  June 08, 2021

Ministry of Power has circulated a Discussion paper on redesigning the Renewable Energy Certificate (REC) Mechanism for comments of stakeholders in power sector today.

Discussion paper on the requirement of redesigning the REC Mechanism has been prepared in order to align it with the emerging changes in power scenario and to promote new renewable technology.

Salient features of changes proposed in REC mechanism are:

  • Validity period of RECs; Floor & Forbearance Price
  • The REC validity period may be removed. Thus, the validity of REC would be perpetual i.e., till it is sold.
  • As RECs are perpetually valid then the floor and forbearance prices are not required to be specified as RECs holders would have the complete freedom to decide the timings to sell.
  • CERC will be required to have monitoring and the surveillance mechanism to ensure that there is no hording of the RECs and creation of artificial price rise in the REC market. CERC may intervene if such case of malpractices is observed in the REC trading.
  • Period for which the RECs are to be issued to RE generators:
  • The RE generator who are eligible for REC, will be eligible for issuance of RECs for 15 years from the date of commissioning of the projects. The existing RE project that are eligible for REC would continue to get RECs for 25 years.
  • Promotion of new and high cost technologies in RE and the provision of multiplier for issuance of RECs
  • The concept of multiplier can be introduced, under which less mature RE technologies can be promoted over other matured renewable technologies.
  • The concept of negative list and sunset clause may also be considered for various technologies depending upon their maturity level.
  • Any RE technologies which need to be promoted may be identified say 2 years in advance. For such RE projects at least 15 years policy visibility would be provided to attract investments and promotion of such technologies in the renewable energy.
  • Multiplier
  • 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. The multiplier would also take care of vintage depending on the date of commissioning of the project.
  • Incentivising Obligated Entities for procurement of RE Power beyond RPO.
  • No REC to be issued to the beneficiary of the concessional charges or waiver of any other charges.
  • The role of trader can be enhanced in the REC trading which will bring in two key advantages i.e., it will give long-term visibility to the buyers of the REC and they can easily fulfil the RPO. Further, the small buyers can bank on the traders for buying REC as an ease of purchase. This will ensure even the small buyers who finds difficulty in trading in REC market will be able to fulfil his RPO

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.