The Supreme Court released an order dated 14/07/2017 which lifted a ban on the trading of non solar RECs. The same was covered in our blog. An article, covering the order was published Business Standard. REConnect was quoted in the article suggesting that ““Trading will resume in the case of Non-solar RECs, but will remain suspended in the case of Solar RECs. However, we believe that it will be some time before trading can start as CERC will have to develop modalities to accept such a deposit”.


The matter of CERC’s order on new RECs pricing and the stay granted by the SC on trading, another  hearing was held in Supreme Court on 14th July 2017.


Main highlights of the Order:


  • An Intervention appeal was filed  requesting  obligated entities to purchase RECs at previous prices i.e. Rs 1500/ REC (MWH) with the additional amount deposited with the CERC


  • The Supreme Court allowed this, and directed that the differential price (Rs 500/REC) i.e. between the earlier floor price (Rs 1500/REC) and the present Floor Price(Rs 1000/REC) to be held by CERC during the pendency of the matter with Appellate Tribunal


  • Therefore, stay on the REC Trading (only for Non Solar RECs) have been withdrawn by Supreme Court and trade is likely to start. However, we believe that it will be some time before trading can start as CERC will have to develop modalities to accept such a deposit.


  • The stay on Solar RECs trading remains in place, and the hearing on that matter will be held  in due course


Today (17/July/17) the Appellate Tribunal was due to hear the above matter, but it has been postponed to a later date.


Implications of the SC order:


  • Trading will resume in the case of Non-solar RECs, but will remain suspended in the case of Solar RECs. However, we believe that it will be some time before trading can start as CERC will have to develop modalities to accept such a deposit.


  • Despite the start of trading, it is very unlikely that any meaningful demand for Non-solar RECs will materialise. Given the lack of any pressure to comply with RPOs, it is unlikely that any obligated entity will spend a higher amount while the matter is still sub-judice in the ApTel.

The SCs order can be accessed here

Our previous analysis of the order on stay of REC trading can be accessed here


This is an attempt to encourage solar and wind  energy in the country, the Ministry of Power (MoP) had waived off the inter-state transmission charges and losses on the electricity generated by wind and solar sources of energy in September last year. That order has now been amended by the MoP  and as per the new order, transmission charges and losses are wavered off only on solar projects.  The MoP, after consultation with MNRE, CEA, CERC and POSOCO, has notified the following:

For generation projects based on solar resources, the waiver will be on projects commissioned till 31/12/2019. The waiver will be available till 25 years of date of commissioning of such projects and on solar  projects entering PPAs for sale of electricity to DISCOMs for compliance of RPO. The remaining of the terms and conditions remain the same as the 2016 order.

As per our analysis, this order by the MoP has a number of limitations. First of all, it is only applicable to solar projects from which the electricity will be sold to the DISCOMs. Secondly, it will only be on those solar projects entering PPAs for the compliance of RPO.

The order released in 2016 can be accessed here.


After the Central Electricity Regulatory Commission’s (CERC) order dated 30th March 2017 on reduction of prices for RECs, many REC-generating companies had filed petitions stating that they had incurred a loss as vintage multiplier was not provided. They had first gone to Appellate Tribunal of Electricity (APTEL) to suggest a way to clear the existing REC stock. While the APTEL agreed to introduce a vintage multiplier, it refused to put a stay on the trading.  When the petition was taken to the supreme court, it not only put a stay on the trading, it has also stayed the new price regime which was introduced by the CERC.


The Business Standard article covering the same can be accessed here.

Our blog covering the reduction in the REC prices and our analysis of the same can be accessed here.


In a recent order dated 24.03.2017, the apex electricity regulator CERC has finalised the fees and charges payable by the Designated consumers to the registry for the purpose of meeting the cost and expenses towards the management of registry and software platform.

The fees and charges determined through this order may be applicable upto Financial Year 2019-20  or as may be determined by the CERC in consultation with Registry and the Administrator

The Fees & charges applicable are tabled below:


With this, the only thing remaining to be approved are the exchange rules and charges for trading. Once that is done, all the procedural aspects to enable ESCerts trading will be completed. We expect trading to start sometime in the second half of April.

The link to the order can be found here.


CERC came up with draft regulations in which they have reduced the prices of their Renewable Energy Certificates to a historic low. The new floor and forbearance prices from the same have been covered in our previous blog which also contains a link of the draft regulation.

REConnect Energy’s co-founder and director, Vibhav Nuwal made the following observations about the scenario in Business Standard “This change rewards non-compliant companies, which can now comply at a much lower cost. It will exert further pressure on distressed projects”.



Honorable Central Electricity Regulatory Commission has determined floor and forbearance prices for REC (solar and non-solar)  which will be valid from April 1, 2017 onwards. The prices have reduced significantly and the solar prices are set to reduce from Rs 3,500 to Rs 1,000 and the non-solar REC prices are set to reduce from Rs 1,500 to Rs 1,000.


No Vintage Multiplier has been proposed for any technology and existing vintage multiplier for Solar generating technologies registered in REC mechanism prior to 1st January 2015 and shall expire after 31st March 2017.


The proposed floor and forbearance prices are given below:


The following is the REC price trend:


The impact of this price reduction on different aspects is as follows:

Impact on existing REC projects:

  • Reduction in floor price will aggravate the financial duress of RECs based projects: Already the newly established REC projects are under distress. Reduction in the floor price will only aggravate the situation as the number of unsold RECs will increase.

  • No Vintage Multiplier: The draft does not clearly state the position on multiplier to be provided on existing inventory of RECs.

Impact on obligated entities:

  • Perverse gain for defaulting Obligated Entity: Obligated entities which are non-compliant will benefit from reduction in prices since they will have an option to purchase RECs and fulfill their RPO compliance at a lower rate. This has never been addressed by the CERC or the state ERC’s,


  • Potential higher demand going forward: Most captive and open access based customers will find it easier to buy RECs than to buy green power. Therefore, the low prices may lead to an increase in the REC demand.


Impact on the market:

  • Low Demand in March 2017: Since the new prices will be applicable from 1st April, 2017, March will see minimum demand as the Obligated entities will have an option to comply with RPO compliance in the next FY.


  • Higher Inventory and therefore lower clearing ratios: If the appropriate multiplier is provided to the existing inventory, the inventory of unsold RECs will jump to 3.6 crore RECS as compared to 1.7 crore RECs as present. Even lower clearing ratios will be experienced at exchanges if the demand does not increase in proportion.

Other issues:

  • Calculation of floor price

  • Validity of RECs


The previous analysis of CERCs floor and forbearance for financial year 2012 to 2017 can be found here.

CERC Determines fees for issuance of Renewable Energy Certificates

In a recent amendment in the Regulation 11 of the REC Regulations, CERC determined the fees and charges payable by the eligible entities for participation in the scheme for, registration, eligibility of certificates, issuance of certificates, and other matters connected there with.  Following are some of the highlights of the regulation:


a)      Fees and charges other than those for issuance of certificates would be continued as they are at present until further orders.


b)      The fee for issuance of certificate for the period from 22.4.2013 till the date of issuance of next order by the Commission was determined at the rate of Rs 10/certificate.


c)      The fee for issuance of certificate for the period from 1.4.2015 till the date of issuance of next order by the Commission was to be regularized at the rate of Rs 4/certificate.


d)      The fees for issuance of certificate for the period from 1.1.2017 until further orders is determined to be Rs 2/- per certificate.


The regulation can be accessed here.

Rajasthan Proposes Wind Tariff for FY 2016-17

The Rajasthan Electricity Regulatory Commission (RERC) recently proposed the new tariff for wind energy sources, which will be applicable for the projects commissioned during FY 16-17. The tariff will be applicable for 25 years.  The details of the tariff proposed are in the table below:



Below are the some graphs on the year-wise tariff’s of CERC and RERC for wind energy and the % changes in the tariffs over the years.


Note: All figures of CERC relate to wind zone-2 as defined by CERC, and all RERC tariffs relate to Wind Power Plants located in districts other than Jaisalmer, Jodhpur & Barmer districts.

It can be noticed from the graphs above that RERC has constantly increased Wind tariffs over the last three FYs except for the current FY, while CERC wind tariffs have risen a bit in terms of %.

Rajasthan has a wind power potential of 5050 MW’s and with these tariffs proposed, it will become an attractive destination for setting up Wind projects.

The Tariff proposed by RERC can be read here.



Analysis of CERC’s 4th Amendment to REC Regulations

CERC published the 4th Amendment to REC regulations in end-March. These regulations will have a significant impact on the RECs markets going forward, as a large portion of the existing capacity under the mechanism will become in-eligible for RECs.

In summary, the following projects will no longer be eligible for RECs:

  • Open access projects that avail concessional wheeling or banking benefit
  • Captive or self-consumption projects commissioned before 29 Sept 2010 or after 31 March 2016 (ie, before the RECs regulations first amendment when captive projects were made eligible and after this amendment)
  • Captive or self-consumption projects commissioned between 29 Sept 2010 or after 31 March 2016 but avail concessional wheeling or banking benefit

Our analysis suggests that several projects will become ineligible for RECs. The largest impact will on bio-fuel co-gen projects and biomass projects, as a large portion of these projects are captive or self-consumption projects commissioned prior to 29 Sept 2010. Older wind projects under group-captive mechanism (predominantly in TN and Maharashtra), and captive small hydro projects will also be impacted.

Solar projects are likely to have minimal impact as most projects are commissioned after 2010.

Source: REC Registry website; REConnect Analysis


This will lead to significant reduction in RECs issued. Our estimate suggests that the reduction could be as high as 40-50% of existing RECs issuance (in FY 15-16, total non-solar RECs issued were 73.6 lakh).

As a result, it is likely that demand for RECs will outstrip supply on an annualized basis during FY 16-17. However, large existing inventory of RECs will ensure that for FY 16-17 trading prices remain at floor-price and clearance remains low.

Note: The above issuance and demand are cumulative for the year (it does not include existing inventory of RECs)

Source: REC Registry website; REConnect Analysis


The regulation can be accessed here.




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