Govt announces amendments to REC mechanism. Here’s what has changed

• Under the new mechanism, the validity of REC would be perpetual, ie, till it is sold
• The existing RE projects that are eligible for REC would continue to get RECs for 25 years

New Delhi: The Ministry of Power has announced amendments to the renewable energy certificates (REC) mechanism which has paved the way for the removal of floor as well as forbearance price limits for these instruments. "Union Minister of Power and New & Renewable Energy, Shri RK Singh has given his assent to amendments in the existing Renewable Energy Certificate (REC) mechanism. The intent behind this decision is to align the 'mechanism' with the emerging changes in the power scenario and also to promote new renewable technologies," said an official statement released by the ministry.

REC mechanism amendments will bring in flexibility for players

The proposed changes will provide some flexibility to the players, additional avenues, rationalisation and will also address the RECs validity period uncertainty issues. "Extensive stakeholder consultations have been held towards drawing up these changes. The Ministry of Power had circulated a discussion paper on redesigning the Renewable Energy Certificate (REC) mechanism for comments from stakeholders in power sector on June 4, 2021," said the Power Ministry.

New REC Mechanism

Under the new mechanism, the validity of REC would be perpetual, ie, till it is sold. Floor and forbearance prices are not required to be specified. The Central Electricity Regulatory Commission (CERC) will undertake monitoring and surveillance to ensure that there is no hoarding of RECs. The renewable energy generator who are eligible for REC, will be eligible for issuance of RECs for the period of PPA as per the prevailing guidelines. The existing RE projects that are eligible for REC would continue to get RECs for 25 years.

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. RECs can be issued to obligated entities (including DISCOMs and open access consumers) which purchase RE power beyond their RPO compliance notified by the Central government. Bilateral transactions are allowed in the new REC mechanism.

However, no REC will be issued to the beneficiaries of subsidies/concessions or waiver of any other charges. 

Background

The changes proposed in revamped REC mechanism will be implemented by CERC through regulatory process. To address mismatch between availability of RE sources and the requirement of the obligated entities to meet their renewable purchase obligation (RPO), pan-India market-based Renewable Energy Certificate (REC) Mechanism was introduced in the year 2010.

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