Blog by Team REConnect

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.

Joint ERC proposes amendment to RPO regulations

JERC; the joint electricity regulatory commission for the state of Goa and UTs has recently proposed a draft to its principal RPO regulations of 2010. The main highlight of the amendment is the declaration of RPO targets from FY14-FY22. The targets set for the years till FY22 are as in the table below:

There were few other changes in definitions as:

1. Renewable Energy Sources – Electricity generating sources recognised or approved by the Ministry of New & Renewable Energy and includes bundled power purchase (to the extent of renewable energy content in the bundled power), power generated  from cogeneration based power plants and certified by the state accredited agency. 

2. Obligated Entity – the entity mandated under clause (e) of sub-section (1) section 86 of the Act to fulfill the renewable purchase obligation under these regulations and includes distribution licensee, captive user for 1 MW and above with fossil fuel (excluding co-generation based captive power plants) and open access consumer.

3. Renewable Purchase Obligation - quantum as mandated under clause (e) of sub-section (1) of section 86 of the Act and specified under these regulations for the obligated entity to purchase electricity generated from renewable energy sources. 


Comments on this were invited by 23.01.2014.

The draft order on amendment can be accessed here.

Principal RPO regulations 2010 of JERC are available here.

MERC asks BEST to meet shortfall in RPO by March 2014

Electricity Regulator of Maharashtra (MERC) on 6th March 2014 released 3 separate orders with regards to verification of RPO compliance of state discoms; namely Reliance Infrastructure Limited – Distribution (RIL-D), Tata Power Company – Distribution (TPC-D) and Brihan Mumbai Electric Supply and Transport (BEST).

Maharashtra currently has the following defined RPO targets in its relevant regulations.

Further, the Distribution Licensee(s) are also mandated to procure 0.1% per year of their Non-Solar (other RE) RPO obligation for the period from FY 2010-11 to FY 2012-13 and up to 0.2% of their Non-Solar (other RE) RPO obligation for the period from FY 2013-14 to FY 2015-16 by way of purchase from Mini Hydro or Micro Hydro power project.

Recently there were updates that Govt. is mulling to introduce hydro-tradable certificates. More on this can be read here

Order w.r.t RIL – D:

In an order dated 5th Dec 2012, MERC had waived/relaxed the shortfall in RPO compliance for FY11 & FY12 and had ordered cumulative compliance of this shortfall along with RPO targets of FY13. Subsequent to this, it was reported that RIL-D had complied with all RPO targets (Non-Solar + Solar) before the deadline of 31st March 2013, except that in case of Mini/Micro Hydel Power projects.

RIL-D fulfilled solar RPO targets with a surplus of 2.13 MUs and non-solar RPO targets with a surplus of 9.29 MUs.

In the present order (refer), MERC has relaxed RPO shortfall in terms of hydro power RPO to FY16, thereby declining the prayer of Reliance to completely waive off such targets. MERC was of strong view that such waive off will be against the intent of having a specific RPO targets from Mini/Micro hydel projects.

RIL-D has now been directed to fulfil shortfall in hydel RPO cumulatively by 31st March 2016.

Order w.r.t Tata Power – D:

Regarding solar RPO compliance, MERC had already directed TPC-D, through an order dated – 20th Dec 2013, waived/relaxed the shortfall in solar RPO till FY16.

Non-solar RPO has been complied by TPC-D with a surplus of 1,2 MUs, except hydro RPO targets.

Current Order waives/relaxes this hydel power purchase requirement by allowing TPC-D to meet the same by FY16.

Order can be read here.

Order w.r.t BEST:

In case of BEST, solar RPO targets were relaxed in an order in Case NO. 30 of 2013. Shortfall in solar RPO is to be met cumulatively by FY16.

MERC noted that BEST has fulfilled its RPO targets w.r.t hydro power cumulatively by FY13.

However, the shortfall in meeting non-solar RPO targets till FY13 is 4.23 MUs which is to be cumulatively met along with RPO target of FY14. This is to be positively complied before 31st March 2014 to repel any regulatory charges, meaning BEST may have to purchase equivalent amount of RECs from the Market in the last trading session of this fiscal.  In our analysis, the approximate requirement in terms of RECs comes down to  4,64,230 non-solar RECs (For gross consumption in FY14 – Refer Page No. 157 – T.O FY13-16 BEST).

Order in case of BEST can be read here.

Our past blog-posts on RPO in Maharashtra can be accessed here -




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

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

Govt. pushes for stronger RPO enforcements

The Ministry of New & Renewable Energy (MNRE) has written to Ministry of Power (MoP) to include stronger enforcement provisions in the Electricity Act itself, which at present is absent.

An article in Business Standard, quoted Joint Secretary of MNRE saying the following, at an event:

“What we have requested is that the Electricity Act itself should mention about RPO… Or there (should) be some other alternative, so that it becomes binding. Also the enforcement provision should be more stronger,”.

He also called for greater investments in renewable energy sector of India.

REC markets have been performing poorly. In January 2014 also, which was 1st month of last quarter of FY14, the volumes remained far from encouraging and resulted in continued clearing of RECs at floor price. More insights can be learnt by clicking here – REC Trade Report – January 2014.

According to recent details made public by Hon’ble MNRE, as on 31st January 2014, the total grid connected renewable capacity of the country has touched 30 GW. However, the achievements highlighted are only around 50 % of the target for the year. The details can be accessed here – MNRE – Physical Progress (Achievements).

Gujarat DISCOMs approach CERC to seek REC benefits

Gujarat Urja Vikas Nigam Limited (GUVNL) on behalf of DISCOMs , had approached Hon’ble CERC for certain amendments to REC regulations, enabling the former to claim solar RECs as “Eligible Entity” for excess procurement over & above the stipulated RPO targets. GUVNL had submitted (in Petition no. 128/MP/2013) that dis-allowance of RECs for excess solar power procurement after meeting RPO targets, is a disincentive  for DISCOMs who have been buying solar power at promotional tariffs with an aim to promote solar power generation in the state.

The matter is unprecedented because an obligated entity (usually a buyer of RECs) wants to claim RECs for excess power procurement and not excess power generation.

In the order dated 2nd Dec 2013 (refer), GUVNL brought forward that DISCOMs had to tie up solar capacity of 380 MW to comply with RPO targets (of 1% in FY13). DISCOMs in-fact have signed PPAs of 971.5 MW solar capacity, that too at promotional tariffs.

GUVNL has also argued that buying costly solar power from developers is going to financially impact the consumers in the state as the higher cost of power procurement is passed on to them. To abrogate such a case, it proposes to claim RECs which will reward DISCOMs as well as take care of consumer interests.  GUVNL also requested for a provision where RPO surplus DISCOMs are allowed to exchange RECs with RPO deficit ones by bypassing prevailing exchange based transactions. In our view, this particular demand questions the very purpose of having a double side closed fair market-based mechanism for RECs.

GUVNL had also prayed the apex commission puts in place a uniform solar RPO target for all states in India.

CERC, in the order, is of the view that current regulations stipulating generators only for claiming RECs is adequate for a healthy REC market. Hon’ble commissions decision can be read as -

“The Commission is of the view that the existing provisions of eligibility in the  REC Regulations which is limited to generating companies is adequate at this stage of development of REC market. Without going into the merit of the issues raised, we intend to clarify that filing of the petition is not the proper process for initiating the amendment to the existing regulations. The Commission under Section 178 of the Act has been vested with the power to make, amend and repeal the regulations on the subjects which have been authorized under various provisions of the Act. Action to make or amend the regulations is initiated when the Commission is satisfied that there is need for such regulations or amendment to the existing regulations.”

However, the commission directed its staff to analyse the issue and come up with an appropriate proposal for consideration.

According to Press Information Bureau (Release ID :103402) the matter was brought to light by Hon’ble Minister of New & Renewable Energy in the Lok Sabha (on 7th Feb 2014). In a written reply Hon’ble Minister quoted that obligated entities were free to procure power over and above RPO targets and that any changes to existing regulations is a quasi-judicial process and the CERC takes a view after following due process of law including public hearing. 

Tamil Nadu drafts RPO targets for FY15 & FY16

Tamil Nadu Electricity Regulatory Commission (TNERC) recently issued a draft order on RPO targets for FY15 & FY16. The following are the targets proposed by the commission: 

Column 1 Column 2 Column 3
Year Minimum quantum of total renewable purchase obligation in %age ( in terms of energy in kWh) Minimum quantum of solar renewable purchase obligation in %age out of total renewable purchase obligation mentioned in Column 2 (in terms of energy in kWh)
2014-15 11.00% 2.00%
2015-16 11.00% 2.00%

This implies that obligated entities (Distribution Licensees only)  in Tamil Nadu will now have to consume a minimum of 9% of non-solar power/RECs and 2% of solar power/RECs to comply with RPO targets in FY15 and FY16. The order is yet to be finalised and comments on the same have been invited no later than 24.02.2014.  

Solar RPO target is a highlight as it has been taken up from currently 0.05 % to 2 %. This shows TN’s strong commitment towards fostering solar generation in the state. Given the fact that a recent judgement by ApTel had set aside state’s ambitious solar policy (for a relevant blogpost – click here), this particular step from TNERC is laudable.

Present draft order can be accessed here.

Previous final RPO order can read by clicking here.

CERC reduces REC issuance fee payable to NLDC

In an order dated 05.02.2014. the apex electricity regulator CERC extended the existing fees and charges chargeable by the central agency (NLDC) for registration of REC projects till 31.03.2014. The decision was taken by CERC after scrutiny of audited accounts of the central agency. The registration charges as tabled below, are going to be in effect even after 31.03.2014, till any further orders. 

Particulars Amount in Rs.
Processing Fees (One Time) 1000
Registration Charges (One time upon registration) 5000
Annual Charges 1000
Revalidation charges at the end of 5 years 5000

Table 1 : Fees & Charges for Registration

While there was no change in registration charges, the issuance fee for RECs charged by NLDC was reduced to Rs. 4 per certificate. This is going to continue for a period of one year with effect from 01.04.2014.

Summary of changes -

Fees & Charges for Registration – Same as in Table 1 (Till further orders).

Issuance fee – Rs. 10 per certificate ( till 31.03.2014).

Issuance fee – Rs. 4 per certificate (from 01.04.2014 to 31.03.2015).

The order can be read by clicking here.

An article in Economic Times can be read here.


Uttarakhand penalizes UPCL for non-compliance of RPOs

After a prolonged wait and significant suffering of RE stakeholders, finally, a regulatory body has shown its true strength and purpose by imposing the penalty on an RPO defaulting entity – a first ever penalty imposed on any obligated entity in India. The case matter is as follow:

In December 19, 2012, UERC (Uttarakhand Electricity Regulatory Commission) had ordered state DISCOM – Uttarakhand Power Corporation Limited (UPCL), to carry forward the unmet RPO for FY 2011-12 for both solar as well non-solar sources to 2012-13 which were to be met alongwith the RPO for FY 2012-13.

  • Subsequently, in September 11 – 2013, UPCL was directed to procure RECs for unmet RPO of 59.12 MUs (59,120 REC equivalent) of non-solar sources for FY 2011-12 within 2 months, i.e. by November 15, 2013 failing which UPCL would be liable for appropriate action u/s 142 of Electricity Act, 2003.
  • In the same order, UPCL was also allowed to carry forward the unmet RPO of FY 2012-13 for both solar as well as non-solar sources to FY 2013-14 which was to be met with its obligation for FY 2013-14 by March 31, 2014 failure of which may attract action against it under Section 142 of the Electricity Act, 2003.

However, UPCL paid no heed to UERC’s directives and failed to comply with Commission’s order.  The Commission also acknowledged that “UPCL has been time and again making repeated non-compliance of the directions issued to it under the Act & Regulations inspite of the fact that numerous opportunities has been provided to it to mend its affairs.” Further, the Commission also commented that “ignorance of law is no excuse. UPCL being a commercial organization and a licensee under the Electricity Act, 2003 has to ensure compliances of the Act, Rules and Regulations made there under.”

UERC has considered UPCL’s non-compliance as willful contravention of the direction of the Commission and has imposed penalty of Rs.20,000/- on the Managing Director of UPCL. The Commission has also directed UPCL to comply its pending RPO by March 2014, failure to which will attract additional penalty of Rs.2000/Day thereafter.

This order brings a ray of hope for all the RE Generators in India who have desperately been waiting to see any positive step towards compliance. This order will certainly boost confidence of RE fraternity towards an almost written-off REC market.

The order can be read here