CERC cuts issuance fee for renewable energy certificates

Power sector regulator CERC has slashed the fee charged for issuance of renewable energy certificates, a move that comes at a time when demand for such instruments is sluggish.

The Central Electricity Regulatory Commission's decision is likely to help in improving the market for Renewable Energy Certificates (RECs) which is yet to take off in a big way.

The fee for issuance of an REC has been cut to Rs 4 per certificate from existing Rs 10 and the reduction would be effective from April 1.

One REC represents 1 MWh of energy generated from renewable sources. The mechanism was introduced way back in 2010 as part of efforts to boost the renewable energy sector.

"Fees for issuance of certificate shall be reduced from the present level of Rs 10 per certificate to Rs 4 per certificate for a period of one year with effect from 1.4.2014," CERC said in an order.

Other charges and fees related to RECs would remain the same, according to the order issued on February 5.

The National Load Despatch Centre is the nodal agency for carrying out activities related to RECs. These include registration of eligible entities, issuing as well as maintaining and settling accounts in respect of certificates.

To participate in the REC mechanism, eligible entities have to shell out money towards one-time registration, annual as well as transaction fee, charges for issuance and those for dealing in the certificate.

At present, the one-time processing fee is Rs 1,000 while one-time registration charges are Rs 5,000. Further, there are annual charges of Rs 1,000.

After five years of registration, the entity has to pay Rs 5,000 towards revalidation charges.

However, in recent months the demand for RECs has been on the decline.

Country's leading power bourse Indian Energy Exchange saw trading volumes of RECs plunge over 60 per cent in January even as their prices remained stable.

As many as 78,955 non-solar and 5,517 solar RECs were traded on the bourse last month. This is way lower than 2,50,722 non-solar and 6,893 solar certificates traded in December.

The decline in REC trading volumes was around 67 per cent in January as compared to December last year.

The clearing price of a non-solar REC stood at Rs 1,500 each while that of solar certificate remained at Rs 9,300.

At the time of launch in late 2010, the government had said that REC mechanism was expected to bring new investments in renewable energy projects and help introducing market based competition in renewable energy sector.