CERC Makes Drastic Changes in the REC Mechanism
In a recent notification, CERC (Central Electricity Regulatory Commission) published new REC regulations.
These regulations differ in many significant ways from the existing REC regulations. A brief summary is provided below:
It is important to note that these regulations, though final, are not yet operational – they will come into force from date as notified by the Commission in the Official Gazette.
Key Changes in the REC Mechanism 2022, are as follows:
- Eligibility for RECs:
- Significantly expanded list of eligible projects
- RE projects, Captive projects, Discoms and open access consumers are eligible for RECs, subject to minimal conditions (should not have availed concessions on transmission or wheeling charges)
- “banking of energy” related provisions have been done away with (ie, even if banking or “preferential banking” is availed, it does not disqualify a project
- Large Hydro projects are also likely to be eligible for RECs (till now, only small hydro projects were eligible)
- REC multiplier for different technologies:
- The REC Multiplier concept is introduced where some technologies like Biomass will get >2 RECs for every MWH of power generated. (see detailed table below)
- REC pricing:
- Floor and forbearance prices have been done away with
- The Price of REC Certificate will be as discovered in the Power Exchange(s) or as mutually agreed between eligible entities and the electricity traders.
- Trading of RECs:
- Direct trading of RECs to be possible. REC Certificates can be exchanged through power exchanges or through electricity traders.
- The Certificates issued shall remain valid until they are redeemed
Details of Certain Features of the new REC regulation
- Eligibility for REC
2. CERC has introduced Multiplier, as below, which will be effective from the date of notification of the regulation for a period of 3 years and will be reviewed from time to time.
The multiplier once assigned will be valid for a period of 15 years.
It is important to note that the certificate multipliers will only be provided to projects commissioned after the date of effect of these regulations