Solar and wind power projects in the state of Rajasthan under the Renewable Energy Certificate (REC) mechanism suddenly find themselves in a limbo. Their project approval has been suspended by the Rajasthan Renewable Energy Corporation Limited (RRECL) with immediate effect until further notice. The state cabinet is expected to set a time duration of suspension.
An RRECL official told Mercom Capital, "In Rajasthan the lowest solar tariff was quoted at, ₹2.44 ($0.038)/kWh; if distribution companies (DISCOMs) purchase power through the REC mechanism, they pay a higher price at ₹3.46 ($0.054)/kWh. The first issue is that they are paying more for power than they can on the open market; the second issue is that the DISCOMs are not getting credit for meeting their RPO obligations when they purchase power under the REC mechanism – the generators receive the RPO credit."
The state level screening committee (SLSC) will not be approving any new renewable energy projects under the Renewable Energy Certificate (REC) mechanism. In a letter issued to the stakeholders, RRECL has made it clear that it won't entertain any applications for registration of projects under REC mechanism until further orders.
This should come as a big blow to the solar power developers in Rajasthan who already are engaged in a tussle with electricity distribution companies, which have long been unwilling to buy power from solar power producers citing higher rates compared to the current low prices achieved in recent auctions (see TANGEDCO Wants Retroactive Solar Tariff Cuts).
While the Government of India is trying to put processes in place to ensure fairness in solar power procurement, apparently the rapid growth of solar is meeting increasing resistance with traditional stakeholders (see MNRE Issues New Guidelines For PV Projects).
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