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.

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.

 

 

 

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.

 

REC Mechanism Sees Low Issuance

July saw significant new capacity getting registered. Registered projects capacity increased from 406 MW last month to 623 MW.

However, our analysis found that very little of that is seeing issuance as of now. Approximately 30,000 RECs were issued this month translating to only 42 MW equivalent capacity (using standard PLFs). This represents only 10% of the total registered capacity, or 30% of the effective capacity (after factoring in PLFs).

 

 

*Calculated from standard PLFs applied to registered capacity

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