CERC is considering leaving the REC price bands unchanged (the limits within which RECs are traded), and also extending the control period from the current three years, reported the Business Standard.
CERC had come out with a draft order suggesting that prices be revised downward to Rs 1,400 – 3,480 for Non-solar, and Rs 9,880 – 13,690 for Solar RECs. Our analysis suggested that this is likely to significantly impact returns on projects, and that the Average Pooled Price (APPC) used in the calcualtions showed significant variation.
The public hearing on the draft order also overwhelmingly suggested that RE project developers feared such a downward revision will impact return and bankability (difficult even in the present scenario). A quick summary of the main points of the hearing are discussed in our most recent newsletter.
If the CERC does indeed let the prices remain unchanged, and also extends the control period it will have a significant positive impact on the bankability of projects opting for the REC mechanism.