Blog by Team REConnect

MNRE favors REC markets for Solar Power

India’s ministry of new and renewable energy (MNRE) is favoring REC markets for development of solar power. Eminent members of the ministry are of the view that solar REC markets will revive soon as they expect buyers jumping in. This optimism is when physical solar power comes at a lower cost as compared to buying solar RECs (floor price – Rs. 9.3 per REC). That means, obligated entities have less motivation paying for higher solar REC cost than physically procuring it.

Also solar floor and ceiling prices have been fixed upto FY2017. The steep declining trend in cost of solar power makes it more difficult for solar REC markets and demands quick revision of these prices.

Recently Shri Upendra Tripathy who has assumed charge as Secretary of MNRE, spoke at a gathering that process is ongoing for a policy review with the FOR (forum of regulators) and CERC (Central electricity regulatory commission). Mr. Tarun Kapoor, Joint secretary MNRE has alaso asked all states to strictly meet the stipulated targets. It is being anticipated that a new policy for solar REC markets will be put in place as soon as a new government is formed at the center.

FOR has also called for engagement of consultants to review the REC mechanism completely.

Media article can be read here.

Delhi discoms likely to comply with RPO by purchase of RECs

Delhi discoms – BRPL, BYPL and TPDDL have all filed a petition to Delhi electricity regulatory commission (DERC) for approval of annual revenue requirement (ARR) of FY 2014-15.

In terms of renewable energy resource capacity, Delhi is indeed poor as compared to other states. Therefore, to comply with RPO targets obligated entities in the state have lesser options than to buying RECs from the markets.

Following are the cost estimates for purchase of RECs submitted by discoms (for FY2014-15)-

BRPL – Rs 28.3 cr (Solar RPO) & Rs 90.7 cr (Non-Solar RPO)

BYPL – Rs 15.4 cr (Solar RPO) & Rs 56.2 cr (Non-Solar RPO)

TPDDL – Rs 17.54 cr (Solar RPO) & Rs 74.71 cr (Non-Solar RPO)


The petitions can be downloaded from DERC’s website.

Updates from 39th FOR meeting

The following are the key issues discussed w.r.t REC markets -

  • The concept of REC multipliers for solar was endorsed in principal.
  • It was also decided that a detailed note be prepared on the desirability and feasibility of merger of solar and non-solar REC in future, and the issue be taken up for discussions in the next meeting of FOR.

The minutes of meeting can be read – here.

REConnect Newsletter Volume 40 – OPEN ACCESS

Dear Reader,

We are pleased to present Open Access Vol 40 – our monthly newsletter covering RECs and regulatory and market developments in the renewable energy space.

Key points covered in this newsletter are:

 1) Two important announcements – Infuse Ventures – a clean tech focused venture capital fund invested in REConnect Energy, and 2) The scheduling and forecasting team reached an important milestone of sending over 15,000 schedules till date. This milestone was achieved in a short span of 8 months.

 2) A detailed analysis of the REC markets in FY 2013-14

 3) Regulatory updates including important changes in RPO regualtions in Gujarat and Rajasthan

 4) Analysis of the most recent trading session of RECs and capacities in the REC mechanism

 The newsletter can also be downloaded by clicking here - or past newsletters from here.

 We hope you find the newsletter a useful read. Do provide us feedback.


- Team REConnect

Captive power plant of Bokaro Steel Plant is co-gen : Jharkhand ERC

In an order dated 24th March 2014, state electricity regulator of Jharkhand (JSERC) is of the view that the captive power plant of Bokaro Steel Plant (a unit of Steel Authority of India) can be regarded as a co-generation plant. This means that power consumption from CPP of BSL will qualify towards fulfillment of RPO set under relevant regulations of JSERC.

BSL had prayed JSERC to

1. declare its CPP of 302 MW as co-generation power plant,

2. exempt BSL from applicability of RPO and

3. waive the RPO applicable on consumption of power from its CPP during FY11, FY12 and FY13.

CPP of BSL fulfills the definition of CPP as BSL has 50% equity in the plant and consumes 100 % of power generated.

JSERC also considered APTEL’s judgement in the case of MERC vs Century Rayon, where in it was declared that fastening of RPO on  would defeat  the objective of section 86 (1) (e) of the Indian Electricity Act.

JSERC has RPO targets defined till FY16. It has a total of 4% RPO (1% solar & 3% non-solar) for all three years FY14, FY15 & FY16.

BSL also is a distribution licensee in Jharkhand. As per data furnished in the order total RPO applicable on BSL for consumption of captive power comes around – 64.8 MW of non-solar and 17 MW of solar RPO.

The order can be accessed here.

REC Trade Report – March 2014

We are pleased to bring the REC trade results and our analysis on REC trade session conducted on 26th March 2014. Following is a brief of the analysis:

With this trade session, a 12-month long financial year FY 2013-14 comes to an end. The prices for both credits (solar as well as non-solar) remained at floor for most part of the year.  Poor enforcement measures of RPO across states saw a continuous lack of demand in the market.

Close to 17.5 lac RECs were issued in March’14 itself, which is a huge 15 % (approx.) of the total RECs issued till date in India (since March 2011) . This can be attributed to issuances of RECs w.r.t sugar co-gen units in Uttar Pradesh.

A strong policy review is the need of the hour. It is likely and should be expected, that the forum of regulators (FOR) takes up this issue for discussions during the forthcoming 40th meeting scheduled on 2nd April 2014.

Non Solar RECs -

Non Solar REC Supply grew by around 22%. Demand also went up by a massive 74%, owing to March being last month of FY14 (and not due to strong RPO enforcement). Evidently, clearing volume also touched a new high of around 6.5 lac RECs.

Non-Solar REC Price continued to trade at floor price of Rs. 1500 per REC.

Solar RECs -

In case of solar RECs also all volumes had an uptick. Supply was up by 13.22.6 % and demand by 32.63 %. The total clearing volume of solar RECs at both exchanges was 11,019 RECs.

As per REC registry, 24370 solar RECs were issued in March 2014.

Unlike in non-solar REC markets, the solar RECs started trading at floor, only from June 2013. The discovered price of solar RECs remained at floor – Rs. 9300 per REC.

Keeping in view the overall market performance, it can be said that the time ahead for investors in solar REC markets remains grim.

For a similar blog-post covering analysis on previous months trade session – click here.

A quick glimpse of trade stats can be had on our Market Tracker.

Gujarat’s first amendment to RPO regulations

Gujarat Electricity Regulatory Commission (GERC) on 4th March 2014 amended its principal RPO regulations of 2010. In these regulations, Gujarat set its RPO targets post FY13. The RPO set are from FY14 to FY17.

Gujarat announced 10% of energy procurement to come from renewable sources, for its obligated entities for FY17.

The year-wise RPO targets effective April 2014 are tabulated below:

GERC also introduced the definition of APPC which was hitherto missing. Average Power Purchase Cost (APPC) for the purpose of REC Mechanism is in line with that of CERC and is defined as -

‘Average Power Purchase Cost’ means the weighted average pooled price at which the distribution licensee has purchased the electricity including cost of self generation, if any, in the previous year from all the energy suppliers long-term and short-term, but excluding those based on renewable energy sources, as the case may be.’

In addition, GERC also clarified that a RE project registered under REC mechanism selling power under captive or third party mode will receive payment equal to APPC for excess injection after off-setting its own consumption, from the discom.

The present order on amendment can be accessed here

The principal RPO regulations of 2010 can be read here

Rajasthan proposes amendment to RPO regulations

Hon’ble Rajasthan Electricity Regulatory Commission (RERC) has recently proposed an amendment to its principal RPO regulations. Comments have been invited by all stakeholders no later than 18th March 2014. Link to the proposal -

These changes, if incorporated into the RPO regulations will have significant impact on CPPs and OA in Rajasthan.

Following are the highlights of such changes -

1)      Solar RPO will have to be fulfilled separately,

2)      Co-gen and WHR power will no longer be allowed to offset RPO, and

3)      The RPO percentages will increase.

4)      Stricter enforcement of RPO likely.

The proposed changes are discussed in detail below:

Inclusion of Solar RPO for captive power plants (CPP) and open access consumers (OA):

In the present regulation there is no separate solar RPO. As a result in most cases CPPs and OA consumers would meet their obligations through non-solar sources. The proposed amendment introduces a separate carve-out for solar RPO that can be met through solar power/ solar REC alone.

However, the requirement of meeting solar RPO separately will only apply to CPPs and OA of 10MW or more installed capacity. CPPs and OA below 10 MW will be required to meet RPO in total only, as is the present case.

This change will bring Rajasthan RPO in line with most other state RPO regulations, and also in line with the National Tariff Policy. After this change, Karnataka will remain the only exception where CPP and OA do not have a separate Solar RPO.

Removal of Co-generation as RE power:

The present regulation considered co-generation as equivalent to RE power. As a result several CPPs and OA could fulfill their RPO obligations by consumption of co-gen power. In a separate pronouncement, the Rajasthan Electricity Regulatory Commission (RERC) has considered Waste Heat Recovery (WHR) as co-generation.

The proposed amendment will not allow offsetting of RPO from conventional power generation or OA from co-gen power. This change follows the recent order of ApTel in the case of Lloyds Metal & Energy. The order can be accessed here. Our blog-post covering the issue can be read - here.

In the above order, ApTel has stated the following:

Upon conjoint reading of the provisions of the Electricity Act, the National Electricity Policy, Tariff Policy and the intent of the legislature while passing the Electricity Act as reflected in the Report of the Standing Committee on Energy presented to LokSabha on 19.12.2002, we have come to the conclusion that a distribution company cannot be fastened with the obligation to purchase a percentage of its consumption from fossil fuel based co-generation under Section 86(1)(e) of the Electricity Act, 2003. Such purchase obligation 86(1)(e) can be fastened only from electricity generated from renewable sources of energy.

It is important to note that co-gen power will continue to be exempted from RPO (as per several orders from ApTel earlier). However, such power will no longer be allowed to offset RPO emanating from other sources like conventional generation or OA. This change will bring Rajasthan RPO regulations in line with the regulations of most states, and with the interpretations of Aptel.

Increase in RPO percentages:

The proposed RPO percentages are:

CPP & OA Consumer with total capacity of 10 MW and above:

Year Non-solar RPO Solar RPO Total RPO
2014-15 7.50 1.50 9.00
2015-16 8.20 2.00 10.20
2016-17 8.90 2.50 11.40

CPP & OA Consumer with total capacity of more than 1 MW bet less than 10 MW:


Total RPO %







Stricter enforcement of RPO likely

RERC notes the following in the proposed amendment: certain CPP & Open Access Consumer have made an appeal in Hon’ble Supreme Court against this order of Hon’ble[Rajasthan] High Court. As there is no stay in the matter, the obligated entities are bound to comply with RPO mandate. Further, RERC has also mentioned that the state agency is in the process of identifying compliance levels by CPPs and OA in the state. These comments point to a stricter enforcement of RPO in the near future.

REConnect Newsletter Volume 39 – OPEN ACCESS

We are pleased to present the 39th Volume of “OPEN ACCESS” - our monthly newsletter on REC Mechanism.

The present volume covers analysis on following main topics:

  • Detailed analysis of the bidding under JNNSM Phase 2 by solar industry export Shri Gopal Somani
  • Various regulatory updates including review of revised procedures for RECs accreditation, registration and issuance. Details about reterntion of RECs for own RPO fulfillment are also included.
  • REC trading analysis for February 2014.

To access the current volume (OPEN ACCESS Vol. 39) please Click Here

To read past volumes of our newsletter please follow this link.

We hope you will find this volume of OPEN-ACCESS an insightful read. As always, look forward to your feedback and continued support.


Team REConnect

CERC notifies changes to REC procedures

CERC recently notified revised procedures for REC mechanism through an order dated 17th Feb 2014. Following are the changes:

1. REC registration applications

a. Recommendation by SA for Registration of Project under REC Mechanism in the format prescribed to be furnished along with the application.

b.Claim for refund to be made within 15 days from the day of payment. Claim made later will not be entertained.

c. Format of the declaration has been modified (Refer to the Order).

2. REC Issuance applications :

This procedure shall be applicable to all Eligible Entities, who have received Certificate of Registration‟ from the Central Agency, and shall be eligible to avail Renewable Energy Certificates from the date of commercial operation or from the 00:00 hrs of next day of Registration date of such plant by the Central Agency whichever is later.

This deviates with the 2nd amendment of the REC regulations which says

“After registration, the renewable energy generation plant shall be eligible for issuance of Certificates under these Regulations from the date of commercial operation or from the date of registration of such plant by the Central Agency whichever is later”

a. Central Agency shall not issue RECs during the trading session at the Power Exchange.

b. The Eligible Entity shall apply for issuance of RECs within six (6) months from the month in which RE was generated and injected into the electricity grid. At least 6 clear working days are available to Central Agency for considering the application.

c.  The application for issuance of Renewable Energy Certificates may be made on 10th, 20th and last day of the month.

3. Retention of RECs:

a. SA to accept application for retention of RECs and shall issue ‘certificate of purchase’ of RECs to the buyer.

b. Eligible entity to apply it online from 1st to 5th of every month.

c. Hard copy of the application has to be submitted by 9th of every month to SA.

d. SA to check the proposed volume and application by 15th of every month.

e. SA to inform CA of list of RECs which will be by 22nd of every month.

4. REC Accreditation application:

The RE generator shall obtain a certificate from the concerned distribution Licensee for the connected load in case of co-generation plants. The Distribution Licensee shall issue such certificate within 15 days from the date of application by the RE Generator and the RE Generator shall submit it to State Agency along with application for accreditation.