The Supreme Court
on Tuesday allowed trading
of renewable energy
certificates (RECs) on the appeal of Indian Wind Power
Association (IWPA). However, the order is restricted to non-solar
RECs and would have to comply with the earlier prices.
In March 2017, Central Electricity
Regulatory Commission (CERC) reduced REC
prices to a historic low. The floor price of solar REC
was reduced to Rs 1/unit and forbearance at Rs 2.5/unit. It was earlier Rs 3.5/unit and Rs 5.8/unit, respectively.
(wind and others), the floor price was reduced to Rs 1/unit and forbearance at Rs 2.9/unit. It was earlier in the range of Rs 1.5-3.5/unit.
The order was challenged by REC
generating companies in the apex court and in the Appellate Tribunal of Electricity
(APTEL). The petitioners had submitted that lowering the prices would never clear the unsold stock
of close to 10 million RECs. The generators asked the APTEL to suggest ways to clear the existing stock
of RECs, which would be hampered by the new price regime.
There are around 1,200 projects under the REC
mechanism, with a total capacity of 5,383 megawatt
Allowing the trading
to commence, Supreme Court’s final decision in the matter would be taken by APTEL, which is separately hearing the case over decrease in REC
prices. The Court said during the trading, the difference in the old and new price would be deposited with the regulators till the matter is pending.
Meanwhile, APTEL on July 14 postponed the hearing in the matter by two months. Sector experts are worried that this might lead to backlog in REC
will resume in the case of Non-solar
RECs, but will remain suspended in the case of Solar
RECs. However, we believe that it will be some time before trading
can start as CERC
will have to develop modalities to accept such a deposit,” said REConnect Energy, a renewable energy
trade facilitating agency.
Executives said buyers would hardly be interested in complicated procedure. “Given the lack of any pressure to comply with RPOs, it is unlikely that any obligated entity will spend a higher amount while the matter is still sub-judice in the APTEL,” said REConnect in an analysis report.
Under the Renewable Purchase Obligation notified under the National Tariff Policy, makes it obligatory for distribution companies, open-access consumers and captive power
producers to meet part of their energy
needs through green energy.
The states or utilities that are unable to fulfil their RPO can buy REC, which represents 1mw-hour of power
produced from a renewable energy
source and are tradable at power
exchanges. It is divided into Solar REC
and non-solar REC.
market, launched in 2010, has crashed last year with more than 1 crore certificates going unsold and has not made significant improvement since then. In the last REC trading
before it was stayed during the March 2017, the price discovered was Rs 1/unit for both non-solar