India Allows Trading Of RECs

• The Supreme Court of India has removed the stay from an Appellate Tribunal order; now it says there shouldn't be a problem if trading is done on forbearance and floor prices given previously
• With effect from April 1, 2017, Central Electricity Regulatory Commission (CERC) had brought down the forbearance price of solar RECs to 2,400 INR ($36.91) per MWh with a floor price of 1,000 INR ($14.962) per MWh
• This is a huge drop from the prices set by CERC until March 31, 2017
• The Supreme Court has asked respondents to ensure any entity purchasing RECs at the new floor price determined by CERC must deposit the difference between the earlier floor price and the present floor price

The path for trading Renewable Energy Certificates (RECs) in India has been cleared by the the Supreme Court. After a reduction in prices, REC generators had complained at the Appellate Tribunal of Electricity about this move.

RECs are categorized in India as solar RECs and non-solar RECs. As per Renewable Energy Certificate Registry of India, one REC is equivalent to 1 MWh. Renewable energy generators can sell these RECs to obligated entities who use it to fulfil their renewable purchase obligation (RPO).

These RECs can be exchanged only in the CERC approved power exchanges for a forebearance price and floor price determined by the Central Electricity Regulatory Commission (CERC) from time to time.

CERC had previously set new forbearance and floor prices for REC. With effect from April 1, 2017, CERC set a forbearance price of solar RECs at 2,400 INR ($36.91) per MWh with a floor price of 1,000 INR ($14.962) per MWh. Until March 2017, the prices were set at 5,800 INR ($90.14) per MWh and 3,500 INR ($54.39) per MWh, respectively.

REC generators had approached the Appellate Tribunal of Electricity (APTEL) to change the new regulation, 'citing losses due to exclusion of vintage multiplier in the new prices', according to Mercom Capital Group. They asked APTEL to suggest a way to clear the existing REC stock. The petitioners approached the Supreme Court when APTEL refused to put a stay on trading even as it allowed a vintage multiplier mechanism.

The Supreme Court has now stated that there shouldn't be a problem if RECs are traded at the figures given previously. It has also asked respondents to ensure any entity purchasing RECs at the new floor price determined by CERC must deposit the difference between the earlier floor price and the present floor price. Mercom called it a 'welcome news for all stakeholders involved'.